Socio-Economic Review (2011) 9, 5981

Advance Access publication November 11, 2010

doi:10.1093/ser/mwq026

Are there laws of motion of capitalism?

Robert Boyer *
CEPREMAP, Paris; GREDEG, Sophia-Antipolis, France
*Correspondence: robert.boyer@ens.fr

Keywords: capitalism, varieties of capitalism, markets, institutional political

economy, regulation theory, financial crisis
JEL classification: B51 current heterodox approaches: socialist, Marxian, Sraffian, B52 institutional, evolutionary, E02 institutions and the macroeconomy, O11
macroeconomic analysis of economic development, P16 political economy

1.

Introduction

The last decade has clearly shown the limits of mainstream economists
approaches. The panorama of ideas and theories has been enlarged after the
bursting out of the 2008 crisis and some key economists have been convinced
to study capitalism as a system. Actually, the major stylized facts of the 2000s
do not fit with the market economy doxa and seem to give a clear advantage to
methodologies that recognize the relevance of the notion of capitalism. In
order to enlighten this new intellectual environment, this article confronts four
major approaches.
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This article takes seriously the conflict of paradigms between a market economy
approach and a capitalism approach. The first has recurrently shown its inability to
explain the major stylized facts of the last two decades. The second now receives
more attention as a possible alternative but the field has been so underexplored
by so few people that the task is somehow promethean. Is it possible to explicitly
state laws of motion of capitalism? Previous failed attempts justify some
scepticism. A review of the multiplicity of meanings and conceptualizations
of economic laws suggests first that the existence of general quantitative
regularities, which economists are fond of, is quite unlikely. Second, it is possible
to identify explicit partial and temporary regularities that are indexed upon a given
institutional configuration of capitalism. Third, mobilizing the results of past
historical analyses and building upon the contributions of some key economists
and social scientistsMarx, Polanyi, Schumpeter, Kaldor, Wallerstein and Kindlebergerthe article proposes seven conjectures about possible laws of motion of
capitalism.

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2.

Does a scientific approach need explicit economic laws?

A French economist who specializes in the history of economic thought has

recently proposed a very illuminating survey of the concepts of law (Berthoud
et al., 2008). It is possible to extract from his analysis at least seven proposals
and conjectures and to extend them to the purpose of the present paper: can
one identify economic laws?
P1. First the duality of the concept of law in sciences is to be underlined: this term
either indicates a constant relationship between variable terms or it states a
causality which is exerted under well-defined conditions. One seems to perceive in the evolution of the doctrines and economic theories a shift from

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Since the Second World War, economists have benchmarked their discipline
against the natural sciences and mathematics. Implicitly, they were looking at
the equivalent of the laws of physics. In retrospect, this grand project has been
disappointing. This is an invitation to investigate the various meanings of laws
in economics and by extension in social, political and historical disciplines
(Section 2).
The term capitalism seemed to belong to a remote past of uncertain foundations for the economic discipline and of hot ideological debates. Had not
the Marxist project of discovering the laws of motion of capitalism failed? Therefore, the concept of market economy permeated the whole economic profession as
a more decent and useful concept. Contemporary research does observe an opposite shift towards the relevance of capitalism, as a multidisciplinary social sciences
concept. Does it help in diagnosing regularities and the equivalent of laws
(Section 3)?
One then encounters a striking paradox. Some heterodox economic
approaches had pursued an investigation of capitalism as a dynamic and evolving
socioeconomic system. One of their basic findings has been to point out the persistent variety/diversity of contemporary capitalisms but with few concerns about
locating the features common to all of these varieties. Quite on the contrary, each
configuration seemed to exhibit specific macroeconomic quantitative regularities.
This is the joint conclusion of the so-called regulation theory and the Varieties of
Capitalism approach (Section 4).
Is it nevertheless possible to pinpoint other types of regularities? It is probably
the case if one adopts a more modest conception of regularities as qualitative dynamical patterns. In order to do so, it is crucial to revisit the main contributors to a
political approach of capitalism and to test their conjectures against the stylized
facts that emerge from the bulk of economic and financial history researches.
Seven broad conjectures emerge out of this very preliminary survey (Section 5).

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the first to the second definition. If the classical economists sought to determine the laws and principles that govern the creation of wealth, the majority
of the contemporary economists seem to be satisfied if they can exhibit any
causality between economic variables or between other variables and some
economic variables.
P2. It would seem that another dividing line is relevant to understanding the
different concepts adopted, respectively, by the macroeconomists who refer
to law as causes and the microeconomists who construct a law as a norm of
rational behaviour. The first group seeks causal mechanisms (for example
that happens if the Central bank raises its interest rate). The second one
rather clarifies what should be the rational behaviour of an individual under
the assumption that only resource allocation problems matter.
P3. The standard theory which puts forward a positive approachimplicitly
research into the laws governing the economyis in fact mainly a normative
theory: how resources should be allocated in an economy that would function
according to the principle of full rationality at the individual level and efficiency of markets. The permanent reference to the concept of optimality illustrates this typical primacy of the professional economist habitus. Some have
even advanced that the standard economist was in fact a preacher of the
market (Marglin, 2008). The misadventures of the Washington Consensus
are there to show the pervasiveness of this conception of economics as a discipline. Today researchers in economic sociology and political economy are following a different and more promising strategy, basically a positive approach.
P4. Economic history does not have to refer to the concept of law since it is essentially a matter of interpretation: it would be a form of hermeneutics. Similarly,
the French economics of convention (leconomie des conventions) brings
into play the plurality of justifications which the individuals may give of
their actions according to the context and the place (une cite in French)
and has coined the concept of test (epreuves), whereby conflicting logics are
struggling to impose an outcome that will depend upon the idiosyncrasies of
place and time. Thus one is far from the mechanicist concept of a causal
link restricted to the economic sphere. Since its inception, regulation theory
has pointed out how the historical time of structural change was orthogonal
to the time of expectations that is implicit to neoclassical theory which
assumes a stable institutional, technological and political environment.
P5. Consequently, what is the status of the pure economy? It aims to sustain a
rigorous analytical judgement. Thus the Walrasian model attempts to
capture the essence of a market economy via a thought experiment. The idea
of causality tends to dissolve into that of interdependence of individual behaviours coordinated by the price system. Whereas the Hayekian conception
assumes that the economic system functions as much with ignorance as with

