Capital as Power theory is a radical framework in political economy that argues capital is not a productive entity measured in utils or abstract labor but a symbolic quantification of organized power. Developed by Jonathan Nitzan and Shimshon Bichler in their 2009 book Capital as Power: A Study of Order and Creorder, the theory claims that both neoclassical economics and Marxism rest on fictitious units—utility and abstract labor—that no one has ever observed or measured . What actually exists, they argue, is capitalization: the present value of expected future earnings, which reflects the power of dominant capital groups to shape—or "creorder"—society . The theory offers a distinctive account of capitalism as a mode of power rather than a mode of production, and it has generated both a dedicated following and sustained critical engagement.
Understanding Capital as Power requires setting aside familiar assumptions about what economics studies. Nitzan and Bichler do not offer a minor correction to existing theories; they claim to perform a fundamental reconceptualization of the field. Their target is the very idea that capital can be counted in universal units, whether utils in neoclassical theory or hours of socially necessary labor time in Marxism. In place of these units, they propose that the only observable measure of capital is capitalization—the market value of expected future earnings—and that this value is fundamentally a measure of power. The theory's ambition is matched by its scope: it offers a new history of the "capitalist mode of power" and a novel framework for analyzing finance, globalization, and conflict .
The framework has attracted attention beyond specialist circles because it addresses a question that mainstream economics tends to avoid: what is capital, actually? After centuries of debate, liberals and Marxists still disagree on the answer, and Nitzan and Bichler exploit this disagreement to argue that both traditions are trapped by their reliance on unobservable units. Whether or not one accepts their alternative, the theory raises the stakes of a foundational question in political economy. This article examines the theory's core concepts, its mechanisms, and the distinctive claims that set it apart from both neoclassical and Marxist approaches.
The Crisis of Capital Theory
Two Fictitious Units
Nitzan and Bichler's starting point is a claim about the failure of existing capital theories. Neoclassical economics measures capital in utils, units of subjective utility that are supposed to represent satisfaction or preference. Marxism measures capital in abstract labor, the socially necessary labor time embodied in commodities. Both units, the authors argue, are entirely fictitious. No one has ever directly observed a util or a unit of abstract labor, and no method exists for measuring them independently of the prices they are supposed to explain . The result is a circularity at the heart of both traditions: capital is what capital measures.
This critique draws on a longer history of dissatisfaction with capital theory, including the Cambridge capital controversy of the 1950s and 1960s, in which economists debated whether capital could be aggregated in a way that was logically coherent. Salvador Santino Regilme, reviewing Capital as Power, noted that the book offers a service to political economy through its determined revival of that almost-forgotten controversy . Nitzan and Bichler extend the critique beyond the technical problems of aggregation to argue that the entire project of measuring capital in universal units is misguided. If the units do not exist, then theories built on them cannot explain the process that matters most: the accumulation of capital.
Power as the Missing Element
The alternative Nitzan and Bichler propose begins with power rather than production. In their account, capitalism is a mode of power in which private ownership functions as institutionalized exclusion. To own something is to have the socially recognized capacity to exclude others from its use, and this capacity is inherently a matter of organized power . Capital, then, is not a thing but a relationship: the quantified claim of dominant groups over future earnings, backed by the institutional arrangements that make those claims enforceable. This reframing has significant implications. If capital is power, then the accumulation of capital is the accumulation of power, and the study of capitalism becomes the study of how power is organized, contested, and reproduced.
The authors describe capitalists as "absentee owners of power," a formulation that emphasizes the separation of ownership from production . Capitalists do not need to manage factories or supervise workers to exercise their power; they need only hold claims on earnings that are enforced by legal and institutional structures. This insight draws on Thorstein Veblen's distinction between industry and business, between the production of goods and the pursuit of pecuniary gain. Nitzan and Bichler radicalize Veblen's critique by making power the central category of their theory rather than a secondary distortion of an otherwise productive system.
Capitalization as the Core Measure
The Discounted Future
If capital is power, how is that power measured? Nitzan and Bichler's answer is capitalization, the present value of expected future earnings discounted at a risk-adjusted rate. David Troy Cochrane, reviewing the book, summarized the conventional understanding of this formula: capitalization represents the present value of an asset based on expected earnings discounted for the probability that those earnings will not be realized . Nitzan and Bichler assign much more meaning to this formula than its quotidian operation. They argue that capitalization is the central institution and key logic of capitalist society, the mechanism through which power is quantified and made comparable across different firms and sectors.
