Mirror images and ideological straitjackets on the path from Solidarity to sellout

For much of the 20th century, there was a curious mirror effect between orthodox Soviet and Chicago School ideologies — both saw the other as the only other possible economic system. Although both time and the ongoing global crisis of capitalism has begun to chip away at such a ridiculous binary, to a maddening degree this ideological straitjacket continues to assert itself. A straitjacket that does not spontaneously materialize but is crafted for the maintenance of power.

The effects of this mirrored duality are still very much with us, and are a crucial factor in the path the countries of the former Soviet bloc have traveled. The usages of this ideological construct are obvious enough in the capitalist world, distilled into “there is no alternative” by the just departed Margaret Thatcher. Less obvious were the usages further East; perhaps the nearest equivalent of the prime minister’s “TINA” is Leonid Brezhnev’s declaration of the Soviet system as “irreversible.”

When the general secretary’s formulation began unraveling in the late 1980s, what was a Soviet bloc economist to do? For many, the answer was to pick up a copy of a book by Friedrich Hayek or Milton Friedman, and jump through the looking glass. And when their new mirror seductively told them to apply shock treatment to their own countries, they did — the mirror told them there was no alternative.

There is always an alternative, Polish economist Tadeusz Kowalik reminds us in his book From Solidarity to Sellout: The Restoration of Capitalism in Poland.* Professor Kowalik, drawing on his decades of experience as a reform socialist often on the outs with the communist authorities for his willingness to challenge orthodoxy, his work as an adviser with the Solidarity trade union and his personal knowledge of the key players, reminds us that Poland — and, by implication, the Soviet bloc as a whole — had an opportunity to create a different economy, one built on cooperatives and democratic participation in the economy.

Such an outcome was widely desired by Poles, and the outlines of such a system emerged in the “Round Table” negotiations held between Poland’s communist authorities and representatives of opposition groups, led by Solidarity, from February to April 1989. Economic democracy was already an established concept, embodied in the “Self-Governing Republic” program of Solidarity, adopted at its first national congress in 1981. In it, Solidarity, which consciously identified itself as a labor union and a broad social movement, declared:

“In the organization of the economy, the basic unit will be a collectively managed social enterprise, represented by a workers’ council and led by a director who shall be appointed with the council’s help and subject to recall by the council. The social enterprise shall … [work] in the interests of society and the enterprise itself.  … The reform must socialize planning so that the central plan reflects the aspirations of society and is freely accepted by it. Public debates are therefore indispensable. It should be possible to bring forward plans of every kind, including those drafted by social or civil organizations. Access to comprehensive economic information is therefore absolutely essential.”

Solidarity’s program forgotten, but the looking glass not on agenda

Although Solidarity’s original program was tossed aside, the Round Table negotiators envisioned significant changes without any “leap” into a capitalist market. The two sides did not have serious disagreements, ultimately agreeing in principal, on the political side, on pluralism, freedom of speech and freely elected local governments. On the economic side, there was agreement on facilitating employee ownership, for employee control of state-owned enterprises and a uniform policy toward enterprises, regardless of ownership form. Summarizing the agreement in Solidarity to Sellout, Professor Kowalik wrote:

“Of primary importance here are the provisions concerning protection of labor and employment, written out in ten settled upon and two contentious points. All these detailed settlements distinctly show that the participants of the agreement had no such thought in mind as a ‘leap’ into a market economy.” [page 60]

Yet a particularly harsh brand of capitalism was instituted; “Thatcherism” or “Reaganism” in the parlance of then and “neoliberalism” in today’s vernacular. Professor Kowalik cites several factors leading to the imposition of shock therapy in contradiction to popular opinion, negotiated agreements and pre-existing platforms:

• The centralization of Solidarity while underground during the period of martial law during the 1980s converted it into a top-down organization with a severe cut in membership and an isolated leadership that drifted to the Right.
• The grabbing of state property by the nomenklatura (the bureaucracy managing enterprises and overseeing that management from within the government) for themselves.
• A blurring of Catholicism with socialism, particularly on the part of Tadeusz Mazowiecki, who would become the first non-communist prime minister, but also by other influential people.
• The adoption of undiluted neoliberal ideology by the Polish economists who would become the architects of economic policy by becoming ministers and government advisers.

One of the agreements arising out of the Round Table was that one-third of the seats to the Polish parliament (the Sejm) would be contested later that year (1989) in June. Solidarity won all but one of the contested seats — so sweeping was the rout that Solidarity became the effective government even though the communists still held a parliamentary majority. Mr. Mazowiecki became prime minister when the next government was formed three months after the election. Solidarity activists dominated the new government, although communists retained some portfolios, including the Interior and Defense ministries.

Critically, however, the new finance minister/deputy prime minister was Leszek Balcerowicz, a proponent of neoliberalism who was distant from Solidarity’s struggles and whose writings were of an abstract nature; “his interests were limited to pure theory,” according to Professor Kowalik. Prime Minister Mazowiecki’s leading economic adviser was Stanisław Gomułka, who converted to neoliberal ideology while at the London School of Economics. And Western advisers beat a path to Warsaw as they did to other Soviet bloc capitals; Jeffrey Sachs, who oversaw shock therapy in multiple countries, perhaps was the most prominent. The International Monetary Fund was also on the scene.

Abstract theorizing instead of examination of concrete reality

Other economists who had imbibed starry-eyed ideas of how market forces would shortly create paradise played roles as well; but the finance minister’s role was so important that Poland’s shock therapy became known as the “Balcerowicz Plan.” Professor Kowalik wrote of his obfuscating tendencies:

“Balcerowicz made great efforts to compromise — like the term ‘social interest’ — the adjective ‘social.’ … Such a standpoint was bound to lead him to extreme individualism, a negation of the role of the state as a general social institution, with only the interest of the authorities being important. Balcerowicz does not write this outright, but his reasoning resembles a lot the well-known view of Margaret Thatcher, that there is no such thing as society (and thus it does not exist). He rejects the very notion of social justice and often simply avoids this subject. … Balcerowicz’s knowledge, of course, remained theoretical, abstract, and distant from real economic policies.” [pages 112-114]

Such an approach and outlook dovetails with orthodox capitalist economics, as distilled through the wellspring of neoliberalism, Chicago School economics: highly abstract, built on mathematics and based on airy concepts such as “perfect competition” rather than on the real world. Firms and individuals are not seen as part of a social structure; factors such as wealth and property are taken as given. Production is alleged to be independent of all social factors, the employees who do the work of production are in their jobs due to personal choice, and wages are based only on individual achievement independent of race, gender and other differences.

Such is the underlying rationale for neoliberalism, which seeks to make “market forces” — the aggregate interests of the wealthiest industrialists and financiers as expressed through the power of the corporations they control — the sole arbiter of outcomes in all social spheres. Neoliberalism, as Henry Giroux recently put it, “construes profit-making as the essence of democracy, consuming as the only operable form of citizenship, and an irrational belief in the market to solve all problems and serve as a model for structuring all social relations.”

New laws accelerate grabbing of state property already in progress

Privatization, however, was already under way by the time the Round Table negotiators hammered out their agreement. A 1987 law enabled the creation of private businesses with the assets of state enterprises and a January 1989 law stipulated outright that state assets could be transferred to private individuals for conducting economic activity. Such transfers were not necessarily done with full value paid, and private firms were given preferential treatment. Professor Kowalik wrote in Solidarity to Sellout:

“[T]he players of the nomenklatura offshoot of privatization consisted of managers of various rank, government and party functionaries associated with them, along with their families. The process, commonly called ‘enfranchisement of the nomenklatura,’ deserves attention because it was then that the phenomenon of corrupt privatization, or arranged clientelistic privatization, developed. …

“The state sector shortly became a cash machine, which was made easier by the authorities through relevant legal regulations. … These laws sanctioned the plunder of the state sector earlier begun by its own managers. The state sector was highly taxed to maintain the entire state infrastructure and doomed to hopeless competition with the nearly tax-free private firms that were also paying infinitesimal customs duties.” [pages 204-205]

The pace was accelerated when the parliament, in late December 1989, hurriedly passed nearly unanimously a series of bills implementing the Balcerowicz Plan, with the plan going into effect on January 1, 1990. Noting the later contrition of the parliament speaker, who said Finance Minister Balcerowicz and Professor Sachs “plainly tricked us,” Professor Kowalik summed up the vote this way:

“Advantage was simply taken of the immense trust that the people had in the first non-communist government. There could be no serious debate, because without a general document presenting a synthesis of the systemic contents of eleven laws and the simultaneously ratified budget, such a discussion was not possible. The parliamentarians acted under the pressure of a race with time, imposed on them by the executive authorities.” [page 133]

One scheme for privatization was the creation of “National Investment Funds” — state companies disposed in this program were to be 15 percent owned by employees, 25 percent by the state treasury and 60 percent by the funds, with the public allowed to buy shares in the funds. Only a minority of privatized enterprises were disposed of this way (more were simply sold to foreign buyers), but the funds were a failure, Solidarity to Sellout reports, because inflation and a declining stock market caused the shares to steadily lose value; moreover, most of the public shares wound up in foreign hands.