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R. Boyer

This brief survey suggests a quite cautious approach in the search of regularities
and causal relations in a social science such as economics.
3. Does the shift from a market economy to a capitalism
approach help?
Yesterday, economists were studying market economies, now all of them propose
to analyse the merits and limits of capitalism. Nevertheless, this does not mean
the emergence of an alternative and coherent paradigm. Even the definitions of
capitalism are quite diverse, because capitalism is a complex entity. Thus, capitalism is still challenging social scientists. Implicitly, at least, economists,

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informed action, standard theory sticks to the postulate that models are
designed like experiments of thought, for lack of a possibility of experimentation at the required level, especially for macroeconomic issues. In a sense,
one could oppose the project of mathematization and of axiomatization of
the economy to that of the constitution of a social physics that would study
how configurations are reproduced and change sequentially under the effect
of a series of causalities.
P6. From a strict epistemological point of view, it is extremely difficult to make
compatible the laws conceived like causal mechanisms and the laws emanating
from humanly constructed norms and regulations. Via specialization, the
economist asserts a causal approach (what are the explanatory factors of
inflation, of unemployment?) but the normative approach is never very
faraway insofar as he is tempted to see in the social norms, legal or ethical,
the sources of the prejudicial discrepancies from a model in which, for
example, unemployment would not exist and where price flexibility would
be guaranteed by principle. Other currents of research attempt to show that
it is rational to satisfy certain ethical standards because they may improve
economic efficiency. However, in any case, ethics and economics belong to
quite distinct domains. This tension between economic efficiency and social
values is very present in contemporary research and it brings many ambiguities, or worse, major misunderstandings.
P7. Finally, Arnaud Berthoud advances the idea that economics should belong to
the field of art or technique, because it should be located at an intermediate
level between a pragmatic approach and pure science. This meso-level is familiar to regulationist research which attempted to show that intermediate categories are necessary to diagnose the existence of regularities, even if they
change through time and across space. Whereas the concept of law seems to
postulate invariants which cross the diversity of economic systems, would
not the task of the economist be rather to delimit with precision the conditions
under which certain regularities are reproduced transitorily?

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63

sociologists and historians do not treat market economy and capitalism as

synonymous. What are the key features that distinguish these two visions of
economies and societies?

First, the market is only one component of a capitalist economy that does not
exclude other coordinating mechanisms and actors than markets and firms.
Second, capitalism is not by nature only an economic system, since it requires
legal rules and a precise type of political power that respects and defends

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The adoption of the notion of a market economy implies that markets are the
dominant, if not totally exclusive, mechanisms for coordinating economic
activity. States, communities and civil society are a priori excluded and this
might be perceived as evidence of the limited ambition of the economist.
But as soon as actual observations contradict the hypothesis of selfequilibrating markets, the neoclassical economists are prone to attribute the
related malfunction to an imperfection with respect to the ideal of a pure
market. Are such imperfections so widely present, for example for labour
and credit and why do they persist? Because these markets are embedded
into social, political relations that distort the mere pursuit of self (economic)interest and the convergence towards an equilibrium. Hence general equilibrium theory is the implicitand frequently explicitbenchmark in many
empirical analyses by conventional economists. Contrary to frequent statements, a market economy approach is not necessarily devoid of any value judgement, since it assumes that efficiency is the key performance criteria and that
the markets are the less imperfect mechanisms of coordination between free
and independent individuals pursuing their own interests. Indeed, for some
fundamentalists, markets are the only perfect mechanism. The normative
content of the notion of market economy should never be underestimated.
Last but not least, since Smith (1776 [1976]), the market is perceived by economists as an abstraction for the price mechanism itself. The power of the metaphor called the market is quite strong since its use has been extended to some
domains of sociology (the marriage market, the family, etc.) and subdisciplines of political sciences (the market for ideas, voting as a market, the
median voter, etc.).
The notion of capitalism unfortunately evokes an ideological construction that
is supposed to be sustained by the doctrine of liberalism, to follow feudalism
and to be opposed to socialism and communism. Actually, it can also be an
analytical tool. A synthetic definition would state that capitalism is a legal
regime, an economic system and a social formation that unfolds in history and
that is built upon two basic social relations: market competition and the
capital/labour nexus. The differences with respect to a market economy are
not purely semantic (Table 1).

