Although I earned a degree in agricultural economics from the University
of California, Berkeley, I never could bring myself to accept the
ideological framework of conventional economics. Early on I noticed
that the agricultural system was consuming ten times more energy than it
was producing in the form of edible food. I looked more deeply into the
environmental, social, and economic costs of the current agricultural
system. These investigations finally led to my first book, "Farming
Profit in a Hungry World" (1977). In this book, I showed how the
profit-oriented agricultural system created hunger, pollution, serious
public health consequences, and environmental disruption, while throwing
millions of people off the land.
I also had a strong interest in the history of economic thought, which
led me to look into the historical evolution of the agricultural system
through the lens of the major representatives of classical political
economy. These economists, who wrote during a period that ranged from
the late 17th century through the middle of the 19th century, lavished
praise on free and unfettered markets in their theoretical works. In
their more policy-oriented writings -- letters, diaries, and more
policy-oriented works -- they promoted the active use of the state to
apply extra-market forces in the interest of capitalists to the
detriment of others. In particular, I looked at the fairly universal
call of these political economists to undermine relatively
self-sufficient small farmers to transform them into wage workers. This
study led me to write "Classical Political Economy, Primitive
Accumulation and the Social Division of Labor" (1983).
A central theme of this book was the creation of a social division of
labor -- the partitioning of the economy into separate commodity
producing units. I then began to look at what light Karl Marx could
throw upon this subject. Reading Marx in this light made me realize
that most of his readers missed what I considered to be very important
to understanding his work. These researches led to my book, "Karl
Marx's Crisis Theory: Labor, Scarcity and Fictitious Capitalo (1987).
I found that Marx sometimes wrote in order to influence contemporary
political conditions. Failing to see that element of Marx's work,
modern readers generally are inclined to read his writings as if they
were timeless truths. For example, his famous articles on India argued
that England was promoting progress in England, but Marx knew little
about England at the time. Instead, he was trying to undercut the
influence of Henry Carey at the "New York Tribuneo, where Marx wrote.
I also found that scarcity was important to Marx, but he obscured this
aspect of his work within the category of the organic composition of
capital. Within this perspective, Marx's crisis theory was far more
sophisticated than more readers had realized. For Marx, subjective
valuations caused market prices to violently oscillate with the mood
about the market, preventing prices from guiding the economy in an
appropriate manner. Crises were required in order to set the economy
right again, although the violence of the cure would eventually cause
the system to collapse.
My study of Marx's work on constant capital brought me back to my work
in graduate school where I was concerned with the irrationality of
investment in long lived capital goods. Since a durable capital good is
an investment in the future and since the future is unknown, rationality
in investment can only occur by accident. Thinking about markets in
this light led me to turn to John Maynard Keynes. I found that while
Keynes was interested in investment in capital goods, he entirely
overlooked the decision to replace obsolete capital goods. The result
of this research was "Keynes, Investment Theory and the Economic
Slowdown: The Role of Replacement Investment and q-Ratios" (1989).
book showed that the neglect of replacement investment caused a serious
misreading of Keynes' work.
One consequence of this study was that I realized that crises were a
necessary component of capitalist economies within the context of
Keynes's analysis, just as was the case within Marx's. In particular, a
strong economy is not conducive to replacement investment. As a result,
without crises, an economy would tend to run down as its capital stock
ages. In addition, an expanding economy freed from crises would create
insufficient incentives for business to become more efficient. In
short, efforts to maintain economic health actually cause the
enfeeblement of the economy. Capitalism needs crises.
These crises, however, can destroy capitalism, since the same crises
that cause waves of replacement investment also destroy the value of
existing capital. This conclusion is similar to Marx's crisis theory
that I discussed in my Marx book.
My next book, "Information, Social Relations, and the Economics of High
Technology" (1991), was a transitional project. As the title
unlike my earlier studies, which tended to look at traditional sectors
of the economy -- agriculture and manufacturing -- I was becoming
interested in the implications of high technology. The main finding of
this book is that markets are absolutely inappropriate for handling
information. Since markets supposedly set price near to the cost of
production of the next additional unit, and since information is almost
costless to reproduce, competitive prices of information goods will tend
I then returned to the work of the Keynes book, trying to apply it to
the postwar U.S. economy in "The Pathology of the U.S. Economy: The
Costs of a Low Wage System" (1993). The main innovation of the book
to show how high wages, like crises, could force firms to become more
efficient. The main theme of the book was that capitalism was a
conflictive, contradictory system. Any effort to make a market economy
run smoothly will in the end only create new problems.
