Review: 50 Capitalism Ideas You Really Need to Know

Jonathan Portes marches boldly into a mountain range of towering topics, stretching from “money”, to “globalisation”, to “inequality”, to “secular stagnation"

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The Independent Culture

Capitalism is a frustrating and often misleading word. It tends to summon to mind a 19th century power struggle between owners of capital – factories and machines – and those who owned nothing more than their own labour.

But that is not really the kind of world we live in anymore. Capital is no longer necessarily something that will kill you if it falls on you. Indeed, some of the most valuable forms of capital in the world today are actually intangible things like algorithms, brands or the agglomeration of skills and experience in an individual company.

And those with economic power no longer need own much capital. Some employees (think of chief executives or senior financial traders in the City of London) are far more influential than the nominal owners of the firm’s capital, the dispersed shareholder register.

As the writer John Kay has argued “modern market economy” would be a more useful description of the kind of society in which most of us in the West exist than “capitalist”.

Yet the word capitalism has stuck. It’s unlikely a publisher with an eye on the mass market would commission a book entitled “50 Modern Market Economy Ideas You Really Need to Know". That doesn't scream 'stocking filler'.

So the next best thing is to have a book called “50 Capitalism Ideas You Really Need to Know” written by someone like Jonathan Portes, a research fellow at the National Institute of Economic and Social Research, who is smart and sophisticated enough to work around the problematic term.

One vignette informs us that Portes joined the Labour Party in 1983

As well as giving us a thorough mini essay on what capitalism is (and isn’t) Portes strides boldly into a mountain range of towering topics, stretching from “money”, to “globalisation”, to “inequality”, to “stagnation”. And he does it all with admirable clarity and breadth of learning and (aside from one unfortunately mangled description of banks’ regulatory capital buffers) without sacrificing any accuracy on the altar of accessibility. The chapters on "immigration" and "unemployment" – two of Portes' specialist subjects as a professional economist – are very good.

Each short thematic chapter, in this easy-on-the-eye edition from Quercus, is accompanied with a timeline of the concept under discussion and lively explanatory boxes, sometimes drawing on the author’s own experiences to make a point. One vignette informs us that Portes joined the Labour Party in 1983, during its march to electoral annihilation on a hard left manifesto under Michael Foot.

The many Conservative MPs who have been upbraided by Portes on Twitter for their sloppy use of statistics and tendentious economic inferences will probably say that biographical detail explains a lot. Yet what actually comes through in these essays is how un-extreme Portes is on economics and the big debates of political economy. He exercises judgement, yet always follows the evidence.

Though familiar with most of the themes in the book, I still learned many interesting factual nuggets, such as that the Bank of England’s £20 notes are not technically legal tender in Scotland (check the Bank's website if you want proof). Nor was I aware that a “Phoebus” cartel of US light bulb manufacturers in the 1930s had colluded to ensure none of their products lasted longer than 1,000 hours. Those without any grounding in economics – but who wish to know more about this dominant economic and social system we insist on calling “capitalism” - will find Portes’ book even more illuminating.

'50 Capitalism Ideas You Really Need to Know', Jonathan Portes, Quercus, £12.99