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R. Boyer

Table 1 From market economy to capitalism: a major paradigm shift

Concept of
markets

Market economy

Capitalism

Pure economic abstraction of supply and

demand adjustments
Horizontal coordination among equals

A nexus of social relations

Ideally self-equilibrating

Uniqueness/
diversity

Ideal of a total disconnection of the

economic sphere (pure economy)
Implicit conception of a natural equilibrium

At best, kinematical time

Ideal of Pareto optimality . . . and . . .
benchmarking and competition reduced
variety

property. Empirical observations exhibit more diverse social, economic and political configurations than would a mere economic system. This explains why the
literature on capitalism stresses so much the existence of stages of capitalism
(commercial, industrial, financial, cognitive) as well as the variety of its brands
in the contemporary world.
Third, the interplay of market competition with the conflicting nature of the
capital/labour nexus promotes the accumulation of capital as a systemic constraint. This is a process full of disequilibria, contradictions and crises, at odds
with the smooth equilibrium typical of the static world captured by the notion
of a market economy. Capitalist economies are dynamic systems, putting into
motion structural change and innovation, i.e. history. The authors working
along these linesMarx, Sombart, Veblen, Schumpeter, in a sense Keynes,
Braudel and Galbraith among othersdo recognize the historical nature of capitalist configurations and the interdependence between the various spheres
(economy, polity, society) that are kept disconnected by market economy
approaches.
Finally, these two different research programmes should be distinguished, even
if the reference to capitalism is not, by far, a sufficient condition for capturing the
essence of contemporary economies. It might explain why a significant fraction of
former orthodox economists have adopted a dynamic approach to capitalism

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Links between
various
spheres
Nature of
evolution

Both horizontal (competition

among firms) and vertical
relations (capital/labour
nexus)
Propagation of an unbalanced
capital accumulation
The interdependence of
economy, society and polity
is intrinsic to capitalism
Accumulation is the norm,
and changing social and
economic relations prevent
any static equilibrium
Sense of historical time
Succession of historical stages
and coexistence of various
brands of capitalism

Are there laws of motion of capitalism?

65

instead of refining models of pure and static economies. Can one find laws of
motion of capitalism or are they the nave illusion of Marxism?

4. How to overcome the legacy of two decades of studies about the

persistent diversity of capitalisms?

4.1

The search for time- and space-specific regularities: regulation theory

Two assumptions were at the core of the seminal analyses about the emergence,
maturation and crisis of Fordist growth that was the starting point of regulation
theory.
On the one hand, it is necessary to specify the precise configuration of basic social
relations prevailing in a capitalist economy in order to understand the nature of
the growth process, its stability or fragility, the prevalence of inflation or deflation, under-employment or over-employment. The nature of the capital
labour relations and the form of competition shape the accumulation regime
that is propelling long-term growth. These two institutional forms along with
the monetary regime also define various regulation modes, which shape the
dynamic pattern according to which actors adjust to their environment
(Figure 1).
On the other hand, capitalism features a relentless transformation of technologies, products, organizations and institutions. Therefore, the concept of equilibrium is devoid of meaning since the accumulation process generates
endogenously recurring imbalances that can be either self-correctingperiodic recessions are the methods for re-equilibrating accumulationor the
source of the break down of the past architecture of institutional forms: this
then is a major or structural crisis. In such circumstances, the previous regularities vanish and the apparent economic determinism is replaced by an open
process of social and political conflicts, trials and errors, in order to build new
institutional forms and possibly restore the viability of an emerging accumulation regime.

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This was precisely the aim of seminal research upon the long-run transformations
of American capitalism (Aglietta, 1982). This was the starting point of regulation
theory and the related large research programme based on the multiplication of
long-run historical analysis of various national economies. This was complemented by a series of contemporary international comparisons of institutional architectures (Jessop, 2001; Boyer and Saillard, 2002; Amable, 2003). Their results
converge with those of similar institutional analyses (Aoki, 2002; Fligstein,
2001; Hall and Soskice, 2001; Yamamura and Streeck, 2003; Streeck, 2009a).

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R. Boyer

Thus, traditionally, regulation theory explores an intermediate space between

general laws that could be derived from the basic features of a capitalist mode of
production and the simple observation of empirical regularities. Between grand
theory and pure description, the formalization of models and the test of the
related modes of accumulation and modes of regulation seek to build this mesolevel analysis. Possible regularities are to be observed at this level. The development of this research programme has more and more downplayed the possibility
of precise quantitative economic laws. Here are some examples.
Contrary to the early works on the United States and France, the Fordist
accumulation regime has appeared much less general than expected. This is
the central result of systematic international comparisons concerning
various European countries, Japan and Korea (Boyer and Saillard, 2002).
The diversity is still more pronounced when the sample of countries is
extended to Latin America (Quemia, 2001).
The modes of regulation themselves are far from having converged towards a
canonical model even if national economies became increasingly interdependent. When they are facing identical shocks, they react differently because
their institutional configurations are not interchangeable. When these economies finally enter into a structural crisis, the objectives of the economic
policy and the recombining of the institutional forms continue to differ.
Long-run historical analyses confirm that possible economic regularities are
restricted to a period of a few decades. This is the case for productivity
regimes or for wage formation because the potentialities of a regulation mode

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Figure 1 Starting from Marxian theory in order to understand the institutions of capitalism:
regulation theory in a nutshell.

