Capitalism: The Future of an Illusion (book review)

The European Legacy Toward New Paradigms ISSN: 1084-8770 (Print) 1470-1316 (Online) Journal homepage: http://www.tandfonline.com/loi/cele20 Capitalism: The Future of an Illusion Giorgio Baruchello To cite this article: Giorgio Baruchello (2018): Capitalism: The Future of an Illusion, The European Legacy To link to this article: https://doi.org/10.1080/10848770.2018.1529871 Published online: 04 Oct 2018. Submit your article to this journal View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=cele20 THE EUROPEAN LEGACY BOOK REVIEW Capitalism: The Future of an Illusion, by Fred L. Block, Oakland, CA, University of California Press, 2018, viii + 252 pp., $29.92/£24.00 (paper) Back in 2004, the celebrated liberal economist John Kenneth ‘Ken’ Galbraith crowned seventy years of prolific intellectual activity by publishing a terse and witty book entitled The Economics of Innocent Fraud (Penguin, reprint, 2009). Condensing therein many decades of life and study qua Keynesian and post-Keynesian economist, Galbraith denounced several claims of “traditional economics” and “ritual views of economic life” bearing no relation to “the reality” of the world’s economies and “reflect[ing]. . . a normal tendency to self-benefiting expression and action,” both of which go generally unnoticed and unpunished (hence the “innocence” of the economic “frauds” per the book’s title; 4–5). Among such claims and ritual views is the commonplace use of the phrase “the Market System” in lieu of the term “capitalism”, so as to hide the ‘sour’ fact of national and global market power and suggest ipso dicto that there exists in practice, and not just in steeply abstract theory, a coherent, time-honoured, self-regulating and beneficial economic order based upon free “consumer sovereignty” and competition (7). Though psychologically and socially reassuring, this suggestion ignores monumental contrary phenomena such as omnipresent “consumer manipulation,” “monopoly” or oligopoly power (12–19), and unchecked “[m]anagement authority” perpetuating “a corporate system based on the unrestrained power of self-enrichment” (38). In his 2004 short book, Galbraith criticised also the universal use of “GDP” qua standard measure of national achievement, despite its blindness to essential aspects of human wellbeing and life’s meaningfulness, and its inherent legitimising function for practices that are detrimental to both (20). Similarly, Galbraith tackled critically the widespread assumption that corporate management is not “bureaucracy” and is therefore incapable of being “unnecessary, inept, selfconcerned” just like public bureaucracy is commonly said to be (30). Indeed, the very distinction between “public” and “private” sectors is, according to Galbraith, nothing but a convenient “myth,” behind which lurk the unethical stripping of much-needed public services and the hijacking of legitimate political authority by special interest groups (40). In his 2018 longer book, Fred Block essentially reiterates, articulates and exemplifies the same innocent frauds identified by Galbraith, whose “institutional and historical way of thinking about the economy” reverberates throughout Capitalism (59; cf. especially chaps. 1–2 and 4–6) despite the latter’s absence among the cited sources (cf. 24–25 and the Bibliography). Even Galbraith’s critiques of GDP qua measure of human progress, corporate ineptitude and state capture by private interests are resumed in Block’s book (cf. chaps. 4 and 7). To these frauds and topics, Block adds only the ritual view that democratic institutions, trade unions included, are enemies of well-functioning markets, and presents instead the traditional Keynesian and social-democratic argument whereby such institutions are actually conducive to more prosperous economies because of their transparent, anti-oligarchic, innovative and demand-strengthening character, as amply exemplified by the Nordic countries, Germany, and much of the Free World in the thirty years after the Second World War (cf. especially chap. 5). Furthermore, Block corroborates all these critical points with concrete examples from Europe, Asia, and the Americas after the collapse of 2008, which Galbraith, an expert on the 1929 crash, did not live to see (he died in 2006). Finally, Block offers an overview of the sort of national and international financial architecture needed today in order to leave behind the chaos and 2 BOOK REVIEW inequality created by the abandonment of “the Bretton Woods system” (155) and the decades of deregulated finance that ensued thereof (cf. especially chap. 7). The egregious white-collar crimes committed in the name of unrestrained, allegedly rational and assumedly socially beneficial self-maximisation are duly noted by Block. In the face of rampant and routinely justified “greed,” he calls for renewed business morality, along the lines of professional deontology, as well as stricter regulation (86). Yet in a milder and far less controversial tone than Galbraith, Block refers to the self-serving innocent frauds legitimising such behaviours as “illusions” and argues that, rather than means of deception, these ritual views are causes of self-deception, insofar as they prevent business leaders, economists, expert advisors and politicians from seeing the truth about socio-economic affairs and the actual history of “capitalism”—a word that Blocks believes no longer carries the sinister connotation colouring it in the past (cf. 15–21). The overall picture of economic reality that Block draws is basically consistent with the wisdom presented in the older and copious international scholarly literature about the “varieties of capitalism,” which, he claims, “has been drowned out by the hegemonic view that capitalism is a unified and largely unchanging system. . . whose inner logic must be obeyed” (13), as though it were the “fixed DNA” of a living organism (144) rather than a set of institutional arrangements built and modified in all sorts of ways throughout modern history (cf. especially chap. 5). This drowning out of alternative conceptions and awareness of historical variants of capitalism is most likely to have occurred in Block’s United States. It is less likely to be so in countries such as Brazil, Switzerland, Sweden, Vietnam, Iran or Germany—and many others, for that matter—where pundits and politicians regularly refer to far less orthodox theories and experiences such as ordo-liberalism, the Social Doctrine of the Church, Marxism, the Scandinavian middle way, Islamic banking, et cetera. Though geographically navel-gazing, Block’s assessment of the American intellectual bamboozlement and misdirection vis-à-vis economic matters is revealing and commendable. A book like his Capitalism, which reprises and condenses dissenting notions and observations going from Adam Smith to Viviana Zelizer, is certainly most urgent in today’s United States, where the prevailing “conventional wisdom” has killed off many of the alternative views still available to the citizens of other countries, whether in Europe, Asia or South America, as well as the memory and knowledge of the many different paths that capitalist economies have taken across the globe in an endless display of adaptability and flexibility (83). Besides, insofar as trends and fads from the United States reach, albeit with some delay, Europe and the rest of the world, Block’s book should put us all on the alert, for many live in the periphery of the empire. The United States, whatever troubles it may be facing in the time and age of “Donald Trump” (1), is still “the global hegemon” (154). Finally, a note on Block’s prose, which is sharp, unaffected, and devoid of cumbersome jargon and fastidious technicality. His informed, synthetic overviews of significant historical cases of successful economic development (e.g. nineteenth-century America, 71–77) or more or less disastrous decline (e.g. 1990s Russia, 37–39, and the gold standard regime, 162–64) are true gems of crystal-clear and intelligent brevity. As such, his book should appeal to the educated public at large, well beyond the confines of academia alone. Giorgio Baruchello University of Akureyri, Iceland [email protected] © 2018 Giorgio Baruchello https://doi.org/10.1080/10848770.2018.1529871