The author has written a sweeping economic history for our time, one that explains how we got into our current mess, and how, if we can prevail against our corrupt politics, we can get back on track.
I suppose the answer comes down to, was the post war period to the mid 1970s the exception for capitalism or the rule. Most of the 19th century, 20th century and early 21st century would suggest that post war period is the exception.
That the unbearable weight of the capitalists to drive the narrative of what is necessary at the expense of working people gives the result.
Why was the post war exception possible for so long? I think it was a confluence of three things. The memory of the depression was still strong, the sacrifices to meet the demands of the war effort resulted in a community cohesion. But most of all, until it was obvious to everyone that the Soviet Union was a busted flush, the capitalist feared more than anything that revolution was possible and that they would be the first against the wall. Giving concessions to working people whilst running a reds under your beds campaign was necessary. Carrot and stick.
"Marx and Engels were, of course, convinced that, though it would take a while, capitalism would eventually collapse under its own weight, as its fundamental exploitation of working proletariats could not be endlessly sustained."
Marx and Engels were, of course, correct. Capitalism did collapse in the sense that commerce ground to a halt for not just hours but for months, multiple times.
Were it not for FDR's middle road of the New Deal the world would be a very different place.
Like you I'm a big believer in the theories and consequent policy advice of JM Keynes.
Countercyclical fiscal policy and Bagehot style support of commercial lenders (boy do I hate that we repealed Glass-Steagall) when businesses cycles get out of control has worked so well.
But we are rolling the dice again because "this time is different."
Excellent column. I think Keynes was more radical than his espousal of the full employment welfare state In that he came to advocate managed trade and capital controls and the euthanasia of the rentier. As Crotty has argued, he came
close to a socialist position, though not to the extent of Kalecki andRobinson.
"The capitalists themselves, along with the politicians they employ to do their bidding, fail to recognize that such greed is what underlies the “gravedigger” scenario."
And this is where Donald Trump and authoritarianism/fascism* step in. Through the use of blunt and brutal power, and violence if necessary, the greedheads will ensure their own success by making it impossible for reforms to even be offered, let alone carried out. Single party rule, whether by virtue of the elimination of other parties or the structural inability of another party to win an election, will guarantee success. By "structural inability" I mean that the ruling authoritarian party uses voter suppression, extreme gerrymandering, and "rigged" court decisions to ensure their own dominance. Before Trump entered politics, the GOP was already "legally" winning elections corruptly with the support all way up to and including the SCOTUS with its current corrupt majority.
*(Note: I consider Trump to be a fascist. Robert Paxton, a renowned expert on fascism agrees. My opinion preceded that of Paxton, but he came around to considering Trump a fascist and reported so in the NY Times in 2024. His opinion, more credible than my own, had nothing to do with me. Personally, I think Paxton was slow to come to the realization, but he has a reputation to protect, I don't. Eventually, the evidence built up and those who don't consider Trump to be a fascist, are, I believe, not paying close enough attention. In a sense, it may not make much difference, but I think it matters because I am emphasizing Trump's willingness to use violence to get his way.)
Thanks for the review. The book has now been added to my (alarmingly high) stack to read.
I read Polanyi’s “The Great Transformation” in college, and it was one of those books that stays relevant for decades. It was transformational (sorry, couldn’t resist) for my thinking. It is a delight to see that his writings remain relevant and probative for our time.
The review, its author, and our situation all call for continued evolution in our thinking. There is never going to be an ultimate explanation or solution. We all need to remain thinkers and actors who employ our thinking. (I cannot imagine Trump having any idea about what I just wrote.)
Before I buy books to add to my alarmingly high “stack” of books (mostly Kindle) I have started listening to podcast interviews of the author (which I search for using Listennotes.com) or their book talks on YouTube or C-SPAN. At my age I doubt I will have time to read all of them unless I just spend the rest of my life on the couch.
I've always found the uprising of the proletariat a dubious prospect. The Roman Empire set taxes on such a way that the common folk had to work themselves almost to death just to survive. The serfs didn't do too well versus the nobility. We 21st century proles are just ignored by our oligarch masters.
Oligarchy Capitalism, maybe an offshoot of the 19th century Rockefeller class seems to increasingly be nibbling away at classic Keynesian economics, in spite of Paul and you, who I gobble up each day, I’m increasingly pessimistic, Will a recession/depression drive out the rascals or set the stage for 1933 Germany?
Sounds like a very good book for us non-specialists to read. Whenever we talk about reforming something or getting to a better solution (e.g. income inequality, chronic government debt, healthcare, etc.), my scientific background pops up the old phrase “kinetics beats thermodynamics.” Bear with me: thermodynamics can tell you the optimal (lowest energy) state of a physical system, but kinetics tells you that you can’t get there if there’s some non-optimal state that’s easier to get to. There may be big energy barriers between where you are and where you would like to be, so if you can make any change at all, your actions will take you to some easier-to-reach non-optimal state. In health care, maybe you think single-payer Medicare-for-all is the optimum, but private insurance lobbyists, employer-linked insurance, and distrust of government stand in the way. So it’s not enough just to identify your desired goal, you also need to identify the barriers standing in the way of getting there, and figure out how to get the “energy” needed to overcome those barriers. It’s true whether you’re a baseball fan or a zoo-hater.
Makes sense. The pull of the easier, non-optimal equilibrium. Central to Keynes, of course, but also, as you point out, in policy work. We used to talk about policies that "block the low road," eg, minimum wages.