Are there laws of motion of capitalism?

67

tend to become exhausted because of its maturation and very success. Essentially,
the crisis of a configuration is, in its initial stages, in the repetition of the business
cycles which lead to a slow deterioration of the structural parameters of the
accumulation regime out of its stability zone (Lordon, 1997).

4.2

The economist: a modern Sisyphus?

If one acknowledges these premises, a double-paradox threatens economic

analysis.

But it is precisely that a capitalist economy is never stuck in a stationary state since
it is affected by the process of accumulation, the recurrence of social conflicts,
major crises and the impact of radical innovations. In such a context, the economist cruelly lacks the tools needed in order to determine the consequences of a
radical innovation: will it, or not, end up generating an unprecedented configuration? The errors of the profession in assessing the consequences of the Euro, the
temporal horizon of the New Economy or the Great Transformation of the Soviettype societies, are there to show the difficulty of the task. When it is important to
analyse an emergent potential regime, the economist is far from being adequately
equipped. The profession does not have a list of the laws supposed to govern great
economic transformations. At most, the neo-Schumpeterians imagine the recurrence of episodes in which a bunch of innovations, primarily technological, transforms the economic system and feeds a new process of accumulation. But they are
not so relevant for analysing institutional, financial and political innovations
without which technological innovations would not be viable.

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The first points out that economists end up understanding the features of a
growth regime or the success of an economic policy at the time when they
enter into crisis and erode the effectiveness of the public interventions that
were so effective yesterday.
The second paradox builds upon the opposition between the kinematic time of
the dynamic models of the economist and the historical time of the transformation of the techniques, institutions, laws and political coalitions. By methodological convenience, the economist postulates the equivalent of a stationary
state, for example a static macro-economic equilibrium or a steady growth
path. In such a configuration, representations, expectations and behaviours
coalesce into a smooth economic equilibrium that makes them mutually compatible. In such a case, the knowledge of the economist is not fundamental
since the economic agents themselves seem to have discovered the economic
characteristics of the prevailing model. It is the charm and evident limit of
the rational expectations assumption. But then crises come as totally unexpected and wildly surprising events, in any case caused by exogenous factors.

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R. Boyer

4.3 Contrasted national trajectories and diversity of contemporary capitalisms:

where is the theory?

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At this stage of the presentation, the logical conclusion seems to be that the search
for general laws for capitalisms is pointless. It is especially so for the regulationist
research agenda: Can one find laws of capitalism? It is probably an impossible
mission! Nevertheless, it might be time to come back to the status of this
theory and try to capitalize upon a cumulative research programme and, incidentally, to reply to frequent criticisms. If economic regularities are indexed upon
accumulation regimes, then this is not at all a theory but a mere post hoc description. Actually until now, no quantitative regularity could be derived from the
comparison of the five accumulation regimes that have been observed in US
capitalism (Table 2). Similarly, if these accumulation regimes are self-defeating,
the related regularities are time-dependent and it is another limitation of the
theory. Can one clever observer diagnose, in real time, a given accumulation regimes entry into structural crisis? This would be necessary to cope with the determinist criteria typical of a large part of the natural sciences.
Similarly, at a given historical period, various forms of capitalism may coexist.
It was recurrently shown for OECD countries: their Social Systems of Innovation
differ drastically (Amable et al., 1997), as do their wage labour nexus (Boyer and
Saillard, 2002). When the sample of countries is extended, the number of key
configurations of capitalism is enriched, for instance from four to five
(Amable, 2003) and unprecedented configurations are pointed out in Latin
America (Quemia, 2001) and Asia (Inoue and Yamada, 2002). It is important
to stress that the brands of capitalism are far less numerous than the size of the
sample of the countries. The related taxonomy is the starting point for building
relatively simple models with a multiplicity of regimesthis is done according to
key parameters directly related to the nature of the institutional architecture. This
is a first necessary step in order to get away from the implicit conception of conventional neoclassical theory according to which only one canonical form of
capitalism exists (one size for all) . . . with only marginal national variations.
But unfortunately, the regulationist analysis is more complex and no general
policy recommendation can be derived from this body of research.
Thus, the economic profession usually prefers a united and simple, but inherently false, theory to an eclectic and much more complete construction, one less
prone to inaccuracies! It could then be interesting to try to explore the founding
blocks of a general theory. Two strategies are available: the first reviews all the
findings obtained within the regulationist research agenda itself; the second
makes advancements to the past literature on the theorizing of capitalism, as
well as the contemporary research that treats the dynamics of capitalism as
the central issue.

