The passage of the Inflation Reduction and chips Acts suggests that the us state is tilting in the direction, not just of fiscal stimulus, but of industrial policy and of a green transition. Neither of these Acts come close to fulfilling the dreams of the new American social-democratic left; even Biden’s original Build Back Better plan came in for criticism as seriously inadequate to the scale of spending needed to avert disastrous climate change, while large parts of these new government programmes consist of handouts to big corporations.footnote1 Still, it is undeniable that Bidenomics represents an unexpected bow in a left direction, a bow that would have been deeper had Joe Manchin and Kyrsten Sinema not put up roadblocks in the Senate.

In this context, a portion of the American left is shifting locations. Where it once offered a strident, external critique of state policy—the government is doing it wrong—Jacobin magazine now sometimes publishes internal critiques as well: the state is doing it right, but not doing enough.footnote2 Of course, some rightly express fears about how this policy shift has been announced as part of a new Cold War with China. At the same time, what one office of government is proffering with outstretched hands, another part of the same apparatus is taking away. After an initial nod of support for Biden’s new economic policies, the Fed has rapidly reversed course, raising interest rates in response to the supposed dangers of an accelerating wage-push inflation that is nowhere in evidence. For Fed Chair Jerome Powell, a modicum of success in compressing the wage scale—to a degree not seen since 1995–2000—is a step too far.footnote3

In a recent issue of nlr, Dylan Riley and Robert Brenner try to hold the pieces of this contradictory formation together, to sketch a theory of ‘political capitalism’ which, they say, has emerged under conditions of ongoing slowdowns in economic growth rates and even tendential economic stagnation.footnote4 In their view, America’s political battles are increasingly taking place as wars among thieves, fighting over what are essentially extracted rents, rather than over the direction of future economic development. Their theses have come in for criticism, in these pages, by Matt Karp, who proposes an alternative political analysis, and Tim Barker, who questions their economic arguments.footnote5

Is there something more in Bidenomics than Brenner and Riley aver, perhaps even a turn towards a new era of state-led economic development and green growth? In a recent article for Jacobin, J. W. Mason uses the occasion of Riley’s recent Sidecar piece on the collapse of Silicon Valley Bank to attempt a critique of Brenner’s account of postwar capitalism’s long downturn, which also underlies the Riley–Brenner theses.footnote6 Mason, a Left Keynesian who teaches economics at John Jay College, nyc, claims that Biden’s Inflation Reduction Act (ira) deserves a cautious welcome from the Left, on the grounds that it directs spending towards productive enterprise, rather than into the accounts of financial asset-holders. There is no hard external constraint in supply or demand for decarbonization technology or renewable energy, he argues. The profit motive can be harnessed by the state to ‘meet human needs’ via green industrial policy. The ira should be seen as a step towards this, although public investment in private enterprise should be ‘managed’ to avoid destructive competition and mass unemployment. The logic here is that fiscal spending—on a large enough scale, and with a green-growth orientation—should be sufficient stimulus for the economy to achieve take-off and generate a lasting economic boom.

Brenner’s account of the end of the long boom, an account which also provides an explanation of why another such boom is highly unlikely, presents a serious intellectual obstacle for Mason’s proposal. At the heart of Brenner’s analysis is the notion of chronic overcapacity: too many producers are trying to sell in the same markets, leading to lower prices, lower profit rates, reduced investment and falling rates of economic growth. Taking Riley’s summary of the state of play as a good proxy for Brenner’s analysis, Mason argues that Riley, ‘following Brenner—talks as if there was a fixed amount of demand out there that producers must compete for’. Hence, Mason speaks about the ‘Brenner paradigm of a zero-sum competition for shares of a fixed market’, and argues that such an account has extremely limited explanatory power, or even none at all.

This is a complete misinterpretation. Brenner’s is not, as Mason believes, a static theory, in which there is a ‘fixed amount of demand’ that producers fight a zero-sum game to capture. Brenner’s theory of overcapacity is dynamic. He charts the conditions of increasing, system-wide economic stagnation, in which demand stimulus does issue in productivity and income growth, but with declining returns to stimulus over time.footnote7 In that vein, he explores the failures of successive attempts at Keynesian demand stimulus to revive the self-sustaining, high-growth economic engine that revved between 1947 and 1973—starting with the direct, public stimulus era of the 1970s and 80s and ending in the indirect, asset-price stimulus era of the 1990s to 2010s. But at no point does he argue that demand stimulus is wholly ineffective. On the contrary, much of his corpus is about the partial effectiveness of that stimulus. The question is, what blocks Keynesian stimulus, in its public and private forms, from restarting the private-investment growth engine? Why does such stimulus tend to be so inflationary, either of asset- or goods-prices, going back to the 1970s? What does Brenner mean when he attributes this stagnation tendency specifically to ‘overcapacity’, to which he later added ‘over-accumulation’?

Note that Brenner does say that this overcapacity results in an ‘increasingly zero-sum game’, but his meaning is quite different from that of Mason’s straw man.footnote8 Brenner points out that, in the world economy today, unlike during the postwar boom, some economies are able to expand rapidly, but only at the expense of others. That is because, as the world economy grows more slowly, any one country can achieve rapid export-led expansion only by taking market share away from others. For example, if global incomes were growing at 2 per cent per year, then a country could achieve rapid export-led growth of 4 or even 8 per cent per year only by taking market shares away from other countries, which would correspondingly grow at less than 2 per cent per year.footnote9 The expansion of the us in the 1990s came at the expense of Japan and Germany, which were in dire straits by 1995. The expansion of China since 2000 deindustrialized Mexico and Brazil. Again, what blocks broad-based and rapid economic growth from resuming, and why is fiscal stimulus far from enough?