What capital remained in Polish hands also became concentrated as, similar to the pattern in Russia, the nomenklatura-turned-privatizers were soon dwarfed by a new class of oligarchs.

Actual cooperatives faced consistent hostility from the government, which saw coops as a temporary “transition” to what it termed “real” privatization. Pre-existing cooperatives were simply  “administratively eliminated,” new coops had barriers placed in front of them and foreign capital, which soon controlled Polish banking, was also hostile. At the same time, state farms were immediately thrown into competition with subsidized Western European agricultural with all domestic subsidies removed at a stroke, devastating Polish farmers. This was in contrast to the buildup of Western European agriculture after World War II, which was nurtured through protective measures.

Results of shock therapy differ widely from promises

The results of the Balcerowicz Plan were devastating, in contrast to promises of a short-lived downturn followed by rapid growth and transition to Poland becoming a “normal” European country, a concept dangled by Western advisers skillfully playing on Polish antipathy toward Russia:

• A 50 percent drop in real wages and a 30 percent drop in industrial output in the first month of the Balcerowicz Plan.
• From 1996 to 2005, the percentage of Poles whose income was so low as to be insufficient for biological survival tripled to 12 percent even though the national income rose by one-third.
• Wage inequality became the highest in the European Union.
• The number of Poles living below the official poverty level ballooned to 58 percent by 2003; the statistics bureau then stopped publishing this figure.
• Before entry into the European Union, the average unemployment rate was 16 percent, topping 20 percent during the early 2000s, more than a decade after the imposition of shock therapy; the rate declined after E.U. ascension due to a stream of emigration.

Having told this story in a somewhat idiosyncratic but nonetheless compelling style, Solidarity to Sellout ends, surprisingly, on an unimaginative note by championing the Scandinavian model of capitalism, seeing Sweden as the model for Poland to emulate. In part, the conclusion follows from Professor Kowalik’s acknowledgment that a lack of organized anger and the sellout by trade unions has allowed the Polish Right to flourish, and a tacit understanding that creating a cooperative economy is drastically more difficult in a privatized economy than it would have been when enterprises were in state hands. He writes:

“[I]t was enough for the trade unions to become involved in support of anti-employee systemic changes and the shock operation. That is why rebuilding he strength of the trade unions in Poland is going to be an extremely difficult task.” [page 298]

Professor Kowalik calls the Scandinavian countries “centers of economic excellence,” contrasting them to Poland’s “role of subcontractor.” The former model by any reasonable measure is superior to neoliberalism, but the professor has perhaps not fully considered that Poland, and the rest of the Soviet bloc, were destined by the dynamics of capitalism to become a source of cheap labor, akin to Latin America’s relationship to the United States. Nor are the more powerful capitalist countries likely to acquiesce to a subcontractor becoming a serious competitor.

Having become completely entangled in the global capitalist system, Poland can only transcend to a better system as part of an international bloc; it can’t be an island unto itself. Given the structural crisis of global capitalism, the aim will have to be higher than simply emulating Sweden, where capitalist pressures are not unknown and the European Union methodically imposes downward pressure.

But regardless of one’s opinion of the conclusion, Solidarity to Sellout provides an outstanding analysis of the capitalist restoration of Poland on neoliberal grounds, as could only be written by an economist with an intimate understanding of Poland, economics, the Solidarity movement and the key individuals in the process. Professor Kowalik’s book is well worth pursing by anybody interested in understanding the post-Soviet path of Central Europe, or, more generally, the dynamics of neoliberalism.

* Tadeusz Kowalik, From Solidarity to Sellout: The Restoration of Capitalism in Poland [Monthly Review Press, New York, 2012]

Defending Howard Zinn

Howard Zinn’s A People’s History of the United States: 1492-Present has always been a controversial book. We are taught as young students that history is made by monarchs, emperors, presidents, generals and industrialists who created the modern world, the only world that can be. The overwhelming majority of humanity is putty shaped by these great men, and we should all be grateful for what they have bestowed upon us.

Professor Zinn’s work is a direct challenge to such narratives, illuminating the struggles of ordinary people against the dominant classes through long periods of history and the violence that accompanies the creation and maintenance of institutional inequality. The potent challenge that People’s History represents more than 30 years after its first printing is demonstrated by a vitriolic attack on it published in the magazine of the American Federation of Teachers, American Educator.

The article, “Undue Certainty,” was brought to my attention by a dedicated New York City high school teacher who is not confident that the AFT will publish a response. The author of the article, Sam Wineburg, could not long maintain his mask of neutrality despite his attempts to root his challenge in a supposed concern for “balance.” A perusal of Professor Wineburg’s curriculum vitae shows no obvious ideological slant, and I shall not attempt to assign him one. Moreover, he took pains to write from a centrist position. Nonetheless, his false equivalences between Right and Left ultimately ring hollow, and his assertions that he is standing up to the “dominant narrative” of People’s History badly at odds with reality.

After acknowledging that traditional school textbooks “too often” hide the history of ordinary soldiers and everyday people, Professor Wineburg’s first critique is that People’s History “is naked of footnotes,” similar to traditional textbooks. It is true that direct footnotes aren’t used, but People’s History contains 18 pages of references, grouped by chapter, and often provides sources in the text, so it is not difficult to find relevant sources.

Questioning the questioning of World War II

The core of Professor Wineburg’s argument centers on a critique of “A People’s War?,” People’s History’s chapter on World War II and the beginnings of the Cold War. (Professor Wineburg uses the 2003 HarperCollins edition while my copy is the 1995 edition, so the page numbers I will cite will vary a bit from those cited in the American Educator article.) The professor begins his critique of the chapter by pouring cold water on the questions raised by Professor Zinn concerning African-American attitudes toward the war, although he does acknowledge that the Black press wrote about the “Double V” — victory over fascism in Europe and over racism in the United States.

Professor Wineburg asserts that Professor Zinn “hangs his claim on [only] three pieces of evidence” — a quote from a Black journalist, a quote from a student and a poem published in the Black press [page 28]. It is strongly implied that these were lone unrepresentative voices. But Professor Wineburg leaves out that the student quote was was read to a crowd of “several thousand people in the Midwest,” according to People’s History, and was met with loud and sustained applause, to the “surprise and dismay” of the NAACP leader who is directly quoted. [page 410]

Moreover, Professor Zinn immediately follows those examples with these two sentences: “But there was no organized Negro opposition to the war. In fact, there was little organized opposition from any source,” save for a handful of very small socialist, anarchist and pacifist groups [page 411]. A page later, the book states, “Public opinion polls show[ed] large majorities of soldiers favoring the draft for the postwar period.” These passages are hardly consistent with Professor Wineburg’s contention that Professor Zinn one-sidedly declares that the U.S. seethed with hostility toward the war.

Professor Wineburg then complains that the number of conscientious objectors was not only low, but that Black C.O.s were proportionally fewer than White C.O.s. He simply uses the raw numbers in these categories without making any attempt to analyze them, an irony when a primary accusation against People’s History is that it is too simplistic. I am not an expert on World War II and am in no position to issue judgments, but a reasonable analysis would take into account the fact that Blacks consistently faced much harsher punishments than Whites, perhaps dampening the willingness to act on ambivalences toward the war. We might also consider the racism that would have made it more difficult for a Black objector to be granted C.O. status by White decision-makers.

Any analysis would surely have to contend with the fact that, as People’s History does but Professor Wineburg does not, the World War I-era espionage act criminalizing dissent was still on the books and the Smith Act passed in 1940 made criticism of the war effort illegal. These acts, while applied ruthlessly against Left critics of the wars, likely would have come down especially hard on African-Americans who publicly objected and wielded as racist object lessons. Would this not have an effect?

War aims and the decision to drop the atomic bomb

Professor Wineburg continues his critique of the World War II chapter by complaining that Professor Zinn asks “yes-no” and “either-or” questions [pages 29-30]. People’s History does ask big questions, but that is rather the point. The book openly asks if an Allied victory would deliver a blow to imperialism and if U.S. post-war policies would match the country’s stated ideals and values. Considering post-war McCarthyism, continued Jim Crow laws and the forcing of women back into the home, these hardly seem irrelevant questions.

Despite ample evidence of hostility to change by the country’s rulers, it is difficult not to conclude that Professor Wineburg is offended by the mere asking of these questions. People’s History presents a long series of evidence of the true U.S. goals of economic dominance covering five pages, backed by quotations directly from U.S. government archives [pages 401-405]. Some of the documents reveal that officials explicitly told Allied governments they would be allowed to keep their colonies.

