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Beyond the Commodity: Toward a New Understanding of Political Economy

It seems almost certain that in the aftermath of the Covid-19 pan­demic, the U.S. economy will be even more dominated by giant firms than it was before. Government rescue efforts have been tilted in favor of the largest firms, and strong relations with suppliers give megacorporations such as Amazon and Walmart a huge advantage over smaller retailers. It seems highly likely that millions of small businesses will not survive the crisis.

This boost to giant firms will inevitably attract the attention of activists and scholars who have been working to revive the anti-monopoly politics that played a central role in the United States from the agrarian populists in the late nineteenth century up until the 1980s.1 Elizabeth Warren’s unsuccessful presidential campaign in the 2020 cycle gave this movement its greatest visibility to date, but the movement is not confined to the Democratic Party. Josh Hawley, Republican senator from Missouri, is just one of a number of con­servatives who have argued that powerful tech companies, such as Facebook, should face antitrust scrutiny.

These efforts to revive Theodore Roosevelt’s iconic trustbusting initiatives in the twenty-first century have met resistance. For advo­cates of racial justice, gender justice, and a postimperial foreign poli­cy, nostalgia for policies advocated by the first Roosevelt is a hard sell. Even in the second Roosevelt’s New Deal, the advocates of anti­trust faced fierce opposition from opponents who saw the efficiencies that came with large size and who insisted that anti-monopolists imagined that all problems could be solved with their one preferred remedy.2 Some of these same arguments have resurfaced recently as critics of the anti-monopoly tradition have suggested that antitrust policies are not sufficient to address current problems.3

These criticisms are inherent in any project that seeks to revive a politics that was powerful in an earlier historical moment. Since so much has changed in the interval, the task of revival can appear nostalgic or even reactionary. This is probably why Milton Friedman, one of the most influential neoliberals of the twentieth century, usually avoided labeling himself as such. He preferred to disingenuously market his ideas in the United States as though they were new, original, and represented a commonsense response to the mistakes made by Franklin Roosevelt and his immediate successors.

A more honest way to give new life to ideas that had considerable currency in an earlier period is to put them on a new theoretical foundation that is derived from an analysis of current conditions. With such a new foundation, the risk of sounding antiquarian dis­appears and the agenda can be broadened far beyond the policy repertoire that was used in that earlier time. It is more than putting old wine in new bottles; it is a question of finding new and better ways of making wine while also modernizing the bottles.

That is the project of this essay. The older anti-monopoly tradition centered on the problem that giant firms undermine the vigorous competition required for markets to work. The problem today is that vigorous competition has been undermined because many of the things we consume differ significantly from the standardized com­modities on which economic theory is based. When goods and ser­vices are not standardized, when they are available from a small number of outlets, when they are transferred over extended periods of time, and when they are interoperable with other purchases, it be­comes costly for purchasers to exit from transactions and power accumulates in the hands of sellers. As a consequence, the discipline of market competition becomes much weaker, and firms are freer to engage in harmful or even predatory behaviors.

The Commodity and Its Discontents

The commodity concept originally emerged from the intersection of two historical trends. The first, dating back to the sixteenth century, was the expansion and systematization of global trade for a number of agricultural products and raw materials, such as cotton, wheat, sugar, coffee, tobacco, wine, iron ore, and precious metals. The second was the process of industrialization from the late eighteenth century on­ward that mechanized the production of cotton cloth, pottery, shoes, and other goods that had earlier been luxuries because production had depended on skilled artisanal labor. Both types of products could be conceptualized as commodities because they were standardized, pro­vided by multiple producers, usually transferred in a single moment in time, and usable without coordinated purchases. Moreover, dur­ing the course of the nineteenth and twentieth centuries, as more and more things could be successfully mass-produced, the understanding of the economy as a system of commodity production was consolidated.

This understanding was the foundation for seeing the market as a largely self-regulating mechanism governed by the price system. When products are standardized and available from multiple producers, they compete almost entirely on the basis of price. When prices for a particular commodity rise, more producers are drawn into the market and some consumers will substitute a different commodity, so the price mechanism is able to bring supply and demand into balance. Moreover, when some producers discover a more efficient production technique, they are able to lower the price, and their competitors are forced to find comparable efficiencies. Hence price competition leads to continuing advances in the efficient use of inputs. The ongoing and rapid balancing of supply and demand and the continuing pressure on all firms to match the efficiency of cutting-edge producers are the central arguments for the superiority of markets over other forms of economic organization.

Yet even in the nineteenth century, the commodity concept provided only a partial and somewhat misleading view of the econ­omy.4 For example, the insistence that human labor was just another commodity that was bought and sold on a labor market was resisted by working people and criticized by many analysts as obscuring the coercive power of employers. Moreover, a significant share of the labor supplied to the economy was not even provided through the market; the work of slaves, apprentices, housewives, and other family members working on farms or in businesses was not commodified.          

Those who claimed that the economy could be understood as a system of commodity production also made greatly exaggerated claims about the market’s ability to dissolve older social hierarchies. Henry Sumner Maine’s famous formulation that society was evolving “from status to contract” was echoed by many nineteenth- and twentieth-century social theorists who imagined that older distinctions of race, ethnicity, gender, and national origin would soon disappear in the new system of voluntary contracting to buy and sell commodities.5 Even Marx and Engels in The Communist Manifesto insisted that in the new bourgeois order, “All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away. . . .”6 Such assertions were recycled in the twentieth century in Gary Becker’s argument that firms with a taste for discrimination against women or racial minorities would be effectively punished in the marketplace.7

The reality is that the market economy has routinely exploited and intensified many of these old hierarchies. Plantation owners in the Caribbean and the American South used sophisticated management and accounting schemes to organize the labor of their slaves.8 Em­ployers routinely used differences in gender, race, ethnicity, and national origin to play groups of workers off against each other. Meatpacking firms in North Carolina replaced undocumented Latino immigrants with workers from Haiti and Honduras who are in the United States with Temporary Protective Status. And while employers and businesses have alternated between pushing women into the housewife role and pulling them into the labor force, gender inequalities persist.

In sum, the view of the economy as a system of commodity production was never completely accurate. It mistook a part of reality for the whole, with the consequence that both the autonomy and the emancipatory potential of markets were greatly exaggerated. And yet, at another level, there was and continues to be some truth to this formulation. Marx highlighted this in his discussion of “the fetishism of commodities.”9 He argued that the buying and selling of things in the marketplace, including the labor of human beings, had the conse­quence that people came to misunderstand actual social relations among people as relations among things. People routinely make the calculation, for example, that it is necessary to work another week to purchase a specific product rather than questioning why the owner of my firm earns many times the wage of an average worker. What we learn from Marx is that it is important to examine the actual social relations that lie behind buying and selling in the marketplace.

