Capitalist Political Economy: Thinkers and Theories

173 Pages·2020·3.859 MB·English

by  Heather Whiteside

Capitalist Political Economy
A key text, Capitalist Political Economy: Thinkers and Theories analyses the field-
forming theoretical contributions to political economy that have defined, debated,
critiqued, and defended capitalism for more than three centuries.
Political economy recognizes and celebrates the many and varied interconnec-
tions between politics and economics in society, together with the economic impli-
cations of public policy and the political impact of market and property relations.
As such, political economy is both an approach to understanding capitalism and a
reflection of the forms and features of capitalism at particular moments. Grounded
in primary and secondary literature including theorists’ original writings and lead-
ing literary biographies, this text explores principal themes in the development of
capitalism and political economic thought. It relates these to markets, property,
profits, labour, investment, innovation, the state, growth and crises, gender, the
ecological limits of capital accumulation, and rival economic practices. The book
contextualizes the legacy of foundational political economists by exploring their
life and times and putting them in conversation with other highly influential theo-
rists. Equally, it also considers more contemporary views.
This book serves as an indispensable source for academic communities who are
interested in the long arc of capitalist development, theories, and theorists.
Heather Whiteside is Assistant Professor of Political Science at the University
of Waterloo, Canada, and Fellow at the Balsillie School of International Affairs,
Canada. Her research and writing centre on theories and practices of privatization,
financialization, and fiscal austerity.

Capitalist Political Economy
Thinkers and Theories
Heather Whiteside
First published 2020
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 Heather Whiteside
The right of Heather Whiteside to be identified as author of this work has been
asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and
Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in
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invented, including photocopying and recording, or in any information storage or
retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent to
infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Whiteside, Heather, 1982- author.
Title: Capitalist political economy : thinkers and theories / Heather
Whiteside.
Description: Milton Park, Abingdon, Oxon ; New York, NY : Routledge, 2020. |
Includes bibliographical references and index.
Identifiers: LCCN 2019053695 (print) | LCCN 2019053696 (ebook)
Subjects: LCSH: Economics—History. | Capitalism.
Classification: LCC HB75 .W577 2020 (print) | LCC HB75 (ebook) | DDC
330.12/2—dc23
LC record available at https://lccn.loc.gov/2019053695
LC ebook record available at https://lccn.loc.gov/2019053696
ISBN: 978-1-138-60430-8 (hbk)
ISBN: 978-1-138-60431-5 (pbk)
ISBN: 978-0-429-46855-1 (ebk)
Typeset in Minion
by Swales & Willis, Exeter, Devon, UK
Contents
Introduction: theory and debate in political economy –
antecedents and developments 1
1. Adam Smith: a wealth of notions 11
2. Karl Marx: a capital idea 28
3. W illiam Stanley Jevons: the new margins of
economics and the economy 51
4. John Maynard Keynes: a general’s theory 73
5. Th orstein Veblen, Joseph Alois Schumpeter,
Karl Polanyi: emigrants and iconoclasts 90
6. F ernand Braudel, Immanuel Wallerstein,
Giovanni Arrighi: world economy and national crises 119
7. F eminist political economy and ecological
economics: home and away 138
Bibliography 151
Index 161

