On Confronting Capitalism and the future of Liberal Praxis and Theory
In my last post (here), I used Vivek Chibber’s (2022) Confronting Capitalism: How the World Works and How to Change it (Verso) to reflect on the political moment. In passing I also noted a feature of his argument that I thought worth developing. In the second chapter, Chibber argues that in a capitalist system the state is not neutral between workers and capitalists. And, crucially, this would be so even if the people who run the state were not captured economically and ideologically by capitalists, and the state itself could be miraculously secured from rent-seeking behavior of well-organized interests. For, the state has an underlying interest in promoting economic growth and this means it will be “strongly biased toward the holders of wealth and capital.” (p. 89)
So, on Chibber’s view the liberal sense of state neutrality with rule of law and property rights has a class bias built into it. “The state in capitalism is not and cannot be politically neutral.” (p. 89; emphasis in original.) The state is, in fact, structurally dependent on capital. (p. 76) And so its baseline tendency is to protect the wealthy’s privileges. (p. 76; emphasis in original) As I hinted, I think this is rather important for political theory. Today I want to start explaining that.
Lurking in Chibber’s account are all kinds of complications that are woven into the nature of the modern state. Some of these complications become clear if we don’t move so fast from the structural dependence on capital to inferring from this the need to protect the wealthy’s privileges. And back up a bit.
So, in my view the modern state requires there to be growth because of the way money and debt operate. I suspect Locke is really the first significant modern thinker to grasp this (recall here), but in him the argument gets connected to ideas surrounding national greatness. The simple part of the story is that in order to service its debts and the interest on them, a state needs to be able to tax a growing economy. These debts often originate in war, but debts have become also a means to pay for non-war related expenses (investments and other goodies). Without growth, debt burdens become really scary rather quickly thanks to compounded interest (otherwise you need to increase taxes quickly). This is so regardless of the way ownership or classes in an economy are organized.* (Obviously, if there is a state debt then there are creditors, but these need not be domestic.)
So, a state that lacked debts altogether could at least have an option to avoid aiming at growth. With debt, the option disappears. (If one takes possible success in war to be constitutive of the modern state then a state without debt is a fiction.) Of course, there are other reasons to opt for economic growth—as Chibber notes in chapter 2 of his book (p. 73), all states, and especially democratic ones, have an interest in maintaining employment among their citizens. And without growth even modest improvements in productivity would generate unemployment (or, if one forbids this possibility, at least workers with nothing to do). Again, notice that this is so regardless of underlying economic arrangements. The same holds for market socialism (like Chibber advocates).
I am not denying that a steady state economy is possible. But that state would have to do without debts (and probably its own money), and it would have to pursue population policies if necessary (but let’s leave that aside).
As Chibber notes, in modern economies without growth prospects investments may dry up (and, thus, generating a vicious declining cycle). So, a modern state will have to pay simultaneous attention to its ability to repaying and attracting creditors. And this biases its political economy toward growth and to a number of rights (including security of contract) associated with (as Chibber would put it) capital just to avoid significant crises.
The reason why I resisted the slide from the rights of capital to the rights of the wealthy implied by Chibber is that one can have a robust system of property and creditor rights where capital is pooled (say through investment or retirement) funds, but otherwise made unattractive to individuals and families. (This would be a limitarian system in which taxes are progressive.) Of course, this is not meant as a criticism of Chibber’s actual point; in our world the rights of capital and the rights of the wealthy are intertwined.
The preceding has a number of important implications that are usually elided. Today I leave aside what all of this might entails for the unfolding environmental crisis. (As I noted in my last post on Chibber, he ignores this somewhat surprisingly.) Rather, given the non-trivial bias toward growth that is characteristic of the nature of the modern state (which is pretty uniformly addicted to debt), it follows that at least some liberal recipes in the art of government that are growth conducive will be converged upon over time by modern states even if they are governed by very illiberal ruling cliques: this involves some respect for contracts, rights of investors, free-ish trade, the provision of public data, education into basic literacy, etc. This is, of course, not a theoretical point, but just an empirical fact about the last hundred years.
My point here is not to be pollyannish about these; clearly adhering to some liberal recipes is compatible with non-trivial corruption and all kinds of civil and political rights violations. But rather my point is that over time modern states have to accommodate policies that will be permissive of economic growth and simultaneously nurture stakeholders that will have an interest in pushing for the expansion of the state’s liberal commitments. And that even when it seems liberal political life is in retreat locally the demand for liberal theory and re-liberalizing values still has a future globally.
That’s perhaps a surprising interpretation of reading Confronting Capitalism. But as regular readers know, I think of liberalism as the reformist off-spring of really existing capitalism everywhere.
*There is a more complicated story lurking here that a state currency or money is not just a legal tender in which taxes have to be paid but also a kind of IOU that the state can use to cover its own expenses. And that a system with a state currency works with less friction if there is economic growth that can be taxed (and so the IOUs can, in principle, be repaid).