Reconsidering the Commodity Frame

If understanding the economy as a system of commodity production was problematic and incomplete in the nineteenth and twentieth centuries, it has become even more distorting in the twenty-first because of changes in what the economy produces and how those things are produced. While we still depend upon the production of some of the same standardized products such as sugar, wheat, cop­per, and petroleum that were important in earlier eras, their weight in the overall economy has diminished sharply. Many of the things that we now consume do not resemble classical commodities, nor are they produced in the way that classical commodities were made.

To be sure, the declining weight of commodity production in the current economy must be understood as a success story for competitive markets. Things produced with the technologies of mass-produc­tion have fallen in price relative to the goods and services that cannot be mass-produced. For example, sophisticated machinery and about a hundred thousand workers made it possible for sock factories in the Chinese city of Zhuji to turn out seventeen billion pairs of socks in 2014.10 This is equivalent to two and a half pairs for every person on the planet. Moreover, a Chinese employee who is responsible for 170,000 pairs might earn just the Chinese minimum wage.

For consumers, the consequence is that the cost of many of the mass-produced items that one needs to survive—basic foodstuffs such as flour, rice, and meat, as well as clothing, oil, gas, and home appli­ances—has been steadily falling as a share of total income. Back in the 1960s, expenditures for food represented about a third of a typical family’s budget in the United States, but that has dropped to less than 10 percent even though there has been a big increase in expenditures for food consumed away from the home. It follows logically that the price of those things that do not lend themselves to mass-production, such as many services, housing, specialized goods, infrastructure pro­jects, and research and development, are rising relative to mass-pro­duced items. This contributes to a dramatic shift in consumption patterns away from standardized products.

Above all, most services—including health services, education, other professional services, and financial services—differ from classi­cal commodities in two key respects. First, they are generally not standardized; most service providers promise to tailor the particular service to the specific needs of the individual client. Second, they are rarely transferred at a single moment in time; they tend to be provid­ed in the context of an ongoing relationship, even if it is just a few hours that the anesthesiologists and the surgeon devote to a particular procedure.

The growing importance of science and technology in the econ­omy is another key element of this shift. Many firms seek to differentiate their products from their competitors by incorporating more sophisticated technologies. This has been going on for some time, but in the twenty-first century, the premium on innovating has increased dramatically. This is most obvious with computer- and internet-based products and with pharmaceuticals, but it is increasingly happening in stodgier industries such as groceries, apparel, and the production of the materials used elsewhere in the economy.

Nowadays, if a firm is producing a standardized product that is being provided by many competitors, business consultants are bound to advise them to shift their business model. They are told to figure out a way to make their products unique, so that the costs to con­sumers of switching to another provider will be high enough to retain their loyalty. There are different strategies for doing this, and many firms use a combination of strategies. One is to develop a powerful and distinct brand that is associated in the public mind with high quality. Another is to rely on innovations that are protected by pat­ents or trade secrets to make one’s offerings distinct from those of competitors. This is a particular variant on the broader strategy of establishing an effective monopoly in a particular market niche which can happen both through law or lack of effective competitors. An­other common strategy is to turn a one-shot transaction into an ongoing relationship, as when automobile companies provide extend­ed warrantees or businesses establish special programs to reward cus­tomer loyalty as with airlines’ frequent-flier programs.

This pattern pushes the economy away from standardized prod­ucts as more firms pursue niche markets and customized products. “Mass customization” has been taken furthest by some auto firms and computer firms which claim that the product will come off the pro­duction line tailor-made to the consumer’s precise specifications.

Moreover, as firms increasingly draw on sophisticated science and technology to innovate, scientific knowledge is bought and sold in the form of intellectual property rights as though it is just another com­modity. But both the creation and the utilization of technological knowledge is very different from the handling of classical commodities. Such knowledge emerges in unpredictable ways through trial and error that builds on the base of previously existing bodies of knowledge, and its existence and development often rely on public sector initiatives in funding research and development, in supporting higher education, and in creating networks of publicly financed research laboratories.11

The new industries that have grown up around the internet exemplify this technology-based movement away from commodities. Firms such as Google and Facebook do not sell commodities; they provide customized services for free, earning their profits through advertising that is designed to reach the specific eyeballs that are most likely to be interested in a particular good, service, or political candi­date. Moreover, these firms are dependent upon thousands of com­puter scientists and data scientists to continuously optimize their platform and expand their attractiveness to users.

Even with the classical commodities such as cotton, sugar, and minerals, it took legal, cultural, and social effort to turn any particular item into a commodity. So, for example, the expansion of global trade in raw materials in earlier centuries required agreement on the stan­dards that would be used, legal rulings to determine who would pay when a shipment ended up at the bottom of the ocean, and a system for financing these transactions. Both then and now, commodities have to be socially constructed. When a new generation of energy efficient light bulbs enters the marketplace, for example, there is a need for standards that allow purchasers to compare them to earlier bulbs, and consumer education is required to persuade buyers of the superiority of the new product.

Today, however, this process of socially constructing commodities has become more convoluted as the process is extended to all kinds of goods and services that are very different from classical commodities. For example, the itemized charges for medical procedures or for telephone, cellphone, or cable television are exercises in commodification. Similarly, those multipage legal documents that one has to sign to access services on the internet are based on the pretense that one is voluntarily entering into a contract with the company to obtain a particular commodity.

Estimating the Magnitude of the Shift

There is no simple, binary distinction between those things that close­ly resemble classical commodities and those that do not. But it is possible to construct a continuum with classical commodities at one end and things that do not easily fit the commodity concept on the other. As suggested earlier, classical commodities are standardized products, produced by multiple firms, transferred in an instant in time, and do not require coordinated purchases. In short, the contin­uum is made up of four distinct dimensions. Things are at the other end of the continuum when they are not standardized, available from a limited numbers of providers, transactions extend over time and create complex interdependence, and when purchases depend on interoperability with other specific goods or services (as when a com­puter only works with certain software programs). Complex inter­dependence denotes a relationship in which both parties have some capacity to inflict pain on the other, although this capacity is usually asymmetrical. A customer who defaults on a loan is irritating to a large bank, but the bank can retaliate by sending out collection agents and seizing property.

In the purchase of a classical commodity such as a sack of potatoes, the transaction is completed in an instant, and the buyer can eat the potatoes, plant them, sell them, or give them away. In contrast, in taking a job or hiring an employee, the relationship extends over time and creates a complex interdependence. When buying a piece of real estate, whether it has buildings on it or not, the relationship with the seller might quickly end, but the buyer has entered into a complex interdependence with neighbors, with the governmental authorities in that particular jurisdiction, and often with a mortgage lender. When depositing money in the bank or taking out a loan, the relationship extends over time and creates a complex interdependence with the banker.

It follows that most forms of education and training are close to the non-commodity end of the continuum because they extend over time, create interdependence with the provider, and often include the promise that the content will be tailored to the needs of the individual student. On the other hand, a one-size-fits-all training program or a language-learning software program would be closer to the commodity end of the continuum.

