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The C Word

Paul O’Mahoney

Capitalism, Alone: The Future of the System That Rules the World, by Branko Milanovic, Harvard University Press, 304 pp, $29.95, ISBN: 978-0674987593

On August 19th, 2019, Business Roundtable, a lobby group comprising almost two hundred CEOs of major American corporations, released to some media fanfare its “Statement on the Purpose of a Corporation”. Such statements have periodically been issued by the body since 1978; but this one drew particular attention for its stated aim of “redefining” the purpose of an American corporation, insisting that every such entity should “promote an economy that serves all Americans”. The retreat from neoliberal principles this seemed to signal occasioned much comment. There was a good deal of reflection in particular on how it rolled back an orthodoxy summed up by Milton Friedman’s assertion in a September 1970 contribution to The New York Times that “the social responsibility of business is to increase its profits”. The statement explicitly superseded previous Business Roundtable statements which had, from 1997 onward, endorsed shareholder primacy, or the principle that a corporation’s primary obligation was to maximise, in a way consistent with legal conduct of its business, monetary return to its shareholders.

This was, naturally enough, interpreted by many to reflect necessary adaptation to a changing environment. It was a response by corporations to the increasing criticism directed at the sort of corporate conduct which is seen either to cause or to exacerbate societal and civilisational woes: financial crises and recessions, rising income inequality, job insecurity, the financial accommodation of dictators and organised criminals and the environmental and climate crisis that imperils the “global commons”. It was widely taken as another indicator of a diagnosis the precise nature of which can be argued but on the fact of which most commentators would seem in agreement: that capitalism is in crisis; that shocks and failures have left the system on the trolley, and whether it is to revive or expire is as yet undecided. 

Branko Milanovic, surveying the metaphorical patient, offers a second opinion. For Milanovic – professor at CUNY Graduate School and the LSE’s International Inequalities Institute, and best-known as the author of The Haves and the Have-Nots (2010) and Global Inequality (2015) – capitalism’s contemporary triumph is total. No longer menaced by the machinations, real or imagined, of the forces of its once most serious rival, communism, it now stands alone. There are varieties of capitalism, but its fundamental principles regulate the financial functioning of the entire globe (including that of nominally communist China). In such a situation, to speak of the system being in crisis is a position that is simply not supported by the facts. The cultural critic Mark Fisher took the title of his book Capitalist Realism to reflect a contemporary situation in which, in a phrase he borrowed from Slavoj Žižek – who borrowed it from Frederic Jameson, who it seems adapted it from an essay by H Bruce Franklin on the work of JG Ballard – it is easier to imagine the end of the world than the end of capitalism. The full title of Fisher’s book offered the supplementary question: Is there no alternative? Milanovic, in a subsection of his final chapter baldly titled “There Is No Alternative” (speech-quotes in the original), sets out an argument that would force us to answer Fisher’s question in the negative: any “gentler” alternative to “hypercommercialized capitalism” would be unsustainable in the face of competitor entities which adhered to the hypercommercialised form; the state or community which convinced sufficient numbers of its members to forgo the amenities of commercial society in promotion of a gentler alternative would only become the prey for competitors in a globalised world. Capitalism in its varieties may be in need of some reform – an idea prominently pushed in conferences and reports over the past year or so by Ray Dalio, the founder and CEO of the Bridgewater Associates hedge fund – but no fundamentally different system of financial arrangement and incentive should be expected to displace it. Capitalism may and must adapt; but nothing indeed short of the end of the world will see it off.

There are two primary forms of contemporary capitalism, liberal meritocratic capitalism and political (or authoritarian) capitalism; the differences are best understood by examination of each form’s respective archetypal representative, the United States and China. The distinguishing features of “liberal meritocratic” capitalism are that there is social mobility, with no legal obstacle to pursuit of a particular career or attainment of a position in society, and that it provides mass free education as a way to reduce intergenerational transmission of advantages, further correcting by the imposition of inheritance taxes. A notable difference from traditional or “classic” forms of capitalism is that the greatest wealth is not necessarily derived from holding of land or capital; rather, members of the top five per cent of earners will frequently have a large income from labour. Liberal meritocratic capitalism is comparatively open and tolerant, resistant to legislating about morality, and it endures as it is the system which seems most to have aligned itself with the needs and desires of free human beings.

