The horizon is not so far as we can see, but as far as we can imagine

Don’t Confuse Capitalism with Industrialization

There is a very bad habit among modern triumphalists, the types who go on and on about how great the current world is, to confuse capitalism and industrialization.

Capitalism is part of how many nations industrialized, but industrialization is where the majority of the gains come from. When you replace human labor with machines run by coal and hydrocarbons and some other sources of power, you get most of the gains of capitalism.

This is why for much of its history the USSR, in fact, did just fine, and actually outgrew most capitalist nations.

Nor is the victory of “capitalism” as clean and clear as people make out. With a very few exceptions, mostly city states, countries industrialized under protectionism, not under “free trade” or “free markets.” This is beyond question, it is not open to debate: It is true of America, Japan, China and Britain, among others.

These were very heavily state-managed economies in many cases. Germany’s electrical revolution was a result of the German High Command making sure it happened, “Siemens, my good man, go start an electrical company!” (Hall’s “Cities in Civilization” tells this story well.)

Likewise, Japan had massive government involvement. And this is when we pretend that, say, Britain forbidding the export of raw wool, wasn’t a government action (and without which there is no textile revolution and thus, likely, no Industrial Revolution at all.)

Nonetheless, to be sure, the majority of the world did industrialize under some form of capitalism. Capitalism is how a lot of the decisions of what to do were made. Capitalism is how the right to command resources was allocated. But it doesn’t happen without massive government intervention: Commons don’t enclose themselves, government has to be onside. Chinese villages don’t give up and say, “Make me into housing!” by themselves either, government force is involved. There is little natural capital accumulation: It comes from taking away other people’s stuff and rights.

Unless we run across extra-terrestrials, or we lose our modern technological civilization, we will never know if it would have been possible to industrialize other than through central government mobilization (so-called communism), protectionist capitalism, or free trade capitalism (for city states).

However, capitalism was, and is, a way to distribute resources to do things. It is not the things themselves. It is not, itself, industrialization, and confusing the two is a dangerous intellectual error.

It is at least conceivable that we could have industrialized in very different ways than we did. History is contingent, what happened happened, but it was a result of specific historical conditions interacting with principles.

Better power sources, funneled through better machines, is the Industrial Revolution. That is not what capitalism is.

And because either we made bad decisions due to our adherence to capitalism, which have lead to the current onrushing climate and ecological crises, OR it is intrinsic to industrialisms, we’d better hope it was capitalism (and state communism) which was the primary problem. We had better hope that there are ways to use machines and energy that won’t cause environmental catastrophe; that there are other ways to decide who gets resources and for what purpose they use them.

If there aren’t, well, we’re likely to lose our civilization or even go extinct.

We need to stop being nodes in a shitty resource allocation algorithm, and we need to start actually making sane decisions based on group autonomy and welfare.

And capitalism, capitalism doesn’t do that.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.



The Ongoing Libyan Catastrophe


Julian Assange Arrested for Violating Bail


  1. Covergirl

    One of your better articles. Conflation is a powerful tool for oppression.

  2. Tom

    No way this can’t end well. This effectively makes any nation doing any trading with Iran, targetable, blacklists a third of Iran as Terrorists, including children.

    It aso opens the door for the CIA to be counter-designated and targeted similarly along with US Forces.

  3. Herman

    Maybe we need to critique industrialization itself. If I remember Jacques Ellul correctly, he argued that the ancient Greeks could have industrialized in their time period but they regarded balance and harmony to be more important than developing technology in an unrestrained manner so they set limits to the development of technique.

    This is a very different way of looking at the world compared to modern people who believe that almost anything that can be done technologically must be done. The same is true of our approach to economics where endless growth is seen as an unalloyed good by most people.

    I don’t think capitalism will solve the ecological problem or any of our other pressing problems without completely destroying human freedom and dignity. I am not sure if socialism can either. Very few people seriously consider the issue of limits and moderation and that includes most socialists.

