Andrew Yang speaking at the Des Moines Register’s Political Soapbox at the Iowa State Fair in 2018
Andrew Yang speaking at the Des Moines Register’s Political Soapbox at the Iowa State Fair in 2018 Andrew Frawley

What is human-centered capitalism? The 2020 presidential Democratic candidate Andrew Yang believes it's the "next stage of capitalism." He sees capitalism as a set of clear stages that begin with the markets of old; next is mercantilism (which is just robbery); then there is the industrial capitalism of the 19th century; then the welfare capitalism of the second half of the 20th century; and the neoliberalism of today (he calls the last 'institutional capitalism'). The human capitalism he proposes appears to be a synthesis of all of these stages. But what is missing from this picture? Not only that it fails to include the struggles of socialism as playing a key part in this evolution, but Yang's concept of capitalism doesn't recognize its boundaries. For him, it does not have a clear outside and a clear inside.

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The history of capitalism, according to Yang, is only about capitalism, as if it did not have an internal logic that responded and adapted to an outside that constantly threatened its very existence. One of those threats was/is socialism, another is the current environmental crisis. But what exactly is it that's threatened? What are people in a variety of social movements confronting when they want better health care, better pay, better childcare, clean water? What is the internal logic of capital?

Before explaining this logic, I need to point out that in the main, Yang's concept of human capitalism is not new. It exists in the world today. It's Germany's social market economy, which was adopted after the Second World War from the ideas of a group of German thinkers who were close (and often met) with a group of American thinkers, many of whom taught at the University of Chicago. The concepts of the former became ordoliberalism, the latter neoliberalism. Combined, these thinkers are known as The Mont Pelerin Society.

On paper, the virtues of ordoliberalism are exactly the same as those of Yang's human capitalism. The state's function is to maintain or enforce market competition and ensure that everyone has the means and welfare protections to participate in the market. Ordoliberalism is, according to Wikipedia: "a socioeconomic model combining a free market capitalist economic system alongside social policies that establish both fair competition within the market and a welfare state." This is mostly Yang's next stage, though his example is Singapore's economy rather than Germany's. But there is one innovation in his human capitalism. It abandons the measurement of economic success or failure that's based on the amount of money circulating in an economy (GDP) for a measurement based on "human well-being and fulfillment." But it is indeed this innovation or point of departure from the social market that reveals he doesn't know what capitalism is exactly.

Capitalism is nothing but the opening of the golden gate to infinity. And in this neverending land, it must grow and grow and avoid anything that comes close to a steady state, an economy with zero growth. This concept (the steady-state economy) is now a key component of a branch of thinking that's described as ecological economics, but it actually goes back to a chapter in John Stuart Mill's 1848 Principles of Political Economy (he called it a stationary state).

Mill's steady state:

When a country has carried production as far as in the existing state of knowledge it can be carried with an amount of return corresponding to the average strength of the effective desire of accumulation in that country, it has reached what is called the stationary state; the state in which no further addition will be made to capital, unless there takes place either some improvement in the arts of production, or an increase in the strength of the desire to accumulate. In the stationary state, though capital does not on the whole increase, some persons grow richer and others poorer. Those whose degree of providence is below the usual standard become impoverished, their capital perishes and makes room for the savings of those whose effective desire of accumulation exceeds the average. These become the natural purchasers of the lands, manufactories, and other instruments of production owned by their less provident countrymen.

Mills did not understand what capitalism is, the infinity of growth. And Yang, in his way, is also misreading the system with his proposed human-centered measurement of the system. Capitalism needs the GDP. It has to know that it is growing by 2 percent or 4 percent or whatever. When the GDP falls below zero, this is called a recession; when it falls far below zero, it is a depression. At this low point, money is violently pulled out of circulation and people are thrown out of work, although there is clearly work to be done, and markets to supply. The problem is not the market or the human or competition. It is the infinite growth of capital.

This point could not be emphasized enough because it has enormous explanatory power. You will misread technological progress, as Yang does, if it is not factored in a concept of capitalism. Technological advancement is a consequence of the pressure to keep growing the magic stuff of capitalism, capital, and often that means cutting the costs of production. This fact has been with us from the very beginning (capitalism's Dutch moment in the 17th century). It is even mentioned in a book that Yang names in his manifesto, Adam Smith's The Wealth of Nations. It is by no means dead. You only have to read about the layoffs at General Motors to see the core of this type of economy (the inside of capitalism) has not changed. The GM job cuts are occurring at a time when the corporation is very profitable. Why? Because its capital, which is mostly owned by the rich, needs more room to grow.