Table 2 The American capitalism: the succession of five different accumulation regimes over 150 years
Regime
Extensive with
limited insertion of
labour

Intensive without
mass
consumption

Organization of
production

Large manufacture

Wage labour
nexus
population

Fragmented and
competitive

Taylorism, then
Fordist assembly
line
Still competitive but
growth of
wage-earner

Income
distribution

Strong reserve army

impact

Shift in favour of
profits

Nature of
demand

From farming community, middleclass, public civil

servants
Second half of the
nineteenth
century

Increasing share of
wage-earner
consumption

Leading role of consumption

of wage-earners

More and more differentiated according to level

of income

More flexibility in employment and remuneration,

privatization and financialization of welfare systems
Stabilization of a high rate of
return on capital for
shareholders
Credit boom as a substitute
for real income of
wage-earners

Inter-war period

After Second World War

1980 to mid-1990s

Mid-1990s to 2007

Extensive with widening inequalities

Large increasing returns to

scale

Exhaustion of the productivity gains and shift

towards services
Decentralization, individualization and decline
of collective
agreements
Decline of the wage share
and then stabilization

Institutionalization of productivity sharing and constitution of welfare

systems
Stabilization ex ante of the
wage share

Finance-led
Delocalization in search for
shareholder value

Are there laws of motion of capitalism?

Historical period

Intensive with mass

consumption

69

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Components

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5.

R. Boyer

What could be the general and common features of capitalisms?

5.1 Marxs conjecture: capitalism implies a dynamic accumulation process and the
succession of booms and crises
Even if the term of capitalism was not invented by him, it is quite logical to start
with the author of Das Capital. As soon as goods become commodities, i.e. produced for their exchange value and no longer for their specific use, the very
process of economic activity is transformed. Each economic entity has to
create more value than is consumed in the commercialization or productive
process and the competition triggers a built-in constraint and incentive to generate more value in order to accumulate capital. Modern theorizing suggests that it
is not necessary to adopt labour value theory to generate such a dynamic pattern.
The institution of a monetary/credit regime generates the autonomy of economic
entities and their search for exchange values, hence competition of all against all
(Benetti and Cartelier, 1980; Aglietta and Orlean, 1998). On top of the polarization of the successful accumulation by some firms at the detriment of others
incurring deficits and finally bankruptcy, the opposition between capital and
labour sets into motion a permanent change. With the transformation of
labour force into a commodity, the process of accumulation experiences a new
dynamism, which is precisely described by Karl Marx in Das Capital. Capital
accumulation becomes the engine of growth and the vector of society-wide transformation, since anything can then become a commodity.
If one follows this argument, it is erroneous to try to build a static theory of
capitalism because essentially this socioeconomic regime puts human history into

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Informed by the present survey, one should follow two principles. On the one
side, it would be erroneous to look for static properties of capitalism, since it
is by nature a constantly evolving regime. The possible laws of motion should
be at most dynamic patterns. On the other side, the possible regularities are
quite unlikely to imply quantitative variables because until now the search for
them has been quite unsuccessful. Thus the properties of dynamic patterns
should be essentially qualitative.
This strategy delivers the following conjectures. Just to help the reader to
capture the essence of each of them, they have been attributed to past economists
or present social scientists . . . but of course, only the author is responsible for such
a labelling. Fortunately, some conjectures are common with other recent contributions in the search for general features of capitalism (Streeck, 2009b, c). A distinctive feature of this article is to stress the dialectical nature of these
conjectures: few permanent trends but on the contrary a succession of contrasted
evolutions caused by the expression of the same contradiction.

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71

5.2 Schumpeters conjecture: capitalism means the permanent search for

innovations that once again trigger accumulation and its crises
The previous mechanisms are sufficient to explain the succession of boom and
crises, more or less severe, according to the precise institutional setting of the
related capitalism regimes. But Marx adds that capitalism brings about permanent innovation in terms of work organization, products, techniques, legal
forms, contracts and social values. Actually, this method of creating new opportunities for accumulation simultaneously increases the degree of uncertainty that
is typical of capitalism, since it is by definition impossible to forecast the success
or failure of any radical innovation. Endogenous innovations thus reinforce the
Marxist conjecture about the unbalanced nature of the process of accumulation.
Observing a very specific phase of manufacturing capitalism, Marx thought to
have proved that the tendency of the rate of profit to fall was a basic and permanent
dynamic pattern of capitalism. Unfortunately, the demonstration of volume III of
Das Capital (Marx, [1867] 2008) was not correct: contemporary economists have
shown that innovations, instead of implying a deepening of the relation between
constant capital and variable capital, actually tend to increase the average rate of
profit as soon as capitalists only introduce profitable innovations (Okishio, 1961;
Bowles, 1981). Therefore, the second stylized dynamic pattern has to be attributed
to Joseph Schumpeter: by pointing out that accumulation needs to be restarted
periodically by bunches of innovation, he identified a basic feature of capitalism.

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motion, thus paraphrasing Marx. This might be the main weakness of JohnMaynard Keynes General Theory: in order to win the battle against Pigou, he
restricted his analysis to the stability of a purely static equilibrium with involuntary employment. In contrast, Michal Kalecki was more in line with a realist
theory of investment as a dynamical process. Imagining that capitalism would
converge towards a steady state is a contradiction in terms.
A second consequence of the domination of commoditization under pressure
from the profit motive is to introduce a radical uncertainty about the reproduction of the economy. Says law is basically false since each commodity has to find
its way to the market. Sectoral crises are thus inherent to capitalism. Furthermore,
the iron law of accumulation implied by competition leads periodically to overproduction, which is a typical new feature of this mode of production in contrast
to the previous ones (Braudel and Labrousse, 1976). Thus, macroeconomic crises
are inherent to the process of capital accumulation within capitalism. Until now,
any time when overconfident economists have reached conclusions about the end
of the business cycle and the impossibility of a major structural crisis, this very
belief has generated the seeds of a new crisis. Quite a surprise for them but not
for any one acquainted with Marxist theory!