The accumulation of income from labour and wealth in the ruling class tends to exacerbate what is the first of this form of capitalism’s disadvantages: that is, systemic inequalities. The ability of those with large labour incomes to diversify their forms of income, to acquire land and own disproportionate volumes of assets, sharpens inequality (Milanovic cites Edward Wolff’s data showing that, in 2013, half of all stocks and mutual funds, 63 per cent of business equity and 65 per cent of financial trusts were owned by the top 1 per cent). Another signal driver of these inequalities, and agent of their entrenchment over generations, is a marked increase in homogamy or “assortative mating”, that is, the tendency of people of very similar educational and socioeconomic backgrounds to marry. Intergenerational transfers of wealth have solidified a ruling class in America at the same time that intergenerational mobility has been in decline.

Another major flaw is the vulnerability of the political system to capture by money, and the tendency of power to align with the interests of the rich. This is aided by a ruling ideology which encourages an amoral ruling class for which the making of money is a value in itself, and nothing not transgressing legal constraints is considered out of bounds in its pursuit. Political donation is considered an investment, a method of advancing one’s economic (and sometimes cultural) interests. This is starkly illuminated by the statistic that: “in 2016, the top 1 percent of the top 1 percent [this is not a typo] contribute 40 percent of total campaign donations”. Milanovic notes the recent work of a group of economists (Martin Gilens, Benjamin Page, Christopher Achen and Larry Bartels) that provides “empirical evidence that the rich have more political clout” and contends that the political system of the United States has the characteristics not of a democracy but an oligarchy. US Congress is much more likely to approve policies that benefit the rich than the poor or middle classes, and it is usually when their interests happen to align or converge that the middle classes will also benefit from policies which favour and have been lobbied for by the rich. That it is, politically, a democracy, with election to rather than inheritance or gifting of positions of government, allows the citizenry legitimate hope and scope to improve the system, but functions also as an alibi for this oligarchic capture of the machinery of government. In the same way, the openness to outsiders characteristic of the ruling class in the liberal meritocratic system, including to those who have come from below, “reinforces the top class in two ways: it co-opts the best members of the lower classes, and it sends the message that the path of upward mobility is not entirely closed off, which in turn makes the rule of the top class seem more legitimate and thus more stable”.

Milanovic recognises that systemic inequalities will over time put enormous stresses on a system, and that something must be done to remedy them. The twentieth century tools used to address inequalities – trade unions, mass education, high taxes and large government transfers – cannot be hoped adequately to do the same in the twenty-first century. The reorganisation of labour limits the power of unions; general education cannot be much further expanded beyond the current standard fourteen or fifteen years, when the societal returns begin to diminish. Options in taxation and transfer policy are limited also, first by the threat of capital flight in the globalised era, and second by the political difficulty of imposing personal taxes, with many people sceptical about the gains they receive for the tax beyond a minimum required to prevent collapse of the social contract. Milanovic’s suggested remedies include measures to increase the amount of assets (stocks and bonds) held by the middle classes; a wealth tax; a more effective system of inheritance tax; and strict limitation of political donation and expenditure.  