Computerization has been a driver of more complex forms of interdependence where multiple providers are routinely involved in a single transaction. For example, in streaming videos from Netflix or Amazon Prime, the operation involves a television set, hardware and software to connect to the internet, an internet service provider, and the streaming service. It is often a complicated task to figure out which of these entities is at fault when the system does not work properly. Moreover, the development of the “internet of things”—through which smart refrigerators might tell the grocery store to de­liver eggs and milk—promises to greatly expand the scope of these complex interdependent systems.

A parallel transition has occurred with business firms. Historically, they purchased many key inputs through competitive bidding to supply needed commodities. Now, however, they purchase a greater share of inputs through long-term collaborative relations with suppli­ers.12 This transition to relational contracting has occurred because firms have increasing needs for inputs that are both custom made and subject to frequent design changes. A recent New York Times story is relevant here: the thrust of the story is that Apple is unlikely to move much manufacturing back to the United States because of the difficul­ty of finding suppliers with the capacity to produce highly specialized parts such as tiny screws when such supply chains are readily avail­able in China.13

Economists are certainly aware that many things are now far from the commodity end of the continuum, but they insist that it still makes sense to conceptualize modern economies as systems of com­modity production because it is a reasonable approximation of reality. They argue that it would be foolish to give up the considerable ad­vances in analyzing economies in mathematical terms just to deal with these exceptions. After all, this is what science does; it uses abstraction to find elegant explanations of underlying processes as a way to make sense of the messiness of the actual empirical world.

But this argument becomes weaker when the exceptions begin to overwhelm the cases that conform to the commodity model. This is what has happened over the last fifty to sixty years; 70 to 80 percent of what is being consumed by households today consists of things that are far from the commodity end of the continuum. One can see this in the official data on personal consumption expenditures. In 2017, $9.2 trillion (or 69.2 percent) of consumer outlays were for services that include major categories such as housing and utilities ($2.4), health care ($2.3), restaurants and hotels ($0.9), financial ser­vices ($1.0), transportation ($0.4), recreation ($0.5), and the category of “other services” ($1.0), which includes education, professional services, and communication. $4.2 trillion represented the purchase of goods, but this included motor vehicles and parts ($0.5), pharmaceuticals ($0.5), clothing ($0.4), recreational goods ($0.4), and food and beverages ($1.0) purchased to be consumed off premises.14

We can make a rough approximation of non-commodity consumption with a few assumptions. First, we can estimate that all but 10 percent of the services purchased were not classical commodities. This allows for standardized items such as fast-food burgers, haircuts for children, and uncomplicated tax returns, as well as the commodities that are used up in service provision such as bandages, napkins, and potatoes. We can further estimate that 20 percent of the goods that were purchased were not commodities either because they were customized, involved long-term maintenance agreements, or were not available from other producers. This is a conservative estimate be­cause the top 10 percent of households in the United States receive just a little less than 50 percent of the income, so luxury goods represent a very substantial share of purchases of both durable and nondurable goods. With these two assumptions, we get to 69 percent of household consumption that does not consist of classical commodities.

But that still represents an undercount since the official data does not include other critical elements of household consumption. First, the cost of owner-occupied housing is not included in this measure of personal consumption expenditures. Second, there are services pro­vided by government, some of which are difficult to measure. State and local governments spend roughly a trillion dollars a year on pri­mary, secondary, and higher education. One study showed that households and businesses derive $800 billion per year in direct benefits from the nation’s surface transportation infrastructure. One might add here the value of amenities such as public parks including both urban parks and national parks.15 Third, there are the services that households receive that are paid for by advertising dollars such as entertainment and information provided by broadcast television, radio, and sponsored internet services. One study suggested in 2011 that the value to consumers from television, radio, and internet was $1.4 trillion per year.16 Finally, a U.S. government study estimates that adding nonmarket services produced in the home would in­crease GDP by $2.4 trillion in 2014.17 Given the importance of per­sonal care for an aging population, this estimate might be far too conservative.

We can also do a parallel analysis on the input side of the economy. As a share of GDP, classical commodities, including industrial raw materials like fossil fuels and basic agricultural products, have been shrinking as a portion of the economy for many decades. In 1947, value-added in agriculture, forestry, and mining accounted for 10.3 percent of GDP. By 2018, this had fallen to 2.4 percent. Even if we adjust this for imported raw materials, their share of the economy remains small.

At the same time, there has been a significant expansion in the weight of a number of other critical unstandardized inputs into the pro­duction process. There is the category of infrastructure—roads, bridges, ports, pipes, wires, sewage treatment plants, and cellphone towers—that are the backbone of the energy system, the transportation system, the communication system, and the public health sys­tem.18 Almost all of these infrastructure projects have to be custom built to fit a particular physical environment.

Then there is the critical role of computer hardware and software as inputs into the production process. While the cost of producing low-end personal computers has fallen precipitously, they are still not a commodity product because of their dependence on interoperability with operating systems and various widely used software programs. At the same time, businesses have become increasingly dependent on ever more powerful computer systems and increasingly complex soft­ware. Enormous quantities of data, stored in the cloud and analyzed by sophisticated computers, have also become an increasingly central input into production, not just for Facebook and Amazon but across the entire economy.

There is also the ever-growing importance of research and develop­ment outlays by the public sector, the private sector, and the collaborations between them in developing new products and new processes. While we continue to treat intellectual property rights as simply another commodity that can be bought, sold, and leased, the reality is that useful scientific and technical knowledge is at the opposite end of the spectrum from standardization. Moreover, as the economy has shifted to services such as health care, the importance of research and development as an input is even greater than it was historically.

The growing importance of inputs which differ from classical commodities has entered the discourse of economists. In fact, one of the cutting-edge areas of economic research has been to devise allo­cation mechanisms for things that do not easily fit the commodity category such as rights to use a part of the radio spectrum, rights to emit certain unwanted chemicals into the atmosphere, or access to certain streams of electronic data. Nobel Prizes in economics have gone to practitioners who have elaborated auction schemes or systems to allocate organs among those waiting for a transplant. The common idea is that it is possible to construct market-like mechanisms to allocate these goods or services in ways that are efficient and optimize certain outcomes.

Nevertheless, when it comes to macroeconomics—thinking about the management of regional or national economies—economists con­tinue to use models in which all production is commodity production. This mismatch between the models and the reality of the dimin­ished role of classical commodities is a critical part of the crisis of modern economics that has produced deep internal disagreements and difficulty in offering policy proposals that persuasively address key social and economic problems.

The Declining Significance of Classical Commodities

Even those transactions that are at the non-commodity end of the continuum, such as medical diagnoses, are typically treated as though they are just another commodity transaction. But our analytic focus needs to be not on the products themselves, or even the process through which a market is created, but on the actual social relations within which these things are bought and sold. When products are interchangeable and provided by multiple parties, it is possible to approximate the ideal market where no individual buyer or seller is able to influence the price. The paradigm for this is the commodity exchange where dealers can buy or sell contracts for the delivery of pig iron, pork bellies, orange juice, or a host of other materials.