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5.3 Polanyis conjecture: capitalism displays a built-in tendency to extend market

relations to the whole society . . . and to destroy its implicit permissive conditions
Marx had already pointed out the pervasiveness of the process that can transform
any good or service into a commodity even if it has no contribution to value creation and accumulation. In a sense, Karl Polanyi extended this feature from the
economy to the whole society. In other words, any market economy tends to
push towards a market society where any relation is finally monetized and then
organized according to a market. This conjecture was derived from the observation
of the long-run evolution of the English economy and it pointed out the shift from
typical commodities to fictitious commodities and the related danger of a collapse
of the entire society under the pressure of pure economic forces.
Thus, when, for instance, labour is transformed into a typical commodity,
capitalism runs into the danger of destroying one of the very conditions of its viability, i.e. the long-run reproduction of the workers who are the bearers of labour

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An innovator takes the risk of a new product, a new technique, a new market. If
initially successful, he is imitated by followers who progressively erode his innovation
rents. The economic system is progressively transformed until it reaches the full
maturity of the innovation and sees the levelling off of the innovators extra profit
(Schumpeter, 1911 [1983]). The sequence may start again with a new cluster of
innovations.
Consequently, Joseph Schumpeter argued that economic development cannot
be disentangled from the sequence of long booms followed by more or less severe
depressions. Paradoxically, his argument is also converging towards the same conclusion as Karl Marx concerning the long-run erosion of the virtues of capitalism
as caused by its own success. When the heroic individual entrepreneur is replaced
by a more collective process of innovation and with the rise of middle classes, the
dynamism of economic development is bound to slowdown (Schumpeter, 1954).
This long-term prognosis has been invalidated by the dynamism of innovation
after the Second World War . . . this shows again how difficult it is to point out
general trends that would transcend the succession of historical epochs, i.e.
accumulation regimes in the regulationist taxonomy.
Nevertheless, the Schumpeterian conjecture about one of the mechanisms
governing capitalist development is still relevant: the surge of information and
communication technologies (ICT) has given a new example of such a sequence.
After the subprime crisis, financial markets themselves are screening all emerging
innovations in order to try to detect which could be the next engine of accumulation and growth. It is important to note that if the turning point from boom to
depression is endogenous and largely determinist, this is not the case for the
emergence of innovations powerful enough to restart accumulation.

Are there laws of motion of capitalism?

73

5.4 Wallersteins conjecture: the capitalist accumulation process tends to spill over
across political frontiers . . . and thus progressively builds a world economy
Clearly, the viability of capitalism requires some basic conditions that it cannot
produce within its own logic. A credible monetary and credit system, legal settlements concerning property rights, contracts and capital labour relations are
usually set by political powers that, by definition, are local. But the inner logic
of market relations and the incentive to permanently innovate challenge these
domestic institutions. Historical evidence suggests that early commercial capitalism started by organizing long-distance trade, which in turn has required different legal rules and institutions. For instance, merchants created their own private
money quite independently from the fiat money created by the prince or political
local authorities. Thus, this very first form of capitalism structurally organized
trade between different political spaces (Wallerstein, 1979, 1980, 1989).
Capitalism is transnational by essence . . . and contemporary globalization is
part of a long-term process. This trend towards the crossing of political boundaries by entrepreneurs, commodities and financial assets takes a new form with
the rise of industrial capitalism, especially in England and continental Europe.
The conventional contemporary vision imagines that development takes place
first at the domestic level and then the economy is progressively opened up to
world trade, productive capital and finance. At odds with this vision, the
British trajectory shows that the first industrial revolution required a surge of
exports for quite structural reasons: the internal imbalance in income distribution between wage and profit called for an extraversion of the process of

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that is not a pure commodity. Similarly, when the monetary regime is no longer
the foundation of market relations but is itself invaded by the profit motive and
intense competition among banks, this second pillar of a capitalist economy
might collapse. Finally, when nature is exploited and destroyed without any consideration for ecological reproduction, the dynamism of accumulation might be
halted by the exhaustion of the natural resources that feed the production of
commodities.
The evolution of capitalism since the publication of The Great Transformation
(Polanyi, 1946 [1983]) has provided another example of a new wave of the commoditization of labour relations, the privatization of the credit and the monetary
regimes and the predatory and destructive impact of the diffusion of capitalism
on global public goods such as financial stability and climate. These are evidence
of a major crisis in the Polanyian sense, since the logic of the market destroys its
implicit permissive conditions: decent work and wage for labour, monetary stability and long-term sustainability of the interactions between the economy and
the ecological system.