    Most socialists think we can have our massive level of consumerism, spread it to the whole world and save the Earth all at the same time. Maybe they are right. Maybe we will finally master technology in a responsible way and develop new tech that will usher in their green Star Trek utopia. But it seems like a huge gamble to me and I am not convinced that socialists are any closer to coming up with a plan to replace capitalism than they were in the days of the USSR.

  4. Good points all. Eliminate capitalism, and the machines will still be spewing CO2 into the atmosphere. Does the atmosphere differentiate between capitalist CO2 and socialist CO2? I think not.

    The current meme is “capitalism bad, socialism good,” but never has and never will either exist in pure form and practiced religiously. Economies have always been a mixture of everything, and economies both nominally capitalist and nominally socialist have been corrupted by practices which were not part of the economic theory (greed, for instance).

    And the current preference for socialism is based on seeing it as an economic practice of “free everything for everyone,” which it most certainly is not, because there is not enough of anything for everyone to have as much of it as they want.

  5. S Brennan

    State sponsored Capitalism [Corporate charters, governmental concessions, wars for corporate resources, government enforced slavery, buccaneers et al] predates Industrialization and didn’t do diddly “growing the pie”…nope, capitalism, on it’s own, didn’t do squat for 95% of the population.

    However, a mixed economy using a WELL REGULATED market did spectacularly [circa 1932-1978], not only providing more goods and services, unparalleled scientific/technological achievement, alongside a ever rising standard of living, it also was capable of internal political concessions meant too redress it’s past/present wrongs.

    How US citizens were convinced to abandon the most successful economic system ever devised in favor of Milton Friedman’s Satanic Verses* is a triumph of treachery and treason over reason and decency.

    *Gilded Age Economics, sans mercantilism.

  6. nihil obstet

    The destruction of the ecosphere is the disastrous result of capitalism. The purely economic/political negatives for most of us are getting worse in other ways. So-called “intellectual property” is the application of scarcity-based reasoning to abundant reality. It means enormous intrusions into people’s lives to prevent “theft”. It means the shutdown of innovation since each device or drug or machine or process uses multiple copyrights/patents that prevent further development. It’s not just coincidence that genuine innovation stopped about the time that the neoliberals ushered in the age of maximizing short term profits, cutting back government research, and privatizing the results of government-funded research.

  7. bruce wilder

    Mainstream economics has deftly avoided explaining the industrial revolution(s) coherently. The hand-waving that characterizes economics teaching at every critical juncture in their narrative logic chain is never less furious than when singing paeans to “economic growth” and modernity.

    Intentional by-products of this deliberate obscurantism are talking about policy as if it were “magic pixie dust” and political rhetoric that attributes causal effect not to institutional mechanisms but to civic virtue, “sound money” and “sacrifice” (with no indication who is to be sacrificed).

    Economic development, at base, is something political societies do. “Why” they do it is less important than that they do it, and doing it requires considerable coordination of distributed decision-making and social cooperation in learning social cooperation.

    I am not a fan of the intellectual habit of re-ifying “capitalism” as an agent. It is too easy and leads to more moral hectoring.

    The imminent consequences of an industrial civilization growing without apparent awareness of limits or impacts on the natural world ought to make us rethink what the essential character of the industrial revolution(s) have been.

    That we really do not have much understanding of the facts of what the modern world is and how it came to be, and therefore do not have useful shared cultural understanding to feed into politics is a serious problem in itself.

    Some well-intentioned people have tried to invent a useful rhetoric, in order to bootstrap some shared cultural understanding of what we need to do, together: “sustainable” “renewable” and so on are rallying cries, but as attempts to create a practical economics not really fully elaborated and well-defined concepts. And, there’s lot of resistance from “official” economists to developing them properly.

    “Laissez-faire” liberalism was telling a rising bourgeoisie what they wanted to hear. This is a tougher sell: telling people what they need to know and understand, even though it is not what they want to believe.

