Upstream - Capitalism, The State, and How We Got Here with Christian Parenti

Episode Date: July 3, 2023

Elements of capitalism have existed throughout history — in institutions like markets, class relations, ownership laws, credit systems, etc. But they were never dominant until they came together, escaping the isolated, laboratory conditions in which they once existed, to coalesce and form a world-dominating capitalist order.  How did the bubonic plague, the world-shattering pandemic occurring in Western Eurasia in the 14th century, along with the Little Ice Age that followed it, give rise in the 1600s to the mode of production that has now come to take hold of the entire world? What is capital, and how is it a social relation, as Marx wrote? And what exactly is the relationship between capitalism and the state? Are these two opposed, like many on the reactionary right tend to assume, or are they one and the same thing, there to support and uphold one another? And what about capitalism itself — what different stages or phases of capitalism exist? How did we go from the more classic mercantile capitalist system to industrialization, culminating in monopoly, imperialism, and now what we tend to call neoliberal capitalism? And what’s coming next? To help us zoom out and give us a historical and overarching understanding of capitalism as a system and a process, we’ve brought on investigative journalist and scholar, Christian Parenti. Christian is the author of books such as Tropic of Chaos: Climate Change and the New Geography of Violence, and, more recently, Radical Hamilton: Economic Lessons from a Misunderstood Founder.  And just in case you were wondering, yes, Christian is the son of the political scientist, academic historian and cultural critic Michael Parenti, author of classics like Blackshirts and Reds: Rational Fascism and the Overthrow of Communism, as well as Inventing Reality: The Politics of News Media. You might have come across Michael Parenti on our Instagram where Robert loves to post so-called Yellow Parenti lectures and memes — check out our Instagram page @upstreampodcast if you want to know more. This conversation is also an excellent complement to our recent documentary, The Myth of Freedom Under Capitalism, which you can learn more about at upstreampodcast.org Further resources: Radical Hamilton: Economic Lessons from a Misunderstood Founder The Great Transformation: The Political and Economic Origins of Our Time By Karl Polanyi Thank you to James Xerxes Fussell for the cover art. Upstream's theme music was composed by Robert Raymond. This episode of Upstream was made possible with support from listeners like you. Upstream is a labor of love — we couldn't keep this project going without the generosity of our listeners and fans. Please consider chipping in a one-time or recurring donation at www.upstreampodcast.org/support If your organization wants to sponsor one of our upcoming documentaries, we have a number of sponsorship packages available. Find out more at upstreampodcast.org/sponsorship For more from Upstream, visit www.upstreampodcast.org and follow us on Twitter, Instagram, Facebook, and Bluesky. You can also subscribe to us on Apple Podcasts, Spotify, or wherever you listen to your favorite podcasts.  

Before we get started, please, if you can, go to Apple Podcasts and rate, subscribe, and leave us a review there. You can also leave us a rating on Spotify now. This really helps us get in front of more eyes and into more ears. We don't have a marketing budget or anything like that for Upstream, so we really do rely on listeners like you to help grow our audience and spread the word. Also, please visit upstreampodcast.org forward slash support to support us with a reoccurring monthly or one-time donation. This helps keep this podcast free and sustainable, so please, if you can, go there to donate. Thank you. Ah Ah

Ah Ah Ah Ah Ah If capitalists in fact had to pay full freight for everything and didn't benefit from what Jason Moore calls the free gifts of nature, then profitability would go to zero. The moment of the enclosures, which is the moment of the seizing of pre-existing use values and their transformation into exchange values, the transformation into property, that never stops. That's not just

the opening act of capitalism's history. That's constantly ongoing at frontiers, geographically speaking. The process of enclosure, i.e. seizing pre-existing elements of biophysical reality and turning it into commodities or property, is ongoing. You're listening to Upstream. Upstream. Upstream. Upstream. A podcast of documentaries and conversations that invites you to unlearn everything you thought you knew about economics.

I'm Della Duncan. And I'm Robert Raymond. Elements of capitalism have existed throughout history in institutions like markets, class relations, ownership laws, credit systems, etc. But they were never dominant until they came together, escaping the isolated laboratory conditions in which they once existed, to coalesce and form a world-dominating capitalist order.

What are these elements or operating principles of capitalism? How and when did they come together? Who and what upholds their dominance? What are the so-called stages of capitalism? And what's coming next? To help us zoom out and give us a historical and overarching understanding of capitalism as a system and a process, we've brought on investigative journalist and scholar Christian Parenti. Christian is the author of books such as Tropic of Chaos, Climate Change and the New Geography of Violence, and more recently, Radical Hamilton, Economic Lessons from a Misunderstood Founder. And in case you are wondering, yes, Christian is the son of the political scientist, academic historian, and cultural critic Michael Parenti, author of classics like Black Shirts and Reds, Rational Fascism and the Overthrow of Communism, as well as Inventing Reality, the Politics of News Media. You may have come across Michael Parenti on our Instagram page,

where Robert loves to post so-called yellow Parenti lectures and memes. Check out our Instagram page at Upstream Podcasts if you want to learn more. This conversation is also an excellent complement to our recent documentary, The Myth of Freedom Under Capitalism, which you can learn more about at upstreampodcast.org. And now, here's Robert in conversation with Christian Perventy. Hi Christian, welcome to Upstream. It's great to have you on. Thank you for having me on. And yeah, I'm wondering if, to start, can you introduce yourself for our listeners and yeah, talk a bit about just how you came to do the work that you're doing. I am a professor at John Jay College, which is part of the CUNY system, City University

of New York. I teach in the economics program. I'm not an economist, I'm a geographer by training. And I was a journalist for a long time, journalist and an academic and I've written a number of books. The first one was Lockdown America and most recent one is called Radical Hamilton, Economic Lessons from a Misunderstood Founder and my focus has always been you know primarily on sort of like the relationship of the state to capitalism with an interest in the role of violence in politics.

