How should we shape the economy to deal with income inequality and climate change? What role should the state play in economic activity? Should we fear AI? These questions are some of the most important ones facing us today. In this post, we’ll have a look at how an array of scholars have tackled them, and what their answers mean for how we think about contemporary Capitalism. You’ll notice that two of these books draw heavily on historical experience, while another two are out-and-out history books. This is perhaps reflective of my own belief, which I have betrayed in this selection, that we cannot comprehend the present or shape the future without understanding the historical trajectory that we are on.
What other books would you recommend to anyone looking for a different perspective on Capitalism? Let me know in the comments.
1. Thomas Piketty, Capital in the Twenty-First Century (London: Belknap Press, 2014)
From one of the most influential economists of the twenty-first century, Thomas Piketty’s Capital is a ground breaking and seminal work in which he takes a long-run view on capital ownership and inequality. The analysis underpins his argument that when the rate of return on capital is higher than the rate of growth for income and output, society will begin to destabilise. While it is not without its critics, this work has been recognised, especially by left-wing scholars and politicians, as one of the most significant contributions to the study of economics, and it is now foundational to modern critiques of Capitalism. It is a long, tough read, with lots of historical data and theoretical analysis. It is worth it, however, for anyone concerned about income inequality and how the issue might be tackled.
2. Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist (London: Random House, 2017)
While Piketty focuses upon income inequality, Raworth approaches the issue of how the economy should react to climate change. Central to her thesis is the idea that the economy should behave like a ‘doughnut’, operating within an upper and lower boundary rather than seeking continual exponential growth. Doing so would prevent humanity from consuming more from our planet than it can provide, and help us live sustainably. Although the book is not perfect — in its suggestions for sustainable products, more could have been done to account for consumer preferences (‘green’ products still need to be better than polluting ones), and it is overly critical of other ‘green’ approaches to capitalism — it is still full of useful ideas. In particular, it exposes the problems with setting growth in GDP as the main goal, and changes the emphasis to sustainability and equitable distribution.
3. William J. Ashworth, The Industrial Revolution: The State, Knowledge and Global Trade (London: Bloomsbury, 2017)
Conventional wisdom has it that free trade (and a laissez-faire state that simply protected property rights), knowledge, and a culture of ingenuity led Britain to become the first industrial nation. As Ashworth argues, however, such an interpretation was invented after the fact to justify policies of the time, and has been used to do so ever since. Using a broad analytical framework, Ashworth argues, to the contrary, that British industrialisation was a result of state intervention in many areas, from protectionism to help import substitution, to aiding colonisation and slavery. High levels of taxation (especially, for example, on waste) forced manufacturers to become more efficient. All the while, the state, in its appetite for taxes, interfered and expanded its knowledge of nearly every facet of industry and production. This interpretation of history, valid though it may be, has ruffled feathers by challenging the economic orthodoxies of our time.
4. Carl Benedikt Frey, The Technology Trap: Capital, Labor, and Power in the Age of Automation (Princeton, NJ: Princeton University Press, 2019)
Advances in AI and automation are threatening jobs, and leading to an increased emphasis on the power of capital in our society. As Frey shows, however, our situation is not unique. During the first Industrial Revolution, and since, machinery and the mechanisation of labour have threatened to displace workers. Much of this change has been good in the long run, Frey argues— this should give us hope when it comes to dealing with AI. Of greater importance is how change is managed in the short term. Frey uses historical research to evaluate how the issues facing us today have been dealt with before (and how our situation differs), before discussing a range of solutions that we now have at our disposal. What was most interesting about this book is the differentiation Frey draws between technology that replaces workers, and technology that augments their work, and what this has meant for different classes (especially in manual and office work) at different times. While there are a number of useful solutions he identifies, I feel that he is unnecessarily dismissive of Universal Basic Income. Nevertheless, Frey helps craft a historical narrative that puts the problems we face today into proper perspective.
5. Caitlin Rosenthal, Accounting for Slavery: Masters and Management (Cambridge, MA: Harvard University Press, 2018)
While this is aimed at a predominantly academic audience, challenging the orthodoxy that places the origins of modern management in the factories of (New and Old) England, Rosenthal’s analysis speaks to the issues of how we understand Capitalism more broadly. It is part of a growing literature that places the origins of Western Capitalism and industrialisation in the systems of plantation slavery, and provides an informative and heart-wrenching view into the accounting systems that supported slavery. The narrative takes the reader from the islands of the West Indies to the Antebellum and Postbellum South in the United States. The argument is compelling and well-delivered, and is a worthwhile reminder of where the institutions that now define our life originated.
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