    For what it is worth, I will object that “Better power sources, funneled thru better machines, is the industrial revolution” is too simple. I realize you know it is too simple — it is one sentence where multiple tomes might not suffice. But, it also leaves out even a gesture at features of “capitalism” that may well be essential — at the very least, deeply entangled — with the industrial revolution(s): use of bureaucracy (my hobbyhorse admittedly), application of scientific knowledge to industrial design, production and management, the use of financial leverage, the use of finance to mobilize resources, the use of financial and management accounting as part of feedback, . . . I could probably add to this list.

    We don’t know how the world we built works and it looks like our Monster is going to destroy its Dr. Frankenstein. Maybe, the monsters is us, is one deep implication of your narrative structure. Might be.

  8. NoPolitician

    What is the better option under capitalism:

    1) Develop a treatment to remove disease from someone’s body

    2) Find a way to manage the disease in someone’s body, with perpetual treatment until death

    Seems like #1 is the one that maximizes shareholder value.

  9. nihil obstet

    No politician: Drug companies were afraid of two possible outcomes of a drug trial. It could kill the patient, or it could cure the disease. They were equally undesirable.

  10. Dale

    I think we should give steampunk a chance.

    Attempt at humor aside, the statistics that haunt me are that within the past 70 years, while the human population has more than doubled, the wildlife on the planet has been cut in half. Population growth and industrialization appear to be the culprits. The logical question would be is it morally right for us to destroy all other life forms in the pursuit of increasing our own numbers and “bettering” our lives?

    Until we can reach consensus on that question all these discussions about politics and economics are meaningless.

  11. Joseph Wolz

    It makes you wonder if the universe is littered with the bones of civilizations and species that killed themselves with climate change.

  12. mago

    Sr. Wolz,

    Maybe. One thing for sure, this planet crunches underfoot with bones of the war dead.

  13. StewartM

    Excellent, Ian; agree with most of it.

    NoPolitician–don’t you mean #2? Swapping us proles actually owning things to having to essentially, rent them for life has been a change in the way everything is being marketed.

    Bill H:

    No, the atmosphere will not differentiate, but perhaps a socialist economy run with a deliberate long-term plan to reduce CO2 emissions will provide a softer landing (note I didn’t say ‘soft’, we’re probably beyond that chance now) than our current system of having a herd of mindless investors chase the next quarter’s profit reports.

  14. @StewartM
    And what, specifically, would make a socialist economy inherently prone to be “run with a deliberate long-term plan to reduce CO2 emissions” as opposed to a mixed or capitalist one? Seems to me that a capitalist economy run with a deliberate long-term plan to reduce CO2 emissions might be equally effective, unless you can provide me with specifics as to why not.

    A capitalist economy does not necessarily consist of “having a herd of mindless investors chase the next quarter’s profit reports.” That is actually a relatively recent perversion of capitalism.

  15. Mark Pontin

    Wolz: ‘It makes you wonder if the universe is littered with the bones of civilizations and species that killed themselves with climate change.’

    It’s a potential solution to the Fermi Paradox/Great Filter question proposed at least as far back as the early 1970s, including by by some SF writers (see forex, “Occam’s Scalpel” by Theodore Sturgeon in 1971).

    More seriously, in regards to Ian’s proposition that industrialization isn’t necessarily synonymous with capitalism, it’s a good corrective to think beyond the mind-numbing claims of neoliberal capitalist propaganda. So one approves of the thought-experiment qua thought-experiment.

    Still, in the real world we can move beyond hypotheticals to some extent. That’s because there have been (at least) a couple of historical instances of significant human cultures that developed the steam engine and/or other enabling technologies of industrialization, and yet that signally failed to take off into an industrial revolution.

