This week I had the opportunity to speak in a small group with Professor Budil. He was able to clarify several of the more difficult aspects of his theory of the two capitalisms. First, a basic explanation for those who have neither read his History of Capitalism nor attended his seminars.
According to Professor Budil, latent capitalism is a system in which wealth remains subordinate to political authority. The sovereign—or an oligarchy, or even the people—retains the final say in economic affairs. Political power can alter economic arrangements, impose regulations, and, in extreme cases, expropriate property or even imprison or execute wealthy individuals. This is not merely a communist phenomenon. European monarchs routinely acted in precisely this way whenever powerful financiers or merchants became troublesome.
Manifest capitalism, by contrast, is a system in which wealth exercises authority over political power. Capital directs the state, assigns its tasks, and, when necessary, removes kings or prime ministers.
This distinction matters because history periodically reaches moments when it becomes more profitable for capital—whether represented by owners, managers, or others—to shut down factories and redirect resources into stock-market speculation, real estate, or similar investments. If such a moment arises under latent capitalism, political authority simply refuses to allow mines and factories to close. If it occurs under manifest capitalism, there is no effective force capable of resisting it.
What we experience today as a civilizational crisis is, in Budil’s terminology, essentially the transition from latent to manifest capitalism.
Readers familiar with his work already know this much. What is less obvious is what emerged during our discussion. In responding to a series of probing questions, Professor Budil explained that both forms are usually present in potential, and which one prevails depends largely on the particular circumstances and the individuals involved. A transition can occur from latent capitalism to manifest capitalism—and just as readily in the opposite direction.
Capital can never be fully subdued. A handful of mistakes, a weakening of state authority, or a failure to recognize the situation is often enough for the power of capital to reassert itself. The reverse is equally true. Capital is frequently unable to prevent an energetic and capable political leader from restoring latent capitalism. France after the Second World War stands as a textbook example. The state’s victory over capital is never final, but neither is capital’s victory over the state.