In such markets, each party will complete the transaction with whatever counterparty offers the best price. Emotional ties or loyalty are supposed to be absent. In contrast, when a business buys paper and pencils from suppliers, the transaction is not as impersonal as transactions on a commodity exchange. One might continue doing business with a particular supplier because of friendship or a track record of reliability,19 but there are other suppliers, and the costs of exiting from one relationship and starting a different one are relatively small.20

This, however, is what changes when the economy moves towards the non-commodity end of the continuum. As there is a steep decline in the interchangeability of the goods and services produced in the marketplace and as complex interdependencies are created, exit from a relationship with a provider becomes more costly and more difficult. For example, it makes sense to be seen by the same dermatologist each time one goes in for a skin check; the doctor who knows one’s medical history is more likely to recognize something that has changed from one visit to the next. But this means that it is now costly to exit this relationship; one will have to start all over with the medical his­tory and train a new doctor to recognize what is new and what has always been there. And as exit becomes more costly, the provider gains power.

The classic example in the literature on switching costs is the case of the qwerty keyboard for typing.21 The keyboard first appeared in manual typewriters in the nineteenth century to solve the problem that occurred when fast typing caused the pieces of metal associated with different letters—the typebars—to be jammed together. The qwerty keyboard separated the most frequently used letters, effec­tively slowing down fast typists, so as to reduce the frequency of jamming. That was in 1873, but the same keyboard is still being used today with devices that have no typebars and no danger of jamming. The explanation is switching costs. It would take millions of hours of training and practice for everyone who uses a qwerty keyboard to master a new and speedier layout of the keyboard. Users are literally locked in to the 1873 keyboard layout. To be sure, the patent on the keyboard has long since expired, but if it were still in force, the designers could profit greatly.

In fact, the qwerty case has become a part of the business school curriculum, and it is not an exaggeration to suggest that the manipulation of switching costs has become as central to twenty-first-century business strategy as price competition was in the nineteenth century. It is useful to examine a few different sectors of the economy where the intersection of switching costs and complex interdependencies create power inequalities and significant governance problems.

The platform economy. A great deal has already been written about the extraordinary power exercised by a handful of giant cor­porations that have gained control over key aspects of the internet economy,22 so this discussion can be brief. Such power, in turn, has allowed these firms to generate hundreds of billions of dollars in profits, much of which has been effectively insulated from taxation by the use of complex accounting schemes that involve offshore tax havens.

These firms insist that they are simply offering a commodity to consumers. To be sure, the customer can forgo the firm’s services altogether, but since Facebook, for example, has 2.7 billion members, this means giving up the opportunity to communicate easily with large numbers of family, friends, and acquaintances. There are a few other social media sites to which one could switch, but their networks are a tiny fraction of the size of Facebook’s.

Just as troubling, for a number of these firms, the business model is to gather as much information as possible on each individual user so they can sell that information to advertisers. When this information is linked with facial recognition software and artificial intelligence, the result is a surveillance economy in which computer firms will be able to provide governments with the ability to identify any dissidents or troublemakers.

Financial services. Financial services have always been far from the commodity end of the continuum, and they have very often been an instrument to reinforce existing inequalities. Creditworthiness has long had class, gender, and race components, with less favored groups forced to borrow at elevated interest rates from predatory merchants and loan sharks.23 Moreover, redlining practices by banks and insur­ance companies in the post–World War II decades played a major role in maintaining patterns of residential segregation. More recently, Af­rican American and Latino households were targeted with subprime mortgage loans in the 2000s, often with attractive initial “teaser” rates, that led to massive foreclosures and the loss of whatever savings fami­lies had been able to accumulate.

The subprime lending crisis exemplifies the transformation of the last four decades. A process of relentless financialization means that all but the poorest households have been effectively turned into customers of an increasingly concentrated set of financial institutions. Concentration has been particularly acute in the banking industry, with a handful of giant banks operating nationally have replaced the multiplicity of local and regional banking institutions. At the same time, the emergence of adjustable-rate mortgages has made households highly vulnerable to the fluctuations in interest rates. Still another shift has been the almost universal substitution of defined benefit pension plans with defined contribution plans. While the for­mer provided retirees with a fixed monthly payment, the latter gives retirees a portfolio of securities whose size and earnings depend upon the ups and downs of the financial markets.

Moreover, most of these defined contribution plans are administered by a handful of financial giants that sell their services to em­ployers. Employees are usually given choices as to how their pension money should be invested, but all of the options are administered by the same entity. So if largely hidden management fees erode the value of the pension savings, the employees have little recourse. The same arrangement prevails for employer-provided health insurance; em­ployees usually have very limited scope to choose among the relative­ly small number of dominant health insurance providers. Furthermore, these insurers bolster their profits by withholding approval for costly procedures or expensive pharmaceuticals, so that even with Obamacare, medical expenses continue to be the main cause of house­hold bankruptcy.

Health care. Beyond health insurance, the actual delivery of health care is far from the commodity end of the continuum. Many prescription drugs are protected by patents, so that the provider has an effective monopoly and can set the price at whatever level will maxi­mize profits. Even with many generic drugs that have gone off patent, the number of suppliers is very small, and they retain considerable pricing power. In most developed economies, the government impos­es price controls on prescription medications, but the United States has steadfastly refused to do so.

Hospital care is another glaring case of a service that is far from the classical commodity. In many locations, there might be only one or two hospitals to choose from for any particular procedure. Moreover, once one has been admitted to a particular hospital, it is the rare individual who will decide to exit even if there are significant lapses in the quality of care. This is the context in which hospital billing has become a kind of national joke, with accountants inventing ever more clever ways to inflate charges for hospital stays. For those with good insurance coverage, the hospital bill is largely fictional. Medicare or high-quality private insurance might pay as little as ten cents on the dollar to settle the hospital bill. Yet the hospital’s own charges are not the only expenses for which the patient is responsible. Many of the physicians who practice in the hospital are not hospital employees and have the right to bill patients separately for their services.

Housing. The purchase and rental of residential properties has always diverged from the commodity model; even when housing units are virtually identical, they differ in location, and different neighborhoods have distinct characters and specific strengths and weaknesses. In addition to racial and other forms of residential seg­regation, the more general problem is that additions to the housing stock depend upon the decisions of developers who must, in turn, gain approval for their projects from local political authorities. In most cities and near-in suburbs, however, there is little vacant land left on which to build. In most cases, the only viable strategy is to increase density by replacing single-family homes with taller apartment buildings. And given the combined costs of assembling sites and construction, most developers opt for the more profitable option of building for affluent consumers. Even when developers might have a more generous outlook, the banks and insurance companies that are likely to finance such projects insist on the safer strategy of building for those with ample purchasing power.

The consequence is a severe crisis of affordable housing that is particularly acute for young adults who are not earning the high sala­ries of computer programmers or other workers at the leading tech firms. Many households are forced to pay as much as 50 percent of their income on housing, while others are pushed into exurban areas that require long commutes.