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R. Boyer

5.5 Kaldors first conjecture: the long-run dynamics of the world economy are
derived from the interactions between the industrial and the primary
commodities sectors
Can the analysis make one step further and characterize how such an interdependent international economy evolves in the long run? Maybe, if one takes into
account the fact that typical capitalist economies interact with rentier States
that deliver the raw materials necessary to the manufacturing industries. The
dynamic of the world economy may result from the interaction of two contrasted
but interdependent logics (Kaldor, 1963, 1967).
On one side, the evolution of manufacturing production is the outcome of the
mobilization of significant dynamically increasing returns to scale. Thus, only
two factors limit such a growth engine: an insufficient demand, or the scarcity
of labour and natural resources. The first factor is crucial in the reversal from
boom to recession, thus sustaining the viability of the accumulation regime via
an adequate regulation mode. Concerning the second one, given the large pool
of labour at the global level, the main hindrance to an unlimited growth of

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accumulation (Sternberg, 1950 [1956]). Therefore, the dynamics of the traditional textile industry in India became dependent on the drastic competition
exerted by the modern methods of production implemented in England.
Similarly, the erosion of Fordism thatquite exceptionally basically relied upon
the domestic marketcomes from the strategy of firms that struggle for new markets
abroad in order to adjust the dynamism of production capacities to a domestic
market that progressively becomes too narrow or less profitable due to labour conflicts implying a profit squeeze. Contemporary financial deregulation was initiated
back in the sixties when large American firms created xeno-dollar markets abroad
and it culminated with the emergence of numerous fiscal paradises. Not to
mention the delocalization of mature unprofitable industries to attractive new industrializing countries (NICs). Finally, two decades later, these NICs are themselves
closely dependent on world trade and flow of productive and financial capital.
To sum up, the unbalanced nature of accumulation regimes triggers a recurring
trend towards the disconnection between the domestic political arena and the
process of accumulation that is operating more and more at the international
level. But since the constitutive institutions equivalent to the one constructed at
the national level are non-existing or weak, frictions and conflicts among firms
and States, and between States, challenge the viability of the internationalization
process. After 2008, the diffusion of the subprime crisis to the rest of the world and
the subsequent difficulties in finding a global solution to the systemic and structural crisis are still further examples of the plausibility of Wallersteins conjecture.

Are there laws of motion of capitalism?

75

manufactured goods production is the limitation of natural resources that

have no capacity to grow at the same pace.
On the other side, at a given period of time, declining marginal productivity is
typical of the production of natural resources. The time lag between any surge
of demand and the ability to satisfy it is usually much larger in natural resources
production than for manufacturing. Therefore, an industrial boom encounters
the limit of rapidly rising prices of natural resources that hurts profitability,
hence the investment and productive capacities. The industrial slow-down
that follows induces a reduction of the demand addressed to rentier sectors
and/or countries, and therefore the relative price of manufactured goods and
raw materials stops deteriorating . . . and a new cycle may take place.

5.6 Kindlebergers conjecture: major economic crises derive from a weak and
lagging collective control over powerful private financial innovations
In the capitalist mode of production, finance tends to evolve faster than the
economy and periodically it tends to become autonomous with respect to the

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In a sense, this is the reinterpretation of the old prognosis of classical economists,

such as Ricardo. He was anticipating the long-run convergence of economies
towards a steady state, where the rentiers would finally appropriate the totality
of the surplus to the detriment of the rate of profit of manufacturers. Kaldor provides a dynamic model that takes into account the structural differences between
the two sectors in terms of productive techniques and time lags. However abstract
and simplified this model might seem, it provides some intelligibility to the recurrence of this very specific dynamic pattern of the world economy. Therefore the
successive oil shocks that are supposed to be exogenous by conventional national
macroeconomic approaches are largely endogenous. Similarly, it explains why it
is not realistic to extrapolate a cumulative and permanent rise of oil and other
natural resources, since this would induce a drastic recession in the short term,
and renewed efforts in order to find new locations of natural resources.
Two recent macroeconomic episodes seem to confirm Kaldors model. At the
end of the speculative Internet boom, one of the limits encountered by the Silicon
Valley start-ups was the spectacular rise of house and land prices. What was one
of the early warnings about the tensions created by the subprime bubble and the
spectacular Chinese accumulation regime? The acceleration of prices of oil and of
most natural resources required by manufacturing was the primary factor that
caused the American down-turn in 2007. But this does not capture the totality
of the mechanisms that shape contemporary international relations. Actually,
the wide diffusion of finance all over the world introduces another set of interdependencies: the rentier economies come to play a major role in financial
intermediation.

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R. Boyer

5.7 Kaldors second conjecture: structural crises exhibit a generational shift in the
conceptions about the relations between State and the economy, from laisser-faire to
interventionism and vice versa
This last dynamic pattern builds on the conjunction of Polanyis and Kindlebergers conjectures. The dynamism of innovation may trigger a rapid and finally
unstable accumulation that unfolds into a structural crisis. Then, the restoration
of the viability of the credit system calls for public intervention. When the deployment of the strategy of individual capitalists leads to the collapse of the pillars of

