Vulture Capitalism demolishes the idea of the ‘free market’ in the corporate age, but has limitations in its analysis of capitalism and how to challenge it, argues Dominic Alexander

The ‘free market’ was supposed to liberate us from the looming ‘serfdom’ of the potentially totalitarian ‘nanny’ state, according to the neoliberals. However, as Grace Blakeley argues in Vulture Capitalism, there’s nothing ‘free’ about the free market. In reality, actually existing capitalist markets are dominated by powerful corporations. Historically, indeed, the putative importance of free trade in the history of capitalism is highly questionable.

Mercantilism, as in the state licensing of monopolies such as the East India Company, was the form capitalism took in eighteen-century Britain. The East India Company’s colonial domination of India, in effect as the state power, allowed for British textile exports to saturate the Indian market, destroying the indigenous craft textile industry and impoverishing Indian artisans, but fuelling the profits of British manufacturers. Rather than the abstract principles of market economics bringing about prosperity, this was political power exercised to engineer wealth for a tiny few at the expense of many millions.

The textile industry was the engine of the industrial revolution, so it was empire and monopoly which led to British capitalism’s emergence as ‘the workshop of the world’. Britain only adopted the principles of free trade once it was in a position to dominate as a result. For the US as well, the mantra of free trade came after a policy of protectionism allowed it to build up its industrial competitiveness. ‘States and markets’ far from being ‘fundamentally different spheres of activity’ have in fact been closely intertwined through the history of capitalism: ‘corporations are political entities’ (p.120).

It follows that capitalism is in no way synonymous with free markets, but instead should be ‘defined by the domination of society by capital’ (p.27). That is, capitalism is inseparable from class and exploitation:

‘Capitalism is, at its core, defined by this divide: the divide between the people who own all the stuff required to produce commodities, and those who are forced to sell their labour power to the capitalists to buy those commodities. The profit of the capitalist comes through the exploitation of the worker – the interests of the two are diametrically opposed’ (p.29).

The central propaganda points of mainstream economics, a highly ideological endeavour, fall apart upon serious inspection. ‘Free markets’ are supposed to deliver optimum outcomes for all; maximally efficient production for the best value possible, alongside the ‘freedom’ of consumers to choose products as they wish. Blakeley annihilates the plausibility of these claims in the course of the book.

Boeing and the power of monopoly

The first case study demonstrating the hollowness of those mainstream claims is the story of Boeing and its 737 Max aeroplane, which, notoriously, suffered two fatal crashes in 2018 and 2019, which killed 346 people in total, and required the whole fleet to be grounded. Blakeley shows how these disasters stemmed directly from the nature of contemporary corporate capitalism. Far from the neoliberal ‘free market’ ensuring efficiency and best value for consumers, the pursuit of profit through shareholder value created an authoritarian management culture which ‘sought to denigrate engineering expertise’ while pushing a ‘radical cost-cutting agenda’ (p.21).

Seeking bigger planes with bigger engines to fly more passengers more cheaply, Boeing avoided the expense of creating and certifying a completely new plane design by changing the existing 737 design until the airframe was dynamically unstable. The software bodge to get round this issue resulted in the ‘world’s first self-hijacking plane’ (p.22). Employees had been warning of problems, with one reported as saying ‘people “will have to die before Boeing will change things”’ (p.23). Meanwhile, the company was a great success for the financial markets: it ‘distributed $24.6 billion dollars in dividends to shareholders – many of which were executives within the company – and bought back $43.4 billion worth of shares’ (p.22). The free market had not worked at all as advertised to produce the best, most efficient outcome, unless of course, that always only meant the greatest possible profits for the capitalists themselves.

Another key element of neoliberal propaganda is shot to pieces in this story. That is the idea that the neoliberal state does not interfere in the markets. Boeing’s disasters should really have destroyed the company, but it had long been an essential part of the USA’s military-industrial complex, and thus it could not be allowed to fail. During the pandemic, the US passed a stimulus package, which included:

‘$17bn worth of loans for businesses deemed “critical” to national security, of which Boeing was one. According to the Washington Post, this national security clause was “crafted largely for the company’s benefit” and came on top of nearly $58bn in loans provided to the wider airline industry – a figure strikingly close to the $60bn demanded by Boeing executives for the airline industry in March 2020’ (p.25).