Introduction
Theory and debate in political economy – 
antecedents and developments
At age 4, Adam Smith was kidnapped by gypsies (Rae 1895). That same day, the
child was eventually discovered and returned to his grandfather with whom he was
staying. Smith is considered a, if not the, father of political economy and economics
so what if he had come to live out his days with Scots-Romani tinkers, where would
political economy be today? Such questions are, of course, unanswerable. Unques-
tionable is the influence Smith has had on theories of capitalism and the capitalist
political economy. But political economy did not begin with Smith, despite most
economics origin stories centring on his work. Influenced by changes in commer-
cial society during his lifetime, and the work of Physiocratic theorists in France,
Smith was drawing from a much older playbook. He was a moral philosopher first
and foremost and is steeped in the tradition of liberal theory inherited from David
Hume and his ilk.
Joseph Schumpeter (1946, 511) traces the equally famous economist John May-
nard Keynes not through Smith but directly to Physiocrats Richard Cantillon and
François Quesnay, calling Quesnay ‘the true predecessor of Keynes’, with nearly
identical views on savings, and aggregative analysis already formulated through
the elder’s Tableau économique (the 1759 Economic Table that provides a suc-
cinct one-page model of the national economy). Who are these almost- mythical
Physiocrats? Undeniably brilliant for their perceptive analyses of economic pro-
cesses, private property and self-interest, diminishing returns, and productive
work (as opposed to the mercantilism of the day which suggested that gold and
the balance of trade constituted the wealth of a nation), the Physiocrats provide
a salient example of how novel ideas in the political economy canon more often
than not can be traced to received wisdom handed down through time, even if the
2 • Introduction
contemporary moment contradicts the time and place of said thoughts’ origins.1
The Physiocrats equally illustrate the point that timing is everything. Writing for
and from the French court of the Sun King Louis XIV (and others), they argued
for the centrality of agriculture in mid-eighteenth-century France, granting agri-
culture the esteemed position of being the sole value-creating industry of a nation,
and arguing for deregulation and laissez-faire policies as applied to the domestic
farming sector. For all their insights, thinkers in this agrarian vein like François
Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–81) were unable
or unwilling to anticipate the looming capitalist transformation and associated
changes for French and European political economy just around the corner. Their
systematized view of the economy, its inputs and outputs of production, value and
exchange, and three-class model of society, were seized upon by Adam Smith, a
friend of Quesnay, to make sense of the burgeoning commercial society. Later Karl
Marx, John Maynard Keynes, and many others, used, or engaged with, Physio-
cratic ideas in their analyses of advanced capitalist relations. For example, Say’s
Law, the famous dictate that supply creates its own demand, was taken to heart
by much of nineteenth-century liberal political economy, only to be torn down by
Marx and Keynes, and subsequently reasserted by Friedman and other neoclassi-
cal economists of the 1970s. John-Baptiste Say, it should come as no surprise, was
a Physiocrat.
Over the centuries, political economy theory has found many expressions. There
has been no shortage of approaches and understandings of what capitalism consists
of, its implications, and whether it is a force for evil or good. The extent to which
‘capitalism’ captures the state of economic affairs is up for debate. Remedies and
resolutions are equally voluminous.
David Ricardo once said that the principal problem in political economy is to
understand the distribution of income amongst the social classes. The ‘who gets
what’ question remains powerfully important in economics today and is mirrored
in Harold Lasswell’s famous definition of politics as ‘who gets what, when, and how’.
If the essence of politics is the study of power, conflict, and co-operation, and eco-
nomics is the collective and individual material bases of producing, distributing,
and allocating social wealth, these two aspects of human life, and areas of social
science theory and debate, are fundamentally intertwined. The academic field of
economics now only partially addresses some of these concerns. By contrast, the
field of political economy embraces the interconnection between politics and eco-
nomics in society, along with the economic implications of public policy and the
political impact of market and property relations. Political economy interrogates
why certain groups or individuals get what, when, and how.
This book puts into conversation the field-forming theoretical contributions to
political economy that have defined, debated, critiqued, and defended capitalism
for more than three centuries. Capitalism has been defined by theorists, delineated
by themes, and developed through advances in social and institutional practices.
Merging the materialist and ideational, this book links periods of capitalist devel-
opment with phases of analysis guided by big thinkers and big changes.
Introduction • 3
The theories and theorists covered here are drawn from multiple disciplines to
push beyond merely tracing the trajectory of familiar economic thought. Foun-
dational economists like Adam Smith, Karl Marx, and John Maynard Keynes, are
joined with other influential political economists like historian Fernand Braudel,
geographer David Harvey, and feminist writing, not to mention frequently side-
lined economists like Thorstein Veblen and marginalized foundational contribu-
tors like William Stanley Jevons. In short, the book aims to engage a wide range of
political economy approaches, bringing together what is often treated as disparate
through disciplinary, ideological, or chronological boundaries in political econ-
omy. Gathering a wide range of theorists is important for elucidating themes in
the development of capitalism and political economy thought related to standard
concerns like how markets function and the impact of capitalism on labour, along
with wider concerns of history, policy, crises, cycles, gender, space, the ecological
limits of capital accumulation, and alternative economic practices. Equally impor-
tant is how political economy thought captures key developments in capitalism,
from ideational conceptions to the material realities of core institutions like the
state, money, and finance.
The existing literature on theories of political economy has proven inval-
uable for this book; much here cites, or is inspired by, important texts in the
field, including: insights on the philosophy of political economy provided by
Heilbroner (1996), Ingham’s (2008) sociology of political economy theories and
institutions; Mann’s (2013) overview of several core theorists; the economics of
political economy explained by Stilwell (2012) and Caporaso and Levine (1992),
and the history of economic thought traced by Lekachman (1959), Backhaus
(2014), Hodgson (1993), and Taylor (1960). However, this book is also different
for its joining of existing political economy theory texts with literary biographies
and the original writing of key economic theorists (e.g., Smith, Marx, Schum-
peter), work by important contributors in political economy often overlooked by
economics (e.g., Braudel, Arrighi, Polanyi), and research on the empirical con-
text of capitalism over the centuries. This book captures the life and times of its
main theorists, and strives to present readers with capitalism of and for these
great thinkers.
Theoretical development: schools and revivals
Only a crisis – actual or perceived – produces real change. When that crisis
occurs, the actions that are taken depend on the ideas that are lying around.
That I believe is our basic function [as economists]: to develop alternatives to
existing policies, to keep them alive and available until the politically impossible
becomes the politically inevitable.
(Milton Friedman, 1962, Capitalism and Freedom)
Just as capitalism evolves over time, debates in political economy move beyond
their original progenitors, sometimes in unforeseen and problematic ways. In