Reconceptualizing Political Economy with Nitzan and Bichler’s Capital as Power

Submission by Joel Davis

After so many decades of consistent losing, the American Right has been conditioned into a defensive posture, largely concerning itself with apologetics for the classically liberal principles they perceive progressives to be violating. Many of the core tenets of classical liberalism and therefore contemporary conservatism express themselves in the logic of neoclassical economics (preserved by the ‘Chicago School’), and so the default conservative position is to defend this logic from Keynesian and Marxist critique. Yet in recent years the Right is finding its principled defense of neoclassical economics increasingly self-limiting – from the emergence of Woke Capital to the destructive consequences of neoliberal deindustrialization – the Reaganite talking points just don’t work anymore. This shift is being brought into focus by the radically transforming coalition of interests behind the Trump presidency; working class and hispanic voters are shifting to the GOP whilst the network of neoliberal special interest groups who were happy to hedge their bets as usual for Romney vs. Obama are consolidating behind the Democrats.

Whilst many on the Right have acknowledged the need to embrace the moment and purge the party of neoconservatives, and many have called for a relaxing of free market ideology in order to further elicit the support of the working class, the Right is still lacking a rigorous critique and replacement of previous paradigms in economic thought capable of articulating the theoretical problems with not merely neoclassical but Keynesian and Marxist approaches alike. This is badly needed in order to lay down the framework for constructing new policy, continuing to flip the socially conservative working class and racial minority vote, and identifying the strategic position we find ourselves in with respect to an increasingly woke capitalist elite which is driving the deindustrialization and dissolution of the United States into a Globalist New World Order.

Despite their ostensibly left-leaning tendencies, I contend Nitzan and Bichler’s Capital as Power (freely available on their website) provides this very framework. In their exposition of the entire discipline of economics’ failure to properly model (or even attempt to model) the power dynamics of capitalism, they reveal the entire exercise of economics to be an ideological concealment of Big Finance’s relation to industry, which they in turn expose as fundamentally one of sabotage and parasitism. However, in order to explain the positive aspects of their system we must start as they do, by first walking through their critique of the dominant economic paradigms which precede them.

In contemporary mainstream economic thinking, the market is still largely conceptualized as a set of trends which emerge from the aggregation of isolated microeconomic interactions between rational participants in the self-interested pursuit of marginal utility. Despite 20th Century economics generating macroeconomic (Keynesian) approaches to address so called “market failures” at the level of State policy, these approaches rarely call the fundamental logic and presuppositions of microeconomics into question, instead viewing divergences from the microeconomic model as ‘distortions’. Nitzan and Bichler point out that it is rather convienient for dogmatic adherents to the neoclassical orthodoxy to simply write off observed divergences from their model as mere distortions, rather than seeing fit to call into question the neoclassical model of the market itself. For Nitzan and Bichler, this impotence of macroeconomics to fundamentally challenge and replace microeconomics completely derives from the formatively liberal presupposition of economics as a discipline in general – the arbitrary stratification of economics from politics, as though there is some non-political logic governing the economic domain.

For Nitzan and Bichler, there is no “free market” where individual rational agents pursue marginal utility completely independentally of their pursuit of political power. Once one becomes a billionaire for example, it is essentially impossible for such an individual to personally consume at a magnitude equivalent to the maximum degree such wealth could in principle facilitate, so what else but power could possibly motivate the billionaire class to continue to increase their wealth? This basic observation collapses economics back into political economy and forces us to recognize much of the financial system’s allocation of capital is motivated by the pursuit of power not “utility”, and this means that it is motivated by differential rather than “absolute” returns on investment. Imagine you are an investment firm, would you rather earn 10% in a climate where the average returns are 12%, or earn 5% in a climate where average returns are 1%? The logic of utility suggests you prefer the first scenario, as it enables you to consume twice as much in absolute terms. However, the logic of power accumulation however suggests you would prefer the second scenario, as you are now in a much stronger position relative to your competitors.

Perhaps in the 19th Century when these theories were first developed it was far easier to believe that markets were mere amalgums of individual choices in the rational pursuit of ‘utility’, but it only becomes clearer by the day that pretty much every key industry is oligopolistic in nature. Conservatives are of course starting to wake up to this reality as their liberal assumptions are being short-circuited by Big Tech censorship , “the market” is powerless against oligarchies because oligarchies are not merely economic phenomena, they are fundamentally political. Does Google really care about serving consumers on the free market to maximize profits, or does Google care about monopolising control of information for the purposes of political power? Nitzan and Bichler’s theory demonstrates this to not merely be a ‘distortion’ of the market, but the capitalist mode of power in action.

