This post is a follow on from my previous post, Capitalism is Not a Useful Concept. While in the previous post my critique is focused on capitalism as a concept, this post presents an alternative lineage in critical political economy which largely puts to rest the Marxian conception of capital, and with it Marx’s historical materialism. This is quite a big claim to make, however I am not claiming to have done it! This work has been done already by the work of major 20th century institutional economists, namely Thorstein Veblen and John Kenneth Galbraith, and by two contemporary researchers, Jonathan Nitzan and Shimshon Bichler, who build on Veblen’s work.

Why am I interested in dismissing Marxian economics in favour of these institutional economists? Quite simply because these thinkers describe far better than Marx the economic functioning of the world of work and the economic system I have experienced in 15 years as a corporate, white-collar technology worker. Their methodology is more refined. They have incorporated a contingent, evolutionary approach to economic dynamics that did not exist in the 19th century. And they were nonetheless critical political economists.

It seems that to even hint about forgetting Marx in matters of political economy leaves you open to accusations of having being lured to the dark side, that you are an apologist for capitalism (whatever capitalism means), or at the best of times, that you are doing so out of ignorance, and are promptly given more Hegel to read. There seems to be this perception that Marx holds a monopoly on radical, critical political economy, and should you question the Marxian hegemony you cannot anymore perform a critical analysis of the workings of the economic system. A hybrid stance is to bastardise, pick and choose and juxtaposition Marx along with just about anything, in order to create something which is Marxian in name only. I have two theories for this bastardisation approach, it is possibly either done out of timidity, for fear of the immune response of the Marxian hegemony, the jostling for academic careers plays a large part here, or out of genuine affection for dear Marx. I have much sympathy for both these imagined reasons, people do what they need to do to stay in jobs they love, and I have my pet, seminal thinkers too, I cannot help but filter new information through these mentors, ‘oh this reminds me of what Deleuze/Nietzsche said in XYZ’. If your pet thinker turns out to have been wrong, or to have been a staunch Nazi (Heidegger), I can imagine I would probably perform similar mental acrobatics to restore my pet’s good name or contemporary relevance.

Marx wrote widely on a huge array of topics, but what I am specifically concerned with here is his conception of economics, and you just can’t do away with the labour theory of value, or historical materialism, and still consider it Marxian economics, as these are the foundational elements of his economic system. Marx remains unsurpassed in his ambitious vision of how things could, and ought to be, and this normative vision is the essence of the progressive left. This this where Marx’s grandeur lies, and this must not be conflated with his political economy work when critiquing or surpassing him. This is a clever rhetorical stratagem employed the Marxist hegemony, where a critique of Marxian political economy is taken as a critique on the normative vision. Critiquing, or ignoring completely Marxian economics, does not mean the person doing so thinks wage labour exploitation (or clubbing baby seals) is a good thing. And let’s not even go down the path of my-critique-is-more-radical-than-yours, if capitalism is an ill-defined concept, socialism as a concept fairs just as badly. If radical critique, to be considered radical, needs to raise as it deep, radical insight the question of capitalism vs socialism, yet both are badly defined concepts with even vaguer economic policy implications, it becomes instantly apparent what a dead end such dick-sizing competitions become.

That being said, now on to the interesting stuff.


Large Corporations and the Market

Galbraith sees the large enterprise which emerged in the 20th century as a planning and risk-mitigation apparatus. As technological innovation advanced since the industrial revolution, the resources required for research and development, as well as the production of commodities have increased dramatically. These resources include yes raw materials and specialised knowledge, in addition to vast amounts of financing and long R&D cycles, Galbraith notes advanced manufacturing requires coordination with other corporations and extensive planning. Another key challenge, as noted by Galbraith in The Affluent Society, was the management of demand for produced goods, by carefully controlling supply and by generating demand for non-essential commodities through marketing. It must be noted that a great deal of economic activity occurs between corporations, and the consumer market is only the most visible market.



Galbraith’s concept of modes of coordination examines two predominant institutional modes for coordinating intra- and inter-institutional transactions. The market system makes use of price signals for coordination, while large organisations use command and administration for coordination. These two dominant modes of coordination give rise to what Galbraith terms the dual economy. For Galbraith, large corporations grew largely to contain market uncertainty, and have largely succeeded now in dominating price signals rather than being dominated by them. In the dual economy, the thousand or so most powerful corporations have developed sophisticated planning and coordinating structures, and this power is so great as to be able to both manage consumer demand through advertising, which influences social attitudes and value judgements, as well as direct state policy objectives. The planning objectives of these corporations are largely concerned with maintaining their position of dominance, rather than concern for society’s needs as a whole. This planning dominance prevents the widespread benefits to society that the affluent society would be able to provide, limiting these benefits to the few.

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