Radical Markets And Generalized Capitalist Realism

Unfairness and inequality is writ large and writ small. It is in the trust-fund baby who inherits a block of apartments and lives off the hard work of the people who pay rent to live in them. It is in so-so writer who gets a book deal because they have loads of followers on twitter. It’s in the turn a graduate student makes during a parallel-session conference to see the talk from X rather than the more interesting-sounding talk from Y because X is from Fancy Pants U and Y is from Gruel College.

What should we do in response to this? We should do whatever we think is most likely to minimize these large and small inequalities. And we should believe whatever theory suggests the most likely means to that end.

The aim of this post is to argue that the theory presented in Glen Weyl and Eric Posner’s book Radical Markets might be that theory. Part of this post, then, serves simply to review that book, to make its ideas known to those unfamiliar.

Or, well, that was the plan. To some extent the chapters can be read independently, and I felt I could make the points I wanted to make while discussing just chapter one, so that’s what I did. Maybe I’ll write more about the others some other time, but if I don’t, I recommend you check the book out. Many of the other chapters are as interesting as the one I discuss.

W&P’s theory is quite attractive, but especially leftist readers will balk at a theory in a book with ‘markets’ in the title. And once they hear the outlines of the theory — that the way to equality is paved with free markets — they might tune out altogether. If there’s one thing that the last forty or so years have taught us, they might reasonably enough think, it’s that markets aren’t the answer.

With the aim of keeping such readers on board — and because it’s independently interesting — I will also present a different argument for W&P’s theory. It is as so: what will resolve unfairness and inequality small will do so large. There is one true theory of social organization that scales to the heights of parasite landlords and the depths of indie book reviewing practices or of the running of academic journals. So if we think we have a decent theory of micro-U&I, we can scale that up to a macro scale. And I’ll suggest that with some massaging the theory of Radical Markets chapter one does give a theory of the microlevel, by showing how its concepts could apply to institutions leftists are involved with and care about, namely academia and literature.

So I do two things: I review that first chapter and I make that argument. If you’re just interested in the book, you can just read the section after the following. I begin though by rehearsing some familiar economic history and its influential and convincing analysis by British critic Mark Fisher, a seminal figure in recent leftist thought.

Where We Are: Generalized Capitalist Realism

The standard story about how we got to 2018 goes as so: post-WW2 Western economies grew very quickly and moreover equitably: prosperity increased and was shared roughly among many. Forced both by the necessity of rebuilding Europe, as well perhaps as temperament, the prevailing mood was Keynesian: the economy could and should be guided when the market went into one of its periodic downturns via things like investing in public works and providing social insurance of various forms.

Things got messed up in the mid-70s with a phenomenon known as stagflation, where inflation rose while growth didn’t. This refuted the Keynesian theory, which held this couldn’t happen, and ushered in the idea that the government should stay out of the economy, that expanding and removing regulation was the way to go. In particular, it was thought that letting businessmen business would improve the lot of all in society, because their increased profits would be shared across us all: money would trickle down from the go getting entrepreneurs to the rest of us; the rising tide would lift all boats.

That didn’t happen. Inequality has grown and grown, and moreover, what drives this inequality is not primarily inequality of wages, but results from returns on capital — land, investments, stock market, etc. Contrary to what people might like to say, what determines your economic station in life is not so much what you do, but what you own. If stagflation refuted Keynesianism, [gestures broadly] refutes the neoliberal theory. Today we’re in the same boat as they were in the 1970s. A new paradigm is in order.

New paradigms are sufficiently hard to see, though, that the inability to see them has a name: capitalist realism. For Mark Fisher, a very influential recent British cultural critic, a typifing feature of post-2008 crash capitalism is the inability to see alternatives to capitalism while also clearly seeing capitalism is no good. He traces this phenomenon in movies, music and culture more generally (a decent introduction to his work can be found on youtube which has several talks of his. His theory of capitalist realism is in particular in his book helpfully titled 2009 Capitalist Realism. A new collection of work has been — sadly posthumously — just published by Repeater Books and people say good things.)

