Marx, Veblen, and Contemporary Institutional Political Economy: Principles and Unstable Dynamics of Capitalism
This is an important book by an Australian radical institutionalist who believes that capitalism is headed for deep recession and financial instability in the near future that may make it unable to survive. The social structure of accumulation that grew up after World War II-the "neoliberal" state, a deregulated financial system, and a set of world institutions-is so riddled with inherent contradictions that it cannot survive. The author builds on the analyses of capitalism by Karl Marx and Thorstein Veblen, supplemented by his own analysis of the post-World War II efforts to rebuild capital institutions. Marx analyzed the emerging capitalism in which the capitalism of the mid nineteenth century was at its height. Veblen analyzed the capitalism of the first three decades of the twentieth century. He saw things differently, as Marx would have approved, for in Marx's world nothing ever stood still. Everything changed over time, including capitalism, but always retaining the class structure that would ultimately bring a revolution. Marx and Veblen disagreed because each was looking at a changing system. At this point, enter Joseph Schumpeter, whom O'Hara ignores. New capital, new capitalists, new organizations appear while the old capitalists, the old capitalism, the old dominant groups die out. Capitalism is revived in new forms, with new leaders, new labor organizations, new government agencies, new vigor. The economy is quite different from Marx's day, but it is still the capitalism of old, with modifications due to the new. An analogy might be the medieval economy from the eighth to the sixteenth century. Based on feudalism and the manorial economy, it was tom by conflict: between lord and serf, lord and king, town and country; within towns between merchants and craftsman; within guilds between masters and journeymen; and more-yet it lasted for almost a thousand years and gave way only with the rise of capitalism. Will capitalism last a thousand years? O'Hara ignores all this. He analyzes systematically the contributions of institutionalists to the processes at work leading to changing institutions. He cites Gunnar Myrdal's holistic method of circular and cumulative causation: if there is a change in one part of the system other parts will change in response, and feedback effects will occur in other parts of the institutional system. Nicholas Kaldor's Post