And I've written a lot about climate change. A book before this book about Hamilton was called Tropic of Chaos, Climate Change and the New Geography of Violence, which came out of years of conflict reporting and years of reporting on environmental issues. So to the extent I have a focus, it's about like the state and its relationship to capitalism. But my interests go, you know, wander far beyond that. Yeah. Well, I actually asked you to be on the show because I heard you on Behind the News, Doug Henwood's podcast, and he's a friend of the show. He's been on a couple times and you were talking about carbon capture, which was fascinating in and of

itself. But I wanted to focus this conversation mostly on your work and your ideas around capitalism and the state, like you said. And so I'm wondering if let's just start with capitalism. So capitalism can be quite like a nebulous term. And we can get into that too. But let's start with a bit of a history. I'm wondering if you can explain how capitalism emerged, where it came from, and sort of what early capitalism looked like. And I'm thinking, you know, we hear about the enclosures, we hear about primitive accumulation. And yeah, I'm just curious if you could sort of what early capitalism looked like. And I'm thinking, you know, we hear about the enclosures, we hear about primitive accumulation. And yeah, I'm just curious if you could sort of like outline that. Well, you know, I think actually, in a way, it'd be better to start with what is capitalism, because you had mentioned in emails that you wanted to deal with the

question of what is capitalism. And because to some extent, the story of its origin hinges on the question of a definition of what it is. And so what I said on Doug's show that you noted to me that you wanted to hear more about was this, my essentially disaggregation of capitalism into certain components. And in this, I'm influenced by, I guess, Karl Polanyi to some extent, which some of my more radical Marxist friends, even though I kind of feel like he's sort of Polanyian in certain ways, he would see Polanyi as a sort of a gateway drug to liberalism. But Polanyi is pretty good in terms of there being an outside of capitalism. So the question, you're right, capitalism is a kind of big nebulous term. It gets bandied around a lot. And what is it is often not asked and answered. And so

capitalism is this whole social system that's dominated by the logic of capital. But capital, which is what Marx writes about in his book Capital, he doesn't talk about capitalism. The word capitalism doesn't show up in capital. Capitalists shows up, but not capitalism. Capital. So he's talking about this process. And capital is the private ownership of the means of production and the employment with money of wage labor for the purpose and the buying of raw materials in markets. of raw materials in markets for the purpose of producing commodities to sell into markets so as to recuperate or realize more money than was initially laid out, right? This social relationship, this is essentially the germ of capitalism or the kind of cancer cell of capitalism,

this social relationship capital, right? And that dynamic of the private ownership of the means of production for the purpose, not of producing for use or not producing for, you know, religious valorization, but the private ownership of the means of production for the purpose of producing things to sell, commodities into markets, so as to recoup more money than was initially invested. That social relation predates capitalism. But capitalism is the social system that becomes dominated by the logic of that social relation. And that social relation has a way of colonizing more and more and more of reality. But the key thing is it can never colonize all of reality. And the more victories that that social relation has,

the more crises it produces for itself. So that's the place to start is capital as a social relation. So capital as a social relation produces class relationships, those who sell their labor and those who own the means of production and buy that labor. And thus we have the capitalist class and other classes, the proletariat or the working class and various other classes, right? Capitalism is very much defined by this relationship, capital, the social relationship,

the kind of the cancer cell, the germ, and by this class that dominates, the capitalist class, the owning class, the one percent and we all own something what we're talking here when we say the owning class we're talking about the class that owns the means of production that owns the commanding heights of the economy not not in the sense that you own a bicycle you own bicycle factories so you have the social relation, the class, and historically speaking, this social relation and this class emerge historically through a relationship with states. And part of what I argue in Radical Hamilton is that the development of capitalism is nurtured from the beginning and continually reproduced up to the present through state intervention. And if you squint your eyes and you look at history, you can begin to see the development of capitalism as fundamentally a state project. Part of what drives the development of capitalism is the concern with warring states in Europe to acquire money to fund their warfare.

And why Europe in particular? Partly because Europe is resource poor, it's geographically divided against itself, it's a series of peninsulas and islands that are riven by mountain chains. You wouldn't want to be a geographic reductionist, but there is something geographically about Europe that prevents the European conquest of itself, right? You have Rome, which is really centered on the Mediterranean, right? Connected by this sea. In China, you've got these great river valleys that sort of facilitate the conquest by centralizing empires. Europe is historically speaking marked by this sort of polynucleated state centers that are constantly at war with each other. And this interstate warfare drives sovereigns to need money and to fund war.

And they start borrowing money and to pay these debts. and to fund war. And they start borrowing money and to pay these debts. They start encouraging what in the long run turns out to be the development of capitalism. So you've got the social relation, the class, and capitalism, the social system, that is dominated by this class, the ruling class, the capitalist class, and by this social process, capital,

though it's never completely subsumed by that process, capitalist society is never 100% governed by capital as a social process. It can't be because it continually goes into crisis and requires external help, bailouts from the state, also because it requires cheap and free inputs from non-capitalist sectors. The most obvious one being sort of just families. People produce labor power not because they are paid to do it but because that's just what we do as a species, we reproduce. And the love and care that goes into producing a person and turning them into someone

who can be exploited as a worker, that is not all paid for and not all mediated through the social relation of capital. Were it to be completely subsumed, and I get into this question like subsumption, real and formal subsumption that Marx talks about and Marxists. Were the reproduction of labor power, i.e. the production and the rearing of human beings entirely subsumed of the logic of capital, mothers would be in the business of raising children to get paid, right? There would be some sort of transaction between mother and child, and that's obviously not what happens, right? So there's this like, you know, would be some sort of transaction between mother and child, and that's obviously not what happens, right? So there's this like, you know, even at the heart of the system, within a family, there's an outside to capital. Capitalism is driven by the crises produced by the social relation of