Because of the divergence from classical commodities, the bal­ancing of supply and demand does not occur. Developers continue to focus on high-income customers, and those of low and moderate income face an ever more difficult housing market. The only market-type mechanism available in this context is gentrification. Both small­er developers and families purchase homes in some predominantly low-income neighborhoods and invest in upgrading the houses. The problem is that this displaces previous residents, often people of color, who then have even less choice as to where to relocate.

Commonalities across sectors. More examples could be added such as the media and entertainment industry, air travel, or even some aspects of energy, but certain patterns are clear by looking at the above cases. First, there is a powerful dynamic in all of these cases towards what could be called “hyperrationalization.” Max Weber used the concept of rationalization to describe the systematization of processes and practices that occurred in the business enterprise in the drive to increase profits. We can think of hyperrationalization as an extension of Weberian rationalization where the provision of goods or services is integrated into larger systems that are often global in scope and involve computer processing of information flows. This is most apparent in the internet platform firms that are profiting by selling consumer eyeballs to advertisers, but it is apparent in the other sectors as well. In financial services, global capital flows are increasingly shaped by computer algorithms that portfolio managers use to allocate capital into different instruments.

In the health sector, pharmaceutical firms organize their pricing strategies for the global market, many health insurance firms operate on a national scale, and hospitals and even many medical practices are increasingly being integrated into larger corporate entities. As com­puterization of health records moves forward, it is likely that approv­al or disapproval of procedures for individuals will increasingly be linked to analyses of the patient’s fully documented medical history. In the case of housing, hyperrationalization is being driven by the investment decisions of the relatively small number of giant financial firms that provide the capital for major development projects. More­over, since the 2008 financial crisis, hedge funds and private equity funds have been purchasing single-family homes as investment prop­erties. Between 2011 and 2017, such firms put around $36 billion into these purchases.24

It is in the nature of hyperrationalization that it works to inten­sify existing inequalities. Greater profits can usually be made by serv­ing wealthier clients, and this leads to airlines competing to create the most luxurious first-class cabins while those in coach are squeezed into ever narrower spaces. This process clearly works against both gender and racial equality, since women and people of color earn less and have less accumulated wealth. The algorithmic logic of hyper-rationalization was visible in the years before the global financial crisis when networks of mortgage lenders systematically pushed mi­nority borrowers into the subprime lending pool where big profits could be made by selling loans that consumers could not sustain when the interest rates were reset at substantially higher rates. Lenders could foreclose and resell the house at a profit to another customer who would not be able to keep up with resetting interest rates.

The other commonality across these sectors is that the provision of goods and services is very much a joint activity between private sector firms and the public sector. To be sure, the relevant level of government varies somewhat; in housing, it is primarily local governments, while in most of the other sectors, it is the federal government that plays a key role. In theory, when government is involved, there should be some restraint on private profit maximization, but this has not been the case in recent decades.

In the financial sector, for example, there were efforts at the state and local level to stop the explosion of predatory lending in the sub­prime mortgage market, but these were effectively stopped by the Federal Reserve, which insisted that federal regulations preempted action by other levels of government. Despite some internal dissent at the Federal Reserve, the authorities took no regulatory action. Even after the crisis, when systematic abuses were exposed, there was al­most no prosecution of major predatory lenders. Once the crisis erupted, however, the Federal Reserve used its powers to prop up a wide range of financial institutions both in the United States and abroad. In short, the federal government both supported the expansion of predatory lending and then protected most financial institutions (with the exception of Lehman Brothers) from the crisis that such lending created.

With the platform economy, the government created the opportunity that the big tech companies have exploited by building the internet and then opening it up to commercial activity. The government could have used its authority under antitrust law to constrain or limit the power of these firms, but it chose not to. Moreover, the government has become a major customer of some of these firms with huge purchases of cloud computing from Amazon and Microsoft.

Perhaps the most striking case is health care, where the government’s role as coproducer is most dramatic. First, the government funds most health-related research including much of the research that generates new pharmaceuticals. Second, the government is the largest purchaser of health care services through Medicare, Medicaid, the Veterans Administration, and programs that provide health care to federal government workers. Third, the government, working with researchers and physicians, helps set the care standards that are used throughout the health sector. Yet the government does not limit the prices of prescription drugs even though many providers are protected from competition by government-granted patents, and as we have seen in the opioid crisis, the government was very slow to stop the overprescribing of dangerous medications.

The Disruption of Economic Analysis

Most economists tend to downplay the role of power in the economy. Markets are generally seen as arenas in which individuals have the freedom to choose among alternatives, and the idea of consumer sovereignty is sometimes invoked to convey that it is ultimately the choices of individuals that determine what the economy will produce. In reality, however, the shift away from classical commodity produc­tion and the processes of hyperrationalization suggest that firms are able to exert considerable power over consumers. When individuals have few opportunities to opt out, either because there are no alternative providers or the other providers employ the same strate­gies, any notion of consumer sovereignty goes out the window.

For corporations, the power differential that results from high switching costs makes it easier for firms to exploit their customers, engage in various forms of exclusion and discrimination, and impose other costs on society. The most obvious form of exploitation is to charge more than the service is worth, as with the exorbitant price of prescription drugs, the absurd bills produced by hospital billing departments, continually rising internet charges, and the vari­ous fees, both hidden and visible, charged by banks and money managers. But exploitation also occurs through the provision of second-rate services, as with nursing homes that have not hired enough workers or inter­net‑based firms that make it pretty much impossible to talk to an actual human being.

This issue of corporate power has gained recognition from some economists who have begun to analyze the return of monopoly power in the U.S. economy. Thomas Philippon pulls together a num­ber of careful analyses to show that competition has declined in many sectors of the U.S. economy in the twenty-first century, producing both higher prices and higher profits.25 Phillipon blames weak antitrust policies and lax regulation for this shift, which he attributes to increased corporate influence on Washington policies. The shift away from classical commodity production might also be part of the explanation for the pattern that Phillipon identifies.

Phillipon additionally shows that the tilt towards monopoly is less apparent in Europe’s economy. There are several explanations for why Europe has coped more effectively with the transition away from classical commodities. First, in the effort to integrate the various European nations into one large marketplace, Europe has been more aggressive in recent decades in the use of antitrust policies to block monopoly power. Moreover, European regulators—both at the na­tional and supranational level—have been more effective than regula­tors in the United States, since political contributions play less of a role in European elections. Second, Europe’s systems of national health insurance and greater public provision of care means that there are fewer opportunities for privatization and hyperrationalization of such services than in America. Third, Europe might lag the United States in areas such as the use of the internet and e-commerce.

