The first part introduces some of the key dilemmas of political economy. Chapter 2 identifies the two central dualities of political economy:

(1) the separation between politics and economics, 
(2) the further distinction, within economics, between the real and the nominal. 

These bifurcations, accepted by both liberals and Marxists, define what political economy does – and what it cannot do. And the most important handicap they impose is the inability to deal with power.

Chapter 3 - The 18 th century triple revolution

The dualities themselves are hardly accidental. As Chapter 3 explains, they were part and parcel of a that swept eighteenth-century Europe: the ascent of modern science, the emergence of liberal politics and the rise of capital accumulation.

This triple revolution undermined the religious–authoritarian cosmos. The hierarchical rule of God and his ordained subcontractors was replaced by a flat law of nature, a secular-universal mechanism that regulated and equilibrated both heaven and earth.

This new worldview made the ‘economy’ a natural process, independent of the ‘politics’ of king and church; and it made the ‘nominal’ incomes of the different classes a consequence of ‘real’ production and consumption rather than naked power and sanctified violence.

But whereas the dualities undermined the power of the ancien régime, they were far less effective in concealing (or revealing) the power of capital. Initially, the problem didn’t seem serious enough, and most political economists were totally oblivious to its consequences. The liberals were all too happy to emphasize the liberating aspects of the market and its separation from state, and they therefore had no reason to drag capitalist power into the open.

By contrast, the Marxists emphasized the exploitative and oppressive nature of the system; but having banked on the economy’s historical laws of motion to dialectically implode the system from within, they, too, felt no need to complicate the picture with the voluntarist indeterminacies of power. And so ‘politics’ remained happily separate from ‘economics’ and the ‘nominal’ distinct from the ‘real’.

20 th century

But that situation started to change in the late nineteenth and early twentieth centuries:

First, the growth of large units – big business, large government and organized labour – upset the presumed automaticity and self-regulating tendencies of capitalism.

 Second, there emerged a whole slew of new power processes – from militarization and imperialism, to finance and inflation, to collectivism and fascism, culture and mass psychology, industrial regulation, monopoly and macroeconomic stabilization – developments that no longer fit the equilibrium theories of mechanical liberalism and the historical inevitabilities of dialectical Marxism. 

Third, political economists started to empirically quantify accumulation – only to find that, in the absence of equilibrium and the presence of power, capital no longer has an ‘objective’ magnitude.

Chapter 4 - ‘micro’ and ‘macro’

Chapter 4 examines the different ways in which political economists attempted to tackle the problem. The solutions are very different, but they all have one thing in common: they try to have their cake and eat it too. The liberals do so by elimination. They break their economy into two separate domains: ‘micro’ and ‘macro’.

The micro sphere is drained of all power, creating a showcase where the laws of economics function smoothly and automatically. Some of the drained power is classified as ‘imperfections’ and tacked on to textbooks as better-to-skip chapters. But the bulk of it – particularly the power of ‘government intervention’ – is exported to the macro field, where ‘distortions’ reign supreme. This solution helps keep the pristine simplicity of liberal theory intact – but at a rapidly mounting cost. Power is now recognized as an unfortunate yet permanent feature of the actual [p.12] economy. And as the power-free models start to fail, liberal economists find themselves increasingly reliant on ‘extra-economic shocks’, ‘selfish unions’ and ‘short-sighted politicians’ to explain what their eternal theories cannot.

The split of (neo) Marxism analysis

Unlike the elusive liberals, Marxists try to deal with power head on – yet they too end up with a fractured picture. Unable to fit power into Marx’s value analysis, they have split their inquiry into three distinct branches:

- a neoMarxian economics that substitutes monopoly for labour values;

- a cultural analysis whose extreme versions reject the existence of ‘economics’ altogether (and eventually also the existence of any ‘objective’ order);

- a state theory that oscillates between two opposite positions – one that prioritizes state power by demoting the ‘laws’ of the economy, and another that endorses the ‘laws’ of the economy by annulling the autonomy of the state.

Gradually, each of these branches has developed its own orthodoxies, academic bureaucracies and barriers. And as the fractures have deepened, the capitalist totality that Marx was so keen on uncovering has dissipated.