*Clara E. Mattei* # Progressive Summary Looks at the current structure of the economic system through the lens of classical economists such as Adam Smith, David Ricardo and Karl Marx. Argues that economic policies of austerity are tools to create a "reserve army" of workers whose sole purpose is to amass profits for capitalists. # Definitions > Capitalism is a socioeconomic system in which employers use their private means of production to hire wage labor in order to produce commodities whose sale generates profits. The system’s two pillars are wage labor and the private means of production. The roof of the system is profit. These two pillars are the attributes of the two main classes that confront each other in society: workers, who live primarily off their labor income, and capitalists, who live primarily off capital income in the form of dividend and interest payments. # Chapter Notes ## Chapter 1 - The Invisible Order > In 2024, 77 percent of American workers reported that they would have financial difficulty if their paycheck was delayed by just one week. > To satisfy our needs, we depend on a system whose logic is not only indifferent to them but also requires our exploitation. Economic growth is produced by a specific social order in which the majority of citizens are compelled to sell their labor power in exchange for a wage that is less than the value they produce. This means that the profits generated by workers form the basis of economic growth. This is a fundamental characteristic of the society we live in, what I call the capital order. > Researchers have calculated that the rate of exploitation of workers to produce the iPhone X (the 2017 model) is twenty-five times higher than that in nineteenth-century factories at the dawn of the Industrial Revolution. The same researchers have also highlighted another fact: if Apple were to produce the iPhone in the United States instead of the Global South, where it can leverage low wages and inhumane working conditions, it would have to sell each phone for $30,000 instead of $900 to maintain the same level of profit. - https://thetricontinental.org/wp-content/uploads/2019/09/190922_Notebook-2_EN.pdf > In the wake of the 2008 crisis, as the US government absorbed financial risks and restructured the financial sector, three asset management firms, BlackRock, Vanguard, and State Street, displaced the banks as the most powerful financial institutions. The firms accumulated “ownership with a power and scale never seen before in the history of capitalism,” according to political economists Stephen Maher and Scott Aquanno. Together, the Big Three in asset management are the largest single shareholders in almost 90 percent of the firms listed on the New York Stock Exchange, including Apple, Microsoft, ExxonMobil, General Electric, and Coca-Cola. Their portfolio encompasses 98 percent of firms on the S&P 500 Index, which tracks the largest American companies—with the Big Three owning an average of more than 20 percent of each company. ## Chapter 2 - The Logic of Austerity > Trump’s “One Big Beautiful Bill,” enacted July 4, 2025, captures the violent arithmetic of austerity: Over the next decade, historic cuts to the social safety net will bankroll a staggering expansion of military and border-control spending. Nearly $200 billion stripped from food assistance—likely pushing more than two million poor Americans toward hunger—will now finance detention centers, border surveillance, and next-generation military tech, securing profits for private shareholders. More than $500 billion carved out of Medicaid will deprive millions of health care coverage, even as those earning over $1 million a year enjoy a collective $114 billion tax break in 2027 alone. And far from reducing the national deficit, the bill is projected to swell it by more than $4 trillion in a decade—making it, in the words of the Democratic House Budget Committee, “one of the most expensive laws in American history.” Once again, austerity is not about taming debt; it is about deepening market dependence and tightening the grip of the capital order. ## Chapter 3 - The Cruel Math of Unemployment > in our society, there is no economic plan formulated through collective decisions—whether democratic or authoritarian—but rather a myopic profusion of outcomes stemming from the individual decisions of large capital holders competing for survival and profit. [Kalecki 10/1943 - POLITICAL ASPECTS OF FULL EMPLOYMENT¹](zotero://select/items/1_ZG7J2R23) > The reserve army is the pivot on which the law of supply and demand for labor rests: it confines the scope of this law within the unbreachable and highly convenient limits of capital exploitation and dominance. > Marx captured this dynamic: “The over-work of the employed part of the working class swells the ranks of its reserve, while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital.” > Worldwide, political parties and governments benefit from these internal antagonisms within the working class. Especially in times of high social discontent, they fan the flames of hatred among the weak, directing it against those even weaker. Restrictive immigration