capital, of accumulation for accumulation's sake, and by the irrationality of the class that dominates, the ruling class, is continually going off the rails and needing to be dragged out and resurrected and bailed out and reconstituted by government. So there's always an outside. And the other key fundamental outside is yet to be commodified external nature. Most of non-human nature, including human nature, has not been fully commodified. You know, pieces of it are enclosed and become property and become commodities. But enormous amounts of the biophysical reality that capitalism, as a socio-economic system depends on,

are not commodified, is not reproduced through the relationship, the social relationship that is capital, right? So capital exists in an enormous outside, and it is dependent on this outside. And that is, as I see it, sort of the Polanian element here, which is that like, capital always has an outside, capitalism always has an outside. And even within capitalist society, societies that are dominated by the logic of capital, they're never completely, totally colonized by it because they can't be. There's also a whole argument about how that would affect profitability. If capitalists, in fact, had to pay full freight for everything and didn't benefit from what Jason Moore calls the free gifts of nature, then profitability would go to zero. So there's the moment of the enclosures,

which is the moment of the seizing of pre-existing use values and their transformation into exchange values, the transformation into property, that never stops. That's not just the opening act of capitalism's history. That's constantly ongoing at frontiers, geographically speaking, at the level of scientific discovery. You can see this in terms of the commodification of genetic information, right? This is just like genes, DNA are something that exists that under certain scientific conditions, which are themselves, it must be pointed out, largely produced through massive public subsidies. Only through this kind of scientific apparatus can genetic material then be patented through the, you know, legal systems of states and turned into property, right?

you know, legal systems of states and turned into property, right? So it's like, you know, the process of enclosure, i.e. seizing pre-existing elements of biophysical reality and turning it into commodities or property is ongoing. So that leaves us with sort of, you know, capitalism is this incomplete social system. It's a system dominated by these relationships, by this class and by this logic, but it is actually never fully subsumed. It's constantly dependent on kind of, for one thing, a kind of hidden in plain sight actually existing socialism, which is the public sector. And let's not think that socialism has to be egalitarian. I'm using it in a, perhaps in the eyes of some in a sloppy fashion,

but in terms of production for use, production for political considerations, and the mobilization of resources, natural resources, labor power, the landscape, for the purposes of utility, be that political or anything else, is always a dominant element in the history of capitalism. We just lived through two moments of this. The 2008 crisis, in which the entire world economy was on the verge of melting down. And you had a group of hardcore free market ideologues in charge of the Treasury Department and the Federal Reserve throw their entire adult

training out the window and socialize the costs of this and basically use a kind of socialism to resurrect capitalism. went in they did they did not follow the price signal they did not let markets determine the value of things they through government power stepped into financial markets and bought up assets that were if they were selling on the open market were going for close to zero bought them up and they bought them up through these government agencies not for the purpose of producing more value in the future, right? They did not advance money amidst this crisis so as to reap more money later, though it might be noted that the TARP program, Troubled Assets Relief Program, did in fact make $20 billion. They did it as an insurance policy to stabilize the entire system. That was one

massive resuscitation of the capitalist system based not on the logic of capital as a social relation. And then amidst the coronavirus crisis, when there's lockdown in core economies that reverberates out to the developing economies of the global south and creates you know a massive economic crisis again there is the logic of profit making the logic of market setting prices all that is thrown out the window and massive amounts of money are printed public debt is taken on and states move according to the logic of the political, according to the logic of security. Sometimes it's the logic of the security of the capitalist system and the capitalist class,

and sometimes it's also the logic of securing society, as when Donald Trump, of all people, imposes an eviction moratorium. So those are two examples, I mean, really, like, historically, world historically significant examples of the state violating all of the laws, the supposed laws of capitalism, so as to socialize and revivify capitalism. And I think that logic kind of runs all the way through it. There's a way in which capitalism is very much, from the beginning to the present, has always been a kind of state project. You would not want to reduce it to the state, but it's like the state is absolutely central. And so then the question becomes, what's the state's agenda?

What logic does the state follow? Is it just going to be that the state is the insurance policy, the janitor that cleans up the messes and bails out the capitalist class? Or do other classes in the society, the working class, broadly defined, the peasantry globally, the working class, broadly defined, the peasantry globally, do they manage through political organizing and mobilization to shape state power, to use its already existing capacity to control the economic activity of the capitalist economy, to push it in another direction, ultimately towards something that we might call socialism.

So I guess part of what I'm trying to do is problematize both capitalism and socialism and try and get us to see the ways in which capitalism is already highly socialized and highly dependent on things that are decried by the ideologues of this system as socialism. But you know, that's, that's its life support, in a way. And it's, it's, it's the incubator, historically speaking, from which it came. Yeah, thank you so much for that. I'm really glad you brought up Carl Polanyi and his sort of groundbreaking book, The Great Transformation, which highly recommend it's a little thick, but incredibly important, I'd say. And Jason W. Moore as well, we've actually had him on the show along with Raj Patel, his co-author of

A History of the World and Seven Cheap Things. Yeah, really fantastic stuff. So I'm really glad you brought those authors and thinkers into the conversation. And I really appreciate too how you sort of brought in this idea of enclosures and enclosing because we're used to hearing about the sort of the classic enclosures that took place between like, I want to say like 13th and, you know, 17th, 18th century in Europe and the UK, or I guess Britain at that time. And that was like physically the enclosure of common lands to be used for private purposes. But yeah, you're talking about the enclosures in much more broader and abstract ways, which I think is really interesting to think about as well.