The political capitalism whose ideal type is found in China now represents a genuine alternative possible evolution of capitalism worldwide. It is characterised by central political control by a party elite, but also by a qualified decentralisation, which allows considerable latitude to regional authorities, but only for as long as they are economically successful. Political capitalist regimes often evolve from former communist societies, and one of Milanovic’s most original contributions is his reading of communism as a political system which “enabled backward and colonized societies to abolish feudalism, regain economic and political independence, and build indigenous capitalism”. This transition was “the functional equivalent of the rise of the bourgeoisie in the West”. Foreign domination was a crucial ingredient in seeding these transitions, as it brought to subjugated nations an awareness of their backwardness. Emancipation therefore meant a social revolution aiming at development as well as a national revolution aiming at independence, and the actors best placed to effect these revolutions tended to be communist parties. The transition from feudalism to capitalism was guided by extremely strong states – typified by China, where the nationalist tenor of the revolution was evident in its independence from the Soviet Union, the seat of international communism.

Political capitalism has some inherent and undeniable advantages over its liberal rival, which, if prosperity is a key criterion of success, permit it to be judged as a viable alternative way of organising society. First, the enormous power wielded by a government which does not need to worry about the nuisance of elections means that large-scale infrastructure projects can be planned, approved and accomplished in a short time; no roads will be held up by objections of residents’ associations. The system also means that the political establishment is insulated from busines, and much less prone to capture by special interests.

One consequence of this enormous state power is that decisions are made according to the dictates of the party and not according to the rule of law. China, and political capitalist countries generally, are characterised by the absence of the rule of law, permitting decisive and unappealable state intervention. With the absence of the rule of law (not anarchy of course, but the law’s lax, inconstant or discriminatory application) goes, unsurprisingly, endemic corruption. The level of corruption in China “is extraordinary by global standards”. As corruption is endemic to political capitalism, it is impossible to eradicate; but, because at too great a scale, or carried out too openly and destructively, it threatens the system, a peculiar equilibrium obtains, a state strategy which “does not address the principle of discretion in decision-making, but cracks down on its most egregious misuses”.

Political capitalism in China has produced a new capitalist class whose rise has been remarkably quick (many of this new class are the children of parents who were farmers). The levels of corruption ensure rising inequality, particularly through clientelism and the selling of positions, which goes on at the same time as the central government remains secure from purchase by business elites. The chances for political capitalism to liberalise rest on whether the Chinese capitalist class comes to rule the state, and whether it uses a move toward representative democracy to do so. An alternative possibility is that China exports political capitalism, ultimately perhaps to currently liberal meritocratic systems. For this to occur the latter would have to become willing to sacrifice their accustomed freedoms for stability and, perhaps, greater prosperity; if it is true that the ideal democratic citizen, an informed and concerned participant in their political system, conscious of their power and duty, is essentially a myth, and that the deepening of the capitalist ethos has eroded desire for public participation and concentrated desire on the satisfaction of personal material wants (as suggested by Robert Dahl), then, as Milanovic argues, political capitalism can provide this as well as can the liberal meritocratic form. The question of whether one or the other form will achieve greater ascendancy in the future is an open one, but the global reign of capitalism itself is indefinitely secure. 

Both systems have to contend with the challenges of globalisation, which brings movement of the factors of production, both capital (moving where operating and production costs are lower) and labour (economic migration in search of better opportunities or income). The latter occurs because potential income varies considerably for people of similar ability, education and motivation, depending on the country in which they work. The systematic differences in income are cast by Milanovic as a citizenship premium and corresponding citizenship penalty. The integration of economies into “global value chains”, necessary for underdeveloped countries to accelerate their growth, pushes production into those less developed regions, while the information technology revolution makes possible overseeing the process from what earlier capitalist models called “the mother country”. Still, movement of a portion of capital does not obviate the conditions driving the countermovement of labour. Milanovic is alert to the problem that economic migration poses in particular to the welfare state, which is an advantage of citizenship. If citizenship is conceived as an asset, higher-value citizenship tends to confer three things: greater economic opportunities and nonfinancial rights, for example to a fair trial, freedom of speech and assembly, etc, and a third, much newer advantage, a claim on valuable streams of social benefits, or membership of the modern welfare state. The emergence of the citizenship-based welfare state is a historic driver of hostility to mobility of labour. For globalisation to become less pressing an issue would require addressing labour mobility: as the convergence between income and opportunities in different countries is a very remote possibility, and dismantling of the welfare state would be politically resisted, the remaining action is curtailment of migrants’ rights and entitlements. Milanovic’s notion of the citizenship premium is the basis for his thinking on reconciling migrants’ desires with natives’ concerns. Assuming a certain demand curve for migration, it is reasonable to say that demand reduces where the cost of migrants to the native population, in terms of their entitlements to benefits of the citizenship premium, is higher. A country must decide on what dividends from the citizenship premium will be offered to economic migrants, finding a point on the demand curve that brings about this reconciliation. (This approach depends, of course, as Milanovic acknowledges, on shutting down or dramatically reducing illegal migration.) As the mobility of capital poses the challenge of an increase in the incidence and sophistication of worldwide corruption, so the other feature of globalisation, mobility of labour, poses a signal challenge to the integrity of political and economic systems.

