The current shame of a Western capitalist world that finances and conceals the ongoing obliteration of Gaza’s population—including forced starvation and the illegal bombing of over one million children, thousands of medical workers, teachers, and more than 230 journalists—cannot be understood in isolation from the economic system we have constructed over the past 300 years. The essential connection between political outcomes and the prevailing economic structure—an insight central to Karl Polanyi’s work—must be brought back to the forefront if we are to make sense of the human tragedy our governments are actively sponsoring.

Contemporaneous with Polanyi’s great work (1944), the Frankfurt School went further to warn us about the inextricable link between the Western-led genocide of the Holocaust and the instrumental rationality fostered by capitalist economies—where all meaning and human interaction become subordinated to abstract measures that dominate us and ultimately erode our shared humanity.

They drew inspiration from Karl Marx, who in the very first chapter of Das Kapital laid the foundation for his critique of political economy: our ways of thinking emerge from specific social relations in which use value and human meaning are subordinated to the value form—an abstraction that embodies the logic of capital accumulation. In such an inverted world, genocides are not aberrations but systemic features of capitalist history. In fact, they often fuel economic growth: for example, the global arms trade, valued at over $600 billion annually, thrives on sustained conflict and destruction. Post-war reconstruction efforts, resource extraction, and disaster capitalism generate trillions in profit, converting human suffering into capital expansion. These economic incentives help explain why genocides have been repeatedly tolerated—and even supported—by capitalist states.

The liberating insight of Marx’s critique of political economy lies in his recognition that social alienation is neither eternal nor spontaneous. This truth becomes especially evident during critical junctures in the history of capitalism—moments when its “natural” appearance collapses and the capitalist order is brought into question. After the Great War, for example, a large majority of European workers began to challenge the sanctity of capitalism’s two core pillars: the wage relation and private ownership of the means of production. The state’s large-scale intervention to accelerate capital accumulation—at a time when market mechanisms failed to deliver the production speed required to win the war—served to politicize both wage labor and private command over investments. It laid bare what is the most Polanyian of all insights: that these institutions exist not by nature, but through explicit political decisions made by the state to protect capital at the expense of labor. In other words, the market and its exploitative practices rest on a fundamentally political foundation.

The crisis of the capital order was embodied in a wide range of post-capitalist experiments, which we examine in detail in the first part of The Capital Order, now available in German translation by Brumaire Verlag. Soviets were not confined to Eastern Europe; even in the heart of the capitalist West, movements like guild socialism, the nationalization of coal, and factory councils were actively demonstrating that democratic work relations could assert the primacy of use value and human need over exchange value and profit.

It is precisely in these moments of rupture that the exponents of instrumental reason and capital domination return to the drawing board. They refine their strategies to safeguard the capitalist order, closing the system’s breaches through the ferocious implementation of austerity policies designed to break the backs—and the wills—of organized workers and peasants. As The Capital Order documents, what the Treasury and the Bank of England accomplished in Britain through interest rate hikes and cuts to social expenditures—measures that heightened unemployment and deepened the market dependence of the working majority—was mirrored in fascist Italy. There, Benito Mussolini’s regime pursued similar ends through brutal state coercion, outlawing strikes, suppressing wages, and murdering political opposition.

The case study of the 1920s demonstrates the deep structural affinities between liberal and fascist economic policies, both centered on the austerity trinity (fiscal, monetary, and industrial austerity) that we see operating still today. The watchword coined at the Brussels conference sponsored by the League of Nations was “work hard, live hard, and save hard”: cuts in social expenditures, regressive taxation, dear money, privatizations and elimination of labor rights.

Liberal and fascist elites, along with their technocratic experts, not only followed a strikingly similar economic playbook, but also offered each other mutual support. Indeed, there is a strong case to be made that Mussolini’s fascist party could gain strength and flourish in a full-blown dictatorship thanks to the unyielding ideological support of the Liberal establishment which recognized that only an authoritarian state could defend the capital order in a country like Italy—where revolutionary energy among workers and peasants had reached a boiling point. This letter of Montagu Norman to Jack Morgan Jr of the House of Morgan (what is still the largest bank in the world) exemplifies a common sentiment:

“Fascism has surely brought order out of chaos over the last few years: something of the kind was no doubt needed if the pendulum was not to swing too far in quite the other direction. The Duce was the right man at a critical moment.” (Letter to John Pierpont “Jack” Morgan Jr., November 19, 1926, G1 307, fol. 27, in Mattei (2022) The Capital Order, page 257)

Fascist and liberal austerity did, in fact, achieve their intended goal: the subjugation of workers to the capital order—at the expense of fundamental human principles. The brutal face of political oppression in Italy soon found a successor in the rise of Nazi Germany. If Mussolini gained support through his promise to eradicate economic democracy and dismantle organized labor, especially via austerity, Hitler rose to power as a direct consequence of austerity’s “success.”

Indeed, more than a decade of punishing austerity policies imposed by Germany’s liberal governments—under pressure to meet the austerity mandates of the League of Nations—had the same intended effect of crippling working-class organization and consciousness in Germany, thereby opening the door for the far right to seize control. In dynamics that we still see clearly today, the political right thrives in conditions of permanent austerity, capitalizing on the precarization of everyday life and the popular internalization of neoclassical economics. As people suffer, they are encouraged to blame weaker or marginalized groups rather than recognizing the systemic causes of their insecurity.

Just as Hitler advanced a militarized version of the austerity regime—repressing wages and labor rights to favor private accumulation—today’s European agenda of growing militarization at the expense of social welfare reveals a chillingly similar logic. If social spending risks politicizing labor, militarization—along with its genocidal consequences—more faithfully serves the dominance of the value form in capitalist society.

A genuine commitment to peace and democratic participation cannot coexist with the imperatives of the capital order. Building a more just and livable future will require the courage to dismantle and redesign our economic foundations.

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[1] Lord Robert Chalmers, the former permanent secretary at the British Treasury, noted that to regain “equilibrium,” the “painful” solution was to “work hard, live hard, and save hard” (Brussels 1920, Verbatim Record, vol. 2, 26– 27, italics added); cited in Mattei, Clara E. The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism. Chicago: University of Chicago Press, 2022. p.134-135.