Yeah, I mean, enclosure is, I mean, the one thing that unites enclosures from pulling down peasant households to make sheep runs to patenting jeans is the centrality of the legal physical power of states. Even though, you know, the enclosures actually start rather illegally at first. I mean, if you look at, you know, that section eight of capital chapters, whatever, 26 through 29 or whatever it is, you know know there's a history of how at first the enclosures by this nascent kind of embryonic capitalist farming class are illegal and are opposed by the royal state they find this destabilizing but then at the end of the process by like the 1720s you're actually having acts of enclosure coming out of Parliament.

But anyway, yeah. No, yeah, yeah. No, that's, that's really fascinating. Just to see how that sort of evolved from sort of informal, illegal to official like policymaking. Maybe actually, it might be helpful. I'm sure most of our listeners are somewhat familiar with the enclosures. But maybe if you could sort of outline what actually happened with the enclosures. I mean, this gets at your first question, which is the origin of capitalism. Where does capitalism emerge from? So yeah, I mean, capitalism, there have been elements of what make up capitalism that have existed for a long time. And, you know, there have been markets that go way back right i mean polanyi argues that markets emerge where hostile forces meet and interact hostile communities you know

meet and interact and it's like closely linked to war you know areas that inside a community you obviously you have exchanged i mean people in all societies people have produced things and exchanged things there is like even you know in hunter-gatherer bands there's like you know rudimentary divisions of labor and there's rudimentary exchange and that markets where prices come in rather than traditional rituals of exchange like the classic sort of the you know the ideal type of this would be that how in many societies hunting and gathering societies like game would be formally given by the hunters to a sort of headman whose job would then be to distribute it to everybody else you know and so there's production and exchange but it's not according to prices it's according to like you

know a whole social logic of whatever religion social stability and this that whatever and that so where these and traditional society is typically governed by these non-economic considerations. The production of use values, the reproduction of the society, the production of sustenance goes on and frequently at a very complex scale, reaching levels of massive urbanization even, but not necessarily governed by prices, but governed by other social logics of reciprocity and social control and religious sensibilities. And that where markets, historically speaking, emerges is where two mutually unintelligible sort of social systems bump up against each other. And that's where things are reduced, like where there isn't a common language and a common ritual so markets are very very old they emerge out of

these places private ownership of the means of production wage labor production commodities for sale money exchange value these things these are the building blocks of capitalism and you can you can find them deep deep deep in human history all across the globe. But when and where they come to dominate is where capitalism begins. And, you know, some people would say that the origins of capitalism go back to the plague in the 1300s. smashes, that begins the disintegration of feudalism and just sort of smashes asunder this whole world that had been governed by a different set of logic. And out of that come markets and contracts. This is the logic of property, the logic of capital. It is like, kind of like escapes the lab as it were, and doesn't immediately come to dominate,

but slowly over the next couple hundred years becomes increasingly dominant. There's a whole climatological history that goes with this, that there's a, you know, Europe's, I mean, much of the Northern Hemisphere, but particularly in the North Atlantic, slips into the Little Ice Age, but particularly in the North Atlantic, slips into the Little Ice Age and there's severe weather disruption coincides with the 300 years that follow the plague and lead into, in the 1600s, like the sort of the more formally recognized rise of capitalism, where you have beginning like the Dutch Republic and then extending to England, the rise of capitalist farming and production for sale in markets. And this class, it's not just capitalist farmers, it's also merchants and financiers. These capitalist classes become the dominant classes over, you know, the next 200 years. And then you have the, you know, you've really definitively the launch of capitalism with the industrial revolution in the late 18th century, right? The late 1700s. And there's all sorts of debates and there's a huge literature on this transition. And one can spend their entire life trying to decide when it starts or or what

what is an appropriate place geographically to say that it begins so there that's kind of a sloppy answer i mean but you know there's like i mean there's like in the mediterranean there's by the 1200s there's some features you know, quite advanced kind of financial capitalism in the struggle between Venice and Genoa. Like people own shares and ships and it's like, there's advanced accounting and credit systems, but it's like, is the social system, is the economic situation dominated by this logic? Not really. Anyway, those are the kinds of debates scholars get into, those are the kinds of debates scholars get into. But that's sort of how capitalism emerges. And the whole Atlantic

story is very important to this, that in this struggle between these rival European states that are running themselves into the ground economically, fighting wars with each other and looking for ways to generate income this drives these states ultimately across the atlantic to stumble into the americas and there by the dumb luck of biological history which at our current understanding of things is that it's like human beings, which as a species come out of Africa, cross into the Americas primarily through the Arctic. And by going through that cold zone, lose a lot of these tropical and subtropical diseases. We're not talking about like genetic differences between people.

We're talking about like acquired immunity here. So the populations in the Americas are, even if there's, and there's some evidence that there's people from Polynesia also came over to South America, that there's like Africans possibly landed in like the Yucatan. I mean, you can debate these things around the edges,

but primarily the Americas are populated by people who have passed through slowly but surely over thousands of years. This zone where all these tropical diseases are, you know, essentially washed out. And then when Europeans and Africans arrive, they bring with them this old world arsenal of diseases that smash to pieces these existing civilizations. And so then that opens the way for military conquest. In other words, to put it differently, you know, Cortez couldn't have, probably couldn't have conquered the Aztecs so easily had there not also been the dislocations of massive pandemics that in some cases you know in the Americas kill like up to 90% of the people in North America like on the East Coast there were cities that had been settled for like 800 years that then

collapse in the face of these diseases some had collapsed earlier before the contact like the mound building societies in the Mississippi. But there's, you know, like the kind of proto-Shawnee in the Ohio, Kentucky River Valley. You know, it seems like the archaeological evidence indicates it was like smashed to pieces by these diseases that come in with Europeans. So then the Europeans arrive in a political shatter zone and manage to seize all of these use values. The silver of Potosi, the furs of the Northeast. And these use values, which become through enclosure and through the logic of money, and by taking on exchange value, become capital and property. And that fuel, that helps fund the rise of capitalism in the core.

