Fun Fact — Money Existed Long Before Capitalism!

Hossenfelder spends the opening minutes of the video talking about the reasons why using money as a universal medium of exchange is more efficient than using a barter system. But what does this have to do with the video’s stated topic? Money existed throughout thousands of years of feudalism, ancient slave societies, and non-capitalist political-economic systems.

Later in the video, she bolsters her case for capitalism with a dismissive reference to “the nations who still don’t use it, such as North Korea, Cuba, and Laos,” which she tells us aren’t “places you would want to live.” Maybe so, but they’re all places where people use currency — the North Korean won, the Cuban peso, and the Laotian kip — to buy and sell products.

To be fair, Hossenfelder seems to be aware that market transactions have existed before — and, where capitalism has been locally replaced by other systems, after — capitalism. She says that capitalism itself comes about when you add “a person or institution who provides capital to those who want to launch a new business.”

This is a little warmer, but still quite cold. Hossenfelder seems to have mixed up the narrower category of financiers with the broader concept of a capitalist. Finance capital is certainly an important part of typical capitalist economies. But Hossenfelder’s definition of “capitalist” implies that we wouldn’t be living under capitalism if everyone who owned a business got their starting funds in other ways — for instance, from inheritance, saving up wages, winning high-stakes power games, or robbing banks.

Capitalism’s critics typically distinguish capitalism from other systems, like feudalism and socialism, by talking about what Karl Marx called “relations of production.” The relationship between a feudal lord and a peasant is one production relation, the relationship between a Roman patrician and his slaves is another, and the relationship between capitalists and workers is a third.

The single sentence referencing North Korea, Cuba, and Laos is the only mention in Hossenfelder’s sixteen-minute video of any possible alternative to capitalism. Even more amazing, there’s only one mention of a critic of capitalism other than twenty-year-old Greta Thunberg. And this single sentence is also the only one in the entire video referencing the concept of class.

She says:

Capitalism got a pretty bad rep when Marx claimed that it’s just about grabbing hold of the “means of production” and “exploiting the working class.” Of course, there was an element of truth to his fears, because some things went badly wrong during the industrial revolution, but that’s another story.

The million-plus subscribers to her channel are left in the dark about what either of the quoted phrases actually means. But the implication of what she says here and later in the video is that “exploiting” the working class just means “mistreating” them, and that this was subsequently solved by the regulatory state.

Marx’s actual point is that, under capitalism, there’s a class of people who own the means of production — everything from factories and farms to restaurants and grocery stores — and a much larger class of people who have no realistic way of making a living except renting out their working hours to capitalists. This means that, whether we’re talking about Victorian England or Sweden in 1970s (in many ways the high-water mark of social democratic welfare states in human history so far), there’s still a deep power asymmetry between workers and capitalists.

Regulation, labor unions, and a welfare state can all sand away some of the most horrifying edges of that power asymmetry, but even heavy doses of all three don’t eliminate it. Most of the working population is still forced by what Marx called the “dull compulsion” of economic necessity to spend half their waking hours, most days of the week, following orders from unelected bosses.

“Exploitation” refers to one class’s involuntary extraction of a “surplus” created by another. Under feudalism, Marx pointed out, this extraction happened right out in the open. Serfs might have their own little plot of land they were allowed to work part of the time, but there were designated periods of time in which they were coercively required to farm the lord’s field.

Under capitalism, exploitation is disguised by the legal form of a voluntary agreement between equal parties — what in Capital Marx calls the owner of money and the owner of “labor power” (i.e., the capacity for a certain number of hours of work). At the end of the day, though, workers under capitalism still have no realistic choice except to part with much of what they produce. There’s a portion of the day in which they’re laboring to produce products or services that are equivalent to what were advanced to them as wages, and a portion of the day in which they’re laboring to enrich the boss. So part of the money generated by the activity of workers in Amazon warehouses, for example, goes to paying for Jess Bezos’s spaceship.

Workers can go work for some other capitalist, but the basic shape of the deal will be the same. If they want to have a job and not beg for change on the streets or go on welfare for as long as they can or live in the woods, they have to consent to this arrangement.

Hossenfelder makes a big show of crediting capitalism with spurring scientific innovation. The example she focuses on — the development of medicine — is particularly poorly chosen, given the massive role played by state investment in medical research even in the ultra-capitalist United States.

But the general point that capitalism spurs technological development (what Marx called development of the “forces of production”) is absolutely correct. The opening pages of the first chapter of the Communist Manifesto are so much prose poetry on this exact point. Where Marx and Hossenfelder differ is on the question of whether capitalism is the best humanity can do — whether the choice is between capitalism and North Korea — or whether it’s possible for workers and communities to run the means of production collectively and democratically, thereby allowing humanity in general to benefit from the high-tech abundance capitalism has generated.

