This is not a review of the best books of the year, but a reminder of the books that I have reviewed during 2021.
In this second year of COVID, let’s start with Adam Tooze’s Shutdown. Tooze is the liberal left’s current favourite historian. And Tooze is the ultimate ‘historian of the moment’. By that I mean a deep analysis of major developments in the economic history of modern nations is not his approach. He wants to provide instant coverage of the actors in history. This he did with his previous best seller, Crashed, which covered the role of the Fed, the other central banks and governments in dealing with the global financial crash in 2008-9. Now Shutdown leaps into telling us what happened during the COVID pandemic and how leaders of finance and government reacted.
For Tooze, it is when, where and how but not much why. Where there is a why – it is very much presented through the prism of Keynesian theory. In Crashed, the global financial crash was the result of the deregulation of the banking system, financial greed and incompetent authorities. But for me, all these were just symptoms or immediate catalysts of the underlying causes in the capitalist economy. In Shutdown, we are again given the same explanations based on the good or bad decisions of the authorities, not on the underlying causes of the pandemic. And again, we are offered Keynesian solutions to the pandemic slump: fiscal and monetary largesse.
A desire to expose the failures of capitalism but a reluctance to propose its replacement is again the thread of thought from that other best-selling left-liberal economist Mariana Mazzucato in her new book of 2021: Mission Economy
Italian-American economist Mazzucato has become a big name in what we might call ‘centre-left’ or even in mainstream economic and political circles. She now advises governments and institutions internationally and appears on various headline forums and seminars. The World Health Organization appointed her as chief of its Council on the Economics of Health for All in 2020. And she recently praised the appointment of (unelected) former ECB chief and central banker, Mario Draghi, as Italy’s prime minister, presumably because he is going to save Italy’s economy.
In this ‘award-winning’ book, she promotes the example of the Apollo space mission to the moon as the way forward to develop innovations and diffuse them across the economy; in what she calls a ‘mission-oriented’ approach. What modern capitalism needs is a ‘purpose-driven’ partnership between the public and private sectors: “moonshots must be understood not as siloed big endeavours, perhaps the pet project of a minister, but rather as bold societal goals which can be achieved by collaboration on a large scale between public and private entities.” Mazzucato sums it up: “Mission Economy offers a path to rejuvenate the state and thereby mend capitalism, rather than end it.” In my view, that is a mission impossible.
While Tooze and Mazzucato have considerable worries about the ability of capitalist economies to deliver and emphasise the need for the state to help, there are no such concerns from Mark Carney, the former head of the Bank of England. Carney made a fortune at Goldman Sachs. When asked recently whether he considered working for this investment bank ‘built a better world for all’, given its reputation as the ‘vampire squid of finance’, he responded “It’s an interesting question. When I worked for Goldman Sachs, it wasn’t the most toxic brand in global finance, it was the best brand in world finance.”
In his book, Value: building a better world for all, Carney poses the age-old question between value and price; as Oscar Wilde once said “knowing the price of everything but the value of nothing”. Carney notes that, in this world of market economies, global poverty and inequality remain – and most important for him, the environment is being destroyed. Carney asks why many of nature’s resources are not valued unless they can be priced. He gives the example of the Amazon rainforest only appearing as valuable when it has become a cattle farm. So price is not always a good measure of value.
What is Carney’s solution to this contradiction between price and value created by the market? It is to persuade capitalist enterprises to do things ethically and for ‘a better world for all’. In working for his latest asset management company, he aims to get investors to make ethical and ‘green ‘ investments. But just as he delivered his Reith lecture on his book on ‘value’, he had to retract an earlier claim that the $600bn Brookfield Asset Management portfolio he was working on was carbon neutral. He based his claim on the fact that Brookfield has a large renewable energy portfolio and “all the avoided emissions that come with that”. The claim was criticized by others as an accounting trick as ‘avoided emissions’ do not counteract the emissions from investments in coal and other fossil fuels responsible for Brookfield’s carbon footprint of about 5,200 metric tons of carbon dioxide.
Let’s turn now to some books by economists of a Marxist persuasion. The nature of China and its development since the 1949 revolution is a major issue of debate among the left and Marxists, in particular. I reviewed just three books this year from a growing number of publications.