So central to this European story of the rise of capitalism is this, essentially, this subsidy from the Americas and the triangle trade of African slaves to the Americas and the cheap nature of the Americas funding the accumulation of wealth in the core, of the Americas funding the accumulation of wealth in the core, which ultimately will be important in the takeoff of the Industrial Revolution. You're listening to an Upstream Conversation with Christian Parenti, author of Tropic of Chaos, Climate Change and the New Geography of Violence, and most recently, Radical Hamilton, Economic Lessons from a Misunderstood Founder. We'll be right back. Oh, it's hippity hop to the bucket shop

I lost all my money and now I have flopped And it's hard times. What a pity, poor boy, it's hard times weighing you down and out. All this is the truth and it certainly exposes Wall Street proposition It wasn't all roses It's hard times What a pity poor boy It's hard times When you're down and out I got no silver and I got no gold I'm almost naked and it's done turned cold And it's hard times, what a pity poor boy

It's hard times, weighing you down and out They catch you with whiskey in your car You're handicapped and there you are. And it's hard times, what a pity poor boy, it's hard times when you're down and out. That was All In, Down and Out by James Xerxes Fussell. Now back to our conversation with Christian Parenti. It's been really interesting hearing you talk about all of these sort of external processes which led to the rise of capitalism. I think sometimes it's easy to simplify these processes, like slave economies turned into feudal economies, which then turned into capitalism and capitalism will, you know, turn or transform into socialism

inshallah. But it's more complex and messy and chaotic. And there are perhaps just like with evolution through natural selection, right? Environmental ruptures, which can set whole new processes into being. And yeah, I mean, I don't know if that's like the best analogy, if that makes sense, but. I think it's what you're getting at. It's, it's born out of the political. I mean, feudalism produces states that have political conflicts with each other and also produce an environmental crisis. There is, you know, as Jason has written about, like this whole kind of cattle-wheat complex, there's a whole environmental crisis that's partly driving this expansion in Europe. There's environmental crisis, soil depletion linked to the rise of ruling

classes, feudal ruling classes, through sub-infudation. The military conflict means that each state needs more and more of it's like warrior caste or class and that means you need to exploit more of the land you have to have a peasant base for each night and so this translates into less and less crop rotation more and more exploitation of the soil and that then also is another driver for these states to go abroad looking for sources of wealth to fund what are fundamentally political projects of conquest. So it's like, it's the political crisis of feudalism, political and environmental crisis of feudal states that produces the discovery of the Americas and the kind of moment of mercantile capitalism,

which is, to put it in Marxist terms, a moment of formal subsumption where the logic of exchange value and commodification is dominant, but it doesn't fully control the process of production. And so that logic in the kind of mercantilist moment is seizing commodities and seizing already existing labor processes and commodifying them. A good example of this would be the fur trade in the northeast of the U.S. that there's a kind of mercantilist moment of formal subsumption when the Native Americans in the Northeast, using their traditional means of production, their traditional tools of hunting, are producing furs in their society according to, you know, a logic of use value. European merchants start interacting with them and give these objects,

beaver pelts, an exchange value. And the key element in this is wampum. They take a Native American ceremonial object, these white and dark blue purple beads made from quahog shells, that function in these Algonquin societies and Iroquoian societies kind of like money but they're not it's not really money things don't really have prices but it's it's a status symbol and it sometimes it's used a little bit the way money is like for bride prices and sort of like for reparations for like murders and stuff like that. And the European traders start producing wampum. And slowly but surely, wampum becomes money. And things, particularly beaver pelts, take on prices. And at that moment, beaver pelts become commodities.

And you have this formal subsumption as opposed to a real subsumption of the production of beaver pelts. And it's a formal subsumption in Marxist terms because the actual process of producing these beaver pelts isn't itself governed by the logic of money. It's not like the Native American hunters who are producing these pelts for the fur trade are buying their tools from Europeans. They're not buying their food and sustenance. The edge of their traditional economy is beginning to overlap with a cash economy. Eventually, through a series of, through overhunting, through commodification, because once beaver pelts become a commodity, i.e. once they have exchange value, then there's a potential to accumulate infinitely. You can't accumulate use values infinitely because that means you're accumulating things.

The Hudson Bay Company actually had this problem. I forget what year it was, but they brought enormous numbers of pelts to Europe and discovered two years later that rats had eaten them all, right? So when you accumulate vast amounts of a thing, you have the problem of managing that thing. So there's almost a natural physical limit to how many beaver pelts you want to accumulate because what are you going to do with them? They become a burden. They rot. Pests eat them. If you can kill beavers and turn them into money, womp them, that you can then turn into anything else, then the physical barriers to accumulation are removed and you can potentially accumulate infinite amounts of exchange value. And so once beaver pelts and

other fur-bearing animals' pelts, have exchange value. There is the potential for infinite accumulation, and you have this massive overhunting. The massive overhunting leads to ecological revolutions, a collapse of old systems of production, and then through that, the real subsumption, the shift from formal subsumption to real subsumption, and Native Americans pretty soon have to buy food to sustain themselves while they hunt, to get money to buy more food. The deer and other game animals are completely hunted out and they

have to start raising cattle and buying cattle and become completely enmeshed in agricultural markets. So that's a sort of a little a little snapshot and processes like that go on around the world in this mercantilist moment and that like that's the that's the prehistory of what lays the groundwork for then the industrial revolution in which you know the the kind of independent producers be they hunters or peasants, are completely deracinated, separated from the means of production, become workers who must sell their labor and increasingly are engaging in factory systems for production and markets for everything from clothing and food to sex and supernatural religious services and well-being.