Beyond the issue of power, the movement away from commodities undermines established sys­tems of economic measurement. Much has already been written about the problems of using gross domestic product as the key metric for analyzing the performance of the economy.26 Our measures of services such as banking are particularly problematic.27 But there are also significant weaknesses in our systems for differentiating between actual increases in GDP and changes in prices. Today, firms are constantly working to differentiate their products from those of competitors by adding new features. This makes it difficult to distinguish between a price increase and an improved product. Moreover, in the effort to woo consumers, there have been dramatic increases in the sheer number of items that are for sale. The Amazon platform reportedly stocks close to 120 million separate items,28 while the Bureau of Labor Standards tracks the prices of about 80,000 products in calculating the consumer price in­dex. In fact, the accepted methodology rests on the idea that consumers are purchasing a relatively standardized basket of goods and services, but that assumption is increasingly problematic as con­sumers have such a broad range of choice for even basic products such as a quart of milk (whole, skim, oat, almond, coconut, and so forth) or a man’s dress shirt (from the Walmart version to custom-made).

But the most serious challenge to economics centers on the idea of a production function. For a given commodity, economists rely on something that is similar to a recipe. Producing an ingot of steel, for example, requires x dollars’ worth of physical capital, y dollars’ worth of raw materials, q dollars’ worth of energy, and z dollars’ worth of labor time. To be sure, there are periodic advances in production technology that produce new and more efficient recipes. But macro­economics depends on the idea that total output is a predictable function of these inputs of capital, raw material, energy, and labor. This leads to the claim that efficiency will be maximized by allocating all of these inputs through market signals. Firms that are more effi­cient will have better access to the inputs they need, and other firms will be under competitive pressure to catch up with those industry leaders.

But the idea of a fixed production function becomes problematic with many unstandardized products. Whether one is talking about building a new subway line in a big city, producing a commercially successful television series, developing an advanced battery with im­proved performance and cost, creating a more effective drug for fighting a particular cancer, or designing a new financial instrument that would be attractive to retail investors, it is hard to see a predict­able relationship between inputs and outputs. To be sure, any of these activities might be done more effectively in one instance than another, but the difference is likely to have more to do with the way the inputs are put together than with the particular dollar value of the inputs.

This insight was elaborated by the economist Harvey Leibenstein with the concept of x-efficiency, by which he meant to capture the differences in output between two firms using roughly identical inputs.29 For example, Firm A might have developed a better system of collaboration between different parts of the organization than Firm B, with the consequence that the time to completion for a new soft­ware program is much shorter than its competitor’s. Or Firm A might be better at creating an environment where its creative staff—writers, artists, scientists—develop better ideas so that both progress and quality of outputs are superior to those of Firm B.

It follows that as an economy moves further away from classical commodity production, x-efficiency becomes progressively more im­portant than allocative efficiency in determining changes in economic output over time. This creates two serious problems. First, few econ­omists have tackled the problem of strategies for improving x-efficiency. The issue has largely been left to organizational theorists and sociologists, but the result is that economists continue to focus on what they know—allocative efficiency—despite the evidence that it is ever less relevant in shaping the performance of economies.

The second problem is even more serious. We stressed earlier that firms increasingly seek to avoid direct competition by differentiating their products and making it more costly for consumers to switch to other providers. The consequence is that the opposite of x-efficien­cy—what we can call x-inefficiency—can be locked into the economy. For many of the dominant firms, it does not really matter whether they are using inputs optimally. Their strong market position means that they can simply afford low levels of x-efficiency, and the chance that they will be challenged by new startup firms is relatively minor. Moreover, if they are challenged, they have a ready option. They often can simply buy up a potential competitor and possibly even suppress their more efficient use of inputs. None of the standard menu of economic policies such as loosening regulations, cutting taxes, or stimulating demand does anything to address this problem.

Governance Challenges of a Post-Commodity Economy

A major irony is that this shift away from commodity production has coincided over the last forty years with an extraordinary resurgence of free market economic ideas—what is often called market fundamentalism. The contradiction is that the Hayekian emphasis on the capacity of the market mechanism to coordinate the disparate activi­ties of millions of people rests on the production of standardized goods that are produced by multiple firms. The reality, however, is that the transition away from the classical commodity creates perva­sive asymmetries of power and information, and poses governance challenges that cannot be solved by conventional markets.

Yet there is a way to explain this irony. The shift away from classi­cal commodities represents a dramatic escalation in human inter­dependence as the division of labor becomes ever more complex. In a world that is increasingly integrated by a whole series of complex systems such as the health care system, the internet, the food production and distribution system, and global commodity supply chains, opportunities to “opt out” and live “off the grid” are very limited. This transformation is exemplified by the impact and influence of social media, and the widespread ambivalence that it produces.

Not surprisingly, this heightened interdependence intensifies people’s fears that individuals will end up as nothing more than cogs in these complex, hyperrationalized systems. This anxiety has, in turn, fueled a resurgence of what Liam Murphy and Thomas Nagel call “everyday libertarianism”—the belief that what I have earned be­longs unequivocally to me alone and that the government’s insistence on taking away some of that through taxation is illegitimate.30 Mar­garet Somers addresses this same phenomenon through her analysis of the widespread influence of “market justice”—the belief in the legit­imacy of the income distribution created by market processes.31 This resurgence has happened both at the elite level—in the theoretical justifications of market fundamentalism—and in the lived experience of millions of citizens.

The reality is that in this increasingly complex division of labor, most people cannot look at a warehouse full of computers or a row of washing machines and say, “I made that through my own labor.” The products of their labor tend to be abstract, and the connections to any actual products are usually tenuous. Nevertheless, insisting that what I earned is unequivocally mine is a way of pushing back against this abstraction by focusing on the concreteness and moral correctness of one’s pretax income. It is a way of drawing a line in the sand that says: “You can push me around only so much; I will fight to protect what I know is mine.”

This resurgence of everyday libertarianism replicates what hap­pened during the Industrial Revolution in England.32 At that time as well, there was a dramatic escalation of interdependence as people were pushed off the land and into the satanic mills of early industrialization. The fear was widespread, particularly in the aftermath of the French Revolution, that the resulting new order would be dominated by governmental power. This was the context in which Ricardo and Malthus insisted on the idea of a self-regulating market and limited government. Their version of “everyday libertarianism” resonated with the anxieties of England’s emerging middle class.33

Neither today nor in the 1830s are limited government and self-regulating markets an adequate response to increasing economic and social interdependence. Nevertheless, the fear that the development of more complex integrated systems will force individuals into obedience and conformity is not irrational. These complex systems can facilitate authoritarian rule precisely because it is so costly for indi­viduals to opt out. It is routine for contemporary authoritarians to exert control over news media, limit what can be said on the internet, and destroy any independence of the judiciary. Once those steps are taken, these complex systems can be used for social control. If, for example, all medical records are now available through an online database, it is not difficult to make access to health care contingent on the individual’s loyalty to the regime in power.