Boeing’s safety problems have continued, and its financial loses mount; the company recently announcing that it wouldn’t release a financial outlook for the year. Despite all this, it seems very unlikely that it will be allowed to fail.

Planning and competition

The corporate procurement scandals arising from the pandemic in the UK may have habituated us to an aura of corruption around corporate lobbying and government decision making, but Blakeley’s argument is that a systemic relationship has developed, which violates the basic supposition of a ‘free-market’ economy: ‘The pressures of competition are often very far from the minds of the executives running the US’ largest corporations … they’re more concerned with artificially inflating their share prices, lobbying politicians and covering up the latest corporate scandal’ (p.26). This renders null all the neoliberal arguments about competition disciplining large corporations like Boeing: again in 2020, ‘as bond markets began to seize up …, the Fed stepped in to announce that it would purchase up to $20bn in corporate debt – effectively agreeing to guarantee the borrowing of some of the most powerful companies in the world’. Boeing itself was then able to issue $25bn of new bonds, ‘the sixth largest on record at the time’ (p.25).

Competition does still exist in this world of monopoly capitalism, however. For Boeing, the competitor is the European Airbus, similarly enamoured of cost cutting and supported by the EU (p.33). These firms don’t compete on price in the way that classical economic theory assumes, rather ‘the firms compete to keep down their costs – with the effect of making shoddy planes … and putting pressure on suppliers to reduce costs’ (p.26). Another area in which such firms compete, which Blakeley leaves unexplored in Vulture Capitalism, is over investment capital, which is why being too big to fail from the point of view of a major state, like the US, becomes a major advantage to a large corporation. Ultimately, however, the fundamentals of capitalism remain unchanged, as Blakeley goes on to explain; it is the class power of capital over labour that really defines the system.

The purpose of Vulture Capitalism is not merely to explode the myths of neoliberal economic ideology, but to argue further that the dichotomy between ‘free markets’ and ‘economic planning’, conceived of as being led by the state, is a fundamental misconception. Corporations engage in complex long-term planning, as Blakeley illustrated with the case of Boeing, for example. It’s just that they do that purely for the sake of profit, and because many such corporations are too large to be subject to the ‘discipline’ of the market, they can pursue that profit without real regard to utility, in neoclassical terms, or in Boeing’s case, to actual human lives.

The capacity of capitalist firms to engage in ambitious planning is also nothing new, as shown by the example of the Ford company’s factory town Fordlandia in the Brazilian Amazon, built in 1928 (p.38). Neoliberalism did not end this at all:

‘What changed between the post-war period and the neoliberal period wasn’t the presence or absence of planning: what changed was who was doing the planning, and whose interests they were serving’ (p.40).

Planning is limited by the interests of profit making, but also since competition between firms is still ferocious, it is an unpredictable process. An ‘anarchic market mechanism’ still operates, and so ‘capitalism and crisis go hand in hand’ (p.53).

The role of the state

Blakeley doesn’t fall into the trap of idealising the social-democratic post-war era, and emphasises at several points the capitalist nature of the state in both the post-war and the neoliberal era (p.168 and p.190). She notes, nonetheless, that in the post-war period, the working class did have some limited influence over economic policy, and this, together with Keynesian policies that aimed at low unemployment, ‘undermined the authority of capital over labour … [and] undermined the “governability” of society by making it harder to threaten workers with precarity and poverty’ (p.41).

In this view, the main point of neoliberalism was precisely to break the relative influence of labour, and to restore the power of capital over the working class. Having crushed working-class movements in the 1980s, the state then could focus less on managing relations between capital and labour, and more on supporting ‘capital’s relentless pursuit of profit and clearing up after the crises caused by this greed’ (p.41).