I then decided to take a longer look at the US economy in what became
"The End of Economics" (1996). I realized that I had missed a
consideration in some of my earlier work. The same cost structure that
made markets inapplicable to information was approximated in
manufacturing and railroads. In other words, the cost of producing or
hauling another pound of steel is relatively small. The major expenses
in such industries are in the heavy investment in fixed capital.
In this investigation, I realized giant corporations had an incentive to
enjoy cost savings from introducing new technologies. This strategy
would threaten to destroy the values of fixed capital and to create a
response from competitors. Typically, these investments increase the
scale of production. As output increases, prices collapse toward the
cost of producing another unit. The consequence is bankruptcy for the
majority of participants.
Just as in the case of the classical political economists discussing the
rural sector, the major economists of the last nineteenth century wrote
elaborate treatises about the perfection of free markets at the same
time that they strongly recommended that the corporations be permitted
to create trusts, cartels or monopolies. Indeed, beginning in the late
nineteenth century, a great merger wave consolidated industry after
industry. Over the next decades, competitive forces weakened until the
Great Depression broke out.
I realized that in the US economy trust in the market pulsated. For a
period, economic forces would get a free hand until the inevitable
crisis occurred, then popular pressure would demand the exercise of
control over the market.
Next, I returned to the subject of information and high technology in
"Class Warfare in the Information Age" (1998). This book went
detail about how markets were inappropriate for handling information. A
more fundamental theme was that the information economy would be used
for monitoring and control than to provide goods and services that would
improve the people's lives.
Many of the ideas of the previous books came together in "The Natural
Instability of Markets: Expectations, Increasing Returns and the
Collapse of Markets" (1999). On a more theoretical level, I tried
show why market are fundamentally unstable because prices tend to move
toward the cost of producing one more unit of output. As I mentioned
before, competition in both information and manufacturing businesses
cause deflationary pressures that tend toward crisis. I showed that
high labor costs as well as high resource costs as a result of
regulation both tend to produce offsetting pressures that reduce the
tendency toward crisis.
On a deeper level, this book calls the conception of competition into
question. I show that intense competition is equivalent to a
depression, yet most economists believe that competition of good and
depressions are bad. In order to get a better fix on competition, I
appealed to Stephen Gould's vision of biological competition.
This argument of book is more complex and almost impossible for me to
sum up in a couple of paragraphs. In short, it is probably my favorite
book to date.
My next project was "Transcending the Economy: On the Potential of
Passionate Labor and the Wastes of the Market" (2000). This book is
very different from anything else that I attempted. The underlying
proposition is that the current economic system has so many wastes that
moving to another sort of economy does not present much of a risk. The
first part of the book explores the many huge wastes in the economy
today. The second part explores the potential of passionate labor --
meaning the sort of feats that people can accomplish when they have the
opportunity to work on something that they love.
At the same time, I had been working for almost 15 years on "The
Invention of Capitalism: The Secret History of Primitive Accumulation".
This book began as a simple rewrite of my earlier book on classical
political economy, but as time went on the book took on a life of its
own. Although the basic idea remained the same, this version was a vast
improvement over the earlier one.
I now have three project underway. The first, "Steal This Idea: The
Corporate Capture of Creativity" analyzes the destructive nature of
intellectual property, which should appear in Spring 2002. In this
book, I describe how corporate powers have erected a rapacious system of
intellectual property rights to confiscate the benefits of creativity in
science and culture. This system threatens to derail both economic and
scientific progress, while disrupting society and threatening personal
freedom. The natural outcome of this system is a world of excessive
litigation, intrusive violations of privacy, the destruction system of
higher education, interference with scientific research, and a lopsided
distribution of income.
I have also written "The Pathology of the U.S. Economy Revisited: The
Intractable Contradictions of Economic Policy", which began as an update
of an earlier book with the same title, which should appear in late
2001. I had not realized the extent to which I had to revise this
manuscript because of the dramatic changes in the economy in the course
of the 1990s.
The third project is an exploration of two visions of the economic
process -- as a system of creating values and as a process of destroying