Yeah, the ever-increasing commodification of everything. And it's really interesting hearing you outline this progression of markets and proletarianization. You know, we just did a documentary episode exploring a lot of these questions, but your recounting of this history and this process is really complimentary. And I think also, like really fascinating hearing about how capitalism emerges in different parts of the world, sort of focusing on different communities, right? And it all culminated, of course, in what many now call neoliberal or maybe late capitalism. And so I'm wondering if you can talk a bit more about these sort of phases of course, in what many now call neoliberal or maybe late capitalism. And so I'm wondering if you can talk a bit more about these sort of phases of capitalism, mercantile capitalism,

sort of the classic period, you've got industrial capitalism and neoliberalism. I mean, in between neoliberalism and, you know, this mercantilism moment, right, is then is the Industrial Revolution. And this is like, I'll put in a plug for my new book, Radical Hamilton, Economic Lessons from a Misunderstood Founder. What happens again and again in different countries and what happens in the U.S. is that, again, this logic of state, the military, the international logic of state security within the state system requires war-making states to increase the amount of revenue available to them and that drives them to push developmentalist policies of industrialization so in the united states what that means is that the american revolution which

itself involves lots of commodification you know these armies come in three armies british french and the continental the american army buying French, and the Continental, the American army, buying resources, right? And they're like, through the process, attaching prices to things, imposing taxes and, you know, commodifying a kind of, you know, peasant economy. much the fact that the new republic's government is concerned with its survival in the face of these, in this international system dominated by the British, French, and Spanish empires still. And Hamilton is very explicit. He says, look, we're not going to survive if we don't build a strong state, a militarized and administratively competent and militarized state with a navy and a land army. And the only way we can afford to do that is if we move towards manufacturing, what we would call industrialization, what they called manufacturing. It's like, we're primarily an agrarian-based economy, even though there was a lot of household-based,

workshop-based manufacturing, extractive and agrarian industries predom, even though there was a lot of household-based, workshop-based manufacturing, extractive and agrarian industries predominated. And he was saying that we have to force-march with state policies and state subsidies and using the state's role as a consumer and all the tools, what he calls the means proper, all the tools of economic policy making available have to be used to force march the American economy towards industrialization so as to increase productivity so that there will be more wealth available for the government to tax and thus build out a military and an administrative apparatus with which to defend itself and even dominate in the international scene. And that logic, the same logic that helps drive the mercantilist moment helps drive the industrial transformation, which is that

states basically plan and push forward industrialization. It's happening organically, this and that, but it needs this shove and subsidy and intervention by governments for military reasons to really drive this transformation. And so that's what happens. There's a whole long story of push and pull. Not all factions of the American elite are down with us at all, in particular the southern planter class that are doing quite well. Though they dominate what is today still the poorest region in the United States, they were up until the time of the Civil War, the richest people

in the U.S. were always southern elites and these extremely wealthy planters who dominated the south were not particularly interested in empowering merchants and bankers and manufacturers in other states for fear that they, the southern planters, would lose control within the national government and they were, from the very government and they were from the very beginning they were explicitly concerned about what this would mean for slavery and already by the time the revolution happens the the peace is signed in 1783 the the u.s is, they meet in 1787. It's ratified in 1789. The 1780s are what's called the critical period.

It's a period of basically economic crisis and rising military conflict. And already by the critical period, numerous northern states had outwalled slavery. And so the southern elites were afraid that if there was a developmentalist and strong central state, it might be dominated by different economic interests. The interests of industrial capitalists, bankers, and workers and small farmers in the north who would oppose the expansion of slavery and oppose the system, period, on moral grounds. And so they resisted. So it's not like this Hamiltonian developmentalist agenda just slid through without problems. There was lots of conflict and there's a whole history of that.

But anyway, so that's the industrial moment. So then, you know, the story of the industrial revolution is a story of booms and busts with greater or lesser involvement from a kind of regulatory and planning and developmentalist state that particularly through warfare, this state achieves preeminence. The Civil War really kind of advances the power of the developmental state, the crisis of the New Deal in World War II, and skipping over radically all of that history. This leads at the end of World War II to the beginning of the Golden Era, in which you have what David Harvey has called you know embedded liberalism you've got this developmentalist version of capitalism that emerges out of both the new deal response to the depression and to world war ii and for about a generation almost

two generations this system in part because world war ii really World War I and World War II, have destroyed so much of the rest of the world's economy that the process of rebuilding in the late 40s through 50s into the 60s provides the basis for just this enormous expansion in which there can be high and rising wages. There's also high levels of investment, rising productivity, very high taxes, but also high rates of profit. By the mid late 60s, the world economy has recovered and you have the return of the perennial problem of overproduction and glut. And that leads to a profit crisis that becomes acute and very clear by the early 70s. And at that moment there's the beginning of an intellectual shift among core economy policymakers. And the old Keynesian consensus that you had to, you know, use counter cyclical spending when the economy went into recession, the government

should borrow, go into debt and spend money to, you know, boost consumption and encourage private investment until the private sector was growing again. And then the government could pull back and could tax and pay off those debts. This is this counter cyclical intervention. Demand management is a key part of that, making sure that the masses of people have enough money to buy the widgets produced by the industrial system. This is a consensus across the West, and it begins to slide into crisis, late 60s, early 70s. there has always been, from the 1920s and 30s, a fringe right-wing element that has opposed this kind of embedded liberalism, this sort of managed capitalism. And they, under the tutelage of Mises and Hayek, have been organizing, particularly under the leadership of Hayek, the economist Friedrich Hayek, who also is a consummate political intellectual organizer

