Where history is a better guide to the future is on the nature of change. It reminds us that we are a stubborn species: one that is deeply resistant to making profound changes in our behavior and habits, even when it is clear that we need to do so. But it also reveals that when change is forced upon us we are astonishingly versatile. We are able to quickly adapt to new, often very different ways of doing and thinking about things and in a short time become as habituated to them as we were to those that preceded them. This being so, while automation and AI have made it possible for us to embrace a profoundly different future, it is unlikely that it will be the catalyst that causes the dramatic changes in “social customs and economic practices” that Keynes envisaged. Far more likely catalysts take the form of a rapidly changing climate, like that which spurred the invention of agriculture; anger ignited by systematic inequalities like those that stirred the Russian revolution; or perhaps even a viral pandemic that exposes the obsolescence of our economic institutions and working culture, causing us to ask what jobs are truly valuable and question why we are content to let our markets reward those in often pointless or parasitic roles so much more than those we recognize as essential.

The principal purpose, however, has been to loosen the claw-like grasp that scarcity economics has held over our working lives, and to diminish our corresponding and unsustainable preoccupation with economic growth. For by recognizing that many of the core assumptions that underwrite our economic institutions are an artifact of the agricultural revolution, amplified by our migration into cities, frees us to imagine a whole range of new, more sustainable possible futures for ourselves, and rise to the challenge of harnessing our restless energy, purposefulness, and creativity to shaping our destiny.

Leslie Hannah, an eminent business historian, has shown how the ‘rationalisation’ of industry, which was favoured by the British Government (represented by the Bank of England), set the stage for the new ‘corporate economy’ which would characterise Britain for decades. The 1920s saw the creation by merger of ICI (chemicals), the Distillers Company (Scotch whisky) and Unilever (soap and margarine). A similar wave of mergers in Germany established IG Farben and Vereinigte Stahlwerke as the dominant chemical and steel producers respectively. (Both these companies were dissolved by the victorious Allies in 1945.)

PART 7: Capitals in the Twenty-First Century

28: Capital as a Service

“And it would be foolish to think that, if one went out to buy the quantities of capital and labour that Apple purchases, one would be able to produce iPhones and MacBooks – any more than one could do so by purchasing appropriate quantities of silicon and glass. The ingredients list is not the recipe. Thomas Thwaites laboriously demonstrated the fallacy of this mechanistic analysis of production through his efforts to make a far simpler item. Capital and labour, silicon and glass: all these factors of production are necessary but no physical description is ever sufficient, or even close to sufficient.

There are a number of models, most of them ignored for decades, in which the corporate sector provides a stabilising function, insuring the working class against fluctuations in the business cycle, rather than expecting them to soak up the volatility.

The intriguing thing is that Simon and Galbraith didn’t write polemics to the effect that this was how corporations should behave — they just described what was in front of them at the time. Before Milton Friedman’s essay, lots of people assumed that this was just naturally the way things would tend. Without the Friedman fiction by, without very great re-engineering of the systems of corporate finance, the industrial economy might have just gone on and developed into a technostructure.

Maybe they were right? It would certainly be good if they were, because that might indicate a much easier path to defuse the immediate source of crisis. If the problem with the modern corporation is the result of the capitalist counter-revolution against the managerial class, we just need to change the terms of the battle.