A decade on, Fisher’s thought seems still on point. Although we have, indeed, seen more inspiring politicians come forward in people like Corbyn and Sanders, there is still the sense — at least, I have the sense — that these are people fighting a rearguard action, the main aim of which is to try to minimize the more intolerable inequalities, to win incremental reforms and try to drag the heavy weight of collective opinion slowly leftwards.

Maybe what they offer is something like a return to the 1950s — to the baby boom, les trentes glorieuses, and so on. But even then we suffer from Fisherian occluded vision. How are we to get a nice fair Keynesian society in the absence of exogeneous shocks like the 2nd world war, or without large supplies of oil? (What about the thought that the 50s were a fluke, the single stable point sufficiently far from the slavery and exploitations of the 19th century behind and climate change ahead that fooled us into thinking something like capitalism could ever sustainably work? This is a terrifying but not outlandish possibility, in my view.)

One is left feeling as a leftist the best one can do is parry, to suck up a lot because the alternative is worse. Let Amazon dodge tax because they’ll leave and go where they can dodge tax and that’s worse; remain in the EU because leaving is worse.

If this weren’t bad enough — and I think already it is bad enough — there’s an important consequence, which will finally bring me to the title of this section. Just as we struggle to see the alternative to capitalism, that is to organization at the level of society, so do we fail to fight against the unfairness and inequality of lower-level institutions.

To take two examples close to my heart: academia is a vastly unfair institution in which reputation, resources, and attention are unfairly distributed. Literary publishing is similarly unfair. We are familiar with economic determinism: be born on one of two adjacent streets in Dublin (Sheriff Street and Mayor Street) and you will either be born in poverty or wealth and you will accordingly either live your life in poverty or in wealth.

Analogues hold in academia and publishing. Do your PhD in NYU or some smaller university in New York I haven’t heard of and you will live your academic career in cushy tenure track jobs or in the hell of adjuncting. Have your book reviewed in the Guardian and people will buy it. Have it reviewed in Jim’s Book Blog and they won’t. In each case talent is drowned in circumstance: a genius on Sheriff street will struggle against a mediocre Mayor streeter, and ditto for the others (there are, of course, exceptions).

Now here’s the important point: we should dislike literary and academic inequality as we do economic inequality. But often we have some control over these former inequalities in a way we don’t over the other. It is, after all, a paranoid fantasy of the right that the left are in control of culture, and while it is indeed kind of fantasy, nevertheless the people running our academic journals, publishing our books, etc are typically leftist, theoretically inequality-disliking people.

My claim is that we nevertheless don’t exercise the control we have over the institutions we do control because of what I call generalized capitalist realism: just as in economics, we know institutions are unfair but don’t see alternatives, and so don’t attempt to change things.

It’s for that reason that, for example, efforts to fix peer review are not any discipline’s top priority. It’s for that reason that there are ever so many literary journals, for example, but none, or very few, that try to operate on different more equality-producing models. Instead a handful of people receive all the attention while the vast majority — which presumably includes many talented people — languish in obscurity.

Generalized capitalist realism hinders us from changing those institutions that we have some control over. What goes for the micro-level of a new literary journal a couple of friends brainstorm goes for the economy.

That sounds like a despair-inducing conclusion. Not only are we screwed economically, but that screwedness drills down to the other things we care about.

But actually, it’s not necessarily such a council of despair. This interrelation I’ve posited between our micro- and macro- level group institutions means that we can parlay any knowledge we have of the micro level to come to develop theories of the macro level. In a sentence: figure out how the litmags and academic institutions should work, tractable problems, and then scale up. More generally, it suggests a means of assessing and indeed introducing alternative ways of organizing: look see how they do at the micro level.

