Romanticising the state

‘Capitalism’ and ‘Capitalist’ are disastrous terms (I).

I have posted on this before, but as I continue to read, listen to, and watch sources of information, my thoughts keep developing. In particular, the book by Arnold Kling and Nick Schultz, Invisible Wealth: The Hidden Story of How Markets Work—especially its interviews with prominent economists, some of whom are no longer with us—was very helpful in clarifying and extending my thinking.

It would be a great improvement to our understanding of social dynamics if people stopped using the terms capitalism and capitalist. Given how ubiquitous these terms are, this may seem a strong claim, but it is one that is easy to sustain.

The Marxist definition of capitalism is:

The socio-economic system where social relations are based on commodities for exchange, in particular private ownership of the means of production and on the exploitation of wage labour.

According to Wikipedia:

Capitalism is an economic system based on the private ownership of the means of production and its use for the purpose of obtaining profit.

The first problem is the ism. There is no role for the state here. The state becomes, implicitly or explicitly, a “reflection” of the economic system, despite the fact that people do not describe non-state societies as “capitalist” even though such societies can have lots of private ownership used for the purposes of gaining income.

Non-state societies cannot manage the scale of economic activity so as to have, for example, firms. Their economic production is overwhelmingly centred on households.

Sedentism—living in dwellings—created households that then became, for millennia, the centre of most economic activity. Even states were governed out of royal or imperial households. It is factories, and offices, that move economic activity out of households.

The mass energy-use take-off we call the Industrial Revolution has brought the arc of economic history that began with sedentism to an end. When economist Robin Hanson writes about the shift from farmer “back” to forager patterns, it is the effects of the supplanting of households from the centre of economic activity that he is pointing to (without fully grasping that).

Note that this shift away from households being central to economic activity is very much about energy use: it applies to both commerce and to state activity (including state production). It is not inherently “capitalist”.

State production also produces commodities: calling such “state capitalism” just shows how much capitalism is a ridiculously protean term.

Eliding the state

The exclusion of the state in defining capitalism is not analytically benign. A classic and continuing use of the term capitalism is to romanticise the state. By viewing the state as a “reflection” of the economic system, all bad things, all disliked features, can be based on the malign influence of “capitalists”, of the dynamics of “capitalism”, with the state reduced to an instrument or reflection of such dynamics. (The same thing can be done in reverse, blaming all bad things on the state—see anarcho-capitalism—but that is much less common.)

The natural—and used—implication of blaming private commerce for all bad things is that, if good people, with good intentions, and proper understanding, run the state, it can do anything needed for their program to be achieved. This is very obvious if one, for example, reads the program of the Democratic Socialists of America.

The term capitalism thereby becomes a vehicle for getting the state profoundly wrong; for not understanding that the state is a fundamental structuring feature of any state society; for not understanding that, across history, states have been the dominant extractor and creator of surplus, and so of class structures. That, when it comes to state societies, the state itself is fundamental.

To see how much that is true, contemplate the monumental constructions of past civilisations. State cultures build far more, and are more socially complex, than stateless cultures. In pre-industrial polities, the state itself—the ruler and the ruler’s agents—dominated what is built.

The state dominates the extraction and creation of surplus even in the most mercantile of societies. Suppress commerce and you elevate the state.

The state’s extraction of taxes creates surplus by taking resources before they can be turned to supporting more babies. Relationship to the means of coercion thus turns out to be a key feature of class in its own right, as one can also see by contemplating all the warrior elites of history.

There is no greater example of how the state dominates the creation and maintenance of class structures than Marxist regimes, than Communism.

Revolutionary Marxism operationally is a Party elite seizing control of the state, pulverising society, and setting up a class structure based on its ideological and regime convenience. Revolutionary Marxism—Communism—is thus the most thorough modern iteration of the general pattern that the state itself is the dominant creator of class structure, due to being the dominant creator, extractor and distributor of surplus.

