These cycles of boom and bust are not, however, pure anarchy. Capitalism, too, has something akin to an economy-wide central planner: the financial system—the first car in the rollercoaster, managing spirits and rationing investment. Economist J. W. Mason, who has developed the idea of finance as planner in a series of articles in Jacobin magazine, writes: “Surplus is allocated by banks and other financial institutions, whose activities are coordinated by planners, not markets … Banks are, in Schumpeter’s phrase, the private equivalents of Gosplan. Their lending decisions determine what new projects will get a share of society’s resources.” Banks decide whether a firm will get a loan to build a new plant, a household a mortgage, or a student a loan for tuition and living expenses—and the terms on which each is repaid. Each loan is an abstract thing that masks something very concrete: work for workers, a roof over someone’s head or an education.

[...] The financial system’s best guesses of ultimately unknowable future profitability, then, govern how concrete resources are set aside. [...]