Jesús Fernández-Villaverde, one of the few economists in the world who equally tackles the problems of energy use in a dynamic way as a sociological and historical theory, has an excellent series of twitter posts about capitalism and modernity.
JFV: I’ve been reading (and re-reading) a lot of social theory.
What puzzles me is that many critics of “capitalism” (whatever “capitalism” may mean, and regardless of the importance of those metaphors) are really critics of modernity, understood as a social movement around technology, legal institutions, and rational conditions.
I teach the economic history of the Soviet Union and socialist China, and all the pathologies (pollution, reliance on fossil fuels, inequality, depersonalization, consumerism, isolation, name it) that you can find in the poor area of 2026 Philadelphia appeared in the same way, or even more, in the Leningrad factory in 1970 in the farm of Ji 719 or Ji.
Critics seem to lack the vocabulary (or, if you prefer, the framework) to distinguish “capitalism” from modernity. For example, people everywhere tend to link personal relationships with consumption displays. There are probably deep evolutionary reasons for this. De Beers didn’t invent spending a lot of money on a useless engagement ring: it rode a pre-existing condition into a form of consumption. The couple in Leipzig in 1982 were interested in a significant implementation like that in Chicago in 2026. Talking about “Love and the Clash of Cultures in Capitalism” misses the point entirely.
Of course, you can try, as some more discerning Trotskyists do, to argue that neither the Soviet Union nor China were truly socialist countries, but this is just a lazy use of the “Scotsman’s inauthenticity,” and, as a result, their appeals have failed to gain much traction outside of other departments of cultural studies.
But this is not just a matter of poor analytical skills, as bad as those are. More importantly, it means that 99% of the policy proposals activists put on the table to fix the problems of “capitalism” will fail because they don’t understand that the basis of these things they are complaining about is false.
I see this in the university. Do you think the company you work with is self-centered and ineffective? Wait until you need to tackle Graduate School at a private Ivy League university. The motivational problems (asymmetric knowledge, work anxiety, lack of timely response, pressure towards compliance) that cause poor performance in the first period are even more prominent in the end due to the lack of profit motive, a sharp disciplinary approach.
At the most basic level, Marx made a modern mistake; Weber got it right. Time to spend less time with Marx and much, much more time with Weber.
Here is the second post:
Many readers yesterday asked for concrete examples of what I think about the difference between the characteristics of modernity and those found in “capitalism.”
Imagine we have a functioning socialist commonwealth. For simplicity, I’ll call it SC.
Consider also that this SC aims to provide quality medical care to its citizens. This is not about overuse. It is about the desire to provide good preventive care, adequate treatment, palliative care, and more.
Soon, he realizes that he needs a scientific and technological complex that develops advanced mRNA targets and, more importantly, industrial capacity to produce tens of millions of doses in a short time when a new virus arrives or an old one mutates. These are complex processes that involve connecting millions of people with different knowledge, skills, and personalities.
But it doesn’t end there. You will need to produce thousands of MRIs, scanners, FLASH radiotherapy machines, and all the confusing array of equipment you find in a top hospital.
And I emphasize: seeking treatment with the latest oncological equipment when you get cancer is not unreasonable. It is a deep human desire that a good society (or any society, really) should try to provide.
How will you accomplish all this? SC does not want to use private property, so it depends on some kind of public property. But public ownership is not a big problem. The real problem is that the SC will need to organize large bureaucratic organizations. Without them, it cannot develop and implement vaccines, MRIs, scans, and more. The need to scale is the main way to play, not who owns the property.
And, because of their scale, these big bureaucratic organizations will face the kind of problems that critics of “capitalism” say are caused by “capitalism.” The organization will be impersonal and fragmented, and inefficient due to job concerns, information asymmetries, compromise outcomes, and internal politics.
Furthermore, because there are drawbacks to every human effort, some requests for treatment will be rejected. SC will not have enough resources to satisfy all medical needs (and medical needs, for all practical purposes, are unlimited), all educational needs, all environmental needs, and all the needs of this or that important cause. Sorry, yes, scarcity will always be with us, with or without AI.
Patients whose medical requests are denied will be especially upset because the SC is built on the idea that such events will not happen. At least in a “capitalist” society there is someone to blame (“the capitalist”).
Those who deny the need for large bureaucratic organizations are living in a fantasy world. I am sure that the day they are told they have prostate cancer, they will run to their nearest organization to get treatment.
Those who deny the problems of large bureaucratic organizations, and how deeply unsolvable those problems are, have never seen how a non-profit works. I have never seen a more intense fight than among non-profit organizations, where some shared sense of good unites members. The battles are really intense because profit does not matter.
I have been studying these problems for almost 40 years, and I have seen many proposals to deal with the problems of large private organizations. Most popular is “participation” or “more democracy” in the organization. No, sorry, more “participation” or “more democracy” makes things worse. Yugoslavia taught us that you cannot run a large bureaucratic organization based on democratic participation (well, you only need to know basic economics; Arrow’s impossibility theorem, anyone?).
Big bureaucratic organizations are essential to modern life, and they are fraught with problems, “capitalist” or not.
This is what Weber understood and Marx, who had an abstract vision of the future, did not. Weber saw that bureaucracy is not a feature of “capitalism” but a form of institution that modern society uses to coordinate large-scale operations under rational, impersonal rules. Hospitals, ministries, armies, universities, yes, organizations all come together in the same way because they work at the same level. The iron cage is not capitalism. It is modern.
Excellent third post on did capitalism create modernity criticizing Quine and the analytic-synthetic distinction (!) by here.
