The Crisis of Capital:
An Interview with Michael Perelman
By Jon Bailes & Cihan Aksan

State of Nature: You describe the economic policy in the US since the 1970s as a “right-wing revolution”. What is particularly “revolutionary” about it?

Michael Perelman: A revolution occurs when one group of people is able to overthrow the existing institutions. Usually revolutions occur relatively quickly. This one was slower and more methodical. It may have been more effective in achieving its short-term goals than most revolutions, although current events suggest, as my book foretold, eventual outcome will prove bad for all concerned, including the revolutionaries.

SoN: You examine how business leaders oppose any kind of state regulation that could be detrimental to short term profits, even when it would seem beneficial to them in the long term, and also how most economists tow the line of the market without question. Does this imply that they are not interested in the longevity of the market economy, or that they are simply unaware that such short-term objectives are undermining it?

MP: I do not think that many business leaders see the world from a long term perspective. Typically, they worry about the next quarterly report. Some of the business press has a slightly longer term outlook; for example, compare Business Week's sometimes more thoughtful approach relative to the Wall Street Journal editorial page. Economists raised a more interesting question. Economic ideology tells us that in the long run markets work out perfectly, but economists rarely look at long-term processes. One of the problems is that capitalism is relatively new, around 300 years or so, despite the earlier existence of little shoots of capitalism. Great depressions occur around 50 years apart, although more than 70 years have passed since the last great depression. As a result, we do not have many historical examples.

Even if economists had a fuller sample of depressions, their rigid faith in markets would probably prevent them from grappling with deeper processes at work.

SoN: All the requisites for long term growth and stability that you examine, such as higher wages, better education and greater solidarity, would empower the majority. To the extent that politicians and business leaders are aware of these potential benefits, does this not suggest that their primary concern is the disempowerment of the people, even when the consequence is lower productivity and the risk of a recession or even a depression? To put it another way, if rebellion has been reduced to the likes of “counter-productive behaviour on the job, including excessively long lunches and breaks, slow, sloppy workmanship, and sick-leave abuse”, is this still not a victory from a business point of view compared to dealing with well organised unions?

MP: Your question hits the nail on the head. Capitalism entails two separate objectives, over and above the blather about creating a stronger economy or a better society. First, of course, on a more abstract level is the increase in profits. At the same time, human beings enjoy exercising authority, and this exercise can be counterproductive. But, empowering workers, in effect, reduces the status of those in authority. Gulf jets and mega yachts provide some status, but the exercise of power over other people creates a certain type of enjoyment.

In other cases, a short-term perspective plays a role. A boss can probably get a worker to speed up right now with a loud yell or even a threat, but in the long run that sort of management will prove counterproductive.

I just sent a new book manuscript to my publisher, The Invisible Hand Cuffs: How Market Tyranny Stifles the Economy by Stunting Workers, which describes how business and economists pay virtually no attention to work, workers, or working conditions. In terms of economics, the profession has treated the few economists who have investigated such matters harshly. Frank Knight, for example, dismissed such research as sentimentalism.

For economists, work is nothing more than the absence of leisure.

SoN: The concept of class is marginalised in much radical criticism today. To what extent do you feel that class should still be a central concern to social and economic theory?

MP: I believe that human potential is the most important productive asset available to humanity besides the environment. Ignoring matters of justice and humanity, class, which consigns the majority to a life in which most people will be performing mind-numbing work, is destructive even by the criteria of standard economics.

SoN: You say that influence can be more important to business than investment in productivity. Is this not always going to be the paradox of the market economy – that, because it is based on ‘free’ competition, attempting to change the rules to make it less free will always be a tactic for those at the top?

MP: Obviously so, I do not know of any major capitalist who has been a consistent libertarian -- even ignoring social libertarianism, which would relate to moral questions, such as abortion or drug legalization. In fact, I suspect that quite a few major capitalists are social libertarians, but economic libertarianism is something else. While capitalists become irate about government policies that hinder their pursuit of profit, most are delighted with the opportunity for a no-bid contract or wielding the power of regulations or the courts to prevent a competitor from cutting into their profit.

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