laws—introduced not coincidentally after the end of colonialism and slavery—are framed as protections for working-class citizens but actually fabricate the political conditions for further economic confiscation that benefits capital accumulation—namely, a body of workers exceptionally vulnerable to the demands of capital. State border policies swell the ranks of the reserve army with those who, lacking basic legal rights, are subject to what the American philosopher Nancy Fraser calls “expropriability”: “the condition of being defenseless, and liable to violation, that constitutes the core of racial oppression.” > Consider Italy’s tomato-sauce export business, which peaked at 4.4 billion euros ($4.62 billion) in sales in 2022, making Italy the third largest exporter after the United States and China. The fancy cans you find in supermarkets worldwide rely heavily on migrant workers who labor more than twelve hours a day, earn 3 euros ($3.40) for 300 kilos (660 pounds) of tomatoes, and often die from heat exhaustion. They endure inhumane working conditions in which fires break out in their lodgings and burn people alive every summer. Similarly, the vast infrastructure for the 2022 FIFA World Cup in Qatar was built through the sweat of thousands of Nepalese migrant workers, who toiled in slave-like conditions and suffered wage theft. The prosperous US meatpacking industry would potentially collapse without undocumented workers, who earn less than the legal minimum wage and suffer from wage theft and injuries. On average there are two amputations a week across US meat plants. > Unemployment fosters a sense of insecurity and destroys solidarity among workers, who often divide into racial or ethnic factions, and then fail to protect the most vulnerable. > If the political conditions maintaining the reserve army disappear, capitalism falls into deep crisis. > When technocrats use terms like “healthy” and “appropriate” to describe the economy, they focus on capital accumulation rather than the needs of people and their living conditions. A labor market that is even slightly favorable to employees encourages workers to push to reduce the rate of exploitation. > The reserve army keeps us docile because we are precarious and replaceable. Even if we have terrible job hours, receive meager paychecks, don’t see our children, and spend more time working than doing anything else, what do we have to complain about? We should be grateful we have a job. To fully grasp the deeply political nature of our economy, it is crucial to stress how these power imbalances are actively consolidated through governmental economic decisions, especially with austerity. The state, in fact, never loses its resolute role as a protector of the market. Unemployment must be “created” to keep our system alive—a system that prioritizes the health of capital, not people. [Foley 2006 - Adam's fallacy: a guide to economic theology](zotero://select/items/1_PIFWFV7B) ## Chapter 4 - The West Over the Rest > As critical scholars Andre Gunder Frank and Samir Amin argue, Western development does not emerge independently from the rest of the world. On the contrary, development results from the active creation of underdevelopment. Simply, there would be no wealth in the US and Europe without the construction of poverty in the rest of the world. [Amin 2019-02-14T18:30:00+00:00 - The Liberal Virus](zotero://select/items/1_UHFCF87M) > In the early stages of capitalism, colonial powers actively suppressed the development of domestic industries in their colonies, but in the last century the open-border system for goods and capital has undermined local manufacturing, achieving the same goal of economic dominance. > As economist Ha-Joon Chang has shown, in past centuries developed countries built their industrial capacity through forms of protectionism: shutting their doors to international competition and lavishly subsidizing their national producers to invest in capital-intensive production. Ironically, the decision-making elite largely based in the US and in Europe now prevent countries of the Global South from doing the same: they impose the “free” trade and the “free” markets. > Western governments boast about aid to so-called developing countries, but humanitarian aid is a facade. Many empirical studies confirm that, at the level of the most simpleminded accounting, more money flows out of Africa than goes in. The most impoverished continent is a “net creditor” to the rest of the world. In 2015, African countries received $162 billion, mainly in loans, aid, and personal remittances. But in the same year, $203 billion was taken from the continent, either directly through capital flight, when multinationals repatriate profits to their home countries, or indirectly through the payment of interests on loans. A report from the Political Economy Research Institute at the University of Massachusetts at Amherst shows that over the past five decades, thirty sub-Saharan African countries have lost more than $2 trillion to capital flight, which is almost the annual gross domestic product of sub-Saharan Africa. This hemorrhage has accelerated since the turn