The capitalization formula is deceptively simple: expected earnings divided by a discount rate that reflects risk. But Nitzan and Bichler argue that every element of this formula is saturated with power. Expected earnings depend on a firm's ability to shape its competitive environment, to secure favorable treatment from governments, and to organize markets in ways that protect its revenue streams. The discount rate reflects perceptions of risk, which are themselves shaped by the firm's power to project stability and confidence. Even the "risk-free" rate of return, often treated as a natural benchmark, is a social convention backed by state power. Capitalization, in this view, is not a neutral calculation but a political act.
Dominant Capital and the Benchmark
Nitzan and Bichler's analysis focuses on dominant capital, the largest corporations whose capitalization and profits set the benchmarks against which all other firms are measured. Their empirical work tracks the ratio of dominant capital's average capitalization to the average of all listed firms. In the 1950s, a typical dominant capital corporation had about 7.4 times the capitalization of the average listed company; by the 2000s, that ratio had risen to 35.5, a nearly fivefold increase . This differential capitalization is the quantitative expression of what the authors call differential accumulation: the process by which dominant capital extends its power relative to the rest of the corporate universe.
The concept of differential accumulation is central to the theory's empirical program. Nitzan and Bichler argue that capitalists do not seek to maximize absolute profits or to accumulate for its own sake. They seek to beat the average, to accumulate faster than their competitors and to widen the gap between themselves and the rest of the economy. This reframing explains patterns that absolute measures obscure, including the wave of mergers and acquisitions that reshaped American capitalism in the late twentieth century, the persistence of inflation in certain periods, and the shifting relationship between finance and industry. Differential accumulation is the mechanism through which the power theory of value becomes empirically tractable.
Sabotage and the Restriction of Production
The Logic of Restriction
One of the theory's most provocative claims concerns sabotage. In Nitzan and Bichler's framework, capitalist firms have no inherent interest in maximizing production or innovation. Their goal is to protect and enhance their earnings, and this often requires restricting output, slowing the introduction of new technologies, or organizing markets to limit competition. The term sabotage, borrowed from Veblen, captures this strategic restriction: the deliberate limitation of productive capacity in the service of business power. The authors argue, contrary to neoclassical theory, that capital has nothing to do with productivity and instead represents power .
The sabotage thesis has intuitive appeal in cases like planned obsolescence, patent hoarding, and the strategic shelving of competing technologies. But it is not merely a claim about particular practices; it is a claim about the fundamental logic of capitalism. If capital is power, then the restriction of production is not a deviation from the system's logic but an expression of it. The firm that produces more efficiently than its competitors may undermine the earnings of dominant capital, and dominant capital has the power to prevent this. The theory thus offers a distinctive account of why capitalism does not automatically deliver the abundance its productive capacities make possible.
Criticisms and Limits
The sabotage thesis has drawn criticism from those who point to the dramatic increases in computing power, medical technology, and agricultural yields over the past century. If capitalist firms are systematically restricting production, how do we explain these gains? Nitzan and Bichler might respond that these gains were themselves shaped by the pursuit of differential accumulation, and that the most profitable innovations are those that can be organized to protect dominant positions. But the response threatens to make the theory unfalsifiable: if every outcome, whether restriction or innovation, can be explained by power, then the theory loses empirical content.
John H. Bradford's review raises a related methodological objection. He argues that the elimination of the distinction between economics and politics renders any empirical test of the theory's ostensible integration impossible . If power is everywhere and everything is power, how would one falsify the claim that a particular outcome reflects the power of dominant capital? The theory's breadth becomes an obstacle to empirical accountability. This is not a fatal objection—many productive research programs have struggled with falsifiability—but it does mean that Capital as Power functions more as a framework for generating hypotheses than as a settled theory that can be confirmed or refuted by evidence.
The State and the Mode of Power
Repudiating State Theory
Nitzan and Bichler explicitly repudiate the need for a theory of the state as distinct from capital. In their framework, the state is not a separate actor that intervenes in the economy but a mode of power that is continuous with the power of dominant capital. Sean Starrs, reviewing the book, argued that the state all but disappears in this account into vague corporate-government coalitions and is replaced by a radically new concept of the state as a mode of power . Starrs contends that this total repudiation is a critical mistake, since the historical record includes numerous instances where state action constrained or reshaped capitalist power in ways that cannot be reduced to the interests of dominant capital.
