Capitalism is a frustrating and often misleading word. It tends to summon to mind a 19th century power struggle between owners of capital – factories and machines – and those who owned nothing more than their own labour.
But that is not really the kind of world we live in anymore. Capital is longer necessarily something that will kill you if it falls on you. Indeed, some of the most valuable forms of capital in the world today are actually intangible things like algorithms, brands or the agglomeration of skills and experience in an individual company.
And those with economic power no longer need own much capital. Some employees (think of chief executives or senior financial traders in the City of London) are far more influential than the nominal owners of the firm’s capital, the dispersed shareholder register.
As the writer John Kay has argued “modern market economy” would be more useful description of the kind of society in which most of us in the West live than “capitalist”.
Yet the word capitalism has stuck. It’s unlikely a publisher with an eye on the mass market would commission a book entitled “50 Modern Market Economic Ideas You Really Need to Know".
So the next best thing is to have a book called “50 Capitalism Ideas You Really Need to Know” written by someone like Jonathan Portes, a senior research fellow at the National Institute of Economic and Social Research, who is smart and sophisticated enough to work around the problematic term.
As well as a thorough mini essay on what capitalism is – and isn’t – Portes marches boldly into a mountain range of towering topics, stretching from “money”, to “globalisation”, to “equality”, to “secular stagnation”. And, aside from one unfortunately mangled description of banks’ regulatory capital buffers, he does it all with admirable clarity and breadth of learning - and without sacrificing any accuracy on the altar of accessibility. The chapters on immigration and unemployment – two of Portes specialist subjects – are very good.
Each short thematic chapter, in this easy-on-the-eye edition from Quercus, is accompanied with a short timeline and lively explanatory boxes, sometimes drawing on the author’s own experiences to make a point. One vignette informs us that Portes joined the Labour Party in 1983, during its march to electoral annihilation on a hard left manifesto under Michael Foot.
The many Conservative MPs who have been upbraided by Portes on Twitter for their sloppy use of statistics and tendentious economic inferences will probably say that biographical detail explains a lot. Yet what actually comes through in these essays is how un-extreme Portes is on economics and the big debates of political economy. He exercises judgement, yet always follows the evidence.
Though familiar with most of the themes in the book, I still learned many interesting factual nuggets, such as that the Bank of England’s £20 notes are not legal tender in Scotland. Nor did I know that a “Phoebus” cartel of US light bulb manufacturers in the 1930s colluded to ensure none of their products lasted longer than 1,000 hours. Those without any grounding in economics – but who wish to know more about this powerful force of “capitalism” - will find Portes’ book even more illuminating.
50 Capitalism Ideas You Really Need to Know. Jonathan Portes, Quercus, £12.99