In their methodical break down of the inconsistencies of mainstream economic models, Nitzan and Bichler don’t pull any punches in attacking status of mainstream economics as a “science”. In their view, it is nothing but a form of ideology functioning as an apologetics and concealment of the process which the ruling oligarchy thinks of itself and employs this self-conception to shape society. They identify the key ontological failing of both the neoclassical grounding of mainstream economics and Marxism as the reified postulation of “transcendent and unobservable entities”, for mainstream economics this fundamental transcendent entity is the util, for Marxism it is abstract labor. These notions are epistemologically dysfunctional and empirically unobservable, they are inherently subjective, abstract, intangible and immeasurable. Mainstream economics procedes to privilege the arbitrary reality of this illusory social world built out of metaphysical atoms of “utility” and imposes models derived from these flawed presuppositions over the observable world, which is then seen as ridden with these afforementioned ‘distortions’ rather than falsifications. This creates a bizarre fantasy of a microeconomic “reality” of rational utility maximizers and a parallel world tainted by said distortions where empirical observations violate the model. The irrational persistance of this microeconomic model as the foundation of the market is nothing but liberal ideology concealing the agency of the capitalist elite.

Additionally, Nitzan and Bichler reveal a circular logic inherent to the method by which empirical analysis is attempted, where no mechanism is given for the translation of these mystical utils into the prices of which the data set is composed. Instead, certain kinds of prices (the price of ‘capital goods’) are posited as the basis of all other prices (the sale of goods in general) to derive a metaphysical basis upon which the true value of something can be assigned, a value which is both the basis of prices and yet somehow distorted by prices. The refutation of comparing prices with prices to describe anything other than prices enables Nitzan and Bichler to construct a purely immanent theoretical analysis of political economy. Rather than positing some transcendent essence subjacent to and yet generative of the reality prices imperfectly represent, prices are concieved in terms of what they do – they assign a homogeneous numerical value to the exchange of the ability to tell someone what to do for being told what to do, so what is exchanged within the price system is fundamentally quantified units of power. They go on to define power as the “confidence in obedience” which expresses “the certainty of the rulers in the submissiveness of the ruled”, and so they concieve of the price system as the quantification of confidence in obedience – the financialization of power.

This has massive implications for examining the relationship of Capital and the State, particularly when taking into consideration the amount of influence privately funded foundations have over the political system through the network of think-tanks, NGOs and lobbyists they support. Political power is expensive (lobbying alone is a multi-billion dollar per year industry in the US), and so preventing potential competitors from generating sufficient capital to invest in political lobbying hostile to the interests of presently dominant investor coalitions is highly incentivized. After Nitzan and Bichler outline their excellent critique of both mainstream and Marxist economic theory (which they destroy on both epistemological and empirical grounds), they name this dominant investor coalition ‘Dominant Capital’ and develop a unique macroeconomic model built upon the presupposition that the rational calculation that drives the actions of Dominant Capital is the pursuit of differential returns on investment, a model that they apply empirically to great success preliminarily in the book itself, and have continued as an active research program ever since (which you can follow here).

It is beyond the scope of Capital as Power to explore in great depth the so called ‘cultural’ aspects of this in great detail as they are primarily focused upon critiquing other schools of thought in political economy and demonstrating their theory’s superiority in modelling financial trends. However, the deindustrialization and financialization of the US economy (and the rest of the Anglosphere) can be retrospectively modelled as a method of centralizing the political donor class, whereby local industry is increasingly disabled from forming donor coalitions capable of rivalling the dominant coalition of investors. The general proliferation of victimary political identities is nothing but a natural extension of this logic of power centralization, but this is a topic for another day.

A key influence upon Capital as Power is Veblen’s notion of the industry-business distinction into their framework in which ‘industry’ in defined as essentially all actual productive activity in contrast with ‘business’ which is conceived of as the distributive imposition of ownership claims upon productive activity. For Veblen, production is itself a necessarily social process communicated qualitatively between participants within which it is inherently impossible to ‘objectively’ quantify the value of individual contributions. He makes this argument by pointing out that the total knowledge and antecedent production necessary to carry out industrial actions is too complex to reduce to a uniform calculation. For example, imagining something simple like the manufacture of a smartphone requires the presupposed knowledge of various constitutive practices like the manufacture of factories, plastic, batteries and functioning electrical grids which themselves presuppose various scientific theories and educational institutions which perpetuate them, which in turn presuppose older philosophical theories and so on. Once you start trying to integrate every vector by which you can construct lineages in this way, it soon becomes incredibly obvious that every industrial activity is fundamentally indebted to the entire socio-historical context it is embedded within in an uncalcuably complex way.