    [1] China circa the 15th century could have accelerated into an industrial revolution two-three centuries ahead of Europe. Its Confucian rulers and bureaucracy instead very deliberately chose social stability — and the perpetuation of a status quo in which they remained dominant — over potentially disruptive change, even suppressing the history of the globe-traversing fleet of admiral Zheng He and his expeditions.

    Thence, two centuries later, in 1792 the Quianlong Emperor’s response to the leader of the British trading mission, Earl George Macartney: –

    “Our Celestial Empire possesses all things in prolific abundance and lacks no product within its borders. There is therefore no need to import the manufactures of outside barbarians in exchange for our own produce.”

    China’s Century of Humiliation followed.

    [2] The Roman Empire developed both steam power and concrete. Very good concrete as anybody who’s ever visited Rome and seen the Colosseum will attest. But the steam engines they developed were only ever used for purposes like opening temple doors (and telling the proles it was the magic of the gods doing it, one supposes).

    To conclude: in both these cultures merchant classes existed, but nevertheless did not instigate the investment in socially-disruptive technologies that we see later in Europe and, in particular, Great Britain, and which then led to the takeoff of the industrial revolution. Why?

    In the Chinese case, the merchant class were underdogs in a stratified heirarchy dominated by royalty, aristocrats, and civil servants. In the Roman case, I’m inclined to think the widespread, longstanding fact of slavery played a primary role — who needs new technologies to do work when there are always plenty of slaves?

    So, not absolutely definitive, but suggestive. Yes, it’s perfectly conceivable as a thought-experiment that you could have industrialization without capitalism. But in actual history the industrialization we’ve seen — with the enormous social disruption that inevitably attends it — has had capitalism to usher it in. As Karl Marx, capitalism’s greatest critic, famously analyzed its socially disruptive power: –

    ‘All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life, and his relations with his kind. The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe.’

  16. Hugh

    Historically in the nineteenth century John Stuart Mill noted that socialism was in essence the consequences of granting the franchise to the working class, which at the time meant working class men.

    As the absence of women in this formulation shows, this definition is incomplete. Socialism is about much more than this.It is about all of us. If you are a member of a society, and you are, you are a socialist. The only real question after this is what kind of a socialist are you? What kind of a society do you want?

    I remember ages ago hearing a conservative whackjob politician railing against a proposed tax increase on the rich. “Social engineering,” he cried. But that’s rather the point. Raise taxes or lower them. It is all social engineering. It is what government does. It is why we have a government. Similarly, with the economy. The economy exists to serve the needs of our society. And that’s the problem with capitalism. Government can limit capitalism or steer it into socially useful directions, but there is nothing intrinsic in capitalism, that it serve any social good or avoid any social harm.

  17. “Group Autonomy” will always dissolve into corruption, like the Communist party. Power corrupts, and absolute power corrupts absolutely. A fascist/socialist totalitarian regime can focus on a small range of objectives successfully as you point out, but it can never generate widespread enterprise and invention.

  18. nihil obstet

    While economics is politics, it’s not all of politics. An authoritarian government can run its economy through state ownership of enterprises or through private ownership. Presumably, so can a democracy, although it’s a lot harder to allow greed as the incentive and not end up with something like we have now, with the greedy wreaking havoc on the rest of us. It’s not just capitalism vs. socialism in allocating resources. It’s also about the allocation of power.

  19. StewartM

    Bill H.

    That is actually a relatively recent perversion of capitalism.

    No, it is by definition the very essence of capitalism. Capitalism is the control and direction of an economy by those who have capital to invest; it is the rule of the investor class. The “mixed economy” of the period up to the 70s was capitalism constrained by ‘socialistic’ elements; those have been/are being removed one by one to give us more the pure, unalloyed, real thing.

  20. @StewartM
    “Capitalism is the control and direction of an economy by those who have capital to invest.” Well, no, not quite. The investors, stockholders, in General Electric do not control or direct General Electric. The management, hired by the Board of Directors, who among themselves own a very small percentage of the company’s stock, do that.