who creates the Mont Perlin Society after World War II and recruits industrialists and intellectuals to sort of defend the free market against creeping collectivism, which for him is everything from sort of like welfare liberalism to Soviet communism. All this is like collectivism and needs to be pushed back against intellectually. Out of that comes the right-wing think tank movement. These ideas are well-funded, but they're pretty marginal up until the crisis of the 70s, when you have a profit crisis, but you also have rising inflation, even as you have rising unemployment. You have stagnant economic growth and rising inflation. And it's amid that crisis, the key thing not being stagflation but being

profit rates, that there's a shift away from the Keynesian consensus of embedded liberalism towards this previously marginalized far-right set of ideas that we know as neoliberalism. And the policy move that is the opening act of neoliberalism is when Volcker plunges the chairman of the Federal Reserve, appointed by Jimmy Carter. And it's Jimmy Carter who begins Reaganomics. Halfway through his first term, he's trying to battle inflation by cooling the economy by trying to like turn down the rate of economic activity and he begins cutting taxes on the wealthy deregulating I think he deregulates like trucking rail and maybe telecoms and he appoints Paul Volcker as chairman of the Federal Reserve Volcker

is trying to cool off the economy by raising interest rates. Reagan wins the election. And between 1980 and 1982, the Fed's rate, the rate at which it lends money, reaches 20% three different times. So this means in the private markets, like if you have a credit card or you're trying to get a line of credit for your small or medium-sized business or get a home loan, it's like you're paying 25%, 26% interest. Which means people stop borrowing money, they stop spending, they stop investing, and the economy goes into the worst recession since the Great Depression at that point. This reverberates out through the global south. This becomes the commodity crisis. And throughout the golden era, many developing economies have been borrowing money

at low, basically pegged to the London interbank overnight rate, LIBOR, which fluctuates, borrowing money at these low but variable interest rates, some of this money is well invested in productive capacity and some of it is stolen and misused. But when the U.S. plunges its economy and the world economy into recession and jacks up these interest rates, it means that it's harder for developing economies to make money, earn hard currency through exports to pay off their debts, to manage their debts. And also that the interest rate on many of these debts shoots through the roof. So you have Mexico goes into a default crisis, Argentina, Brazil, and then on and on and on over the next, really, like 15 years throughout the global south.

One country after another goes into a debt crisis, and the OECD economies, led by the U.S. and the U.K. primarily, enforce neoliberal, that is to say, radical, utopian, free market economic restructuring on one country after another. And it begins with Mexico. Mexico goes into crisis in 82. It's about to default on its sovereign debt. And in exchange for lifeline loans,

it begins the process of negotiating away what was the first socialist constitution in world history. The Mexican constitution of 1919 is seen as sort of the first socialist constitution. It says very clearly, like, that there's enormous amounts of economic activity that are not to be commodified. It says everything in Mexico belongs to the state, down to the rock salt. I mean, it enumerates like everything. Everything that exists in Mexico is the property of the state and private property exists, but only at the pleasure of the state. It has no rights

autonomous from what the political class might decide. So Mexico slowly negotiates away all this. Article 27 of the constitution is what has to be changed and that blossoms and that culminates in NAFTA. So what happens is then structural adjustment imposed upon one developing economy after another and it's always the same thing. It says in exchange for lifeline loans you will get enough credit to keep the lights on and avoid revolution and social collapse but you must sell the national airline, you will sell the national oil company. You will, you know, open your financial sector to flows of hot money. You'll sell off all the productive state assets, the cement companies, the breweries, you know, the

bakeries, the fish processing companies. All these assets will be sold. You know, and this is in the name of efficiency and getting your balance of payments correct. So that's this neoliberal assault in the global south and in the north is what we call neoliberalism. And what happens in the north is that in response to the Volcker Shock and this recession that is, for political reasons, this cold bath recession caused by the Volcker shock is matched by the smashing of PATCO, the air traffic controllers union that had foolishly in retrospect endorsed Reagan. 11,000 of them go out on strike. Reagan fires them all because a lot of them at

that point were federal employees because airports and air traffic control system was more federally controlled than it is now. He stacks the National Labor Relations Board with people who are hostile hostile to the interests of organized labor and he radically cuts taxes on the rich and facilitates deindustrialization, forces a sort of shift in the tax burden to consumption and working people and liberates the American ruling class to begin a new process of accumulation. And you get rising inequality, but you get a boom. You know you get this real estate boom, stock market boom, but wages basically from 75 on remain flat line whereas the economy grows and more and more of that growth is accumulated as profits by the class that owns the productive assets. So that is what neoliberalism is. It's

the rebellion of the 1% against the form of managed capitalism that emerged out of the crisis of the Depression and World War II. Yeah, thanks for a really comprehensive history. And I think it's not a huge stretch to argue that, you know, Biden's presidency has really been for all practical purposes, Reagan's seventh term in office. That is to say, it's all been Reaganomics since the 80s. And, you know, at the same time, it does sort of feel like we're on the cusp of a new era in capitalism, that something fundamental is really shifting and has been for a little while now. And yeah, I guess I'm just wondering more broadly what your thoughts are on that. Yeah, I mean, in some ways, Biden is the

same old thing. But in other ways, he's quite different. But it's less about the personalities and more about the conditions, the crisis. I find it interesting how neoliberalism's rhetoric continues, but the policy of bailout is getting deeper and deeper. And it amounts to kind of almost a de facto socialization of investment to some extent. investment to some extent. The way that the federal government is, for the second time, the first time being the 2008 crash, basically just has to go into, first you have the financialization of capitalism, right? Part of neoliberalism leads to a de-industrialization, a relative de-industrialization, and the kind of boom of these financial sectors. And now that version of capitalism keeps going into crisis.