Forecasting the future of capitalism cannot be attempted without blunt acknowledgement of what Milanovic calls its “inevitable amorality”, which is manifested in myriad ways and is tied to the reigning economic ideology: “hyperglobalization requires as its intellectual superstructure an ideology that justifies money-making (of any kind) and in which financial success dominates all other objectives and creates a society of fundamental amorality”. A defining feature of today’s capitalist system is the “outsourcing of morality”, or a reliance solely on laws, not at all on nominal ethical norms, and the disregard of professed personal convictions or traditional notions of “fair play” to constrain behaviour. As long as an act or a pattern of behaviour is deemed legal (or, more to the point, not proved illegal), it is considered perfectly acceptable. It is even considered beyond reproach, and to criticise sharp practices is, for Milanovic, to miss the point; people who do so are “criticizing the symptom and not the disease. In reality, such amoral behavior is necessary for survival in a world where everyone is trying to acquire as much money as possible and to climb higher in the social pyramid. Any alternative behavior seems self-defeating.”

Some critics of course deplore this gross amorality and its acceptance, as they deplore another aspect of capitalism, its tendency to infiltrate every domain of human existence, to leave little or nothing not either directly commercialised or at least conceived of in transactional terms. Some writers have posited that this will be capitalism’s ultimate undoing; that some set of abiding human impulses will eventually revolt at the system’s imposition of its values and reject it in its entirety. Milanovic demurs, however, arguing that the notion that this thinking is imposed from outside, in contravention of our nature and better judgement, is fanciful. The commodification of life, even private and family life, and the atomisation induced by capitalist calculation, proceeds for the reason that “we are willingly, even eagerly, participating in commodification because, through long socialization in capitalism, people have become capitalistic calculating machines. We have each become a small center of capitalist production assigning implicit prices to our time, our emotions and our family relations.” Commodification of the private sphere “does not presage a crisis of capitalism” because it is not felt as an intrusion; for most, it is rather “a step toward enrichment and freedom”, and the capitalist calculus “encourages better use of time”. (One might suggest this idea to be a component of the sustaining ideology of moneymaking as the highest objective, with the most detailed theoretical exposition of this position contained in the work of Gary Becker.) Nor is capitalism to be presumed threatened by the predicted automation of jobs; robots and artificial intelligence are only the latest phase of the mechanisation that has proceeded since the industrial revolution. Fear of automation is based on the “lump of labour” fallacy, the idea that there is only a set number of jobs, and the false notion that human beings have limited needs. There is every reason to expect that mechanisation will produce more jobs not yet foreseen, and new possibilities create new needs and wants to be met by services. The chorus advocating for measures such as a universal basic income to address the automation of jobs is premature (Milanovic sees universal basic income as a problematic proposal with too many unknowns for its success to be foreseen).