    The actual definition of capitalism goes more like, “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.

  21. bruce wilder

    While economics is politics, it’s not all of politics. . . . It’s not just capitalism vs. socialism in allocating resources. It’s also about the allocation of power.

    Industrialization, which entails a vast deepening of specialization, with a concomitant increase in commitments, scale and intense, often tightly coupled cooperation creates a lot of potential social conflict to resolve, hence a lot of politics. It isn’t that economics is politics, but that the economics of industrialization creates a huge demand for politics.

    It is a huge demand for a politics of a certain kind, too: a politics of abstract rules applying to anonymous persons, because large-scale commercial and industrial activity creates a society in which you are dependent on the ethical integrity of strangers for a vast array of necessities and conveniences. As specialization in production deepens, and the array of products and services multiplies, that is as the society becomes more complex, the number of rules multiplies as well.

    Whether an industrialized society is efficient — efficient enough to survive in competition with societies that are less complex and make less use of domination and rules — depends delicately on how wasteful the society’s politics are, how much of the surplus generated from the productivity of increased specialization and scale is wasted in disputes over the distribution of income and power. As an illustration, consider how a few scofflaws can slow vehicle traffic to a halt in a densely trafficked street system; if the rules are sensible and everyone follows them, there are few accidents and instances of gridlock and the like and time in transit declines.

    Few catastrophes are more immiserating to a society highly developed in an economic sense than an eruption of political violence, crime, war and revolution.

    It is also true that economic systems serve primarily private interests. Not necessarily in a corrupt sense, but just in the sense that my appetites are private and their satisfaction reflects a demand for private goods. Our private interests are everywhere in conflict, and as the extent of cooperation increases in scale with industrialization, so, too, does conflict multiply and intensify. It is just another story of the same intense demand economics creates for politics.

  22. bruce wilder

    My hobbyhorse, my commenting obsession i suppose, is the Big Lie that is mainstream economics: the core of that falsehood is that the economy is organized primarily by markets, that the economy can be usefully and powerfully thought of as if it was a system of markets focused on the efficient allocation of resources by means of market price. No part of that is true. We do have a money economy and, hence, prices — that is the half-truth used to color the lie.
    The tremendous demand for politics set off by the increasing specialization and scale of the industrial revolution(s) was answered historically by the institution of many great administrative hierarchies, political organizations that generate and wield political power. These administrative hierarchies organize the economy, incidentally forming and administering prices. Very few — some, but few — markets are used in the organization of the economy and those most prominent markets are financial.

    Administrative hierarchies are not focused on the efficient allocation of resources per se. Their task is better thought of as the control of production processes by an amalgram of managerial (aka political) and technical (aka engineering) means; their economic contribution to efficiency the control of error and waste.

    When Chicago school economists pressed their Lie about the “(free) market economy” into the thesis that the top executives of great business hierarchies should “maximize profit” and radically increase their own pay, arguing from the false metaphor of competitive firms in markets, they set off a conflagration of looting and control fraud.

    Should that conflagration of looting and control fraud be called, “capitalism”? The label is not as important as freeing ourselves to think clearly and realistically about how the economy is actually organized.

  23. nihil obstet

    bruce wilder, you inspired me to go back and start rewatching Adam Curtis’ 2007 The Trap: What Happened to Our Dream of Freedom. I’ll be thinking over how the philosophical basis underlying control of complex situations has unforeseen consequences. I’m with Galbraith that what we now call neoliberalisms is just justification of greed, but how it became and maintains dominance is still an interesting question.

    How much do we need administrative hierarchy? Who controls the managers? Do we change the structures of control or the basis of the economy? As I say, I’m thinking.