The U.S. has a long history of interventions in other countries, often to directly benefit U.S. corporations. The U.S. intervened militarily almost 100 times in Latin America alone before 1970 and has a long history of overthrowing governments not to its liking. Does this history truly have no relevance to an analysis of U.S. war aims in World War II? It should not be controversial that the first world war was fought for imperial gains and colonies, nor that a struggle between the U.S. and Germany to be the successor to Britain’s declining world dominance was a factor in early 20th century foreign affairs. World War II did in fact end with the Allies dividing the world among themselves, nor did the Allies exert themselves to stop the Holocaust.

Professor Wineburg is certainly entitled to draw different conclusions than Professor Zinn, but his accusation that People’s History asks one-sided questions to pre-determined answers itself appears to be pre-determined. Professor Wineburg’s subtle contention that Professor Zinn gives insufficient credit to the Allies’ supposed zeal to defend Jews is complemented with a more direct accusation that People’s History fails to acknowledge the suffering of Poles. As I am Slavic and a Marxist intellectual, I need no lectures on Nazi barbarism; I am painfully aware of what the Nazis did to people like me in the Mauthausen death camp. I doubt Professor Zinn needed such lectures, either. Nonetheless, Professor Wineburg writes:

“Zinn is silent about Poland. Instead, he approvingly cites Simone Weil, the French philosopher and social activist. At a time when the Einsatzgruppen were herding Polish Jews into the forest and mowing them down before open pits, Weil compared the difference between Nazi fascism and the democratic principals of England and the United States to a mask hiding the true character of both. … Zinn adds that the real struggle of World War II was not between nations, but rather that the ‘real war was inside each nation.’ Given his stance, it’s no wonder that Zinn chooses to begin the war not in 1939, but a full year later.” [page 30]

That is a heavy charge. Did Professor Weil really say that? When we examine the relevant passage, we find that what she wrote was rather more subtle; neither she nor Professor Zinn is quoted accurately. Here is the relevant passage in People’s History:

“A few voices continued to insist that the real war was inside each nation: Dwight Macdonald’s wartime magazine Politics presented, in early 1945, an article by the French worker-philosopher Simone Weil: ‘Whether the mask is labelled Fascism, Democracy, or Dictatorship of the Proletariat, our great adversary remains the Apparatus — the bureaucracy, the police, the military. … No matter what the circumstances, the worst betrayal will always be to subordinate ourselves to this Apparatus, and to trample underfoot, in its service, all human values in ourselves and in others.’ ” [page 412]

There are no direct comparisons of countries. Reasonable minds can disagree with Professor Weil’s anti-authoritarian stance or her imagery, but her writing unmistakably is a cri de coeur for democratic values to be honored, an end to oppression everywhere and for people to have control over their lives. That is not unreasonable. Jim Crow and racism was enforced with state-sponsored and -enabled terrorism across the U.S. South, women could hardly be said to have attained equality even if their labor was needed for the war effort and all sorts of national hatreds coursed through the populations of all belligerents.

That the evil of Nazi Germany was a unique menace that had to be eliminated is not an excuse for Allied countries not to take stock of themselves. No Allied country was anywhere near as cruel as the Nazi régime — but is that the bar we wish to set for ourselves?

Finally, Professor Wineburg addresses Professor Zinn’s contention that Japan was seeking to negotiate a surrender in the months before the atomic bombs were dropped on Hiroshima and Nagasaki, and that it was not necessary to drop them as the dominant narrative has consistently maintained. The complaint here is that Professor Zinn relies on “the two defining texts of the revisionist school, Gar Alperovitz’s Atomic Diplomacy (1967) and Martin Sherwin’s A World Destroyed (1975).” But Professor Zinn also quotes from U.S. government documents that are based on interviews with “hundreds” of Japanese civilian and military leaders, and also notes that the U.S. had broken Japanese codes, revealing that Japanese leaders were talking of surrender.

Moreover, Atomic Diplomacy has a “selected bibliography” of 28 pages and A World Destroyed supports itself with more than 100 pages of notes, sources and documents. It is rather difficult to argue that these books are not well sourced. Nonetheless, Professor Wineburg rests his case on his disbelief that the Japanese had any intention to surrender. He writes:

“The Japanese had been courting the still-neutral [in the Pacific theater] Soviets for months, with airy proposals containing scant details about surrender terms. In fact, as late as June 1945, their backs to the wall and all hope seemingly lost, the Japanese were still trying to barter with the Soviets, going so far as to offer Manchuria and southern Karafuto in exchange for the oil needed to stave off an American invasion.” [page 31]

Is it really so remarkable that the Japanese were maneuvering to avoid a surrender they were becoming reconciled to, even if they had only the slimmest of hopes? This passage “proves” that Japan was willing to try anything to avoid a surrender, not that they were definitively determined to fight on no matter what. For a critic so quick to accuse Professor Zinn of “undue certainty” in the support of a preferred narrative, Professor Wineburg appears to be the one rather casual with documentation.

Is it really ‘neutrality’ that is the issue?

Having built up a head of steam, Professor Wineburg perhaps does not realize the extent to which he reveals an agenda, and not merely disapproval of conclusions supposedly too strong. In different passages, he issues these harsh judgments on People’s History:

“It is here that Zinn’s undeniable charisma becomes educationally dangerous, especially when we become attached to his passionate concern for the underdog. … Instead of encouraging us to think, such a history teaches us how to jeer. … A history of unalloyed certainties is dangerous because it invites a slide into intellectual fascism.” [pages 33-34]

Wow! “Intellectual fascism”? What purpose is the use of such invective by someone who has spent pages claiming to be above any partisan scholarship? The purpose is to dismiss out of hand any real critique of the modern capitalist state and its workings. Professor Wineburg’s lines of attack demonstrate that he identifies strongly with these dominant powers. It is not uncommon for a person with such an identification to react with fury when patterns of domination are challenged because such patterns are so deeply woven into the fabric of society. Here is how he dismisses People’s History:

“Zinn remains popular not because he is timely but precisely because he’s not. A People’s History speaks directly to our inner Holden Caulfield. Our heroes are shameless frauds, our parents and teachers conniving liars, our textbooks propagandistic slop. Long before we could Google accounts of a politician’s latest indiscretion, Zinn offered a national ‘gotcha.’ They’re all phonies is a message that never goes out of style.” [page 33]

So there we have it. How dare Howard Zinn question our great country and its great institutions! There is no reason for anyone to complain, so he writes only to indulge a childish desire to poke people in the eye and only the immature could possibly follow him. Sam Wineburg may have convinced himself that he has “exposed” Howard Zinn, but he has exposed only his own desire to guard the honor of the powerful and keep them safe from criticism.

People’s History is an attempt to write people into the history that they lived. Professor Wineburg’s illogical contention that the Right’s efforts to erase people from history — the ideological re-writing of history in school textbooks in Texas and the elimination of Mexican-American studies in Tucson, Arizona, are merely two of the most recent efforts — is equivalent to the pioneering work of Professor Zinn is unworthy of an educator. And far less removed from such ideologically inspired erasures of history than he would like to believe.

Stagnation, not growth, is the norm for mature capitalism

Economic growth is supposedly the norm, necessitating that an explanation be found for slumps and stagnation. But are these reversed? Is stagnation is the norm with the periods of strong growth requiring explanation?

A two-decade “long depression” occurred after an 1870s bubble inflated by speculation in railroads and construction in North America and Europe burst; the Great Depression lasted more than a decade and ended only because of World War II; and stagnation had been the recent fate of the world’s advanced capitalist countries even before the economic crisis that broke out in 2007 and 2008.

There are no signs of any recovery; on the contrary unemployment remains high across North America and Europe, with consumer and governmental debt rising to unsustainable levels. This state of affairs is the new norm of capitalism, argue John Bellamy Foster and Robert W. McChesney in their newly released book, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China.*

The authors, frequent collaborators in Monthly Review (of which Professor Foster is the editor), marshal an impressive collection of material to present an understanding of the capitalist dynamics that have brought the world to its present state of crisis and why that is the natural outcome of these dynamic forces, examining the crisis from a global perspective.

A structural crisis of capitalism is not the same as a standard “business cycle.” During the Great Depression, the U.S. economy moved through an entire cycle, but the “boom” period of the cycle merely gained back some of the dramatic losses of the early 1930s before the economy began sinking again in 1937. Periods of “epoch-making innovation,” such as that resulting from the steam engine or the automobile, have fueled growth for a time, but no such inventions are on the horizon today.