With the claim that hypercommercialised capitalism has reached its apogee and is not in crisis, the sole end to the system Milanovic can envisage is, indeed, the end of the world – specifically, a nuclear war whose destructiveness would qualify it as an extinction event. He does caution, with the example of World War I in mind, that the economic interdependency characteristic of capitalism will not prevent war, and that, contrary to what its most zealous advocates sometimes claim, globalised capitalism does not necessarily promote peace. Even a war which destroyed half of the world would not, for Milanovic, mean the end of capitalism, as technological know-how would survive and, despite setbacks and adaptations, a capitalist system could be expected to be again established and in the fullness of time be expanded.

Assuming we are not wiped out, the future direction of capitalism hinges on the interaction and competition between, and perceived success of, the two main models. Liberal meritocratic capitalism holds a recognisable edge because of its democratic character; for most people, democratic freedoms are self-evidently a primary good, valuable in themselves and not lightly to be traded for greater prosperity or the promise of security. Furthermore, the required consultation of the population provides “a very powerful corrective to economic and social trends that may be detrimental to the populace’s wellbeing”. Political capitalism for its part promises a more efficient management of the economy and greater growth. The attractiveness of this is clear in a system where moneymaking has displaced other pursuits in the hierarchy of human ends, especially as “everyday experience seems to show that many people are willing to trade parts of democratic decision-making for greater income”. One major limit to political capitalism’s appeal is apparent in its greatest attraction, however: it must “constantly deliver high rates of growth”, where the advantages of liberal capitalism are somewhat “natural” and “built into the setup of the system”. One might say that liberal meritocratic capitalism must preserve its great selling point, where the authoritarian form is obliged constantly to create it.

The likeliest further evolution of capitalism globally will depend on the liberal meritocratic system. Either it will become a “people’s capitalism”, with lower levels of income inequality, less concentration of the ownership of wealth and much greater intergenerational income mobility (preventing the formation of an enduring, entrenched elite), or it will converge with the political-authoritarian form. The latter scenario becomes possible where liberal capitalism becomes increasingly plutocratic, elites feel they could run society more efficiently in a quasi-authoritarian fashion, and the population (particularly the younger part of it) loses faith in the ability of the democratic process to effect meaningful change. Such disenchantment is the seed of the renunciation of interest in politics, and of the willingness to trade political freedom for economic gain.

Capitalism has so far buried its many obituarists, from Marx and his successors – both respectable thinkers and the propagandists of the Soviet laboratory – to such eminent twentiethcentury economists as Joseph Schumpeter and Robert Heilbroner. Its remarkable adaptability, epitomised in its tendency first to withstand, later to absorb and ultimately to commodify its antagonists and the putative agents of its subversion, encourages agreement with Milanovic’s claim that it is not in crisis. The question of its future modalities, however, cannot be separated from consideration of crises which are bound up with the capitalist system. Capitalism is generating crises, within and between states, that may threaten its endurance, if only because a functioning market requires stability. One may note that Milanovic’s own reading of the role of communist revolutions and regimes in history supplies grounds for why a communistic, or at least left-wing, revolutionary impetus might again fit the moment. Where in the twentieth century it was colonialism that manifested the gaps between nations, today the scale of income inequality, and noted decline in real wages and intergenerational mobility, makes manifest the comparative backwardness of cohorts of citizens within nations. It is reasonable to believe that these glaring inequalities will generate some revolutionary impulse to redress them, driven by those citizens who feel deprived of any material stake in the state; perceived as these inequalities are as products of unrestrained capitalism, such revolutionary thought and action would have both a social element, aiming at advancement of the deprived or backward, and a nationalist one, reacting to the globalism that is the hallmark of contemporary capitalism.