Below I’ll do this. I’ll suggest the macrolevel theory of the economy and politics presented in Radical Markets can be used to help us think about what we want of our cultural institutions. Its fruitfulness — in addition to the intrinsic attractiveness of the theory — should cause us to believe it, to some extent. In order to do so, I need to explain what that theory is. To this I now turn.

Inequality is etched into Dublin’s geography: being born in the finance district on Mayor street makes your prospects much rosier than being born a few metres away on deprived Sherriff Street

Radical Markets

What do we want of an economy? In a sense, as it stands, we don’t want much. We want to struggle through; we don’t care if we read that GDP if up or unemployment is down because we know that we won’t benefit from the former and the latter is probably some bogus stat got by tweaking definitions. In the same vein, as things currently stand we have no reason to worry too much about one of P&W’s concerns in chapter one, ‘allocative inefficiency’, which are the gains an economy could enjoy were it not subject to various forces that hinder using its resources most efficiently. We don’t care about this because we don’t have control over the resources, so the gains wouldn’t go to us.

In a socialized system — by which I mean one where resources are collectively owned and allocated and otherwise used in support of the common good — we would have reason to care about all the things above.

So, P&W say, let’s see how to make that happen. How should we best organize an economy that it benefits the common good, taking it as given that extant solutions haven’t worked?

Here’s a first pass from the socialisms of the past: we centrally organize the economy. Capital is held in common by the people via the government and the government takes a bird’s eye view on how to distribute and use the various resources the economy has, including labour, to allocate them efficiently.

There are several issues with that. PR-wise, it would be a hard sell: even if ‘socialism’ the word is now acceptable — partly because, a fact I find hilarious, the republicans have basically semantically satiated the whole planet by misapplying so that it’s lost its former shock factor — Soviet-style systems are not likely to find much favour.

More importantly, and mentioned by P&W, is the standard free market critique of centralization: it’s not efficient, because there’s too much dispersed knowledge that no one group will be able to capture and synthesize. In addition, they fear that the incentives to add value to collectively owned capital will be weakened — we do up houses we own and add value to them but we don’t do so for rented accommodation.

Their solution aims to solve many of these problems in one fell swoop. (When I say ‘their’, I should point out — as they do — that the view is in the economics literature. Since I don’t know the work they reference, I won’t pretend I do, but here I’ll list some names who seem to be important in case you want to google more: Henry George and the Georgist movement more generally; William Vickrey for the idea of everything being up for sale; Arnold Harberger and Maurice Allais for refinements. But probably you should just read the book for proper references.)

As I understand it, there are three central and interrelated claims. First, all assets — everything everybody owns — is constantly up for sale (which, when you think about the implications, means that basically all assets are constantly up for temporary ownership or rental). This is meant to help with allocative inefficiency: if someone has something they’re not using, or not using properly, they run the risk of it being bought from them and put to use to its whole potential. Second, the price of all assets is determined by the owners of those assets. This is meant to get around the problem of centralized planning: no one agency is responsible for assessing the value of everything. But thirdly, and perhaps most importantly, for all your assets, you have to pay a somewhat sizable yearly tax proportional to the price you set for them, which in theory immediately quashes the very obvious objection to the second point, namely that people will just set massively high prices for everything.

There’s a lot here, and it takes some getting used to. But let’s concentrate on three, the point and implications of which are somewhat easy to grasp: we should think of it as capturing the idea that the benefits you derive from temporarily owning a given asset are shared among the community who benefit from the money the tax raises. Another way to say it is that the tax, in combination with the fact the owner could not be the owner at any time, are a reasonable decentralized translation of the crucial and attractive idea of common ownership, which makes allocative efficiency the concern of all of us, because we all have a share in the profits of what’s allocated.

That’s all somewhat abstract, so let’s consider an example. The cases in the book typically cast property developers as the protagonist; since I don’t imagine that’ll fly with my imagined readership, let me describe a case I worked out in my head to help me see how this system could help me. I should say that here I’m departing from straight up exposition of the book, and it’s possible I’m overlooking or just plain wrong about something.