Thinking about the conversion of production into distribution in the way Veblen lays out forces the realization that prices cannot reflect the so called “real” value of a product, prices are a pure function of distribution and therefore they are a means of arbitrating control over production. As profit margins are optimized when total productive output is kept lower than its potential maximum due to the stronger negotiating position enabled by limiting and/or monopolizing supply, this means for Veblen that the fundamental relation of business to industry is one of sabotage. Rather than driving innovation and productivity, business enterprise is often rewarded by limiting it as firms are not mere passive actors who receive price information from the invisible hand of the free market, but often flex their strategic capacity to actively inflate prices. This price generating autonomy and the indeterminacy that it produces further undercuts mainstream economic logic, as the rate of return for investors reflects their capacity to sabotage production to their strategic advantage. This is in stark difference to how mainstream (and Marxist) theorists consider prices to be fundamentally reflective of a material quantity of actual productive output. Capital as Power builds upon this conception of business as sabotage by extending it into the financial domain, by revealing the drive to differentially capitalize on investment to not only incentivize antagonism toward employees, contractors and customers, but also the sabotage of the average rate of return for competitor investors across the entire economy.

Nitzan and Bichler’s account of the rise of capitalism, and its functioning as a mode of power that structures society also draws inspiration from the work of Lewis Mumford, particularly by incorporating his concept the megamachine. Mumford’s megamachines are composed of the social technologies which fundamentally drive civilizations, with our conventional notion of a ‘machine’ merely describing a secondary output of these social megamachines through which machinically coordinated institutions in turn transmit and apply technological knowledge to dominate material reality. The fundamental purpose and function of these megamachines is the subordination of creative production to a centralized accumulation of power, and Nitzan and Bichlerthink of capitalism as history’s most powerful megamachine to date. Driven primarily by the price system itself, capitalists are primarily motivated to struggle for power and thus strategic control over creative production. This struggle is not to make good products or invent new technologies (as capitalist apologists generally claim), but to sabotage all creative production which violates the logic of differentially accumulating their power. The only innovation rewarded is that which is able to be captured by centralized ownership and therefore useful to the capitalist megamachine’s telos of power centralization. In this sense innovation is largely in spite of rather than because of Capitalism, which is why state-directed industrial policy is always critical to economic development.

This notion that accumulating capital has become a fundamental means by which power is accumulated in modern society is made explicit by considering the social function of money – to quantify, homogenize and render exchangeable the field of imperatives constitutive of social power. Whilst of course the State’s legal system and security apparatus in conjunction with its capacity to issue currency gives it the capacity to not just found but also intervene in this process, the capacity for Capital to form institutions which intervene in the State’s internal processes is itself immense. So, rather than conceptualizing Capital and the State as distinct antagonistic entities, Nitzan and Bicher model the center of these interrelated processes of both accumulation and State intervention in the process of accumulation as a coalition they christen Dominant Capital. In keeping with their rejection of the arbitrary division between political science and economics they model capitalist government and capitalist corporations existing in a state of interdependency, with both operating according the logic of the differential accumulation of power. I do find this overly cynical view of the State to be my least favourite aspect of their theory, as States do have moral, cultural and geostrategic projects that often run in contradiction to the logic of Capital, a contradiction I believe we need to emphasize if we are to resist the total liquidation of a qualitative political identity outside of the brutality of differential power accumulation through finance.

The key theoretical takeaway from Nitzan and Bichler though, is to stop grounding prices in reified units outside of the constitutive social process which generate them, to stop viewing capital in material terms (as if it is based in the combined value of “capital goods” and labour power), but in the socio-symbolic terms of finance itself. To model this Nitzan and Bichler introduce the concept of differential accumulation regimes, of which there are two: the depth regime and the breadth regime. Both of which allow dominant capital to engage in differential accumulation by alternate means. This is due to the oscillation between these two regimes which Nitzan and Bichler see as the key macroeconomic pattern of modern history. The first accumulation regime is the breadth regime: where business operates by expanding the size of its organization relative to its competitors. This mode of capital accumulation is fundamentally driven by state investment, corporate amalgamation and a proletarianization of a subset of the population, it is the less overtly hostile and conflict driven aspect of business focused more upon the monopolization of industry. By contrast in the depth regime, dominant capital operates more by consolidating the advantages gained from monopolization and sabotages smaller competitors and the labor market through the pursuit of stagflationary economic conditions through increasing prices and flexing regulatory influence (this of course sounds like a pretty good description of what these Covid-19 lockdowns are doing to the middle and working classes).

