Discussion · Bonfire Dinteg Labs

It's a strange fact that the more sophisticated and polished a theory gets, the simpler it tends to be. New theories tend to be inspired by a confluence of many factors, and early attempts to express the theory will seek to enumerate and connect everything that seems related, which is a *lot*.

If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2025/12/06/big-nascent-important/#riley-and-brenner

@pluralistic Excellent as usual! It’s great to have at least somebody who understands the basic principle of money = power in the public intellectual sphere. For the most we only have hectobillionaires pretending to be victims and their schills. 🙂

"in a persistently low- or no-growth environment…parties can no longer operate on the basis of programmes for growth."

Meanwhile, all parties do blather on endlessly about finding ways to 'grow the economy.' We need to ask them what their plans are if there is no 'growth.'

@pluralistic

I really like the application of the concept of "metabolizing" in this context.

But as you develop the theory, it gets progressively more streamlined as you realize which parts can be safely omitted or combined without sacrificing granularity or clarity. This simplification requires a lot of iteration and reiteration, over a lot of time, for a lot of different audiences and critics. As Thoreau wrote (paraphrasing Pascal), "Not that the story need be long, but it will take a long while to make it short."

This week, I encountered a big, exciting theory that is still in the "long and complicated" phase, with so many moving parts that I'm having trouble keeping them straight in my head. But the idea itself is fascinating and has so much explanatory power, and I've been thinking about it nonstop, so I'm going to try to metabolize a part of it here today, both to bring it to your attention, and to try and find some clarity for myself.

At issue is Dylan Riley and Robert Brenner's theory of "political capitalism," which I encountered through John Ganz's writeup of a panel to discuss Riley and Brenner's work:

https://www.unpopularfront.news/p/politics-and-capitalist-stagnation

Riley and Brenner developed this theory through a pair of *very* long (and paywalled) articles in the *New Left Review*. First is 2022's "Seven Theses on American Politics" (£3), which followed the Democrats' surprisingly good showing in the 2022 midterms:

https://newleftreview.org/issues/ii138/articles/4813

The second article, "The Long Downturn and Its Political Results" (£4), is even longer, and it both restates the theory of "Seven Theses" and addresses several prominent critics of their work:

https://newleftreview.org/issues/ii155/articles/dylan-riley-robert-brenner-the-long-downturn-and-its-political-results

(If you're thinking about reading the source materials - and I urge you to do so - I think you can safely just read the second article, as it really does recap and streamline the original.)

The second article, "The Long Downturn and Its Political Results" (£4), is even longer, and it both restates the theory of "Seven Theses" and addresses several prominent critics of their work:

https://newleftreview.org/issues/ii155/articles/dylan-riley-robert-brenner-the-long-downturn-and-its-political-results

(If you're thinking about reading the source materials - and I urge you to do so - I think you can safely just read the second article, as it really does recap and streamline the original.)

So what *is* this theory? Ganz does a good job of breaking it down (better than Riley and Brenner, who, I think, still have a lot of darlings they can't bring themselves to murder). Here's my recap of Ganz's, then, with a few notes from the source texts thrown in.

Riley and Brenner are advancing both an economic and a political theory, with the latter growing out of the former.

The economic theory seeks to explain two phenomena, the "Long Boom" (post-WWII to the 1960s or so), and the "Long Downturn" (ever since).

During the Long Boom, the US economy (and some other economies) experienced a period of sustained growth, without the crashes that had been the seemingly inevitable end-point of previous growth periods.

Riley and Brenner say that these crashes were the result of business owners making the (locally) rational decision to hang on to older machines and tools even as new ones came online.

Businesses are always looking to invest in new automation in a bid to wring more productivity from their workers.

Profits come from labor, not machines, and as your competitors invest in the same machines as you've just bought, the higher rate of profit you got when you upgraded your machines will be eroded, as competitors chase each others' customers with lower prices.

But not everyone is willing to upgrade when a new machine is invented. If you're still paying for the old machines, you just can't afford to throw them away and get the latest and greatest ones.

Instead, as your competitors cut prices (because *they* have new machines that let them make stuff at a lower price), you must lower your prices too, accepting progressively lower profits.

Eventually, the whole sector is using superannuated machines they're still making payments on, and the overall rate of profit in the sector has dwindled to unsustainable levels. "Zombie companies" (companies that have no plausible chance of paying off their debts) dominate the economy.