Such a forecast is familiar territory, perhaps uncannily so: a variation of it is the substance of the most formidable critique of classic capitalism, foreseeing that the system would generate class conflict, via an expanding class of have-nots, that would undermine and eventually destroy it. (A major difference is the nationalist dimension, where Marxism was explicitly internationalist in its vision.) It is a possibility to be reckoned with that atomisation will spur disenfranchisement of increasing numbers, necessitating greater state intervention to regulate not only the market but what Klossowski or Lyotard would call the “libidinal economy” of the nation – to address the growing resentments that threaten to corrode or subvert the social contract. The crucial difference when imagining the consequences of disenchantment in the liberal meritocratic system, compared with the classical capitalist system, is that in the latter revolutionary ferment would spur purposive political action, where in the former one imagines rather the spread of nihilism, the one stance that desires neither progress nor return because it has abandoned hope. 

In an early tabulation of the defining respective features of the classical, social democratic and liberal meritocratic forms of capitalism, Milanovic notes that homogamy or assortative mating is characteristic of the first and third, but not the second. The geographical and temporal range of social democratic capitalism is the US and Europe after World War II. There is much to unpack from this fact. Mass participation in war is, historically, the greatest driver of the democratisation of benefits, with compulsorily conscripted citizenries gaining in return suffrage, social security and access to education; memory of war is the safeguard of equality because it is the source of social solidarity. A man tends not to look down on another of lower professional station if they are fellow veterans; the one’s service when it was called for makes him the other’s equal, and worthy of the other’s respect, on a level fundamental enough to be beyond erosion by distinctions in civilian life. The collective memory of World War II which sustained the era of social democracy delayed the onset of inequality in British society, and surely helped to make uncontroversial the establishment of the NHS. The same national solidarity is arguably behind the Wirtschaftswunder in Germany and les trente glorieuses in France, the period of postwar economic recovery that lasted to the 1970s. In the US, the GI Bill, granting returned servicemen college tuition money or low-interest business loans and mortgages, became one of the nation’s greatest drivers of upward mobility. In recalling such one might justly frame politics, reversing the dictum of Clausewitz, as the continuation of war with the interposition of other means. That solidarity – which (along with mass male casualties across classes) normalised heterogamy – the lasting bond forged among citizens of a threatened state, is eroded as those who fought or endured the war retire from public life, disappear from the higher echelons of the corporate and government worlds, and ultimately die off; as the direct contributors to the war effort become less visible and influential in civilian life, it is natural to expect a waning of the solidarity forged by the experience of war, a waning which is the condition for the transition to the neoliberalism of the 1970s and 1980s.

Hypercommercialised capitalism, sustained by neoliberal ideology, promoting atomisation rather than solidarity, is the contemporary liberal meritocratic form; and perhaps its defining ideological pose is hostility to state intervention in the market. The Business Roundtable statement that softened the doctrine of shareholder primacy by invocation of a broader range of corporate responsibilities pledged ethical dealing with and consideration of its full range of American stakeholders, namely, customers, employees, suppliers, communities and shareholders. It nowhere, unsurprisingly, mentioned the state, or imagined that one might number among a corporation’s obligations the payment of taxes to benefit citizens, even those who might not be customers. Neoliberal ideology is, of course, the inheritor and extension of the ideological framework that helped capitalism to emerge and afterward sustained it. The calculating capitalist citizen is not “natural man”, but, as Milanovic asserts, a socialised product of a particular system, a system which required the scaffolding of argument for its establishment. One of capitalism’s great strengths has always been the savagery of its vision – typified in the contemporary amorality which Milanovic details – and the ability of this vision to cow and overawe its critics. The arguments which first liberated lending at interest from the sinful shadow of usury would eventually, as Albert Hirschman has recorded, turn the passions, suspect in the Western philosophical and Christian traditions, into competing and mutually restraining impulses, and then redefine them as interests. They would promote the initially shocking doctrine that every man pursuing his own self-interest ultimately redounded to the benefit of society. (This principle, given early and polemical articulation by Mandeville in his 1714 Fable of the Bees, was latent already a quarter-century earlier in Locke’s Two Treatises on Government, and was conventional by the late eighteenth century, accepted not only by Adam Smith but in the mature political thought of philosophers like Kant and Hegel.) The predatory nature of contemporary capitalism is scaffolded not only by an ideology of small-government libertarianism and deregulated markets, but also the commonplace insistence that criticisms of the capitalist system invariably issue from those who have failed in it, and are motivated by resentment and envy (a position extremised ad absurdum by Ludwig von Mises in his little volume The Anti-Capitalist Mentality).