of the century, averaging $65 billion a year, a sum that far exceeds annual inflows of official development aid. The more the peripheral states are pushed to privatize, the more these resource-rich countries transform their wealth into dividends for international private shareholders. Oxfam reports that in 2024 the superrich in the Global North extracted $30 million an hour from the Global South. > Palestinian labor boosts the profits of Israeli capitalists in multiple ways. Ibrahim Shikaki has shown how the Palestinian reserve army helps pacify the conflict between capital and labor in Israel by taking away bargaining power from Israeli workers. The construction of a pool of cheap Palestinian labor keeps the wages of Israeli workers in check. Moreover, Israeli employers pay Palestinians more than they could earn in the domestic economy, yet less than their Israeli counterparts, ensuring higher profits for Israeli businesses. As one owner put it in the newspaper Davar: “It is almost impossible to fire an Israeli worker or move him without his permission and wage increase. On the other hand an Arab worker is exceptionally mobile, he can be fired without notice and moved from one place to another. They don’t go on strike, they don’t make demands.” > Capitalism has no vision for humanity. There are another fifty countries in the Global South experiencing debt problems. Structural poverty fills the boats of migrants who try to cross the Mediterranean in search of a livelihood, maybe even a happy life. And a reasonable prediction is that there will be 1.2 billion climate refugees by 2050. The wealthy European states react with the militarization of their borders, a great opportunity for private investors. According to Antony Loewenstein, from 2015 to 2023 the EU spent at least $3.7 billion on high-tech research to find the most efficient ways to target migrants. The same corporations that make profits out of everlasting wars, such as Airbus, BAE Systems, and Leonardo, then sell their drones to keep displaced people out. The Mediterranean region is a deadly area where, according to the International Organization for Migration’s Missing Migrants Project, at least 31,206 people died from 2014 to 2024, including at least 1,328 children. The US protects its border with Mexico with lethal technology, paying millions to at least thirteen military companies including Elbit, Lockheed Martin, Raytheon, and General Dynamics. ## Chapter 5 - Democracy is Anti-Capitalism > It is common among well-meaning liberals to point fingers at the likes of Donald Trump, Viktor Orbán, and Giorgia Meloni as bad actors. But the strong parallels between the economic policies of Mussolini’s fascist regime and the British government of the 1920s dissolves the reassuring distinction between right-wing authoritarian governments and liberal democracy. This blurred distinction is more common than we might think in the recent history of capitalism. > Historical change does not happen out of blueprints; alternatives develop through peoples’ active participation, and it is only if we have the conceptual tools to understand the world differently that we can act differently. I cherish Antonio Gramsci’s intuition that the combination of knowledge that is at once theoretical and practical can guide us toward new horizons, provided that we engage personally and concretely. As radical historian Robin Kelley puts it, “Revolutionary dreams erupt out of political engagement; collective social movements are incubators of new knowledge.” New knowledge entails collective self-transformation. > Each of us can take steps to politicize our lives. And by “politicize,” I mean participate in the transformation of the material and social reality around us. The steps can be as small as connecting with your neighbors to build community. After all, getting to know your neighbors is typically the first step in starting initiatives to stand up for basic resources, such as tenant organizations to protect renters’ rights or community food programs. If you’re a student, you might stand up for your fellow student workers or organize assemblies to oppose your university’s investment in corporations that profit off human rights violations. In my own efforts, here in Tulsa, Oklahoma, at the Forum for Humane Economics (FREE), we hold monthly discussions with citizens from all walks of life to connect our daily problems to the economic structures that create them and envisage courageous alternatives. The Forum is structured as a council and is the product of a collective endeavor to spread economic knowledge, both locally and internationally, that fortifies the organization of effective systems of economic solidarity. It connects existing realities on the ground, such as Cooperation Tulsa, which, inspired by Cooperation Jackson in Mississippi, collectively owns and organizes the production and distribution of food in a peripheral urban setting, and the Really Really Free Market, which organizes the exchange of essential goods without the intermediation of money. The path toward concrete transformation begins with real connections and conversations. # Quotes # References