Consider the infuriating nightmare that is the Dublin rental market. Landlord inherited some apartments from his father. He’s not a very good landlord: he doesn’t fix things like the broken radiators when asked, for example, confident that it doesn’t matter because he’ll still have people beating down his door to pay 1k a month for a room with a bathroom hewn into where a cupboard would be. This 1k amounts to some 50–60% of his tenants’ salary, and the cold and the constant money worries means, to a person, they each suffer from some mental or physical ailment.

Here’s what I like to understand the Radical Marketeer will tell the landlord:

Fine, keep the house. I bet you think it’s worth millions, right? Well, okay, give me the number and we’ll put it up for sale and we’ll use the decent percentage of the total value you pay as tax for social services. You never know, maybe the money will go to the health service so you’ll be paying for the sickness you cause.

What will Landlord do? Well, here’s a hope. They’ll internalize sufficiently the logic of the radical marketeers according to which society at large shares in their profits, and also society is compensated for the opportunities society loses while they — Landlord — profits.

And that means they’ll think as so: what goes for me goes also for my tenants. Maybe, just maybe, one of them has some brilliant piece of intellectual property that they are currently being prevented from working on because they’re depressed because they spend all their money on renting my squalid hovel.

That is, Landlord comes to realize that just as their advantage is everyone’s advantage (through taxation), so everyone’s disadvantage is their disadvantage (through the lowered returns on taxation caused by the underdeveloped intellectual property).

Then certain calculations become viable even by their self-interest. If they lower the rents, they can lessen the valuation of their property (making certain plausible enough assumptions I won’t spell out) and so they can lessen their tax burden. But they also potentially free up others, by demiserating them somewhat and enabling them to worry less about money, to develop their property: in the example, it lets the depressed person work on the app which is that person’s valuable intellectual property. Numbers would need to be crunched, but 1k rent and miserable tenants might be, in a suitably well-engineered tax system, an action plan of lower expected value than 800 rent and happier more productive tenants, by Landlord’s own self-interested lights.

This might sound naive. Maybe it is. And I’m sure it would be hard to implement (and it’s also possible I’m departing in some ways I don’t know from the intentions of the authors here). But I can’t help but feel that this sort of societal engineering could work, and even if it’s a very uncertain ‘could’, that seems, in light of the dearth of other options, good enough to go on.

But let’s back up and repeat the main idea: something like partial ownership where the profits resulting from owning stuff gets taxed. I think this is pretty attractive, but let me end this exposition by considering briefly some objections that have probably occurred to you.

So — is it actually attractive? Here’s what you might think: I don’t want to save for years and buy a house, to set up roots somewhere, make friends, find a school for the kids only to get a notification one day that someone has bought my house and I need to move out. Everything constantly being up for grabs, even if grabbing it is heavily taxed, is not attractive. And here’s another, more Realpolitik-y objection: if this system would indeed be good for people like us and bad for the people whom the current system benefits, then to the extent that the current system works for the interests of those whom it benefits, this system will never get implemented.

So, first, reply to objection one: I think this does require giving up on some long-held fantasies about the good middle class life. It will require being open to possibilities that what you have might be taken; that life might get much more unpredictable.

But there are things to say. For example, for many of our lives already are unpredictable in pretty much this way: the necessity of renting and precarious jobs means the chance we’ll have to quickly up sticks is always there. But even in the settling down fantasy, absolute security isn’t guaranteed: as the authors point out, you will have a mortgage to repay, and if you don’t your house will be repossessed. The future is inherently uncertain; if anything, by making everybody’s futures similarly uncertain, we level the playing field for us relative to those with wealth.

As for reply two, that seems pretty fair. And I think the authors realize it — their plan is not suddenly to try to introduce their proposal. They want to do small scale testing, sow the seeds of the idea, see how it works. And in the spirit of small scale testing …

Application: Joint Ownership Of Academic Papers

Recall the central hypothesis of this paper: that the correct means of organizing scales. If the above is the correct account of economic organizing, then it should also scale, in this instance scale down.