The reassertion of stagnation as normal state

Professors Foster and McChesney argue that, in the absence of such dramatic innovation, which have not occurred for several decades, stagnation is the expected norm, particularly in “mature” capitalist economies:

“The result was that the economy, despite its ordinary ups and downs, tended to sink into a normal state of long-run slow growth, rather than the robust growth assumed by orthodox economics. In essence, an economy in which decisions on [business] savings and investment are made privately tends to fall into a stagnation trap; existing demand is insufficient to absorb all of the actual and potential savings (or surplus) available, output falls, and there is no automatic mechanism that generates full recovery.” [page 12]

One way of conceptualizing that is to note that U.S. corporations are sitting on at least $2 trillion of cash — there are not enough investment opportunities to put that money, accumulated by a small number of hands, to good use. Investment decreases because demand decreases under the impact of stagnant or declining wages, and financial speculation increases.

The rise in the accumulated surplus leads to general deprivation. The “competitive capitalism” of the 19th century kept over-accumulation at bay through dramatic expansion but also through frequent bankruptcies, the authors write. In the modern era, they argue, there is a chronic buildup of excess capacity and thus stagnation, although regular business cycles continue. A lack of price competition caused by the consolidation of many industries into a small number of major competitors pushes prices higher, aggravating the erosion of living standards.

Price competition is ruinous to oligopolistic corporations, the authors argue, so they indirectly collude to prop up prices. (This requires no formal agreement when serious competitors can counted on one’s fingers.) Specific cases of price competition come in destructive forms, such as outsourcing huge amounts of production to countries with extremely low wages and sweatshop conditions. Firms compete through cutting production costs and by increasing market share through advertising and marketing techniques, rather on on retail pricing.

Thus, competition in a modern capitalist economy assumes a form drastically different than the mythological image of small firms competing on an even playing field commonly taught:

“Competition over productivity or for low-cost position remains intense, but the drastically diminished role of price competition means that the benefits of economic progress tend to be concentrated in the growing surplus of the big firms rather than disseminated more broadly by falling prices throughout the entire economy. This aggravates problems of overaccumulation. Faced with a tendency to market saturation, and hence the threat of overproduction, monopolistic corporations attempt to defend their prices and profit margins by further reducing capacity utilization. This, however, prevents the economy from clearing out its excess capacity, reinforcing stagnation tendencies. … Major corporations have considerable latitude to govern their output and investment levels, as well as their price levels, which are not externally determined by the market, but rather with an eye to their nearest oligopolistic rivals.” [page 37]

(The reference to “monopolistic corporations” in the quote above does not refer to a “pure” monopoly, but rather a handful of corporations that, as a group, act in a monopolistic manner — “monopolistic” and “oligopolistic” are used interchangeably throughout The Endless Crisis.)

“The stagnation tendency endemic to the mature, monopolistic economy, it is crucial to understand, is not due to technological stagnation, i.e., any failure at technology innovation and productivity expansion. Productivity continues to advance and technological innovations are introduced (if in a more rationalized way) as firms continue to compete for low-cost position. Yet this, in itself, turns into a major problem of the capital-rich societies at the center of the system, since the main constraint on accumulation is not that the economy is not productive enough, but rather that it is too productive.” [page 38]

Crisis is not a bolt from the blue

The current slump — ongoing stagnation following a steep downturn — is decades in the making. The Great Depression was ended by the massive spending needed to fight World War II, but the boom period of the 1950s and 1960s wound down as pent-up consumer demand was satiated, the final boosts from the automobile ran their course, the stimulus of the Vietnam War ended, and new productive capacity in Europe and Japan contributed to a global surplus. Professors Foster and McChesney demonstrate that financialization was the response to the stagnation that began to grip capitalist economies in the 1970s.

“[U]nable to find an outlet for its growing surplus in the real economy, capital (via corporations and individual investors) poured its excess surplus/savings into finance, speculating in the increase in asset prices. Financial institutions, meanwhile, on their part, found new, innovative ways to accommodate this vast inflow of money capital and to leverage the financial superstructure of the economy up to ever greater heights with added borrowing — facilitated by all sorts of exotic instruments, such as derivatives, options, securitization, etc. Some growth of finance was, of course, required as capital became more mobile globally. This, too, acted as a catalyst, promoting the runaway growth of finance on a global scale.” [page 42]

As a result, debt and financial profits increased much faster than the overall economy. Financialization rests on increasing asset prices; thus, a series of financial bubbles was necessary to keep the whole thing going. As instability increased, repeated central-bank interventions were necessary to deal with a steady outbreak of market and currency crises. The increasing power of financial institutions enabled them to induce governments to deregulate markets, encouraging ever more risky behavior.

The effect of these developments, the authors write, is a “stagnation-financialization trap,” whereby financial expansion has become the main fix for the system, which merely enables the cycle of crises to continue without dealing with the underlying structural weaknesses.

“Today’s neoliberal regime itself is best viewed as the political-policy counterpart of monopoly-finance capital. It is aimed at promoting more extreme forms of exploitation. … Neoliberal accumulation strategies, which function with the aid of a ‘predator state,’ are thus directed first and foremost at enhancing corporate profits in the face of stagnation, while providing further needed cash infusions into the financial sector. … Neoliberalism has also increased international inequalities, taking advantage of the very debt burden that peripheral economies were encouraged to take on, in order to force stringent restructuring on poorer economies.” [pages 44-45]

Thus, the system’s only answer has been attempts to re-inflate new asset bubbles. Globalization has only made this problem a global one:

“At the world level, what can be called a ‘new phase of financial imperialism,’ in the context of sluggish growth at the center of the system, constitutes the dominant reality of today’s globalization. Extremely high rates of exploitation, rooted in low wages in the export-oriented periphery, including ‘emerging economies,’ have given rise to global surpluses that can nowhere be profitably absorbed within production. The exports of such economies are dependent on the consumption of the wealthy economies, particularly the United States, with its massive current account deficit. At the same time, the vast export surpluses generated in these ‘emerging’ export economies are attracted to the highly leveraged capital markets of the global North, where such global surpluses serve to reinforce the financialization of the accumulation process centered in the rich economies.” [page 63]

International oligopoly supplants national oligopoly

The concomitant need for growth under the rigors of capitalist competition fuels corporate mergers; such combinations are necessary to buoy profits via increasing market shares when markets are mature. Because of globalization, the tendency toward oligopoly now takes place on an international scale.

This internationalization of oligopoly gives a false impression of renewed national competition, professors Foster and McChesney argue, because national firms are subsumed by international firms as part of the process of globalization. As under earlier, national scales, few corporations can survive this competition. The 500 largest corporations in the world collectively earn revenues of about 40 percent of world gross domestic product! [pages 76-77]

As ever more power accrues to the capitalists who reap the profits from these corporations, they can move production, or, as is standard in the apparel and computer industries, subcontract production to the places with the lowest wages and longest hours, thereby accumulating fantastic profits and reversing, for now, earlier downward pressures on profits.

“Corporations seek, by means of divide-and-rule strategies, to gain advantages over different local, regional, and national labor markets, benefiting from the reality that, while capital is globally mobile, labor — due to a combination of cultural, political, economic, and geographical reasons — for the most part, is not. Consequently, workers increasingly feel the crunch of worldwide job and wage competition, and giant capital enjoys widening profit margins as the world races to the bottom in wages and working conditions. …

The conflict between workers is engendered by capital through the creating of an industrial reserve army of the unemployed. This divide-and-rule strategy integrates disparate labor surpluses, ensuring a constant and growing supply of recruits to the global reserve army, which is made less recalcitrant by insecure employment and the continued threat of unemployment.” [pages 114-115]

Chinese wages, for instance, have remained at about five percent of the U.S. level since the Deng Xiaoping-led imposition of capitalism in the late 1980s because of hundreds of millions of displaced rural farm workers streaming into cities; rural incomes are still lower than average city wages.

Nonetheless, sweatshop pay and conditions are so poor in China that the pattern is workers staying for at most a few years then returning to their villages because physical survival under such conditions for much longer is impossible. That they can return is because the Chinese government has not yet succeeded in eliminating rights to the land held by villagers, a remaining vestige of the Mao era that, ironically, props up the sweatshop system. Those land rights are a social benefit that enables migrants to survive their stints working in sweatshops.

On such horrific conditions rests modern capitalism. Nor are workers, primarily in advanced capitalist countries, who have steady employment the norm, when viewed on a global scale. Using International Labour Organisation figures as a starting point, professors Foster and McChesney calculate that the “global reserve army” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion — far less! [pages 144-146]

Failure of orthodox economic ‘theory’

The authors note that orthodox economics assumes that new industrial development will eventually employ all these people, a hope based on ideology and not on reality. The countries that industrialized in the 19th century, particularly Britain and other European countries, were far from able to absorb all their displaced farmers — each experienced massive emigration. But today’s developing countries can’t export their population; as a result, the economy can’t possibly grow fast enough to absorb all their reserve labor armies even if the global economy weren’t in a years-long slump.

