The legendary Wobbly Fred Thompson used to tell a story about his introduction to Marxism. One day when he was thirteen, he read in the local New Brunswick newspaper that Canada was having a good harvest. This was great news, he thought. He went into the kitchen to tell his mother that the family would soon have enough to eat. But it wasn’t that simple.
“There’s something called economics,” his brother told him.
Thompson decided he’d better learn about this “economics.” Some weeks later, he went to a meeting of the Socialist Party of Canada and liked what he heard. He came home with some pamphlets and books from a socialist publisher in Chicago to learn more about Marxism, and Thompson was launched on a lifetime of struggle against a society that produces poverty alongside plenty.
Turns out there’s something called capitalism.
A century later, Jacobin staffer Hadas Thier has written a book (for another socialist publisher in Chicago) for another generation of Fred Thompsons. A People’s Guide to Capitalism is a lively, accessible, and thorough account of Marxist economic theory, as well as a study guide “for those of us who are attempting to make sense of the world in order to change it.”
Thier shows that the power of Marxism lies not only in answering the urgent questions that capitalism forces on us but in showing how the questions are connected:
How can there be a housing glut, when millions are homeless? Why do forty-five thousand people a year die, even pre-coronavirus, in the United States — the richest country in the world — from causes linked to lack of health insurance? How could hunger be the leading cause of death among young children around the world, while current global food production supplies enough to feed more than one and a half times the world’s population? Why does money flow to oil, nuclear weapons, and junk food, rather than to fulfill human needs for health care and education?
Thier ties each of these questions to a bigger one: Why do profit, power, and wealth come before human needs and lives? Figuring out how to fight a system organized in this way requires understanding how and why the questions are connected.
Marxism for the Twenty-First Century
A People’s Guide to Capitalism rescues economics from dusty, overly technical explanations common in mainstream economics and sometimes on the Left as well. The book is written for twenty-first-century socialists, with examples from the world we know. You may have sung that “they have taken untold millions that they never toiled to earn” during a rousing version of “Solidarity Forever,” but you’ll realize just how many untold millions when you read how surplus value, the ultimate source of capitalist profit, is extracted from a Starbucks barista:
Let’s say you work for Starbucks and they pay you $120 for an 8-hour shift. But you can probably make $120 worth of fancy coffee in an hour, or probably in a half hour at a busy store. Even once you subtract the cost of materials and use of the equipment, Starbucks doesn’t pay you anywhere near the value you’ve created (hundreds of dollars a day). They buy your labor-power from you, not the actual fruits of your labor. And you make that value back for them in an hour. The rest of your shift, you’re basically working for free!
To underline that a high rate of exploitation isn’t exaggerated or exceptional, Thier quotes Lan, a Vietnamese garment worker, talking about the shoes she helps produce by the thousands every day.
“I’d like my son to have shoes like these, but he can’t,” Lan told an Oxfam researcher. “I think he’d want them, and I feel sorry for him. The shoes are very pretty. You know that one pair of shoes that we make is valued more than our whole month’s salary.”
Thier doesn’t sidestep or shortchange difficult concepts. Each chapter in the map through Marxist economics is interspersed with sidebar detours, taking up the gibberish of mainstream economics (“A Marginally Useless Theory”), new developments under capitalism (“What’s in a Bitcoin?”), related questions in Marxism (“Outside the Abode of Production”), and much else.
And she follows her explanations of complicated ideas with quotations from Marx’s writings, along with those who followed him. If you haven’t read much Marx before, you’ll be glad to discover that he’s not as impenetrable — nor as humorless — as he’s often made out to be. And if you have read Marx before and sometimes struggled with the language or the complexity of formulations (that’s me), you’ll understand them better in light of the context and explanation Thier provides.
This is particularly handy in the early chapters in which Thier explains some of the building-block concepts of Marxist economics, like the way useful things like food and clothing get transformed into commodities to be bought and sold. If you ever started a reading group on Marx’s Capital and quailed at the opening chapters (me again), you’ll know this is challenging stuff. Thier’s twenty-first-century examples help once again — for example, a trip to the supermarket, courtesy of David Harvey, to illustrate commodity fetishism:
Hidden within this market exchange of things is a relation between you, the consumer, and the direct producers — those who labored to produce the lettuce.… The end result is that our social relation to the laboring activities of others is disguised in the relationships between things. You cannot, for example, figure out in the supermarket whether the lettuce has been produced by happy laborers, miserable laborers, slave laborers, wage laborers, or some self-employed peasant. The lettuces are mute, as it were, as to how they were produced and who produced them.