So let me consider one case study that happens to be something I know a bit about: academic publishing. Academic publishing has issues. Even setting aside its ridiculous business model (whereby publishing companies profit from the free labour of academics), there are great problems. Publishing is necessary to get a job, and trying to publish doesn’t cost anything, so people constantly send things to journals. There are a limited number of journals, and they are all staffed by a limited number of people such that the submitters vastly outnumber the editors. An editor tries to find a couple of people to review all the papers, which takes time, and on the basis of the verdict of those two people, the paper is either published or not, and if the former it bears an accreditation discipline-wide.

One problem is precisely of centralization: for every paper, there is a small group of people who decide on the worth it will bear relative to the whole discipline. Many people are locked out of this decision making process, and their particular knowledge and perspective are put to waste (a fact made more pressing by the fact that post-peer review barely exists, and it’s exceedingly difficult to get reply papers published.) It’s as if the worldwide price of a given commodity — say grain — were decided by ten farmers in Wales, completely ignoring all the different perspectives on grain and its distribution the farmers of the world possess.

This is a problem that just gets more and more difficult with each passing year, as the publication arms race continues, and although I won’t make the case, arguably exactly the same holds for literary publishing (there the centralizing, worth-conferring agents are agents and publishers and editors of literary magazines and such).

Recall that the intution underlying the Georgist tax model is partial ownership leading to cohesion. I benefit from your success. So here’s a thought: we could institute partial authorship of academic papers to harness the dispersed knowledge of the scientific community and to reward the bearers of that knowledge for manifesting it. (I should say: this particular framing in terms of partial ownership I get from Ananya Chakravarti who shared her research on this topic with me, although I had independently arrived at pretty much the same idea.)

Papers get publicly published, and undergo something like open review. Anybody can see and anybody can make comments, good or bad. There is some way of keeping track of the contributions people make, and we come to understand — as we already implicitly do understand — that academic work is not done in a vacuum, but is inherently a collaborative affair, and we cause our institutions to recognise that such that providing a sufficiently useful review or evaluation of a paper causes you to be, in a sense, a co-owner or author of it, or at least to receive some of the value that comes to accrue to it if it is eventually published.

Note that this has exactly the features we could expect of a market-based solution to a problem: we reveal dispersed decentralized knowledge by giving the knowledge bearer an incentive to reveal that knowledge, leading to an efficient propagation of knowledge across the community. In reality, this could mean a much more streamlined and effective review process, a fact that all academics should relish, as well as people getting rewarded for contributions to the knowledge their discipline produces other than peer reviewed monographs (if you’re an academic, you probably know this type: they don’t publish much, but their comments to their colleagues improve their colleagues’ papers to a great extent. Such people’s CV’s don’t adequately reflect their contribution to the discipline, a problem which the proposal just suggested would go some way to fixing.)

Of course, there are issues (perhaps most notably concerning anonymity), just as there are issues with the Georgist proposal. This is a first word and not a last word. But the idea seems so very promising to me that I think it should be something we should seriously consider. And that means, scaling up, that I think the Georgist proposal is also worth our attention.


Reasonable people can and (hopefully) will disagree with much of this. Fair enough. You could even think the whole project is wrongheaded. But at least it’s possible, and given the current flaws of out institutions, flaws that make us all suffer, we should look at all the possibilities there are for improving things in light of our values, even if they’re not in line with our pre-existing ideological commitments.

It wouldn’t be overegging things too much to say that reading this book and thinking through and writing down these thoughts had a big effect on me: it made me think, for probably the first time, that the task of social organization wasn’t one in which the best I could hope for was rearguard action, wasn’t just stemming the flow of the Amazons and lawyers and Ivy Leagues and triple barreled central London literary agents. In short, it made me think that a world beyond generalized capitalist realism was possible, and that for me was a valuable and happy thought to think.


(I wrote a follow-up considering how the ideas developed here could apply to literary publishing here.)