Abstract
Jim Stanford’s Economics for Everyone: A Short Guide to the Economics of Capitalism is a wonderful book. Clearly written and highly accessible, it provides an excellent introduction to the capitalist economy, from a radical perspective.
The book began life as a guide to economics for trade unionists, and it is refreshingly free of the unrealistic abstractions that characterise mainstream economics textbooks, but without ‘dumbing down’. Throughout, the focus is on demystifying the economy, which Stanford views as fundamentally socially embedded, experienced by everyone in the normal course of their everyday lives, and therefore amenable to understanding without the need for arcane, expert knowledge.
In keeping with this, Economics for Everyone is infused with a critique of orthodox economic thought which, according to Stanford, presents itself as objective and scientific, yet by simultaneously sanctioning privilege, inequality and exploitation, is inherently political. In contrast to mainstream economics, Stanford draws upon a range of heterodox traditions (Marxist, institutionalist, Keynesian and feminist) to construct an approach to political economy focused on the conditions that lead to the production of a surplus, and on how and to whom it is distributed.
The book adopts a broadly historical materialist perspective whereby human labour, and the conditions under which it occurs, are at the centre of economic analysis. For Stanford, like Marx, only human labour produces value, and this analytical lens allows the book to frame people’s everyday experiences of work, paid and unpaid, as constitutive of economic activity. Stanford therefore moves well beyond the orthodox economic focus on markets and prices, although a good understanding of these mechanisms is also provided.
In the book’s first section, Stanford introduces some basic tools of economic analysis. The economy, he explains, is constituted by ‘all the work that human beings perform in order to produce the things we need and use in our lives’, and the conditions under which such work is performed. Unlike most mainstream textbooks, he recognises a variety of approaches to understanding the economy and the way the dominant neoclassical approach, by focusing simply upon models of individual decision-making, tends to obscure the historical specificity of capitalism.
The second section examines the underlying dynamics of capitalist economies. Stanford outlines the class relations between wage labourers and the owners of capital that give rise to profit-oriented production under capitalism. Very usefully, Stanford advocates the use of unit labour costs as the key metric for understanding the relationships between capital and labour, due to its expression of relative compensation, work intensity and productive efficiency. Later in the book he uses this framework to show that the distribution of the economic surplus depends upon political and economic power rather than just the impersonal ‘market forces’ as understood by mainstream economists. Moreover, Stanford moves his analysis beyond the spheres of markets and firms, exploring how the household is an economic unit that is crucial to both social and economic reproduction.
In the third section, Stanford outlines some of the more systemic features of capitalism. Competition between profit-oriented firms is posited as a key dynamic. Yet Stanford also recognises that the model of perfect competition favoured by orthodox economists offers an unrealistic description of actually existing markets, which are characterised by large oligopolistic corporations with significant market power that benefit from economies of scale. Stanford argues that competition is responsible for many of the socially and environmentally destructive elements of capitalism, as well as its more innovative tendencies. There is a chapter on investment which, following Keynes, Stanford views as the key determinant of employment and growth, but which can be highly volatile.
In the fourth section, Stanford shifts the focus to money, crisis, states and globalisation. Stanford recognises that the centrality of money to capitalism also underpins the system’s fragility. Under neoliberalism, notes Stanford, there has been a growth in the ratio of financial to asset-backed wealth, as well as an integration of everyday life with finance (via pension funds for example), which created the preconditions for the global financial crisis and magnified its effects on workers. Central banks are also examined, as is their contemporary remit of inflation targeting. Refreshingly, Stanford recognises the inherently political nature of central banks and monetary policy. Indeed, he argues that the trend under neoliberalism toward central bank independence is a deliberately undemocratic arrangement, quarantining monetary policy from democratic processes. This leads into a discussion of the economic role of states more generally, where Stanford demonstrates the centrality of the state to capitalist economies and the undemocratic nature of capitalist economies that accord disproportionate political power to the relatively few who own and control productive resources. The focus on the state is extended to a discussion of globalisation, which, Stanford points out, is both contested in its effects and more limited in its extent than is usually acknowledged. This leads into the recognition of uneven development, which Stanford attributes to differences in political power, not simply the relative scarcity of resources or corruption.
Stanford concludes the book with a ‘report card’ on capitalism. He judges it a dynamic system with enormous potential for innovation, but this sits alongside perennial inequality, insecurity, and inbuilt tendencies to ecological destruction. Stanford therefore examines prospects for both changing and replacing capitalism. He argues that workers, acting collectively, do have the power to influence states, repress private profit-oriented interests and quarantine working-class living standards from capitalist markets. However, Stanford also argues that a future beyond capitalism is realistic. He recognises the problems of actually existing socialist economies, but also advocates learning from successful experiments in non-capitalist organisation. This represents the culmination of the book’s focus upon political activism – that only through mobilisation can economic processes be shaped for the better.
Overall, while one might quibble with some of its interpretations or choices of emphasis, Economics for Everyone does a fine job in introducing those with no specialist training in economics to the key dynamics of capitalism. It is suitable for anyone in search of a critical introduction to the capitalist economy.