It also helps that these chapters are preceded by one on the origins of capitalism that dramatically portrays the violence and cruelty of the system “hidden within this market.” Those who constructed capitalism in its most rudimentary stages committed some of the most horrific crimes in human history along the way.
On this point, Thier uses writings by later Marxists to emphasize — with more power than is present in some writings by Marx himself — that capitalist industry didn’t just develop in Europe while the rest of the world stagnated. “Rather,” Thier writes, citing the twentieth-century Guyanese Marxist Walter Rodney, “Western Europe developed economically by actively underdeveloping Africa and other parts of the colonized world.”
Thus, slavery and genocide are woven into the fabric of a system that claims to be about freedom. This underlines the conclusion that flows throughout A People’s Guide to Capitalism: the ultimate source of the inequality and injustice we see around us lies in the structure of capitalism.
When Things Fall Apart
Marxist economics explains not only how capitalism works but why it regularly doesn’t — during the periodic economic busts that inevitably follow the booms. As Marx and Engels wrote:
Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce.
Of course, in a world where billions go without enough food, there’s no such thing as “too much means of subsistence.” There’s only too much from the point of view of the capitalists — too much to sell their products at an acceptable profit.
Thier introduces the chapters on capitalist crisis by unpacking a long quotation from Engels that ends: “The contradiction between socialized production and capitalistic appropriation is reproduced as the antagonism between the organization of production in the single factory and the anarchy of production in society as a whole.”
Under capitalism, production within workplaces is generally highly regimented, but the economy as a whole is a free-for-all. Businesses make their investment decisions behind closed doors, each hoping to get a leg up on the competition — by introducing the most popular model, the new product, the next trend. Success means a greater share of the market and therefore more profits.
All the important questions for society as a whole — how much food should be produced, how many homes to build, what kind of drugs to research and manufacture, how to generate electricity — are decided by the free market.
In economic good times, success seems contagious. Companies make ambitious investments, produce more and more, and watch the money roll in. But when enough companies jump in, the market gets saturated, sales slump, debts grow, and the record profits start to sink. The effects spread from part of the economy to the next, as Thier explains, using the example of oil:
If refineries sit idle because there is an overproduction of oil, the workers are laid off, and the creditors, who financed the investment, are dragged down as well. But as future oil extraction and refining projects are pulled back, so too is demand for the raw materials (steel, concrete, plastics, electricity, etc.) and engineering necessary for the production of oil rigs, pipelines, and so on. The construction business and service and retail companies, which had benefited from the springing up of oil boomtowns, suffer as well.
Because of the complexity of the international capitalist economy, the boom-slump roller-coaster ride can look and feel different each time around. Thier devotes a chapter to analyzing the crash last time: the Great Recession of 2008–9. She explains why and how the parasitical realm of banking and finance was the detonator of this slump but looks beyond popular left explanations about “financialization” to reveal the underlying crisis of global overproduction.
Among Marxist economics writers, there are some disagreements about the details here, specifically about “which aspects of Marx’s writing — falling profitability, overproduction (or in some cases, underproduction), disproportionality among branches, the role of credit — are emphasized and how these pieces fit together,” Thier writes.
In her account, Thier tends to stress overproduction, to the disappointment of those who emphasize falling profit rates. This focus on overproduction crucially emphasizes how an organic mechanism of capitalism — inevitable in a system driven by exchange, exploitation, and competition — repeatedly causes crisis.
Regardless of their ideology or morality (or lack thereof), capitalists are inevitably driven to reduce costs, they inevitably see an advantage in producing more for less, and this inevitably leads to frantic overproduction that undermines profitability and ultimately slams the economy into reverse.
In other words, capitalism stops working not because of a mistake or failed policy, but because it’s been working the way it’s supposed to. As Thier writes:
Competition is the mainstay of capitalism. It can’t be made friendlier or softer because it requires an accumulation of capital at any cost, in order to get ahead or get left behind.… These same processes of accumulation necessarily lead to contradictions that threaten the very profits that capitalists seek. Every contradiction for capitalism is both a great hazard to our lives — since we are made to pay the price — and also an important crack in the system. Every periodic crisis is a potential point around which to organize.
A People’s Guide to Capitalism is very much a book of the moment. It relies on a theoretical tradition dating back nearly two centuries, but the main setting is the Great Recession, the years of “recovery” and intensified neoliberalism that followed, and — thanks to a new introduction and afterword written while the book was already in production — the potentially more catastrophic crisis set off by the coronavirus pandemic.
This book helps us understand capitalism’s past and present — so we can fight better to make the future socialist.