I suppose the answer comes down to, was the post war period to the mid 1970s the exception for capitalism or the rule. Most of the 19th century, 20th century and early 21st century would suggest that post war period is the exception.
That the unbearable weight of the capitalists to drive the narrative of what is necessary at the expense of working people gives the result.
Why was the post war exception possible for so long? I think it was a confluence of three things. The memory of the depression was still strong, the sacrifices to meet the demands of the war effort resulted in a community cohesion. But most of all, until it was obvious to everyone that the Soviet Union was a busted flush, the capitalist feared more than anything that revolution was possible and that they would be the first against the wall. Giving concessions to working people whilst running a reds under your beds campaign was necessary. Carrot and stick.
"Marx and Engels were, of course, convinced that, though it would take a while, capitalism would eventually collapse under its own weight, as its fundamental exploitation of working proletariats could not be endlessly sustained."
Marx and Engels were, of course, correct. Capitalism did collapse in the sense that commerce ground to a halt for not just hours but for months, multiple times.
Were it not for FDR's middle road of the New Deal the world would be a very different place.
Like you I'm a big believer in the theories and consequent policy advice of JM Keynes.
Countercyclical fiscal policy and Bagehot style support of commercial lenders (boy do I hate that we repealed Glass-Steagall) when businesses cycles get out of control has worked so well.
But we are rolling the dice again because "this time is different."
Excellent column. I think Keynes was more radical than his espousal of the full employment welfare state In that he came to advocate managed trade and capital controls and the euthanasia of the rentier. As Crotty has argued, he came
close to a socialist position, though not to the extent of Kalecki andRobinson.
Free and fair competition is the only way capitalism succeeds….we have kind of allowed this in addition to the monopolies
"The capitalists themselves, along with the politicians they employ to do their bidding, fail to recognize that such greed is what underlies the “gravedigger” scenario."
And this is where Donald Trump and authoritarianism/fascism* step in. Through the use of blunt and brutal power, and violence if necessary, the greedheads will ensure their own success by making it impossible for reforms to even be offered, let alone carried out. Single party rule, whether by virtue of the elimination of other parties or the structural inability of another party to win an election, will guarantee success. By "structural inability" I mean that the ruling authoritarian party uses voter suppression, extreme gerrymandering, and "rigged" court decisions to ensure their own dominance. Before Trump entered politics, the GOP was already "legally" winning elections corruptly with the support all way up to and including the SCOTUS with its current corrupt majority.
*(Note: I consider Trump to be a fascist. Robert Paxton, a renowned expert on fascism agrees. My opinion preceded that of Paxton, but he came around to considering Trump a fascist and reported so in the NY Times in 2024. His opinion, more credible than my own, had nothing to do with me. Personally, I think Paxton was slow to come to the realization, but he has a reputation to protect, I don't. Eventually, the evidence built up and those who don't consider Trump to be a fascist, are, I believe, not paying close enough attention. In a sense, it may not make much difference, but I think it matters because I am emphasizing Trump's willingness to use violence to get his way.)
Thanks for the review. The book has now been added to my (alarmingly high) stack to read.
I read Polanyi’s “The Great Transformation” in college, and it was one of those books that stays relevant for decades. It was transformational (sorry, couldn’t resist) for my thinking. It is a delight to see that his writings remain relevant and probative for our time.
The review, its author, and our situation all call for continued evolution in our thinking. There is never going to be an ultimate explanation or solution. We all need to remain thinkers and actors who employ our thinking. (I cannot imagine Trump having any idea about what I just wrote.)
Before I buy books to add to my alarmingly high “stack” of books (mostly Kindle) I have started listening to podcast interviews of the author (which I search for using Listennotes.com) or their book talks on YouTube or C-SPAN. At my age I doubt I will have time to read all of them unless I just spend the rest of my life on the couch.
I've always found the uprising of the proletariat a dubious prospect. The Roman Empire set taxes on such a way that the common folk had to work themselves almost to death just to survive. The serfs didn't do too well versus the nobility. We 21st century proles are just ignored by our oligarch masters.
Oligarchy Capitalism, maybe an offshoot of the 19th century Rockefeller class seems to increasingly be nibbling away at classic Keynesian economics, in spite of Paul and you, who I gobble up each day, I’m increasingly pessimistic, Will a recession/depression drive out the rascals or set the stage for 1933 Germany?
Sounds like a very good book for us non-specialists to read. Whenever we talk about reforming something or getting to a better solution (e.g. income inequality, chronic government debt, healthcare, etc.), my scientific background pops up the old phrase “kinetics beats thermodynamics.” Bear with me: thermodynamics can tell you the optimal (lowest energy) state of a physical system, but kinetics tells you that you can’t get there if there’s some non-optimal state that’s easier to get to. There may be big energy barriers between where you are and where you would like to be, so if you can make any change at all, your actions will take you to some easier-to-reach non-optimal state. In health care, maybe you think single-payer Medicare-for-all is the optimum, but private insurance lobbyists, employer-linked insurance, and distrust of government stand in the way. So it’s not enough just to identify your desired goal, you also need to identify the barriers standing in the way of getting there, and figure out how to get the “energy” needed to overcome those barriers. It’s true whether you’re a baseball fan or a zoo-hater.
Makes sense. The pull of the easier, non-optimal equilibrium. Central to Keynes, of course, but also, as you point out, in policy work. We used to talk about policies that "block the low road," eg, minimum wages.