Capitalism, North Korea, or . . .?

Anyone who’s ever heard of the six-decade-long embargo the United States has imposed on Cuba — which almost every country on the planet annually begs us to lift for humanitarian reasons in United Nations resolutions — or, say, the Vietnam War might have some inkling that not all the problems that beset Cuba and Laos are products of innate flaws in their economic systems.

To put it in terms a scientist should be able to understand, these economic experiments haven’t exactly been allowed to proceed under laboratory conditions. This is true even of the country with the most deeply undesirable political model of the three she lists. The United States bombed North Korea so intensely during the Korean War that some estimates put the casualties at 15 percent of the population.

That said, it would be foolish to blame everything that ails these societies — some of which, by the way, I’d much rather live in than others — on external factors. Their systems do have very real flaws. But Hossenfelder is willing to entertain a variety of different forms of capitalism, and throughout her video blames the environmental and other failings of real-life capitalism on capitalism not having been “set up” correctly — with enough regulation, or with sufficiently smart regulations. Why isn’t she similarly willing to consider alternative possible kinds of socialism?

The most obvious objection to the societies she lists, or broadly structurally similar examples like the Soviet Union, is that they were or are politically authoritarian. One of the main values that has inspired socialists over the generations is a desire for more democracy than exists under capitalism. We like democracy so much we want to extend it to the workplace, and to large-scale economic decisions of the kind currently made by wealthy CEOs only accountable to their shareholders. In countries like the USSR, workers had no more institutionalized say in what happened in factories or offices than their counterparts in the capitalist West, and large-scale decisions were made by unelected bureaucrats.

There were also real problems with economic efficiency, particularly with aligning production priorities with fine-grained consumer preferences, that can’t be reduced to the lack of democracy. Even if we added a free press and multiparty elections to the basic structure of the Soviet economy, so that whichever party won each election got to appoint the head of the state planning office, I see little reason to think that would have taken away the day-to-day frustrations of consumers at Soviet grocery stores.

It could be that, at least at this phase of history, we don’t know how to organize an efficient modern economy without some market mechanisms of the kind that the USSR lacked. But that doesn’t mean we need capitalist property relations that disenfranchise most the population at the workplace and create a small elite of capitalists with outsize political power.

Why not have, for example, a system where the “institution” that “provides capital to those who want to launch a new business” is a state-owned bank, and it only provides capital to internally democratic workers collectives? This would still provide market mechanisms where they are needed. Meanwhile, the “commanding heights” of the economy — like energy, finance, and transportation — could be taken into public ownership. Sectors like health care and education could be taken outside of the market altogether and provided as public goods, free at the point of service — as indeed they already are, to one extent or another, in actually existing social democracies.

My friend Mike Beggs has provided some detailed thoughts about the logistics of such a model here. (Full disclosure: I’m cowriting a book with Beggs and Bhaskar Sunkara fleshing out this model.) Someone as smart as Hossenfelder might well have good objections to this model that would give us pause. But for her to make them, she’d have to do something she’s shown no inclination whatsoever to do: she’d have to actually seek out critics of capitalism and ask us what we think.

“But That’s Another Story”

Throughout the video, Hossenfelder waves away concerns about environmental or other externalities with the phrase “that’s another story.” It never seems to occur to her that one of the main motivations for criticisms of capitalism is a considered judgment that it’s all the same story.

In other words, there are at least two reasons to think the long-term horizons of the Left should go beyond reforming capitalism with better regulations or a bigger welfare state to transcending capitalist property relations entirely. One is philosophical: we don’t think it’s fair or reasonable that some people have to rent themselves out to capitalists while other people get to live off the labor of others.

But the other reason is practical. We’ve noticed that where important reforms have been achieved in the past, they’re eroded or even reversed by the efforts of the politically powerful capitalist class. As the Marxist theoretician Rosa Luxemburg once put it, reforms are important, but a workers’ movement whose long-term horizons are limited to reform ends up being like Sisyphus in Greek mythology — perpetually rolling a boulder up a hill only to have it roll back down.

That’s bad enough when it comes to reforms that remove entirely avoidable forms of human misery. But it’s potentially catastrophic when it comes to the environmental issues that seem to be among the only problems with capitalism Hossenfelder has noticed. If we don’t take power out of the hands of the capitalists who are letting their unquenchable thirst for profit destroy the planet, our very survival as a species may be at risk.