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This is the "secular stagnation" that economists dread. Note that this whole thing is driven by the very same forces that make capitalism so dynamic: the falling rate of profit that gives rise to a relentless chase for new, more efficient processes. This is a stagnation born of dynamism, and the harder you yank on the "make capitalism more dynamic" lever, the more stagnant it becomes.

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Hoover and Mellon's austerity agenda in the 1920s sought to address this by triggering mass bankruptcies, in a brutal bid to "purge" those superannuated machines and the companies that owned them, at the expense of both workers *and* creditors. This wasn't enough.

Instead, we got WWII, in which the government stepped in to buy things at rates that paid for factories to be retooled, and which pressed the entire workforce into employment.

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This is the trigger for the Long Boom, as America got a do-over with all-new capital and a freshly trained workforce with high morale and up-to-date skills.

So that's the Long Boom. What about the Great Downturn? This is where Ganz's account begins.

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As the "late arrivals" (Japan, West Germany, South Korea, and, eventually China) show up on the world stage, they do their *own* Long Boom, having experienced an even more extreme "purge" of their zombie firms and obsolete machines. This puts downward pressure on profits in the USA (and, eventually, the late arrivals), leading to the Long Stagnation, a 50 year period in which the rate of profit in the USA has steadily declined.

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This is most of the economic theory, and it contains the germ of the political theory, too. During the Long Boom, there was plenty to go around, and the US was able to build out a welfare state, its ruling class was willing to tolerate unions, and movements for political and economic equality for women, sexual minorities, disabled people, racial minorities, etc, were able to make important inroads.

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But the political theory gets into high gear after years of Great Downturn. That's when the world has an oversupply of cheap goods and a sustained decline in the rate of profit, and the rate of profit declines every time someone invents a more efficient and productive technology. Companies in Downturn countries need to find a new way to improve their profits - they need to invest in something other than improved methods of production.

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That's where "political capitalism" comes in. Political capitalism is the when you get when the cheapest, most reliable way to improve your rate of profit is investing in the political process, to get favorable regulation, pork government contracts, and cash bailouts. As Ganz puts it, "capitalists have gone from profit-seekers to rent-seekers," or, as Brenner and Riley write, capitalists now seek "a return on investment largely or completely divorced from material production."

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There's a sense in which this is immediately recognizable. The ascendancy of political capitalism tracks with the decline in antitrust enforcement, the rise of monopolies, a series of massive bailouts, and, under Trump, naked kleptocracy. In the US, "raw political power is the main source of return on capital."

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The "neoliberal turn" of late Carter/Reagan is downstream of political capitalism. When there was plenty to go around, the capital classes and the political classes were willing to share with workers. When the Great Downturn takes hold, bosses turn instead to screwing workers and taking over the political system.

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Fans of Bridget Read's *Little Bosses Everywhere* will know this as the moment in which Gerry Ford legalized pyramid schemes in order to save the founders of Amway, who were big GOP donors who lived in Ford's congressional district:

https://pluralistic.net/2025/05/05/free-enterprise-system/#amway-or-the-highway

Manufacturing's rate of profit has never recovered from this period - there have been temporary rallies, but the overall trend is down, down, down.

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But this is just the beginning of the political economy of Brenner and Riley's theory. Remember, this all started with an essay that sought to make sense of the 2022 midterms. Much of the political theory deals with electoral politics, and what has happened with America's two major political parties.

Under political capitalism, workers are split into different groups depending on their relationship to political corruption.

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The "professional managerial class" (workers with degrees and other credentials) end up aligned with center-left parties, betting that these parties will use political power to fund the kinds of industries that hire credentialed workers, like health and education. Non-credentialed workers align themselves with right-wing parties that promise to raise their wages by banning immigrants and ending free trade.

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Ganz's most recent book, *When the Clock Broke: Con Men, Conspiracists, and How America Cracked Up in the Early 1990s* looks at the origins of the conspiratorial right that became MAGA:

https://us.macmillan.com/books/9780374605445/whentheclockbroke/

He says that Riley and Brenner's theory really helps explain the moment he chronicled in his own book, for example, the way that Ross Perot (an important Trump predecessor) built power by railing against "late arrivals" like Japan, Germany and South Korea.

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This is also the heyday of corporate "finacialization," which can be thought of as the process by which companies stop concerning themselves with how to make and sell superior products more efficiently, and instead devote themselves to financial gimmicks that allow shareholders to extract wealth from the firm. It's a period of slashed R&D budgets, mass layoffs, union-busting, and massive corporate borrowing.