China and India contain too large a reserve army of labor for wages to substantially increase there; therefore Chinese and Indian consumption will not be a path out of world economic crisis as many orthodox economists and political leaders have hoped, according to The Endless Crisis. Orthodox economics, dominated by rigid Chicago School thinking, completely failed to predict the financial meltdown and subsequent stagnation. The reason for that lies in orthodox economics existing as an ideological campaign that long ago severed itself from analyzing the real world.

“Their abstract models, geared more toward legitimizing the system than to understanding its laws of motion, have become increasingly otherworldly — constructed around such unreal assumptions such as perfect and pure competition, perfect information, perfect rationality … and the market efficiency hypothesis. … This is an economics that has gone the way of stark idealism — removed altogether from material conditions.” [page 5]

The Endless Crisis is a welcome, and very needed, departure from the usual apologetics for capitalist outcomes. Professors Foster and McChesney provide a single source for understanding the present economic impasse, laying out with devastating precision the reasons for the economic crisis, the inevitability of crisis, the inequality and instability inherent in the capitalist system, and the need to move to a more humane system. Transcending capitalism and creating a better world can only be accomplished internationally, with working people around the world linking together. The authors write:

“Never before has the conflict between private appropriation and the social needs (even survival) of humanity been so stark.” [page 63]

Past structural crises of capitalism could be overcome because there was still room to grow. But when there are no more new markets to conquer, deprivation for the many is the only way for the few to continue to accumulate in a system dedicated to that ever narrower accumulation.

* John Bellamy Foster and Robert W. McChesney, The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China [Monthly Review Press, New York, 2012]

Self-directed workers as a “cure for capitalism”

The economy of the future will not be a tabula rasa. Today’s bricks will form part of tomorrow’s edifice and, assuming that humanity’s zig-zagging and often circular course toward greater freedom continues, pieces of a better world exist scattered around us.

Cooperative enterprises are surely part of that (hoped for) better tomorrow. If tomorrow’s better world is one of economic democracy, environmental sensitivity, rationality in production and distribution, equality and meaningful community involvement, than cooperatives will form some of the backbone. Some of these bricks are already here: Successful cooperatives exist today, although they are as yet small islands of democracy in the vast sea of authoritarian capitalist enterprises.

No one model could ever be universal. Differentiated internal operations and cultures are bound to develop. But certain bedrock principals can, and should, be in place for cooperative enterprises operating in an economy that increasingly includes them. The economist Richard Wolff, in his latest book, Democracy at Work: A Cure for Capitalism,* argues that the ability of the workers of an enterprise to be involved in all its strategic decisions is the most important principal to bring about economic democracy, without which political democracy is a formal, empty shell. He introduces the term “workers’ self-directed enterprises” to encompass such enterprises.

During the last structural crisis of capitalism, the Great Depression of the 1930s, massive movements from the Left, including unions, socialist parties and communist parties, forced widespread reforms to be instituted. Eventually, however, Keynesianism and social democratic programs developed new sets of instability and capitalists were able to at first slowly and then more vigorously roll back one reform after another. Professor Wolff argues that even if a suite of reforms could be enacted, the fix would be temporary — capitalists would intervene to take back the reforms, plunging us back into crisis.

But the problem is not simply that the wealthy, through their concentration of accumulated capital, can so readily bend political systems to their ends. The problem is the instability of capitalism itself — capitalists are induced to do everything they can to increase profits due to the relentless nature of competition. That can be achieved through taking a larger share of a market or through cutting costs — the latter can include the introduction of machinery or moving facilities to somewhere else where the workers can be paid far less. These decisions are made by a small number of people at the top of the company, ultimately by the board of directors, a body that almost always includes top executives.

A similar process of alienation happened in countries that used the system of the former Soviet Union, in which the government owned all enterprises. Professor Wolff uses the term “state capitalism” to describe that model because, in place of a private board of directors, state officials made all the decisions, again excluding workers. Those officials controlled all the production of the workers, appropriating the surplus by paying the workers a small fraction of the value of what they produced, the same as in a traditional private capitalist enterprise. A many-sided argument among Bolsheviks and others on how to organize production raged after the October Revolution, but, within a year of assuming power, the Bolsheviks nationalized large enterprises under the impact of the multiple deep crises of World War I and the threat of the advancing German army.

Such a system became synonymous with “socialism.” Along with many others, Professor Wolff argues that “socialism” has to be a much different system, one in which the workers themselves make the decisions of their enterprises, in conjunction with the community of which they are a part. A central part of the ongoing furious campaign against “socialism” is the supposed efficiency of capitalism in comparison to anything else. The inherent instability of capitalism (euphemistically called “business cycles” in orthodox economics) is itself inefficient, nor is it possible to measure all the wins and losses across a society.

“In short, the notion of measuring the efficiency of economic events or processes or of an economic system is a mirage. It is not possible to identify or measure all of the effects of any social factor, nor is it possible to separate and weigh all the influences that combine to produce each effect. The very concept of efficiency would have been banished from discourse, let alone science, long ago had it not proven so ideologically useful. Efficiency discourses resemble capitalist notions of efficiency, which in turn resemble the medieval doctrines and debates concerning how many angels can dance on the head of a pin: they too will one day strike people looking back as bizarre and absurd.” [pages 29-30]

Moreover, Professor Wolff continues:

“The efficiency argument for capitalism rings hollow in the face of high and enduring unemployment affecting jobless millions and their relatives, friends, and neighbors. Watching the growing absurdity of foreclosures creating both homeless people and empty homes throws into serious question the standard defense of capitalist efficiency. … Socialists and communists during the Cold War often simply inverted the standard argument by insisting that is was [their version of] socialism or communism that was efficient (or more efficient than capitalism) and thus represented progress. They, too, often ignored the impossibilities of identifying and measuring all costs and benefits and of separating and evaluating each of the myriad influences that produced them.” [pages 30-31]

Having set the stage, Democracy at Work provides a concise summary of the lead-up to the present crisis, from the Great Depression through the explosion of debt incurred as a result of stagnant or declining wages, and summarizes in clear, accessible language the basic problems of advanced capitalist and Soviet-style systems. The book then gets to its heart, sketching out the concept of “workers’ self-directed enterprises.” WSDEs are a distinct form of cooperative enterprise — this is an enterprise in which the workers themselves are the directors, making all decisions on what to produce, where to produce, how to distribute, determining wages and other compensation, and hiring management.

The surpluses produced would never be appropriated and distributed by anybody else. In a capitalist corporation, the board of directors are legally required to maximize the profits of the corporation going to the shareholders, regardless of the cost to the workers or the local community, and only the shareholders vote on who the directors are. The profits of the company, the bloated pay of the top executives and the huge piles of cash diverted into speculation are the product of the surpluses produced by the workers — and the competitive pressures of capitalism ensure that this process continually deepens.

WSDEs would operate in a far more humane manner. The workers themselves will make the decisions on technological innovation, which is only proper since they, and the surrounding community of which they are a part, will have to live with such decisions. (This is unlike a capitalist enterprise, in which those who bear the cost have no say in the decision.) The self-directed workers can consider a far wider set of issues and concerns about adopting new technology, or any other strategic decision, thereby fully weighing the effects on themselves, their families and their communities.

Professor Wolff proposes that a specialized agency be created that would monitor technological innovations, what enterprises need more workers, which enterprises have registered a desire to commence new production, and other social needs, to be funded with enterprise profits.

“Rather like a matchmaking service, this agency’s task would be to match employees willing to change jobs with job availability and to arrange for appropriate training and inducements to facilitate the reallocation of personnel. No loss of income would attend the transition period for workers who left one job for another. To run this agency would cost a small portion of all the surpluses distributed by WSDEs to sustain its staff and activities. This agency’s reports and services would form one basis for the decision by all workers about whether to make the technical change in question.” [page 132]

Jobs can be rotated (easing boredom), pay differentials minimized (drastically reducing inequality), environmental concerns would be taken seriously (otherwise you’d be polluting your own home) and communities would be stabilized (who would move their jobs to another country for a cut in pay?). And by being involved in your workplace’s decisions — and rewarded for your efforts in making the enterprise a success — alienation is drastically reduced. Without the need to work a crushing number of hours to compensate for low pay, you would have the time to be more of a participant in your community.

Professor Wolff’s concept of WSDEs rests on the workers being their own directors; that is, making all the strategic business decisions themselves. He stresses this aspect, and sees ownership of the enterprise as less important, arguing that different ownership models can co-exist with WSDEs. Local, regional and national governments could own them but allow them to be run by the workers; the workers themselves could own the enterprise individually or collectively; or ownership could take the form of shares traded on a market. The author also prefers not to pre-judge whether a system based on WSDEs would take place under market conditions or in which planning predominates; he believes that they can be compatible with either.

