Cooking the Books 2: Capitalism, but not as they know it

Eric Hobsbawn and Amartya Sen have both written interesting stuff. Hobsbawm on the history of capitalism in Britain and Sen on how famines are not caused by a shortage of food but by the collapse of some people’s legal entitlement to it. But their comments on the current crisis are confused.

In an article in the New York Review of Books (, reprinted in the Guardian (14 March), entitled “Capitalism Beyond the Crisis”, Sen questions “whether capitalism is a term that is of particular use today”, arguing:

“It seems to be generally assumed that relying on markets for economic transactions is a necessary condition for an economy to be identified as capitalist. In a similar way, dependence on the profit motive and on individual rewards based on private ownership are seen as archetypal features of capitalism. However, if these are necessary requirements, are the economic systems we currently have, for example, in Europe and America, genuinely capitalist?”

Citing increased state funding over the years of the armed forces, the police, health and education as examples of non-market, non-profit economic activities, he concludes: “the idea of capitalism did in fact have an important role historically, but by now that usefulness may well be fairly exhausted”.

The market and profits certainly are central to capitalism, and state spending certainly has increased compared with some past periods, but is state spending really non-capitalist or is it not rather part of the necessary overheads of running capitalism? Capitalism and the state have always co-existed. In fact the state helped capitalism come into existence and expand and is needed to maintain it today. State spending on armed and police forces is patently aimed at serving capitalist interests at home and abroad. State spending on education and health is essentially aimed at providing employers with a fit and trained workforce and so too is pro-capitalist.

Hobsbawn also thinks we should be looking towards a society that is neither capitalist nor socialist, as in the title – “Socialism has failed. Now capitalism is bankrupt. So what comes next?” – of a recent article of his in the Guardian (10 April) brings out. But his definition of capitalism is as wrong as his definition of socialism. He contrasts “the centrally state-planned economics of the Soviet type and the totally unrestricted and uncontrolled free-market capitalist economy”.

Arguments can go on about whether Russia was some form of capitalism or some new  exploitative class society, but it was clearly not a classless society based on the common ownership and democratic control of productive resources with production directly to meet human needs and not for sale on a market, i.e. not socialism.

The case for saying that it was still a form of capitalism – best described as state capitalism – is that wealth there still took the form of “an immense accumulation of commodities” as articles for sale, produced by a class of people obliged to sell their working skills for a wage or a salary on whose unpaid labour a privileged class lived.

As an historian of capitalism Hobsbawn must know that, if defined as a “totally unrestricted and uncontrolled free-market” economy, “capitalism” has never existed because there never has been a time when market forces alone have exclusively determined how an economy has worked. States have always intervened to try to distort the market in favour of particular capitalist groups as well as to engage in the activities Sen mentions.

As class ownership, production for sale with a view to a profit, wage labour and surplus value still exist – as they patently do, whatever the degree of state activity  – “capitalism” is the best term for describing the existing economic and social system.

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