Capitalism and its Critics: A History from the Industrial Revolution to AI by John Cassidy

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Capitalism and its Critics: A History from the Industrial Revolution to AI by John Cassidy

'Capitalism and its Critics: A History from the Industrial Revolution to AI' by John Cassidy

By the start of the 19th century, capitalism was the dominant economic system of developing nations and the aspiration for much of the world. And yet, at every step in its evolution, capitalism was challenged for its shortcomings, especially when its implementation disadvantaged large segments of the population. Marxism was one of the revolutionary alternatives, social democracy also challenged capitalism’s drive for maximum profits, but as John Cassidy reminds us in Capitalism and its Critics, capitalism has never been static or monolithic. Like its alternatives, it’s come in many flavors, molded by a variety of conflicting theories about society as well as economy.

Cassidy, a New Yorker staff writer, waded into the complexity with the goal of achieving clarity. He begins his survey not with the birth of the modern stock exchange in Amsterdam but the industrial revolution in Britain. In the 1700s, when machine-powered mills began to supplant cottage weavers, the new factories were supported by investment capital gained from the slave trade and slave-based plantations in the New World. In The Wealth of Nations (1776), the first systematic reflection on the new economic order, Adam Smith advocated increased production in a competitive market whose benefit “extends itself to the lowest ranks of people.” He assumed that free market forces acted as an “invisible hand” that generally led to the best results. However, he wasn’t an unbridled champion of a market society. Smith distrusted businessmen for their avarice and opposed monopolistic corporations. He supported free trade between nations, criticized the destructive aspects of colonialism and thought slavery was inefficient for depriving enslaved laborers of any incentive beyond survival. “Smith was a noted critic of capitalism as well as its greatest philosopher,” Cassidy writes.

Cassidy explores some two dozen economic theorists or ideological movements. He explains the rage of the Luddites and the inspirational role of laissez faire economist Milton Friedman for Chile’s dictator Augusto Pinochet as well as Ronald Reagan. Karl Marx and Friedrich Engels get their chapters, as does John Maynard Keynes, whose ideas about government’s role in regulating capitalism for the public good were dominant from the 1930s through the ‘70s. Cassidy doesn’t ignore ideas from outside the industrialized west, including Mahatma Gandhi’s economic advisor J.C. Kumpara and Argentina’s Raul Prebisch, who argued for changing the lopsided dynamic between nations such as the U.S. and countries on “the periphery.”

Highly pertinent for today among Cassidy’s gallery of economists is Nicholas Georgescu-Roegen, a Harvard-educated Romanian who ended his career at Vanderbilt University. He was concerned with the social and economic consequences of the degrading and depleting the world’s natural resources. His The Entropy Law and the Economic Process (1971) was a tour de force that critiqued positions held across the spectrum, including the notion of inevitable economic growth.

The future? Capitalism has proven remarkably resilient and adaptable, but as Cassidy writes, governments around the world had to intervene twice this century to save the system, first during the Great Recession and then during Covid.

Buy Capitalism and Its Critics on Amazon here.

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