Like every ideological superstructure, the standard liberal meritocratic capitalist one gives a picture that is in the fullest sense partial. As has been detailed by Mariana Mazzucato in The Entrepreneurial State, the image of government as inefficient and wasteful, and the private sector as the engine of innovation, is a myth. The 2008 crash and the Covid-19 pandemic, both crises of globalisation, have refocused attention on the potential role and power of the state. As globalised capitalism generates more crises, for example contagious market collapses or despoliation of the environment, which the market cannot correct, the resurgence of the state becomes more likely. To modify or ameliorate hypercommercial capitalism will not require, as Milanovic imagines, persuasion toward a “gentler alternative”, but rather the harnessing by the state (and the co-operating system of world states) of the capitalist system’s savagery. It is states which must inevitably manage the negative consequences of the globalised capitalist competition for resources; even where the state attracts investment, benefiting from globalisation, the decline of real wages and entrenchment of social immobility and systemic inequality will inevitably stress the state system of government. Returning to the libidinal economy that shadows the financial one, one might reasonably conceptualise the spread of destructive emotions such as resentment, despair, envy and varieties of rage and boredom as negative externalities of the industrial process, which it falls to the state to manage. If capitalism is to be tipped into crisis prompting its self-correction, it will most likely be by the actions of states which recognise the origins of their own political crises in aspects of the globalised capitalist system. A more brazen, savage stance by the state might take the form of the embrace by liberal meritocratic capitalist systems of aspects of the authoritarian capitalist systems, particularly as these latter seem much less vulnerable to the capture of government by money and the consequent lapse toward oligarchy. This would, however, imperil the democracy and tolerance characteristic of liberal states, as well as the rule of law, and the risk might well be weighed greater than the potential reward.

The alternative, if the state is to meet and control the brazen savagery of hypercommercialised capitalism, and regulate and moderate its worse tendencies, lies precisely in the rule of law. The popular outsourcing of morality, and restraint from exploitation only in the face of legal impediment, argues for the articulation in some instances of new and more onerous laws, and in most cases much harsher penalties for contravention of the existing legal constraints. Derisory financial penalties do not deter corporate malfeasance, insider trading or falsifying accounts, much less culpable negligence or lax auditing. Milanovic acknowledges that the amorality of contemporary capitalism provokes the response of the state, as “the commodification of our lives leads to broader use of, and often unconstrained reliance on, the passions of power, pleasure, and profit. For these passions then to produce favorable social effects one must impose ever greater governmental ‘fencing-in,’ trying to stay, through legal constraints and tough legislation, one step ahead of possible abuses”. The classical capitalist vision of the “transmutation of the vices into virtues” (or as Mandeville subtitled his polemic, “Private Vices, Publick Benefits”) becomes “difficult to effect in hypercommercialized societies”. Its difficulty notwithstanding, the implicit suggestion that only a government of superhuman incorruptibility could successfully impose these constraints is a surely a counsel of despair. Milanovic’s own recommendations for stabilising future liberal meritocratic capitalism are regulatory or legal in nature (tax advantages that assist the middle classes to acquire assets; funding to expand and improve public schools; “citizenship light”, which would reconcile migrants’ and natives’ desires; and strictly limited and exclusively public funding of political campaigns). All address problematic aspects of the system which its current functioning generates, though none strike at its sustaining ideological superstructure. What is missing are the comprehensive and punitive measures that the state, as holder of the monopoly of violence, ought to enshrine to remind that the sovereign remains a Leviathan.


Paul O’Mahoney works in Trinity College, Dublin.