We view the hereditary rule of the Kim dynasty in the Kimdom (North Korea) as some weird aberration but such “socialism in one family” was created because Kim il-Sung (1912-1994) grasped the operational logic of Communism more thoroughly than any other Communist leader. All forms of left-progressivism operate to elevate left-progressives to positions of authority: Communism just takes it to the nth degree.

It is entirely—and demonstrably—possible to set up inheritance as the apex succession mechanism on top of a state apparatus, including a Party-state apparatus. After all, there have been plenty of states where the hereditary principle operated at the top of a system of hierarchical, even bureaucratic, control: from the Inca Empire (1438-1533) through to the Roman Empire under various dynasties such as the Constantinian (305-363) or Valentinian (364-455) dynasties, the Khmer Empire (802-1431), and the Song (960-1279) and Ming (1368-1644) imperial Chinese dynasties—though the pattern in China goes back to the Warring States period (c. 475 –221 BC).

This is even more so when one can harness, one can mobilise, the other basis for class power, for class authority, that Marx’s economism does not cope with: the role of managing the burdens of self-consciousness through rituals and patterns of public meaning and legitimacy which is undertaken by shamans, priests and clerisies down the ages. This is the social realm that all Marxist regimes and movements very much mobilise, and pay so much attention to, via ideology and which is part of it being a political religion—a religion where Communism/Socialism never fails, people fail Communism/Socialism.

Kim il-Sung created Juche ideology that elevated him and his lineage—the Mount Paektu Bloodline—to messianic status. The status granted to a Stalin or a Mao became hereditary in the Kimdom. The role of the cult of personality in signalling loyalty in a situation where loyalty is compulsory harks back to the long history of deified rulers.

In many ways, the Kimdom represents the other end of an historical arc that starts with the Anabaptist Kingdom of Munster. So much of left-progressivism is prefigured in Anabaptist Munster: 

• the rigid exclusion of believer from non-believer based on what Carl Schmitt (1888-1985) would later call the friend/enemy distinction; 

• the intense moralising of disagreement by an owning-morality “knowing” elite deciding who is or is not a legitimate participant in the discourse and decisions; 

• the doubling-down on the ideology regardless of failures; 

• believing that they know the proper arc of history; 

• holding that past and present society are dominated by processes of sin and corruption; the imposition of rigid, pervasive social control; 

• the anointing of a personified Messiah-Ruler; 

• the creation of an intensely moralised hierarchy; 

• the abolition of private property.

Those cases where left-progressives achieve control of the state showing the most similarities.

In contemporary Western democracies, the state spends around 30-50 per cent of GDP and regulates the rest. Treating what it does as “capitalism”—as a mere reflection of its society, of private commerce—is analytically childish. It is a worse-than-childish in its mis-construal of basic social dynamics—that the state is a fundamental structuring element of any state society—that is disastrous for human flourishing because it thereby dismisses centuries of struggle to impose accountability on the state. This then ends up justifying monstrously unaccountable Party-States.

Not that the liberal democratic West should be too smug. Liberal Theory also suffers the delusion that states just “reflect” their society and so systematically underestimates how hard it is to impose accountability on the state apparatus. Sticking a bunch of elected politicians on top of the state apparatus does not solve the problem of ensuring systematic accountability. This is especially so as the expansion in the size and reach of the state apparat increases the scale of the networks and resources who benefit from frustrating such accountability—indeed, who benefit from turning elections as much as possible into rituals of legitimacy that don’t change things in ways inconvenient to the unaccountable classes and their status and authority games.

In Britain, PM Tony Blair debauched the UK’s constitutional order through expanding quangoes, instituting human rights legislation that empowered judges over elected ministers and devolving decision-making to the EU, thereby massively increasing the degree to which British elections became legitimating rituals that changed remarkably little. This is, however, just an extreme case of a more general problem across Western democracies.