And so there's a de facto socialization in the form of quantitative easing, where this financial sector is producing these assets that it can't sell, right? Stocks, bonds, derivatives, this, that. And the federal government has to go into these markets and buy up this stuff that is otherwise total shit that no one will buy. You have companies like all the zombie companies like JCPenney and others that, I mean, if not on life support, would collapse and be liquidated. So that's a sign of a real weakness in global capitalism and in this model. And we don't really talk about it that much. Bob Pollin had a piece that he wrote with somebody else, I forget who that person was, in the Boston Review.

I think the title was, Neoliberalism Has a Bailout Problem. But it's like, really what it constitutes is almost a kind of a de facto socialization of investment Capitalists if left to their own devices if left to the logic of free markets They're not going to make enough money to continually reinvest so everything has to be put on life support And they have to literally given money by the public sector in the form of you know, these firms issue stock that no one would buy under competitive conditions. And so the federal government goes in and buys these assets. That's what quantitative easing is, to boost the price, to artificially juice the price.

And so we have a kind of de facto socialized, financialized version of capitalism. It's not sustainable. It's totally insane. And I think our discourse around it is lagging far behind. Partly because everybody on the left, the nominal left, is busy canceling each other and policing their language. And I don't think we're focused enough on the political economy of this whole thing. This new moment is really strange. And there's a whole literature developing about sort of, you know, like the end of capitalism. How will it end? And what is it turning into?

I mean, when would you not call this political economy capitalism? What level of socialization would we say it's something else? These are questions that are emerging. Wolfgang Streck has a whole book about that. How will capitalism end? And no one really has the answer. I guess, despite the fact that you just said it's a huge question mark, I'm wondering what your thoughts are.

What is next? I mean, there are so many different breakdowns occurring. And yeah. Well, I mean, the thing is that's obviously next and is present is the climate crisis and this gets to the kind of reason you want to have me on was about carbon capture and sequestration i mean carbon capture is a technology that exists and there's no way the market can deploy it there's no there's no commodity that it produces that's going to be competitive so it's something that states have to do and I think they will do and I mean I think that what's what's next is a period of crisis and I suspect a deepening of this de facto socialization.

That does not mean that the system becomes more egalitarian. World history is full of class societies that were not capitalist. But yeah, I think that politics will increasingly be in the saddle and that security is increasingly going to be the logic that drives decision making. And that gets back to this question about capitalism, capital, the ruling class, and the capitalist state. I really think we need to focus less on sort of like capitalism, capital, the ruling class, and the capitalist state. I really think we need to focus less on sort of like capitalism, overthrowing capitalism. I mean, I'm all for that. Though, you know, it's not as easy as it looks to create socialism. And I say that as somebody who has real sympathy for actually existing socialism. I don't think it's as easy as it looks. And all my, you

know, Trotskyist friends and grad students who dismiss and decry actually existing socialism as if the issue was that the leaders didn't have the right ideas, I think they're frequently not taking into consideration the material constraints that the Soviet Union, Cuba, Evo Morales in Bolivia, whoever, are up against. And that the tepid kind of pink tide that many on the left decry for not being left enough. I mean, these people are not necessarily, you know, Evo Morales, for example, they have not pursued a kind of social

democratic path simply because they didn't have the guts to go all the way, but because they are like our landlocked country with very few resources and a long history of US intervention, you know? And it was Fidel Castro himself who told Chávez somewhere along the line, he said, you know, don't do what we did. Don't like, don't militarize it and go whole hog because they're just going to come at you really, really hard and you know, you're going to have to try some other path to socialism. It's not, it's not as simple as if you have the right ideas and the balls, you can do it. It's always going to be very, very difficult.

So that was a digression. But I think that the crisis of climate change is going to mean that the state is called back in. And the question is, will the increasing role of the state, will the state's footprint be a kind of fascistic, militaristic one, or will it be redistributive and democratic? And in that process, implicit in that process, is what class will dominate in this process as it develops? The 1%, the ruling class, or other classes in society? Can society, can the working class in all its factions, manage to assert its rights and its power and its agenda in the process of dealing with the crisis of climate change? I think there

are very real openings for that. You know. You can imagine the kind of mass mobilization in the face of emergencies of fires and floods that are already happening, but they're going to be happening at a much greater scale. And the way in which an ethos and a discourse of the collective, of solidarity, are going to appeal to people. And the legitimacy of hoarding,

the legitimacy of extremely wealthy elites is going to be much harder to sustain. That kind of inequality is easier to justify when the lights are on and everything's okay. But when your town is wiped out and there are like hundreds and thousands of people who are hungry, who have paid their taxes all their lives and have played by the rules and they're not getting anything and this class of parasites still exists, I think then you get real problems and that people can get radicalized very quickly in the face of these crises. So now that radicalization could become xenophobic, racist, militarized, vigilante fascism, or maybe it could be some sort of like climate crisis,

you know, what I've called storm socialism. And I'm hoping for that, and I'm trying to do what I can to like push for that. You've been listening to an Upstream Conversation with Christian Parenti, author of Tropic of Chaos, Climate Change and the New Geography of Violence, and most recently, Radical Hamilton, Economic Lessons from a Misunderstood Founder. Please check the show notes for links to any of the resources mentioned in this episode. Thank you to Carolyn Rader for this episode's cover art,

and to James Xerxes Fussell for the intermission music. Upstream theme music was composed by Robert. Upstream is a labor of love. We distribute all of our content for free and couldn't keep things going without the support of you, our listeners and fans. Please visit upstreampodcast.org forward slash support to donate. And because we're fiscally sponsored by the nonprofit Independent Arts and Media, any donations you make from the U.S. are tax exempt. Upstream is also made possible with support from the incredible folks at Resist Foundation. For more from us, please visit UpstreamPodcast.org and follow us on Twitter and Instagram for updates and post-capitalist memes at Upstream Podcast. Twitter, and Instagram for updates and post-capitalist memes at Upstream Podcast.

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