There is no inevitability to the economy degenerating into either a softer or harsher version of authoritarian rule, however. There is an alternative solution that is consistent with maintaining freedom for the individual. This alternative is to make the society more democratic and more egalitarian. If society is successful in doing this, individual freedom would be even greater than in earlier periods when millions had no choice but to perform mind-numbing labor in factories and farms.34

Reforming Governance in the New Economy      

There are certainly parts of the traditional anti-monopoly policy agenda that are still highly relevant to the power imbalances created by the movement away from classical commodities. Some giant firms should be broken up, some should be treated as public utilities that are strictly regulated, and some should be reorganized on a not-for-profit basis. But the point of the analysis here is to suggest that there is a broader governance challenge once we recognize two problems. First, reliance on competitive markets as a mechanism to discipline firms no longer makes sense. Second, many of the critical goods and services are being coproduced by public and private entities, but we cannot assume that those public entities are prioritizing the needs of the public. What we need are new governance structures that would prevent organizations—including corporate entities, nonprofits, and government agencies either working together or separately—from abuses of power and from failing to meet the actual needs of different groups in the population.

These new governance structures are needed both to regulate the production of non-commodities and to shape the future evolution of production to reduce the negative outcomes of hyperrationalization. The problem, as K. Sabeel Rahman has argued, is that the dominant regulatory model in the United States in the post–World War II period has been technocratic; it is focused on finding experts who will use their specialized knowledge to manage such regulatory tasks as influencing the growth of the money supply, keeping financial insti­tutions in line, and promoting competition in markets.35 This model lacks democratic legitimation; it deliberately takes issues out of poli­tics and gives authority to panels of people with expert knowledge. It is then relatively easy for self-interested parties to mobilize public suspicion of elites and argue that the regulators are simply rule-obsessed bureaucrats imposing arbitrary and unfair rules on those who are trying to do something productive. Moreover, technocratic regulation is particularly vulnerable to cognitive capture by the inter­ests that are being regulated. Profitable industries are able to fund scholars to generate studies that endorse policy approaches that are preferred by the regulated groups, and they are often able to persuade the regulators to adopt their way of seeing things. This is, for exam­ple, what happened with antitrust policy in the United States.36 A body of academic research persuaded government regulators that antitrust action should not be taken just because an industry was highly concentrated.

 Rahman insists that sustainable regulation must have a democratic character that includes significant citizen input into regulatory deci­sions. He acknowledges that there would continue to be a role for experts, but citizens would exert enough influence in these forums that those with technocratic expertise would be forced to consider how particular policies impact different segments of the public. Moreover, active citizen involvement would be a protection against cognitive capture, since experts who were too closely aligned with specific interest groups could be exposed as unreliable stewards of the public interest.

The problem, of course, is that there are not obvious models of what a more democratic regulatory regime might look like. Yet progress in developing such models is an urgent priority. If we are unable to solve the problem of creating effective democratic forms of economic regulation, we might be doomed to the consolidation of authoritarian power by governments allied with powerful corporate interests. That is the direction foretold when expert regulation has been neutered by cognitive capture.

Rahman’s advocacy of democratic regulation is rooted in a grow­ing literature that seeks to solve the current precariousness of liberal democracies by creating new institutional mechanisms that would deepen and expand democratic participation.37 The argument is that the widespread distrust of the existing political elites is the consequence of a policy regime in which ordinary voters feel they have little ability to influence the important decisions that impact their lives. In this diagnosis, a key part of the problem is that both local and subnational governments tend to be starved for resources and critical decisions are made at the national or supranational level. As a conse­quence, many voters have disengaged from politics at the grass­roots level with a corresponding decline in their understanding of how politics works. If such voters could be involved in meaningful delib­erations in their own communities, they might develop the skills and organizing capacity to exert greater influence over both sub­national and national elected officials.

There have been many experiments and initiatives that follow from this diagnosis. One of the most significant has been the spread of participatory budgeting from its origins in a Brazilian city to its implementation in hundreds of cities around the world.38 The idea is that a portion of the city’s budget for infrastructure spending is allo­cated through citizens’ assemblies that include all interested residents. There are huge variations in the way that these schemes are implemented in different places, with some cities making the citizen input purely advisory and allowing it to influence only a tiny proportion of the total budget. Regardless of program specifics, however, well-de­signed initiatives that give citizens real power tend to produce greater civic engagement and increased political capacity among the citizenry.

Such experiments suggest that democratizing regulation might be feasible. At the county level, one could imagine regulating the deliv­ery of health care services through elected county health boards that were analogous to elected school boards. The local health boards would also send representatives to sit on a statewide board that would have input into state-level decisions. The local boards could process citizen complaints, so that there would be another avenue of redress to deal with abusive physicians or hospitals and other health facilities that were providing inferior care. But the main focus of the local boards would be on improving health outcomes. They would be both an early-warning system for when things were going wrong—such as physicians overprescribing dangerous opioids—and they could also deal proactively with public health challenges such as rising rates of childhood asthma or adult diabetes. There have been previous initiatives to increase citizen involvement in health care delivery, but these have usually been captured by interest groups. Some combination of improved institutional design and public mobilization would be needed to make sure such elected boards would be both effective and responsive to all sectors of the community.

Locally elected boards are not a feasible response to all of the challenges of governing a post-commodity economy, however. Regu­lating the internet, addressing the use and abuse of personal data, and the management of the financial system has to occur at the national or even the international level.39 But here, as well, there are ways to assure that regulation is more democratic than technocratic. For example, for independent regulatory agencies such as the Federal Communications Commission, the Securities and Exchange Commission, and the Food and Drug Administration, Congress could create public oversight boards that would meet on a regular basis with the commissioners and their top staff. The rules could require that the members of the oversight board be completely independent of the regulated interests, so they would be in a position to challenge cognitive capture. Moreover, the oversight boards would have a budget sufficient to commission research to challenge the decisions of the appointed commissioners. This would allow them to generate a public debate about the choices that the regulatory agency was making.

To be sure, there are many complexities of institutional design that need to be worked out. But as with the locally elected health boards, the fundamental idea is that the democratic citizenry needs to exercise sovereignty over the workings of these complex systems that shape many of these key non-commodity outputs. It will take considerable collective learning and adjustments to make these new institutional arrangements work effectively, but both these new governance institutions and the process of learning would work to strengthen democracy.

This essay has focused on the new governance challenges created by the movement away from classical commodities. An effective response to these new governance challenges, however, cannot be blind to issues of race, gender, immigration status, and the environment. Here again, simply reviving the older anti-monopoly rhetoric and policy repertoire is doomed to failure. In the current context, dealing with power imbalances requires reconstructing democratic governance, and this must be done in a way that is egalitarian, inclusive, and environmentally sustainable. If it is not, it will certainly fail because it will lack the broad support that is required to overcome the inevitable resistance of powerful interests.

The choices we face are rather stark. Without significant initiatives to deepen democracy, a non-commodity economy will increasingly lead to the consolidation of power by giant corporations and the state. In one scenario, the corporate entities will be dominant, and the consequence will be that all of the irrationalities of a poorly regulated market economy will be intensified. The rich will become ever richer, environmental crises will intensify, and powerful interest groups will control government decision-making. In the other scenario, the state will be dominant, and it will consolidate new forms of authoritarian governance bolstered by the new capacities of surveillance capitalism. In both of these scenarios, the future is bleak.