The way welfare-state apparats have created ever-larger numbers of people insulated from the consequences of their ideas—but who benefit from status plays that moralise disagreement that then generate purity spirals—has a huge amount to do with modern madnesses.

Historian Orlando Figes analysed the Russian Revolution as the dictatorship of the bureaucracy. Western societies are suffering the corrosive effects of evolution networks within bureaucracy—whether government, non-profit or corporate bureaucracy—and elsewhere (notably academe) of people insulated from the consequences of their ideas, insulated from making things work. The, at times, startling lack of attention to the problems of social order that has become such a feature of contemporary left-progressivism comes from this.

The ongoing refusal to confront what is revealed in the Fauci diaries also reveals how much of Western elite/progressive politics has become about frustrating accountability to the wider citizenry. There are a great many people who do not want to confront that larger the tax-paid state and quasi-state apparatus become, then the larger and better resourced the anti-accountability networks become, because they benefit from those apparatuses having as little accountability as possible. Even if that is not so, they often cannot bear the thought that people like them are the problem, or that the moralised status games that give them such comfort—or even a sense of identity—might be the problem.

The negative idealism of Critical Theory and its derivatives, where one gets to criticise any constraint one doesn’t like, call it oppression, but take no responsibility for making things work—other than handing resources and moral authority to people like themselves—is status-play catnip to such people.

The notion of capitalism obscures all this. It particularly obscures grappling with how much welfare state apparatuses colonise their societies, and colonise them through social pathologies. Public health, for example, gets more authority and resources the metabolically sicker its polity populations become. Not exactly a positive incentive structure. Moreover, the welfare state not only colonises social pathologies, it increasingly generates pathological politics and status plays precisely because of its funding of ever-wider networks of people insulated from the consequences of their ideas.

This is Why I Call It the Homeless Industrial Complex

The next post in the series examines how capitalism and capitalist mislead about the dynamics of commerce.

References

Herbert Gintis, Carel van Schaik, and Christopher Boehm, ‘Zoon Politikon: The Evolutionary Origins of Human Political Systems’, Current Anthropology, Volume 56, Number 3, June 2015, 327-353. https://pubmed.ncbi.nlm.nih.gov/29581024/

F. A. Hayek, ‘The Use of Knowledge in Society,’ American Economic Review, Sep. 1945, XXXV, No. 4, 519-30. https://statisticaleconomics.org/wp-content/uploads/2013/03/the_use_of_knowledge_in_society_-_hayek.pdf

Arnold Kling and Nick Schulz, Invisible Wealth: The Hidden Story of How Markets Work, Encounter Books, [2009] 2011.

Meir Kohn, ‘An Alternative Theoretical Framework for Economics,’ Cato Journal, Vol. 41, No. 3 (Fall 2021). https://www.cato.org/cato-journal/fall-2021/alternative-theoretical-framework-economics

Xavier Marquez, ‘A Model of Cults of Personality,’ APSA 2013 Annual Meeting Paper, Last revised: 26 Aug 2013. https://www.academia.edu/4205457/A_Model_of_Cults_of_Personality

Xavier Marquez, ‘Two Models of Political Leader Cults: Propaganda and Ritual,’ Politics, Religion, & Ideology, Volume 19, Issue 3, 2018, 265-285. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3208495

Joram Mayshar, Omer Moav, Zvika Neeman, ‘Geography, Transparency, and Institutions,’ American Political Science Review, June 2017, 111, 3. 622-636. https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2016/twerp_1129_moav.pdf

Joram Mayshar, Omer Moav, Luigi Pascali, ‘The Origin of the State: Land Productivity or Appropriability?,’Journal of Political Economy, April 2022, 130, 1091-1144. https://www.researchgate.net/publication/356707920_The_Origin_of_the_State_Land_Productivity_or_Appropriability

James C. Scott, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, Yale University Press, 1998.

James C. Scott, Against the Grain: A Deep History of the Earliest States, Yale University Press, 2017.