In Capitalism
Vulture Capitalism

Image Credit: https://www.metmuseum.org/art/collection/search/333939

By Michael Roberts. Originally published on his blog, on May 8, 2024.

Grace Blakeley is a media star of the radical left-wing of the British labour movement. She is a columnist for the left-wing journal, Tribune, and a regular panellist on political debates in broadcasting – often the only spokesperson on the left advocating socialist alternatives.

Her profile and popularity took her last book, Stolen, straight into the top 50 of all books on Amazon. Her new book, entitled Vulture Capitalism: Corporate Crimes, Backdoor Bailouts and the Death of Freedom (Bloomsbury 2024) has achieved even greater popularity, ‘long listed’ for the women’s non-fiction book of the year, and even making Glamour magazine as a book essential for young fashionistas to read.

Blakeley’s main theme in Vulture Capitalism is to debunk the longstanding concept of mainstream neo-classical economics that capitalism is a system of ‘free markets’ and competition. If capitalism ever did have ‘free markets’ and competition among companies in the struggle to obtain profits created by labour (and Blakeley doubts that it ever did), then it certainly does not now. Capitalism now, she argues, is really a planned economy, controlled by big monopolies and backed by the state. The monopolies plan strategy and investment in conjunction with governments; and small companies and workers must obey: “actually existing capitalist economies are hybrid systems, based on a careful balance between markets and planning. This is not a glitch resulting from the incomplete implementation of capitalism, or its corruption by an evil, all-powerful elite. It is simply the way capitalism works.” I take this to mean that the big monopolies, finance and the state now plan the world and avoid the impact of the ups and downs of markets (free or otherwise), which are now basically irrelevant.

As Blakeley explains, market forces do not operate within companies. Ronald Coase was the mainstream economist who first outlined how firms operate on internal planning. There are no markets or contracts between sections or workers and management within firms. Management plans and workers apply them. But Blakeley argues that this planning mechanism now applies to relations between firms, or at least large ‘monopoly’ firms. “Large firms are able, to a significant extent, to ignore the pressure exerted by the market and instead act to shape market conditions themselves.”

If anything goes wrong and there is a crisis, the big monopolies and the state work together to resolve, with little impact on themselves. “within actually existing capitalism—a hybrid of markets and central planning—the largest and most powerful institutions in the public and private sectors can work together to save their own skin. Rather than bearing the consequences of the crises they have created, these actors shift the costs of their greed to those with the least power—working people, particularly those in the poorest parts of the world….. And the monopolies combine with the state to resolve such crises. “Every recent crisis—from the financial crisis to the pandemic, to the cost-of-living crisis—has involved a key role for the state in solving capital’s collective action problems. And even though capitalists have often wailed about the pain inflicted on them at the time, they have always come out on top.”

Blakeley argues that crises in capitalism are no longer resolved by what Joseph Schumpeter (and Marx for that matter) called ‘creative destruction’ . Crises in capitalism ie slumps that lead to the liquidation of companies; mass unemployment and financial crashes, have been increasingly overcome through ‘planning’ by the big monopolies and the state. “The evidence suggests that Schumpeter’s temporary monopolies are becoming increasingly permanent. So, not only are relationships within the firm based on authority rather than market exchange, but the authority of the boss is also relatively unconstrained by the discipline of the market. Bosses are increasingly able to act as powerful planners within their domain. And in doing so they are able to exercise significant power over society as a whole.”

For me, two doubts about this thesis arise here. First, while there may be no markets or competition within firms, are we really saying that there is no competition among firms over the share of profits exploited from the labour of working people; that markets (free or otherwise) exert no influence on capitalist accumulation?

For a start, competition at an international level among multi-national companies is intense: cartels do not operate with any conviction in international trade and investment. The trade and investment war between the US and China is not a good example of global planning. Moreover, the drive for profits in capitalist production leads to an incessant search by companies for technological advantage over rivals. Companies that appear to have a ‘monopoly’ in a particular sector or market are always under threat of losing that hegemony – and that applies to the largest companies too. Indeed, technological competition has never been greater.