This article originally appeared in American Affairs Volume IV, Number 3 (Fall 2020): 20–47.

This paper was made possible by the generous support of the Hewlett Foundation. Among those who provided valuable feedback on earlier versions of this paper are George Aumoithe, Marion Fourcade, Angela Harris, Richard Healey, John Judis, Matthew Keller, Jee Kim, Karl Klare, Mieke Meurs, Will Milberg, Juliet Schor, Margaret Somers, Mridula Udayagiri, Fred Wherry, and Josh Whitford. The author alone is responsible for any remaining errors.

1 See particularly the work of the Open Markets Institute. See also Tim Wu, The Curse of Bigness (New York: Columbia Global Reports, 2018); Matt Stoller, Goliath: The 100-Year War between Monopoly Power and Democracy (New York: Simon and Schuster, 2019); Gerald Berk, “Antimonopoly and the Democrats,” Dissent, November 25, 2019.

2 Ellis Hawley, The New Deal and the Problem of Monopoly (Princeton: Princeton University Press), 1966.

3 Gabriel Winant, “No Going Back: The Power and Limits of the Anti-Monopolist Tradition,” Nation, January 2, 2020; James Galbraith, “The Past and Future of Antitrust,” American Affairs 4, no. 1 (Spring 2020): 55–62.

4 This was analyzed by Karl Polanyi through his concept of fictitious commodities; see Polanyi’s The Great Transformation (Boston: Beacon Press, 2001).

5 Henry Sumner Maine, Ancient Law (New Brunswick, N.J.: Transaction, 2002), ch. 5.

6 Karl Marx and Friedrich Engels, The Communist Manifesto, in The Marx-Engels Reader, ed. Robert Tucker, 2nd edition (New York: Norton, 1978),

7 Gary Becker, The Economics of Discrimination (Chicago: University of Chicago Press, 1957).

8 Caitlin Rosenthal, Accounting for Slavery (Cambridge: Harvard, 2018).

9 Karl Marx, “The Fetishism of Commodities,” in The Marx-Engels Reader, ed. Robert Tucker, 2nd edition (New York: Norton, 1978), 319–29.

10Rising Wages Hit Firms’ Profits in China’s ‘Sock City,’” South China Morning Post, November 21, 2014.

11 State of Innovation, ed. Fred Block and Matthew R. Keller (Boulder: Paradigm, 2011).

12 Daniel Roos, Daniel T. Jones, and James P. Womack, The Machine that Changed the World (New York: Scribner, 1990); Josh Whitford, “Waltzing, Relational Work, and the Construction (or not) of Collaboration in Manufacturing Industries,” Politics & Society 40, no. 2 (2012): 249–71.

13 “A Tiny Screw Shows Why iPhones Won’t Be Assembled in USA,” New York Times, January 28, 2019. This reasoning could change, however, if trade tensions with China become more serious. The question is whether it would be easier for Apple to rebuild those supply chains in the U.S. or in Vietnam or Malaysia.

14 Data are from the Bureau of Economic Affairs, “Personal Consumption Expenditures,” National Income and Product Accounts.

15 Lewis Daly “What Is Our Public GDP?” (New York: Demos, 2014).

16 E. Brynjolfsson and J. H. Oh, “The Attention Economy: Measuring the Value of Free Digital Services on the Internet,” Thirty Third International Conference on Information Systems, Orlando 2012.

17 B. Bridgman, “Accounting for Household Production in the National Accounts: An Update, 1965–2014,” Survey of Current Business (February 2016): 1–5.

18 The central role of infrastructure is also emphasized in Foundational Economy Collective, Foundational Economy (Manchester: University of Manchester Press, 2018).

19 Mark Granovetter, “Economic Action and Social Structure: The Problem of Embeddedness,” American Journal of Sociology 91, no. 3 (November 1985):

20 Albert Hirschman, Exit, Voice, Loyalty (Cambridge: Harvard University Press, 1970).

21 Paul David, “Clio and the Economics of Qwerty,” American Economic Review 75, no. 2 (1985): 332–37.

22 K. Sabeel Rahman and Kathleen Thelen, “The Rise of the Platform Business Model and the Transformation of 21st Century Capitalism,” Politics & Society 47, no.2 (2019): 177–204; Shoshana Zuboff, The Age of Surveillance Capitalism (New York: PublicAffairs, 2019).

23 Fred Block, “Democratizing Finance,” Politics & Society 42, no. 1 (2014): 3–28.

24 Alana Samuels, “When Wall Street Is Your Landlord,” Atlantic, February 13, 2019.

25 Thomas Philippon, The Great Reversal (Cambridge: Harvard University Press, 2019.)

26 Joseph Stiglitz, Amartya Sen, and J.-P. Fitoussi, Mismeasuring Our Lives (New York: New Press, 2010).

27 Brett Christophers, Banking across Boundaries (Chichester: Wiley Blackwell, 2013).

28 “How Many Products Does Amazon Sell?,” Scrapehero, April 24, 2019.

29 Harvey Leibenstein, Beyond Economic Man (Cambridge: Harvard University Press, 1976).

30 The term comes from Liam Murphy and Thomas Nagel, The Myth of Ownership (New York: Oxford University Press, 2002). See also David Woodruff, “To Democratize Finance, Democratize Central Banking,” Politics & Society 47, no. 4 (2019): 593–610.

31 Margaret Somers, “How Grandpa Became a Welfare Queen,” in The Transformation of Citizenship, vol. 1, ed. Juergen Mackert and Bryan Turner (New York: Routledge, 2017), ch. 6.

32 Fred Block, “Read Their Lips: Taxation and the Right-Wing Agenda,” in The New Fiscal Sociology, ed. I. W. Martin, A. K. Mehrotra, and M. Prasad (New York: Cambridge, 2009), 68–85.

33 Everyday libertarianism or market justice can be seen as related to Marx’s commodity fetishism. People understand themselves in relation to things, but they are unable or unwilling to recognize the social relations in which they are embedded.

34 Polanyi, Transformation, 265.

35 K. Sabeel Rahman, Democracy against Domination. (New York: Oxford University Press, 2017).

36 Brett Christophers, The Great Leveler (Cambridge: Harvard University Press, 2016).

37 Deepening Democracy, ed. Archon Fung and Erik Olin Wright (New York: Verso, 2003); John Gastil, “The Lessons and Limitations of Experiments in Democratic Deliberation,” Annual Review of Law and Social Science 14 (2018): 271–91.

38 Gianpaolo Baiocchi and Ernesto Ganuza, Popular Democracy: The Paradox of Participation (Stanford: Stanford University Press, 2017).

39 Fred Block, “Financial Democratization and the Transition to Socialism,” Politics & Society 47, no. 4 (2019): 529–56.

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