The issue is not merely taxonomic. If the state is simply a mode of power indistinguishable from capital, then the theory loses the ability to analyze conflicts between states and firms, or between different state apparatuses. Antitrust enforcement, labor legislation, and financial regulation have all, at various times, constrained capitalist power in ways that cannot be explained by the interests of dominant capital alone. Starrs suggests that a reconceptualization of state theory, rather than its abandonment, would strengthen the power theory of value . As it stands, the theory's strength—its insistence on the unity of political and economic power—becomes a weakness when that unity is assumed rather than demonstrated.
Creorder and Social Change
The concept of creorder—a portmanteau of creation and order—is central to Nitzan and Bichler's account of how power operates. Capitalism is not a static system but a process in which dominant capital groups continuously reshape the institutions, markets, and social relations that constitute their power. This process is neither purely spontaneous nor purely planned; it is a continual negotiation between different centers of power, each seeking to organize the social world in ways that enhance its own capitalization. The concept is meant to capture the dynamic, contested, and deeply political character of capitalist accumulation.
The creorder concept also signals the theory's distance from deterministic accounts of capitalism, whether Marxist or neoclassical. There is no inevitable logic of history in Nitzan and Bichler's framework, no teleology of productive development or class struggle. What exists is a continual process of ordering and reordering in which power is exercised, contested, and transformed. This emphasis on contingency and agency is one of the theory's strengths, but it also raises questions about what, if anything, is distinctively capitalist about the mode of power the authors describe. If power is always and everywhere organized through processes of creorder, what makes the capitalist epoch different? The answer lies in the specific mechanisms of capitalization and differential accumulation, but the theory could do more to specify what those mechanisms presuppose.
Assessing the Framework
Productive Provocations
Despite its unresolved problems, Capital as Power has been a productive intervention in political economy. Tim Di Muzio and Matt Dow, writing in the Handbook of Alternative Theories of Political Economy, described the approach as an insightful and important perspective that can be used to investigate a variety of political-economic problems, including wealth inequality and the power of finance . The theory's empirical work on differential accumulation has generated findings that stand independently of its more contested theoretical claims. A critic can reject the power theory of value while still learning from the historical patterns the authors have documented.
The theory has also demonstrated its capacity to generate new research questions. Cochrane's work on the De Beers diamond cartel and on the reputational damage suffered by BP after the Deepwater Horizon spill shows how the capital as power framework can be applied to concrete cases . These applications do not resolve the theoretical debates, but they demonstrate that the framework has heuristic value beyond the book's original arguments. The question for critics is not whether the theory is true in every detail but whether it generates insights that other frameworks miss.
The Definitional Gap
Bradford's review identifies what may be the theory's most significant weakness: the authors do not adequately define their main concepts, including capital, capitalization, capitalism, and power . If power is the answer to the question of what capital is, then the analytical work must be done by a precise account of what power means and how it operates. Bradford's criticism suggests that this account is missing, leaving the theory vulnerable to the charge that it explains accumulation by naming it. The concept of Capital as Power is evocative, but it requires a specification of power that the book does not fully provide.
This definitional gap is not merely a matter of philosophical precision. Without a clear account of power, the theory cannot distinguish between different forms of power—economic, political, military, ideological—or explain how they relate to one another. It cannot specify what counts as an increase or decrease in power, except by reference to capitalization, which is what the theory is supposed to explain. The result is a framework that is rich in insight but under-specified in its foundational concepts. Whether this is a fatal flaw or a spur to further theoretical development depends on how one views the relationship between a research program and its initial formulation.
Capital as Power theory ultimately offers a distinctive and challenging account of what capital is and how it works. Its critique of neoclassical and Marxist value theory is forceful, and its alternative framework—capitalization as the measure of organized power—has generated a substantial body of empirical research. The theory's unresolved tensions, particularly around the definition of power and the treatment of the state, are real, but they are the tensions of a framework that is still being developed rather than a settled doctrine. For readers seeking to understand a foundational question in political economy, the theory provides both a provocation and a set of analytical tools that repay serious engagement.