“How WSDEs will come to exist with private versus socialized productive property and to coexist with markets versus planning will not be determined by spurious claims about their comparative efficiencies. It will be determined through the construction of particular, specific postcapitalist economic systems as they emerge in transitions from both private and state capitalist systems.” [page 144]

Fair enough. But here I believe caution is warranted. Leaving a full market system in place would inevitably re-introduce some of the problems of capitalism, albeit in different and milder forms. As I have previously discussed, if collective enterprises, no matter how democratically they are run internally, compete with each other in unfettered markets, market forces would require the collectives to ruthlessly reduce costs (including their own wages) and aggressively expand the market for their products. Failure to do so would mean not surviving in competition with the enterprises who do adapt themselves to market conditions. Because all materials and finished products would remain commodities subject to price volatility in this scenario, the cooperative workers’ own labor would also become a commodity — in essence, they would “become their own capitalists.”

Some amount of planning — democratic, bottom-up planning based on aggregate demand as a guide and not top-down planning imposed as an order — would seem to have a significant role in an economy dominated by cooperatives; moreover, the cooperatives would have to have some cooperation with each other, particularly in negotiating prices up and down the supply chain. Ultimately, these are questions that won’t begin to be solved until there is more practice, although a “matchmaking” agency of the type proposed above implies some amount of planning.

Much more immediate is the question of how WSDEs would co-exist with capitalist enterprises. WSDEs would handle competitive problems and grapple with issues of size and other issues differently than a capitalist enterprise. For instance, Professor Wolff argues, if WSDEs organized mutual support and pooled political strength, or prove to be more productive, they could prevail against capitalist enterprises. Not extracting large amounts of money for bloated executive pay could free extra funds for developing innovations, or differentiating their products as made under democratic conditions could be a marketing advantage.

Early on, WSDEs would need state assistance. Professor Wolff advocates adapting the model of Italy’s “Marcora Law,” which enabled workers to take over troubled enterprises. The author suggests offering the unemployed a choice: Either the traditional weekly benefits, or taking it as a lump sum, pooling their resources with others taking the lump sum, and forming a WSDE. These new enterprises would likely need to rely on technical assistance, subsidized credit, tax breaks and other assistance; such aid can be looked upon as an extension of existing programs to assist small businesses or for women- or minority-owned businesses.

Social solidarity with and by existing cooperatives, unions and activist groups would be another form of support. A strong cooperative movement would provide an alternative to traditional authoritarian capitalist employment, eroding capitalists’ ability to impose harsher working conditions.

Democracy at Work does formulate one difference from traditional concepts of cooperative enterprises that will likely be seen as controversial: A differentiation between “surplus-producing” workers and “enabling” workers. The first group are those who directly produce the outputs that are sold. The second group include accountants, managers, secretaries, clerks and many other job functions that provide the conditions that enable the “surplus-producing” workers to do their work. Professor Wolff is careful to stress that both categories are equally crucial to the success of an enterprise.

Nonetheless, he advocates that only the “surplus producers” be allowed to make the decisions regarding the appropriation and distribution of the surplus. All other decisions would be voted on collectively by all workers. The rationale is that such an arrangement “secures the absence of any exploitation within the WSDE” [page 166]. But leaving such major decisions to only a portion of the workforce risks engendering a division within the workforce, the opposite of the goal, and arguably applies too narrowly the laudable goal of ending exploitation.

Moreover, this formulation presupposes that management will form a group distinct from line workers. But there should not be such a distinction: Managers should be elected by the workers a whole, to specific terms and be recallable. There is no reason why management and supervisory positions should not be rotated — workers can become managers, and then go back to being workers. More people would become familiar with more roles, be able to assume greater responsibility and be better equipped to participate in strategic decision-making.

Nor is there any reason why people can’t change roles from a direct production job to a support job, which, to be fair, is tacitly acknowledged in the author’s stress on the ability of workers to change job functions within WSDEs. Having two categories of jobs with a crucial decision-making function reserved for one category would seem to defeat the purpose of cooperation — equality. If everybody is necessary to the enterprise, then everybody should be eligible to vote on everything.

Decision-making, however, will not be confined to the walls of the enterprise. Residents and workers should participate in each other’s decisions to the extent that they are affected, Professor Wolff writes. Community representatives should participate in WSDE decision-making, and vice versa, as WSDE members are part of the community.

“In societies where WSDEs are the prevailing organization of production, capitalists will no longer occupy a crucial political position. Capitalists’ use of the surpluses they appropriate will no longer dominate politics. We will no longer have capitalists making political use of the resources typically at their disposal — the surpluses they appropriate. Instead, the community of workers who direct WSDEs will be the prevailing political partner of residence-based governing bodies. …They might finally realize democracy, which under capitalism was never allowed to go beyond very limited electoral functions.” [pages 167-168]

A much higher level of democracy does not mean that a society with an economy based on WSDEs would be a utopia. Professor Wolff is forthright in noting that there will be new problems and contradictions. But with vastly less inequality distorting all areas of society, problems would be more easily tackled. And just as the transcending of earlier systems eliminated many but not all social ills, transcending capitalism will put many problems behind us.

“The slave and feudal systems that proceeded capitalism fostered forms of crime rooted in their mixes of economic risks and rewards. But those systems never displayed the recurring boom-and-bust cycles common to all forms of capitalism. These cycles are the products of capitalism — not of this or that group (the state, criminals, others) functioning within that system and in response to its upswings and downswings. … Overcoming the systemic roots and nature of capitalist crises requires a change in the economic system.” [pages 51-52]

Professor Wolff’s Democracy at Work offers us a well-written practical guide to alternatives to capitalism, one that we can begin to build today with the tools at our disposal. Whatever disagreements a reader may have with this or that detail, Democracy at Work is recommended to anyone seeking a concise study of why we need to bring a better world into being and how we might get there.

* Richard Wolff, Democracy at Work: A Cure for Capitalism [Haymarket Books, Chicago, 2012]

Could the rise of China fatally de-stabilize capitalism?

By Pete Dolack

The world is not limitless, yet growth without limits is touted as a permanent economic elixir. But natural resources aren’t infinite, nor can demand be infinite. What happens when the limits of growth are reached?

We aren’t supposed to ask that question about capitalism; the assumption is that economic activity will always grow. The insertion of China into the world capitalist system has created the opportunity for more growth as a country of 1.3 billion people has been thrown open to the world’s markets.

But what if, rather than throwing capitalism a lifeline in the form of a vast pool of consumers who will drive demand, China instead will fatally destabilize an already weakened world economic system?

China will be the final straw that will bring about the downfall of the capitalist system is the provocative conclusion of an interesting book by a Chinese economist, Minqi Li, who now teaches at the University of Utah. Professor Li doesn’t pull any punches in his book; indeed his book’s title is The Rise of China and the Demise of the Capitalist World Economy.* The book’s central thesis is that the huge mass of low-wage Chinese workers will drag down wage levels globally; the increase of industrialization in developing countries will lead to exhaustion of energy sources; and that ecological limits will force a halt to growth, fatal to a system dependent on growth.

Professor Li believes that the combination of these crises will bring an end to the capitalist system by the middle of this century. The Rise of China, however, is not apocalyptic; rather it methodically builds it case piece by piece through a sober examination of economic trends, calculations of the limits to a range of natural resources, analysis of long-term environmental unsustainability, and study of historical trends going back centuries. Nor is this a bleak work; Professor Li writes in the Gramscian spirit: pessimism of the intellect, optimism of the will. What will follow the collapse of capitalism is not pre-ordained but is up to humanity to determine.

The first two of the book’s seven chapters provide an interesting discussion of Chinese history, before and after the 1949 revolution. Pro-capitalist factions within the Chinese Communist Party gained the upper hand soon after Mao Zedong’s death in 1976, with Deng Xiaoping wresting party leadership by the end of the decade. Early reforms granting concessions to workers and peasants cemented political control for the Deng faction, Professor Li writes, enabling the party to then introduce capitalism. A 1988 law granted enterprise managers full control in the workplace (including hiring and firing at will), and the development of market relations enabled privileged bureaucrats to enrich themselves.