Thus we find ourselves in a world where banks and corporations were bailed out in 2008, and again in the pandemic, but public services are ground into the dust. All the while, state spending has grown rather than shrunk, as was ostensibly supposed to happen under neoliberal policy: ‘In the US, state spending as a percentage of GDP is far higher today than it was during the 1970s’ (p.48). In France, during the pandemic, the top companies benefitted from government support, while paying out €34bn to shareholders, and sacking 60,000 workers worldwide. A French report further found that ‘public assistance to the private sector now exceeds the amount paid out in social welfare’ (p.62).

The increasing concentration of capital has created effects which confound the neoclassical understanding of how capitalism is supposed to work. Amazon is a leading example of this. It had lost $6.2bn by 1999, yet its capitalisation was even then $450bn, not turning a profit until 2018. In a section on Softbank and WeWork, Blakeley argues that it is in fact decisions by ‘the banks’ about which companies to lend to actually determine which ones become the most profitable’ (p.135). Blakeley also observes that ‘Amazon survived despite market forces, not because of them. Even today, the structure of the company looks highly irrational: certain areas of Amazon … are highly profitable, while services like Prime make a loss. The market is telling Amazon one thing, but it seems to be doing another’ (p.92).

Profits and politics

Blakeley’s exploration of the self-reinforcing circularity of monopoly capitalism is certainly powerful, but there are some limitations to the perspective. One is that it could give the reader the impression that the problem is simply one of corruption in the nexus between finance institutions, corporations and politics. To be fair, Blakely specifically warns against this direction of thought, emphasising that the ‘fusion of political and economic power’ is natural to the functioning of capitalism and ‘not an aberration resulting from conspiratorial networks or clandestine societies’ (p.54). Rather, our only way to escape the class exploitation and crises of capitalism is ‘through the thorough democratization of our entire economy’ (p.55).

In the discussion of ‘anti-trust’ laws to break up monopolies, Blakeley notes the failure of such laws, in the US particularly, to restrain their growth, due to the fact that ‘competition authorities have consistently failed to act to prevent mergers’ (pp.168-9). However, the argument here effectively reduces the issue to a political problem. This is despite the fact that, as Blakeley acknowledges, the drive towards the concentration of capital is a fundamental tendency in capitalism. This mismatch does point towards a weakness in the analysis since, in fact, anti-monopoly sentiment is not merely a pet grievance of the left, but has always had widespread purchase across politics, particularly in the United States. So why is the political failure so marked?

There is more to the situation than the political influence of the giant corporations. Their power derives from their dominant role in production and profit-making. Nonetheless, despite much reference to Marx, the source of the weakness in the book’s argument is the absence of consideration of some of the other fundamentals of capitalism. To be sure, Blakeley does explicitly ground her analysis in the US Marxist Monthly Review school theory of monopoly capitalism (pp.109-10). This theory has its strengths, but also its problems, because it is underpinned more by Keynesian economics, than by Marx’s theory of value and his analysis of the core dynamics of capitalist production. As a result, there is no real explanation in Vulture Capitalism of why capitalism has been behaving the way it has done for the last half century.

The ruthless dismantling of the social-democratic welfare state, and the relentless attack on workers’ rights and standards of living worldwide, stem not simply from the rise in the concentration of capital, but from the difficulty capital has had since the 1960s in maintaining the rate of profit. The ongoing profitability crisis of capitalism, which erupted again in 2008, and from which there has been no real recovery, has driven the neoliberal stranglehold on economic policy domestically and internationally. The ongoing crisis only reinforces corporate influence, since the mass of profit that giant corporations command goes some way towards balancing the profitability problem and helps to explain their apparently impregnable political influence.

Blakeley does not seem to think that a simple return to the social-democratic past is possible, but does not substantiate why the capitalist class will not countenance such a turn, despite the increasing instability of the system. An analysis which concentrates only on the effects of monopoly power itself, particularly its political influence, is not able to explain fully the nature of these problems.