This applies to competition within the nation state as well as internationally. In 2020, the average lifespan of a company on Standard and Poor’s 500 Index was just over 21 years, compared with 32 years in 1965. There is a clear long-term trend of declining corporate longevity with regards to companies on the S&P 500 Index, with this expected to fall even further throughout the 2020s. Blakeley supports her argument with evidence of the growth of market power and monopoly concentration provided by recent studies. However, these studies are not convincing, in my view.

Second, if monopolies and the state can now plan and avoid the vicissitudes of the market, why are there still major crises in capitalist production at regular and recurring intervals. In the 21st century we have had the two largest crises in the history of capitalism in 2008 and 2020. Did capitalism avoid these through ‘planning’?

Blakeley dispenses with the ‘out of date’ Marxist explanation of crises that Marx argued for, between the profitability of capital and productivity of labour that leads to regular and recurring crises of investment and production. For Blakeley, capitalism can actually avoid or at least resolve such crises by ‘planning’ and by getting handouts from the state. Monopolies can avoid ‘creative destruction’ and can continue to motor on at the expense of small businesses and the rest of us.

For Blakeley, crises do occur but they are no longer the “natural results of either unrestrained free markets or greedy unionized workers” or it seems from any inherent economic contradiction in capitalist accumulation. Now crises result “from political choices made by states and corporations in response to shifts in power and wealth then underway in the world economy. Naturally, these choices tended to consolidate the status quo and benefit the powerful.” But if crises are now the result of bad political choices by those in power, then better decisions could work to keep capitalism not only free of markets but also free of crises. ‘Planned’ capitalism can work if there are no inherent faultlines in capitalist production any longer. Blakeley has basically resurrected the theory of ‘state monopoly capitalism’, an old Soviet/Stalinist/Maoist term which argues that crises in ‘competitive’ capitalism have been ended at the expense of stagnation. Democracy has been replaced by monopoly power (assuming that there was any real economic democracy ever).

Blakeley instructs us to realise that, under capitalism, workers are considered as just bees, doing the bidding of the Queen and her drones. But “what differentiates us from other animals is our capacity to reimagine and re-create the world around us. As Marx wrote, human beings are architects, not bees.” Apparently, there was a time when workers did have a say in planning. I quote Blakeley from a recent interview on her book: “So planning continued as it had before, throughout the history of capitalism, it’s just that rather than workers, bosses and politicians, the workers were pushed out and it was just bosses and politicians that ended up planning.” Really? Workers used to have a say in planning economies in some ‘pre-monopoly age’ and were not always bees? If Blakeley means that trade union used to be stronger before the neoliberal period and so could exercise some influence in monopoly planning or that German workers councils could do the same, those of us who lived through the 1960s and 1970s know that not to be the case.

Blakeley’s answer to this ‘death of freedom’ for workers is not planning to replace markets as we old socialists used to argue, but workers’ own local enterprises. And Blakeley presents us with a package of examples of when workers have developed their own cooperatives and self-managed activities that demonstrate that it is possible to organize society without markets, without the state (and without planning?).

Blakeley’s best example is the Lucas Plan of the 1970s, which saw workers develop proposals to transform a multinational arms manufacturer into a worker-owned social enterprise. “The Lucas Plan was an extraordinarily ambitious document that challenged the foundations of capitalism. In place of an institution designed to generate profits via the domination of labor by capital, the workers at Lucas Aerospace had developed an entirely new model for the firm—one based on the democratic production of socially useful commodities. It was almost as if the workers had never needed managing at all, as though they were creative architects rather than obedient bees.”

And then there was the ‘participatory budgeting movement’ in Brazil, “in which citizens have taken control of government spending with astonishing results”. Other examples are taken from Argentina and Chile. Blakeley concludes “the evidence is clear: when you give people real power, they use it to build socialism.” But the evidence is also clear that all these imaginative projects by workers at the local level have either eventually collapsed; or have been consumed by capital (Lucas); or continue without having any wider effect on the capitalist control of the economy – has ‘participatory budgeting’ in Brazil led to a socialist Brazil? Have the projects in Argentina stopped the horrendous series of economic crises in that country?

Blakeley is aware of this of course: “without reforms to the structure of capitalist societies, such innovations are bound to remain small. Unless we socialize and democratize the ownership of society’s most important resources—unless we dissolve the class divide between capital and labor itself—there can be no true democracy.”