  24. bruce wilder

    . . . what we now call neoliberalisms is just justification of greed, but how it became and maintains dominance is still an interesting question.

    one of the most interesting mysteries of human culture to me involves asking how ideas come to matter in shaping institutions, shared or common expectations and judgments, and collective or public action.

    it is clearly a dynamic maybe even cyclical process, related to some extent to the passing of generations as well as the burgeoning of mass-media and the means of propagandizing the unconscious. Adam Curtis has a genius for poking at the mystery with observation of the social, communicative process in the very stream of consciousness where it must happen.

    neoliberalism was a deliberately engineered project of political-cultural change, which labored away from the 1940’s into the 1970s and then, rose as a Great Wave. There is a shared sense among scholars studying neoliberalism as an historical social and cultural phenomenon especially that the Great Wave of neoliberalism has run its course; i don’t know that that i completely buy into that thesis, if only because it seems to substitute an expectation that something may emerge spontaneously to replace it driven somehow by a continued dialectic with neoliberalism for an genuine understanding of the power dynamics that drove neoliberalism.

    i am sure you and Galbraith are right: neoliberalism at base is in part an apology for greed. but, neoliberalism was wildly successful at grabbing the levers of power, of enabling coordinated action on policy and even the architecture of policy, as well as flooding the public discourse with its framings. neoliberalism took over the public mind, like a demon parasite taking control of the brain of the host on which it intends to feed.

    part of what explains its dominance over the intellectualism of economics is that neoliberalism was never, ever simply one thesis against the world; it instituted and nurtured itself as an evolving dialectic with opposing poles: a right neoliberalism against a left neoliberalism. as a dialectic, it has legitimized itself in a circular discourse in which its own most prominent critics were as committed to neoliberalism as those they appointed themselves to criticize on behalf of political partisans in opposing camps. a Krugman or DeLong is as dedicated to neoliberalism as Barro or Mankiw, which parallels the Carter-Reagan-Clinton-Bush-Obama or Thatcher-Blair alternation.

    setting up that dialectic required a surrender of sorts on the culturally designated centre-left in the class war. that’s the significance of Charles Peters’ infamous 1982 Manifesto for neoliberalism: it documents that shift and surrender of the soi disant centre-left, at least among the thought leaders of a certain kind of high-minded political opinion journalism. in important ways, i would understand that phenomenon less as a dynamic of ideas on their own terms, as the working of careerism. there wasn’t any money to fund the careers of would-be journalists (or economists) along almost any other path. neoliberalism became this Great Wave on the strength of changing the structure of the economy to remove the supports for the kind of New Deal liberalism Galbraith practiced back in the day. as soon as an Ezra Klein, Matthew Yglesias or Noah Smith has to earn a living, they are transformed. ditto, I suppose, in a way for many politicians who find themselves toadying to donors to get the money to pay the manipulators of public opinion who dictate their “messaging” and soon there is no alternative. In the U.K., Blair’s most lasting legacy was a highly structured career path for ambitious young Labour activists who wanted to become M.P.’s, a career path that locks them into an ideology of contempt for the working class and its interests. The Guardian’s transformation into a neoliberal bastion of lies and liars driving as fast as they can for bankruptcy or more abject dependence on donors than American public broadcasting is a political tragedy for the left.

  25. I call this mistake \”Cargo Cult Economics\”

  26. StewartM

    Bill H.

    The actual definition of capitalism goes more like, “an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state

    That’s actually false, Bill, as you can have forms of socialism with private ownership, private firms, and private investors, entrepreneurship, and free competitive markets.

    (Worker co-ops instead of corporations).

    What differs is that the investors are not stockholders, but bondholders, and cannot buy, break up, replace the leadership of any private firm. The leadership of the private firms are elected by and accountable to the workforce there, and thus the investor class, while important, takes a back seat in priority. And despite such an economy having all the things that pro-capitalist propagandists say is good (free markets, entrepreneurship, etc) these would screech that such an economy is definitely NOT capitalist (and they’r right) because it lacks the key ingredient–ownership and control of the economy by the investor class.

Powered by WordPress & Theme by Anders Norén