Related to this, there is another aspect to the development of capitalism that is also left curiously unexplored in Vulture Capitalism, and that is the nature of technological development. This is also part of the systemic drive towards gigantic monopoly firms. As technology has become ever more complex and advanced, so greater quantities of capital, and tremendously specialised production facilities are required for such things as computer chips. This drive, and new essentially infrastructural industries, represented by the likes of Google and Microsoft, create a massive bias towards giant corporations to dominate the global economy. Blakeley blames monopolies for stagnation in innovation, but such giants are the consequences of technological development, rather than being the prime movers in its trajectory.

Furthermore, all that sophisticated technology acts to reduce the proportion of human labour involved in production, and therefore reduces the production of surplus value, from which profit derives, in the economy as a whole. The more capitalism develops in this way, the greater problem capital has in reproducing itself, due to this tendency for the rate of profit to fall. The contradiction fuels the crisis, and means that there are no sane voices in the ruling class capable of accepting a social-democratic rebalancing to stabilise their increasingly crisis-ridden system.

How to change it

Blakeley repeatedly insists on the class power of capital as being central to the system, but awareness of that seems, at times, absent from the final section of Vulture Capitalism, which contrasts the planning-for-capital analysed previously in the book to the possibility of democratic planning for the social benefit. Blakeley rightly emphasises that capitalism and socialism are not to be identified with markets or state planning respectively, since markets ‘existed long before the emergence of capitalism and state planning existed long before the emergence of socialism’ (p.242).

Socialism is instead about collective agency: ‘Socialism should not base itself on asking people to trust politicians – it should be a movement based on asking people to trust each other’ (p.242). Among the examples she gives of what this means, Blakeley gives an account of the Lucas plan; a strategy drawn up by the workers of Lucas Aerospace Corporation in 1976 to move the company away from arms manufacturing towards socially useful products, from dialysis machines to wind turbines, as an answer to its market difficulties.

Needless to say, the workers’ initiative was not well received by management or the government, but it remains an inspirational moment for imagining how the economy could work in a radically different way. It certainly is a good example of the potential for industries to be run collectively and democratically by their workers. Blakeley goes on from this example to examine experiments in participatory budgeting in local government, most famously Porto Alegre in Brazil (pp.252-4), and others from Kerala, to Argentina, to Wales. These are all each in their own way useful experiments with some successes to celebrate, however they are limited by their very localism. Blakeley answers this problem with a chapter on ‘Planning at Scale’, which inevitably discusses Salvador Allende’s government in Chile and its Cybersyn project for planning (pp.266-8). This project was, of course, cut short by the bloody Pinochet coup.

There are many very useful ideas and plans for democratising the economy suggested in this final section of Vulture Capitalism, but they all suffer from the same problem, which is the power of capital. When any of them start to gain traction, from the GLC’s innovative initiatives in the 1980s (p.240) to Allende’s Chile, capital has the political and terrorist power to snuff them out. There is a further weakness to plans like participatory budgeting, which is that they do nothing to challenge the ownership and control of production, and it will only be through taking control in that sphere that the power of capital can actually be broken.

There needs, therefore, to be a better strategy than to accept that in ‘majoritarian electoral systems … activists have little choice other than to work within existing social democratic parties. Doing so successfully will, however, require a strong focus on building power outside of these parties as well – in communities, in the labour movement and on the streets’ (p.282). The defeat of the Corbyn project is over four years ago now, so this won’t cut it as a strategy. Similarly, invoking left projects in ‘more pluralistic systems’, like ‘the “movement-party” championed by activists and politicians in countries like Spain’ (p.283), reads particularly weakly, given the failures of every reformist venture from Syriza to Podemos to Die Linke.

For long stretches of Vulture Capitalism, Blakeley seems to be arguing strongly that corporate-planned capitalism needs to be entirely replaced by a democratically planned economic system. If that is the right impression, then the only answer is to build a mass revolutionary movement to bring such a system about. Wasting time working in existing social-democratic parties is not going to get us anywhere.