As described earlier dominant capital is pursuing differential accumulation, and it can beat the average by either increasing its amount of employees faster, or by increasing its per employee earnings, or a mix of both. The former is the breadth regime and the latter the depth regime, these two regimes can be further subdivided into internal and external modes. In the breath regime external depth involves the hiring of new employees and increasing the size and capacity of the business as a consequence. Internal breadth involves merger and acquisitions, no new capacity is added by instead power is merely shifted between investors. This approach is of greater benefit to dominant capital, as with external growth comes the risk of general gains in productivity and creativity escaping the control of dominant capital and thus reducing its differential power. Amalgations enable dominant capital to grow via the centralization of pre-existing capital and reduces the risk of competitor growth, it also allows the risk of investing in actual equipment, plant, R&D and labour to be taken on by up-and-coming competitors who can just be amalgamated later once success has been demonstrably secured.

Internal depth operates via cost cutting which reduces production cost below the average, and external depth via stagflationary price increases despite productive stagnation. An interesting implication of this is that it refutes the notion that Capitalism is “hooked on economic growth”, a notion common to mainstream economics and Marxists alike. However, dominant capital can and will grow its slice of the pie even if it means reducing the total size of said pie, a key notion to ponder in consideration of geopolitical strategy. We are often told that the lesson of the 20th Century is that Capitalism is the most competitive economic system, but if systematically sabotaging the industrial capacity of its host country is the fundamental mechanism by which it operates, it massively problematizes the neoliberal consensus that State-led economic projects will be outcompeted by the “private sector”, in fact it is almost certainly the case that this neoliberal consensus is itself a mode of capitalist sabotage (which is why since its adoption our industry has been gutted and exported to China, and the illusion of continued “growth” only remains due to financialization).

[From Capital as Power, page 317]

[From Capital as Power, page 318]

The graph of aggregate concentration depicts the steady growth of dominant capital. Whereas in the 1950s, the top 100 corporations, which are used to represent dominant capital in this context, possessed “40 per cent of all market capitalization”, this had increased to by the early 2000s to 60 per cent. There was an even larger increase in the  “aggregate concentration of net profit”  With dominant capital growing to 53 percent today from the mere 23 percent in the 50s. Bichler and Nitzan still think this undersells the real scope of Dominant Capital’s growth however, and give their own differential measure that shows that a typical top 100 dominant capital corporation was 31,325 times bigger than the average American firm, a staggering nineteenfold surge from the 50s where it was only 1,667 times the size of the average. 

Mainstream economics views markets as mere composites of external breadth (investing in “capital goods”, R&D and labor) and internal depth (cost-cutting for efficiency gains), for Nitzan and Bichler this is why their models are macroeconomically useless, they’re completely missing the mechanisms of amalgamation and stagflation, the mechanisms they argue are most essential to an analysis of Capitalism able to actually predict reality. This claim they back up with both empirical data and an open and live invitation to empirically falsify their theoretical framework, a challenge all other economic schools try to get their excuse-making out front of in advance.

All in all, Capital as Power has the effect of wiping the slate clean in so far as political economy is concerned and offering a radically new way to conceptualize its dynamics in order to begin to think genuinely new solutions to industrial stagnation and decline outside of the limitations of mainstream discourse. An obvious conclusion to draw however is that without a serious subordination of the strategic logic of capitalist sabotage incentivized and facilitated by the financialization of power within the liberal paradigm of governance, protecting our middle and working classes and the industrial strength of our society as a whole is impossible. This kind of analysis is desperately needed by the Right, liberal paradigms of thought such as mainstream economics were powerless to protect us from the globalist liquidation of our civilization, we need to stop defending them and recognize the inescapable centrality of the state to industrial processes. If we fail to do this, we will continue to sleepwalk into subversion and sabotage by a capitalist elite which only grows increasingly disloyal and hostile to our nation as a whole.

4 Comments Add yours

  1. Русский Человек says:

    You are linking .pdf files in your images btw, so they don’t show in the article.
    Either make screenshots of the pages and link them in the article directly or use

    to cite a .pdf:


    1. Русский Человек says:

      Well, at least now I know wordpress accepts &lthtml&gt tags.
      Here is the proper reference to &ltblockquote&gt tag.


      1. Русский Человек says:

        Well, fuck wordpress.


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