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In the original papers, Riley and Brenner drop all kinds of juicy, eye-opening facts and arguments to support their thesis. For example, in the US, more and more machinery is idle. In the 1960s, the US employed 85% of its manufacturing capacity. It was 78% in the 1980s, and now it's 75%. One quarter of "US plant and equipment is simply stagnating."

Today's economic growth doesn't come from making stuff, it comes from extraction, buttressed by law.

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Looser debt rules allowed households to continue to consume by borrowing, with the effect that a substantial share of workers' wages go to servicing debt, which is to say, paying corporations for the privilege of existing, over and above the cost of the goods and services we consume.

But the debt industry itself hasn't gotten any more efficient: "the cost of moving a dollar from a saver to a borrower was about two cents in 1910; a hundred years later, it was the same."

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They're making more, but they haven't made any improvements - all the talk of "fintech" and "financial engineering" have not produced *any* efficiencies. "This puzzle resolves itself once we recognize that the vast majority of financial innovation is geared towards figuring out how to siphon off resources through fees, insider information and lobbying."

Reading these arguments, I was struck by how this period also covers the rise and rise of "IP."

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This is a period in which your ability to simply buy things declined, replaced with a system in which you rent and subscribe to things - forever. From your car to your thermostat, the key systems in your life are increasingly a monthly bill, meaning that every time you add something to your life, it's not a one-time expenditure; it's a higher monthly cost of living, forever.

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The rise and rise of IP is certainly part of political capitalism. The global system of IP comes from political capture, such as the inclusion of an IP chapter ("TRIPS") in the World Trade Agreement, as well as the WIPO Copyright Treaties. This is basically a process by which large (mostly American) businesses reorganized the world's system of governance and law to allow them to extract rents and slash R&D.

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The absurd, inevitable consequence of this nonsense is "capital light" chip companies, that *don't make chips*, just designs, turned out by one or two gigantic companies, mostly in Taiwan.

Of course, Riley and Brenner aren't the first theorists to observe that our modern economy is organized around extracting rents, rather than winning profits. Yanis Varoufakis likens the modern economy to medieval feudalism, dubbing the new form "technofeudalism":

https://pluralistic.net/2023/09/28/cloudalists/#cloud-capital

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Riley and Brenner harken back to a different kind of feudal practice as the antecedant to political capitalism: "tax-farming."

> Groups of entrepreneurs would advance money to the sovereign in exchange for the right to collect taxes from a given territory or population. Their ‘profit’ consisted in the difference between the money that they advanced to the ruler for the right to tax and what they could extract from the population through the exercise of that right.

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So, these entrepreneurs invested in politics, the control of means of administration and the means of violence, as a method for extracting surplus, in this way making for a politically constituted form of rent.

Unlike profits, rents are "largely or completely divorced from material production," " they ‘create no wealth’ and that they ‘reduce economic growth and reallocate incomes from the bottom to the top."

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To make a rent, you need an asset, and in today's system, high asset prices are a top political priority: governments intervene to keep the prices of houses high, to protect corporate bonds, and, of course, to keep AI companies' shares and IOUs from going to zero. The economy is dominated by "a large group of politically dependent firms and households...profoundly reliant on a policy of easy credit on the part of government...

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"The US economy as a whole is sustained by lending, backed up by government, with profits accruing from production under excruciating pressure."

Our social programs have been replaced by public-private partnerships that benefit these "politically dependent firms." Bush's Prescription Drug Act didn't seek to recoup public investment in pharma research through lower prices - it offered a (further) subsidy to pharma companies in exchange for (paltry/nonexistent) price breaks.

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Obama's Affordable Care Act transferred hundreds of billions to investors in health corporations, who raised prices and increased their profits. Trump's CARES Act bailed out every corporate debtor in the country. Biden's American Rescue Plan, CHIPS Act and Inflation Reduction Act don't offer public services or transfer funds to workers - instead, they offer subsidies to the for-profit sector.

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Electorally, political capitalism is a system of "vertiginous levels of campaign expenditure and open corruption on a vast scale." It pushed workers into the arms of far-right parties, while re-organizing center-left parties as center-right parties of the lanyard class. Both parties are hamstrung because "in a persistently low- or no-growth environment...parties can no longer operate on the basis of programmes for growth."

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This is really just scraping the surface. I think it's well worth £4 to read the source document. I look forward to the further development of this theory, to its being streamlined. It's got a lot of important things to say, even if it is a little hard to metabolize at present.

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I'm on a tour with my new book, the international bestseller Enshittification!

Catch me next in #Madison, CT (MONDAY!); #Hamburg; and #Denver!

Full schedule with dates and links at:

https://pluralistic.net/tour

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