Intellectuals on the one hand, and enterprise and bureaucratic elites on the other, sought the growth of market relations and a firm turn toward capitalism. The two groups, however, disagreed on how the spoils would be divided between them, and the party was split three ways on how fast and how far to move toward putting the economy on full market relations. It was Deng who proved to be “the master of Chinese politics,” Professor Li writes, as he was able to implement an intermediate strategy between the party’s poles and use the crackdown in Tianamen Square to reduce the intellectuals to the junior partners of the ruling elites and to break the resistance of urban working people. Thus the stage was set:

“Throughout the 1990s, most of the state and collective-owned enterprises were privatized. Tens of millions of workers were laid off. The urban working class was deprived of their remaining socialist rights. Moreover, the dismantling of the rural collective economy and basic public services had forced hundreds of millions of peasants into the cities where they became ‘migrant workers,’ that is, an enormous, cheap labor force that would work for transnational corporations and Chinese capitalists for the lowest possible wages under the most demanding conditions. The massive influx of foreign capital contributed to a huge export boom.” [pages 64-65]

The “socialist rights” that were revoked included job security, medical insurance, access to housing and guaranteed pensions. The creation of an exodus from the countryside provided a huge pool of surplus labor to keep wages extremely low.

“China’s economic rise has important global implications. First, China’s deeper incorporation into the capitalist world-economy has massively increased the size of the global reserve army of cheap labor. In some industries, this allows capitalists in the core states to directly lower their wages and other costs by directly relocating capital to China. But more important is the ‘threat effect.’ That is, capitalists in the core states force core-state workers to accept lower wages and worse working conditions by threatening to move their factories or offices to cheap labor areas such as China, without actual movement of physical capital. …

“Secondly, China’s low-cost manufacturing exports directly lower the prices of many industrial goods. To the extent that unequal exchange takes place between China and the core states, part of the surplus value produced by Chinese workers is transferred to the core states and helps to raise the profit rate for capitalists in the core states.” [pages 70-71]

Professor Li’s analysis rests on “world systems” theory, which divides the world’s capitalist countries into three general groupings. World systems theory emphasizes that capitalism is a global system that changes and mutates over time and therefore must be analyzed as a single unit rather than as a collection of nation-states. The global division of labor forms the basis for a division of the world’s countries into three broad categories: core, semi-periphery and periphery, with the latter two subordinate to the core countries and the periphery the most exploited.

Inequality between core and periphery is an “indispensable mechanism” of global capitalism, Professor Li writes, and the existence of a semi-periphery acts as an important buffer because it is exploited to a relatively lesser degree than the periphery and can also, to a lesser degree, exploit the periphery. The semi-periphery historically comprised a small percentage of the world’s population and thus could be “bought off” relatively easily and thus a buffer against any united resistance by the world’s non-core countries. But if the semi-periphery were to become a significant portion of the world’s population, the world system would be destabilized.

The massive size of China is the destabilizing agent, Professor Li argues. He presents four possible scenarios that could arise from the rise of China:

“First, China may fail. China’s great drive toward ‘development’ in the end may turn out to be no more than a great bubble. [In this scenario,] as China sinks back to the status of periphery or poor semi-periphery, China’s existing regime of accumulation will collapse as it can no longer withstand the exploding social pressures the very process of accumulation has generated. This scenario, however, may be the least devastating for the capitalist world-economy.

“For the capitalist world-economy, the problem of China lies with its huge size. China has a labor force that is larger than the total labor force in all the core states, or that in the entire well-to-do semi-periphery. As China competes with the well-to-do semi-peripheral states in a wide range of global commodity chains, the competition eventually would lead to the convergence between China and well-to-do semi-peripheral states in profit rates and wage rates. This convergence may take place in an upward manner or a downward manner.

“In the downward-conversion scenario (the second scenario), China’s competition, with its enormous labor force, will completely undermine the relative monopoly of the historical well-to-do semi-peripheral states in certain commodity chains. As relative monopoly is replaced by intense competition, the value added contained in the traditional semi-peripheral commodity chains will be squeezed, forcing the historical well-to-do semi-peripheral states to accept lower wage rates that are closer to Chinese wage rates.” [pages 109-110]

Professor Li is arguing that, in this second possible scenario, wages rates in industrialized countries not among the “core” states (industrialized countries other than Western and Northern Europe, North America, Japan, arguably South Korea) would collapse under the competitive pressure of China’s low wages, which long hovered at about five percent of U.S. wage rates, and in the mid-2000s were one-quarter to one-fifth of countries such as Argentina and Hungary. A collapse in wages in semi-peripheral countries around the world such as Argentina, Hungary and Turkey would spark unrest and lead to economic depression around the world.

“There is the third scenario, that of upward convergence. China may succeed in its pursuit of ‘modernization’ and become a secured, well-to-do semi-peripheral state. In the meantime, the historical well-to-do semi-peripheral states may succeed in maintaining their relative monopoly in certain commodity chains. As a result, the Chinese wage rates converge upwards towards the semi-peripheral levels. Unfortunately, this scenario is as dangerous for the capitalist world-economy as the second scenario. The problem, again, lies with China’s huge size. Should the Chinese workers generally receive the semi-peripheral levels of wages, given the size of the Chinese population, the total surplus value distributed to the working classes in the entire well-to-do semi-periphery would have to more than double. This will greatly reduce the share of the surplus value available for the rest of the world.” [pages 110-111]

Here, Professor Li is arguing that a multi-fold increase in Chinese wages simultaneous with a maintenance of wages in countries around the world would likely be unsustainable. Multi-national companies based in core countries have moved production to China to take advantage of its low wages and lack of effective labor laws, enabling them to extract more surplus value. “Surplus value” is the sizable difference between the value of what an employee produces and what the employee is paid; some of the surplus value is used by capitalists for investment or to cover other expenses but much of it goes into stratospheric executive pay and financial-market speculation.

An upward convergence of wages around the world in present-day low-wage havens such as China would significantly reduce capitalists’ profits. In this scenario, capitalists would seek to cut wages in core countries to make up the difference, which in turn would trigger reductions in demand. Declining rates of profit, under capitalism, lead to economic downturns. Each of the world’s major economic crises, from 1873 on, have followed declines in the rate of profit.

“If the scenario of upward convergence turns out to be too expensive for the capitalist world-economy, what if China’s upward mobility takes place at the expense of the historical well-to-do semi-periphery? In other words, imagine the scenario (the fourth scenario) in which the rise of China (and India) successfully displaces the historical well-to-do semi-periphery, what are the likely implications for the existing world system? … [A]fter all of the investment is distributed, how much will be left for the other half of the globe?” [page 111]

Were the growth in energy consumption of the Chinese and Indian economies to continue at the same rates, and likewise for the United States and the eurozone, the rest of the world would be left without an energy supply in two decades, Professor Li argues. He writes:

“Given these trends, the rest of the world will have to get by with less and less energy consumption after 2017 and by 2035 there would be virtually no available energy left for the entire world outside China, India, the U.S. and the Eurozone. It is certainly impossible for such a scenario to materialize.” [pages 111-112]

But will there be enough energy to meet even the increasing needs of whatever countries will be in a position to dominate energy resources? Because of the intense competition imposed by the market in capitalism — individuals, businesses and states must all engage in it — a substantial amount of available surplus value must be used toward further capital accumulation to secure and expand market share. Those who do not do so are eliminated in the competition.

Investment is a necessity, and to compete successfully, what is wrung out of labor must rise. Machinery is the route toward greater efficiency. But as machinery and consumer products become more sophisticated, energy and other resources are consumed at greater rates; thus energy inputs rise faster than the population, pushing energy usage beyond sustainability and degrading the environment.

The world is already consuming resources beyond the world’s bio-capacity, Professor Li argues. Not only have the world’s “core” countries already exceeded their regional bio-capacities, but China, India, the Middle East and Central Asia have as well. Using calculations in a 2006 report by the World Wildlife Fund in the USA and Canada, the Zoological Society of London and Global Footprint Network, China and India consume resources and impose domestic environmental damage at a rate twice beyond their ability to be sustainable. Although those countries consume per capita far less than do the U.S. or the European Union, they also have much lower bio-capacities.

Such problems are compounded by an imminent peak in oil and gas, and limits to a variety of metals and other natural resources. If renewable energy sources prove unable to make up for the future shortfall in energy from oil and gas, the world will have much less energy available to it in the latter part of the 21st century than is available now. Professor Li believes that renewable energy will only be able to produce a small percentage of that of non-renewable sources. Even if his pessimism proves unfounded, the unsustainability of present energy consumption remains — as is the damage being done to the environment.

Another looming crisis for the capitalist system is the lack of a successor to the United States as the system’s center. Capitalism has had a succession of dominant centers; each successive center has been bigger to be able to cope with increasingly complex tasks. When London succeeded Amsterdam as the financial center, the financial center became located within a country with a powerful military, not only a large merchant fleet as Amsterdam’s United Provinces possessed. With New York succeeding London, the country at the center is continental in size and possesses a military that can be projected around the world.

Professor Li predicts a rapid decline for the U.S., including an imminent end to the dollar as the world’s central currency. Here I believe the professor’s forecast will prove to be considerably off; although the U.S. has entered a period of decline, its military and financial powers will remain preeminent for some time. And the dollar and U.S. debt instruments remain safe havens.