Blakeley rightly calls for an end to trade union restrictions, a four-day working week and universal basic services. “A far better proposal would be to decommodify everything people need to survive by providing a program of universal basic services, whereby all essential services like health care, education (including higher education), social care, and even food, housing, and transport are provided for free or at subsidized prices. And ensuring that these services are governed democratically would also help build social solidarity at the local level—something that a UBI would be unlikely to achieve.” Indeed. But how can any of these necessary measures in the interests of working people be achieved without public ownership of the means of production? How can we decommodify essential services without public ownership of the energy companies, publicly owned health and education services, publicly owned transport and communications or of basic food production and distribution?

Here, Blakeley’s proposals seem very thin. Citing a programme for the UK, she wants ‘retail banks’ nationalised; and she wants to democratise the central bank. That’s finance. But I see no demands for nationalisation of the big monopolies that Blakeley says controls with impunity our society now. What about the big fossil fuel companies; big pharma (that profited from COVID) or the big food companies (that profited from the inflationary spiral)? What about the mega social media and tech companies that suck up trillions in profits? Should they not be publicly owned?

When it comes to the world economy and the Global South, Blakeley refers to what she calls the “developmentalist approach’ adopted by some countries where it is assumed “that the state can act as an autonomous force within society”. For her, China is an example where “the result has been the construction of an astonishingly successful model of development”. But this success, says Blakeley, was only achieved by the exploitation of Chinese workers just as happens in the rich world: “it was precisely the ability of Chinese planners to promote economic growth while suppressing the demands of workers that underpinned the Chinese “miracle.” So, for Blakeley, China is no different from the ‘developmentalist’ economies of Japan or Korea.

But is that right? In the West, ‘state monopoly planning’ has not avoided successive economic crises and delivers ever slower economic growth and investment, as in Japan and the rest of the G7. But ‘state monopoly planning’ in China has led to unprecedented growth without any slumps as experienced in the West or in other ‘emerging economies’ like India or Brazil. And contrary to Blakeley’s assertion, China has achieved the fastest growth in real wages among all the major economies. We can only explain this different result because there is a difference: China’s economy is based on state-led investment planning that dominates not capitalist firms and the market, unlike in the West.

And take the issue of climate change and global warming. Surely, it is abundantly clear that markets and pricing solutions cannot deal with the climate crisis. What is needed is global planning based on public ownership of the fossil fuel industry and public investment on a grand scale by states in cooperation. It cannot be solved by local workers enterprises.

Blakeley says that “expanding” public ownership of firms—whether at a local or national level—is “another key element in the democratization of the economy, because it challenges capital’s power over investment”. But ending capitalist power (monopolistic or not) through public ownership is not just ‘another key element’ but the key element. Without it, democratic planning and control by workers of their economy and society is impossible. Blakeley puts ‘democracy’ before public ownership and planning – the cart before the horse. To travel towards socialism, we need both the horse and the cart together.

Capitalism has not overcome international crises through state monopoly planning. Crises continue to occur at regular intervals, caused by the contradiction between the striving for more profit and the increasing difficulty of realizing that profit. Crises are still inherent to the capitalist accumulation process and not the result of ‘bad choices’ made by politicians doing the bidding of monopolies. Only the ending of private capital and the law of value through public ownership and planning can stop such crises.

Blakeley’s analysis of modern capitalism as one of ‘planned capitalism’ is confusing. Has the capitalist leopard that emerged as the globally dominant mode of production in the 19th century really changed its spots? Blakeley’s previous book, Stolen, had the subtitle “how to save the world from financialisation.” – note, not capitalism as such but finance capital.

And the title of this new book is also confusing. Our enemy this time is not ‘financialisation’ but ‘vulture capitalism’. But what is Vulture Capitalism? I searched through the book to find out. There is no explanation of this term in the book apart from referring briefly to vulture hedge funds pressuring poor country governments for debt repayments. The term vulture capitalism appears to have no relevance to the context of Blakeley’s theme in the book. I assume that it was just a smart marketing title dreamed up by the publishers. It’s worked in selling the book; but it does not work in explaining anything about capitalism in the 21st century.

*****

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