Isabelle Weber’s, How China escaped shock therapy. is the winner of the Joan Robinson prize of 2021. It is an account of how and why China did not go down the road of restoring capitalism through the ‘shock therapy’ of privatisation and the dismantling of state control as Russia did in the early 1990s. Weber argues that the ‘gradual marketization’ of the Chinese economy facilitated China’s economic ascent but without leading to ‘wholesale assimilation’ to capitalism. The decision of the Chinese leaders to make a gradual move towards capitalism was anything but a foregone conclusion or a “natural” choice predetermined by Chinese ‘exceptionalism’. Weber appears ambiguous on the economic foundation of the Chinese state. For her, China ‘grew into global capitalism’ but still “maintained its control over the commanding heights”.
There is no ambiguity from John Ross, in his new book, China’s Great Road. Ross is Senior Fellow at Chongyang Institute for Financial Studies, Renmin University of China and writes profusely in defence of China and its economic model as he sees it. He seems to argue that China’s economic success is not so much due to public ownership and state-directed investment but primarily the result of Keynesian-style ‘macro management’ of credit and fiscal measures as in capitalist economies. Ross’ explanation of China’s economic success implies that capitalist ‘macro management’ can work – when it has clearly failed in the advanced capitalist economies. Even so, Ross seems to suggest that China’s ‘Keynesian’ approach is taking it steadily towards socialism, even if there are a few bumps on the way.
Richard Smith is his new book definitely does not miss the contradictions in a transitional economy. He considers China is a “bureaucratic hybrid”, neither capitalist nor a ‘command’ economy. But Smith concentrates his fire on the failure of the Chinese government to handle the continued rise in carbon emissions and environmental degradation that China’s economic expansion has generated. Rather than coordinate with China to deal with climate change, the ‘international community’ is aiming to ‘contain’ and isolate China globally.
Another Smith (Murray E)’s view on China is closest to my own. But that is not the only reason I recommend Smith’s Twilight Capitalism as the best book I have read this year.
Authored by Murray EG Smith, Jonah Butovsky and Josh Watterton, these Canadian-based Marxist economists have delivered a comprehensive and often original analysis of global capitalism in the 21st century. As the authors start by saying, “this book is a hybrid of sorts”, namely an updated version of previous work by Murray Smith, namely Global Capitalism in Crisis: Karl Marx and the Decay of the Profit System published in 2010 and also Smith’s excellent 2018 book, Invisible Leviathan, which takes the reader deftly through the debates over the validity of Marx’s law of value. The book begins with the ‘here and now’ – and so with the COVID pandemic – but soon the authors get down to the nitty-gritty of Marx’s account of capitalist crises, both theoretically and empirically. In promoting Marx’s law of profitability, the authors deliver a significant critique of other explanations.
Both Smith and I have a debt of gratitude to the work of Henryk Grossman who in the 1920s and 1930s virtually alone sustained and revived Marx’s political economy in the face of misunderstandings by Marxists in Western Europe and distortions by Soviet economists. Rick Kuhn as the biographer and restorer of Grossman’s works has released another collection of his works. This time it is a long awaited first full translation of Henryk Grossman’s The Law of Accumulation and Breakdown of the Capitalist System into English.
This was the most important, influential and yet most denounced of Grossman’s works. It recovers not only Marx’s primary explanation of capitalism’s economic crises and breakdown tendency but also his method in Capital. Grossman is usually attacked (and again recently) for having a ‘breakdown’ theory of crises under capitalism and fatalistically refusing to recognise that capitalism could escape the final collapse. Yet I remind everybody that the title of his book had a subtitle: “being also a theory of crises” ie regular and recurring crises, not total breakdown. The weakness of the book is Grossman’s need to deal with Austrian Marxist Otto Bauer’s long forgotten approach to crises. But I urge everybody to read Grossman’s book because it explains Marx’s theory of crises in detail and also the driving economic forces behind imperialism. Rick Kuhn’s new version is the full one, but you can read the abridged version for free here. Rick Kuhn is preparing a fourth volume of Grossman’s works for 2022.
And to finish, in 2022, Pluto Press will be publishing a new book by Guglielmo Carchedi and myself entitled: 21st century capitalism – through the prism of value. Watch this space.