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slow process that governs the formation of the rate of profit. The related speculation ineluctably runs against the macroeconomic constraints of the real
economy and this generates a financial crisis. It is more or less severe according
to the nature of the accumulation regime and its degree of dependence on
financialization. There is a long-lasting tradition in standard economic theory
to attribute these recurring crises to the irrationality of individuals, the greed
and corruption of some financiers or even the adverse impact of public
regulations.
It can be argued, quite on the contrary, that the occurrence of crisis is a permanent and structural feature of financial markets facing radical uncertainty
(Orlean, 1990). A review of all the major financial crises since the seventeenth
century confirms the generality of the mechanisms that are mixing the Schumpeterian general hypothesis with the specificities of financial innovations intensively
studied by Kindleberger (1978). The sequences from the innovator to economic
crisis can be easily summarized. The next step aims at understanding why economic actors and especially public authorities cannot learn from this impressive
succession of financial crises. One apparent reason relates to the fact that each
precise financial innovation is by definition without precedent and its proponents
can argue that it is so new that previous regularities are no longer valid. Remember the belief in the financial community about ICT and the related end of the
business cycles or the self-confidence of Wall Street about the absolute security
provided by securitization. De facto, beneath the absolute novelty, Kindlebergers
dynamic pattern still applies. Either the innovation miserably fails and is forgottenthe Laws systemor public authorities design regulations and new rules of
the game in order to make the benefits of the innovation compatible with financial stabilitythe modern commercial banks (Boyer et al., 2004). The history of
bank runs shows that they disappeared after a trial and error process of financial
regulations (Figure 2).
The contemporary crisis is a new example of the relevance of Kindlebergers
conjecture: the financial laisser-faire strategy adopted by the American public
authorities has definitely contributed to the severity of the ongoing crisis.

Are there laws of motion of capitalism?

77

capitalism, it is up to collective actors such as States to introduce countervailing

forces in order to curb their opportunism. Rhetorically, political discourse then
legitimizes State interventions by the fact that financial stability and social
peace are public goods (Rajan and Zingales, 2003).
This is the beginning of a search process aimed at realizing a redesign of the
institutional configuration, acceptable politically and viable economically in
terms of the resilience of the accumulation regime. Generally, the previous
sources of financial and economic instability are thus removed, but the maturing
of this new regime ineluctably triggers new opportunist strategies that finally
destroy the coherence of the new accumulation regime and the mode of regulation. The legacy of the previous structural crisis is only embedded into the institutions and the legal system but no more in the memory of economic actors. It is
then tempting to attribute the blocking of accumulation to the excessive constraints imposed by regulations and public controls: deregulation becomes
quite a tempting strategy since it fulfils the objectives of the most powerful
actors. The previous regulations are interpreted as arbitrary devices that were
only generated via ideological and political struggles: economic actors as well
as politicians forget that they emerged out of the collapse of a laisser-faire
approach to capitalism. Actually, one observes the succession of laisser-faire
periods, followed by a structural crisis; new regulations are then enforced and
they generate a relatively stable accumulation pattern until it itself enters into a
genuine form of crisis. The frequency of crisis follows the same pattern (Bordo
et al., 2001; Boucher, 2003).
This looks like a Kondratieff wave but the mechanisms are quite different from the
ones contemplated by the Russian economist. According to Nicholas Kaldor, one of
the rare convincing explanations of these long cycles is to be found in the succession
of intellectual conceptions about the functioning of a capitalist economy.

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Figure 2 Financial crises: the outcome of private innovations dynamism versus lagging collective
control.

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R. Boyer

6.

Conclusions

This article proposed to take a serious look at the comeback of the concept of
capitalism but also to reassess the notion of laws in the social sciences. It delivers
the following provisional conclusions.
C1. Two decades ago, the term capitalism was perceived as quite ideological
indeed. Nowadays, a wider fraction of the economic profession refers again
to this notion/concept. Is the change real or cosmetic and simply transitory?
In any case, it seems to mean that the concerns of economists have shifted.
First from static to dynamic analyses, second from more and more
micro-studies to tentative analyses of the interdependences typical of an
entire economic system. Clearly, technological, organizational and institutional innovations are more and more recognized as key factors in the
long-run dynamism of capitalism.
C2. Nevertheless, the failure of orthodox Marxism in identifying general laws of
motion of capitalism should be acknowledged. Regulation theory has emerged

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One generation experiences the large social, political and economic costs of a
major crisis, a consequence of liberalization. Remember the trauma associated
with the American Great Depression that legitimized new political compromises
and a totally different vision of the relations between State and market, the polity
and the economy. Extensive regulations had, in the end, been quite favourable to
the stability and dynamism of the Golden Age. When the dynamism of this configuration eroded, the inefficiency of the Keynesian policy mix called for searching for alternative forms of organization, and the relations between the State and
the economy were reassessed. The generation exerting the power in the political
and economic spheres had no direct experience of the interwar crisis: they
implicitly assumed that if John-Maynard Keynes is wrong then Milton Friedman
is necessarily right! Deregulation became quite attractive, at least, within all
societies that cannot manufacture new social pacts. For instance, the Glass
Steagal Act that organized the separation of commercial and investment banks
was abandoned in 1999. Most people had forgotten that this Act was passed
after the 1929 1932 collapse for quite serious reasons: preventing catastrophic
financial collapses due to speculation. Quite soon, the fragilities of this form of
accumulation manifested themselves in various initially limited crises (October
1987 stock market crash, LTCM collapse, ENRON bankruptcy, etc.) but all the
disequilibria kept piling up until the collapse of Lehman Brothers. The melting
down of the American financial system is the direct consequence of this obliviousness towards history. Can it happen again? was what Hyman Minsky
(1982) was asking about the Great Depression. The response is yes! in conformity with Nicholas Kaldors second conjecture (Kaldor, 1987).

Are there laws of motion of capitalism?

79

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