Declines from the capitalist system’s apex have tended to be gradual and not precipitous; moreover, the former financial center tends to remain powerful in financial markets for some time after the military baton has been passed. And there is no country remotely near being able to mount any challenge to U.S. military supremacy; U.S. military spending is nearly equal to military spending of all the rest of world put together and a significant portion of the Pentagon budget goes to weaponry.

It is a contradiction that the “duties” of the central power contribute to its ultimate decline. For the U.S., that is not only the enormous drain of military spending that starves the rest of its economy of investment and needed social provisions, but that it props up the world system through its deficits.

“After the systemic breakdown of the early twentieth century, the capitalist world-economy can no longer afford another similar breakdown. The hegemonic power has since then assumed the new responsibility to actively manage the global economy. Instead of allowing the system to simply collapse [during the repeated economic crises from the 1980s], the U.S. responded to growing systemic instability by running large and rising current account deficits, in effect pumping ‘liquidity’ into the global economy.” [page 123]

No other country has a big enough economy, nor a big enough military to apply the muscle that underlies the capitalist system, to replace the U.S., yet the capitalist system is unable to function without such a center. The next hegemon must be bigger than the U.S., and there is no country or bloc that fits the bill. Moreover, Professor Li argues, such a hegemon would be so large that it would stifle competition among countries, kicking out one of the crucial legs of the capitalist system.

Crises in economics, the environment, shrinking natural resources and the chaos of global warming are leading to a threat to very survival of humanity, Professor Li argues. Moreover, multiple crises are leading to a point where economic growth is no longer possible, the ultimate contradiction for the capitalist system, the very existence of which is based on endless growth and accumulation. He writes:

“Centuries of relentless capitalist accumulation have set humanity on a course of self-destruction. The very survival of humanity and civilization is at stake. The crisis can not be avoided or overcome within the historical framework of capitalism. To rebuild human society on an ecologically sustainable basis, there must be an economic system that is based on the production for use which is capable of meeting people’s basic needs, rather than one that is oriented towards the endless pursuit of profit and accumulation.” [page 173]

What comes next is up to humanity to decide. Professor Li quotes world-systems theorist Immanuel Wallerstein as predicting the world will enter a post-capitalist era in the second half of the 21st century. But what will that system or systems be? It could well be much worse — an authoritarian feudalism in which survival is a struggle in a time of scarcity is certainly foreseeable. Or it could be a democratic socialist system, in which production is for human necessity rather than an elite’s wealth accumulation and in which the consequences of a changing climate and the limitations on the world’s resources are handled in fully democratic, rational manners without elites to confiscate most of what is produced.

All social systems are historical, and capitalism is no exception, Professor Li argues. Indeed, all previous systems have reached their limits and been supplanted by newer forms. Ending on an optimistic note, he writes that “if the future socialism is able to make the best use of the human knowledge of nature that has been developed under capitalism and further expand that knowledge” and a sustainable relationship between population and resources can be established, then “humanity will be in a position to resume the great historical march to the realm of freedom.”

The Rise of China rewards the reader with a wealth of information and analysis. It is not necessary to agree with everything in the book to find it a valuable contribution toward understanding the stresses of the present economic crisis and a stimulant to discussion of the viability of continuing on the current economic path. One conclusion that shouldn’t be controversial, however, is that there will be no saviors. We’ll have to save ourselves.

* Minqi Li, The Rise of China and the Demise of the Capitalist World Economy [Monthly Review Press, New York, 2008]

Envisioning an evolutionary path toward a democratic economy

By Pete Dolack

It is never sufficient in itself to be against something. Activists seeking to bring a better world into being have to be for something. That is no easy task for people advocating for something better than today’s world of corporate domination, harsh austerity and races to the bottom.

It is not an easy task because capitalists have saturated the world’s cultures with their ideologies, and the 20th century’s biggest anti-capitalist challenge — state ownership of the means of production on the model of the Soviet Union and its Central European satellite states — has irretrievably lost credibility. Yet the capitalist triumphalism that smoothly maintains nothing could possibly be wrong with our modern consumer paradise, which continues essentially unabated despite four years and counting of deep malaise, can not mask profound structural problems.

The endless drive on the part of capitalists to increase profits that leads to continual movements of production to new sources of cheaper labor; the continual downward pressure on wages that leads to an inability of people to be able to buy what is produced; the continual despoiling of the environment under the pressure of ever more intense competition; and the finiteness of the Earth’s resources in the face of a structural need for limitless expansion all impose limits on the capitalist system.

Grandiose plans to strip-mine the Moon and the asteroid belt aside, humanity will have to develop a more stable, more humanistic system of production and consumption. A realistic plan to guide the world out of runaway capitalism and into a new system that is sustainable is necessary.

Can such a sustainable, more humanistic system evolve out of capitalism itself? Gar Alperovitz, in his newly re-issued book America Beyond Capitalism,* firmly believes the answer is yes.

Explicitly attempting to find an intermediate course between reform and revolution, Professor Alperovitz has laid out a program designed to gradually bring large corporations under public control and therefore make them socially accountable through a “Public Trust” system whereby public institutions buy progressively larger portions of corporations’ stock. Concomitantly, cooperatively owned enterprises rooted in their communities and enterprises owned by local governments would be nurtured; community-development organizations expanded and funded through progressive taxation; and long-term strategies would be implemented to capture the new wealth that will be created as productivity continues to increase in the future.

Details of many of these plans are not yet worked out. The details of a better world can only be worked out in its creation, and therefore Professor Alperovitz provides conceptions rather than details. New ideas have to begin somewhere — conceptions based on real-world conditions are the beginning place for serious ideas. Is the professor’s optimism warranted? That is a difficult question to answer, and one that this review will return to presently.

Professor Alperovitz introduces the term “Pluralist Commonwealth” to encompass his ideas of leveraging the structures of modern capitalism for a transition to a democratic, decentralized system in which the wealth created in production would be distributed fairly; economic power has been wrested from a small class of capitalists so that economic and political power is no longer concentrated; and the length of the workweek is gradually reduced so that everybody has the time and opportunity to participate in community decision-making.

None of the pieces of the Pluralist Commonwealth system constitute leaps or revolutionary breaks. Instead, the author assembles an impressive collection of ideas and institutions already in existence; ideas for building upon these; proposals for new institutions and structures that flow out of existing ones; and concrete measures to break down racial, gender and other disparities. He is not shy about analyzing an ideologically diverse collection of thinkers and writers: In one three-paragraph stretch, for instance, he quotes favorably Friedrich Hayek, Hannah Arendt, Jane Jacobs and W.E.B. DuBois.

But fear not those of you who blanch at the mere mention of neoliberal godfather Hayek (a number that would include myself). Professor Alperovitz has assembled a damning array of statistics to illustrate the debilitating inequality of the United States — among them, that one percent of U.S. households hold half of the entire country’s wealth; that corporate taxes accounted for 35 percent of federal receipts in 1945 but only seven percent in 2003; and that 300 multi-national corporations account for 25 percent of the world’s productive assets. With such concentrations of economic power comes instability at the community level because corporate power can shutter enterprises that are depended on for jobs, he writes:

“A central question concerns the economic underpinnings of local democracy. It is obvious, for instance, that active citizen participation in local community efforts is all but impossible if the economic rug is regularly pulled out from under them. What, precisely, is ‘the community’ when citizens are forced to move in and out of specific geographic localities because of volatile local economic conditions? Who has any real stake in long-term decisions? That a substantial degree of economic stability is one of the critical preconditions of local involvement is documented in several important studies. …

A related issue involves the power relationships that set the terms of reference for municipal government. Numerous scholarly studies have demonstrated that local government decision making commonly is heavily dominated by the local business community. Commonly, too, the thrust of decisions favorable to business groups radically constrains all other choices. The use of scarce resources to develop downtown areas, and especially to attract or retain major corporations, inevitably absorbs funds that might alternatively be used to help low- and moderate-income neighborhood housing, schools, and community services.” [page 47]

That the vast size and reach of corporations is debilitating to democracy is obvious; Professor Alperovitz even quotes conservatives to that effect. But he goes beyond the size of gigantic enterprises to the gigantic size of the United States, arguing that the very size of the U.S. (and its projected population increase this century) is a hinderance to democracy as well. He asks:

“[I]s it really feasible — in systemic and foundational terms — to sustain such values [equality, liberty and democracy] in a very large-scale, centrally governed continental system that spans almost three thousand miles and includes almost 300 million people? And, if not, how might a democratic nation ultimately be conceived?” [page 63]

Following up on this idea later in the book, he concludes that the “regional” level would be the appropriate level to deal with economic and political issues. Most U.S. states contain too small a population to solve large problems on their own; Professor Alperovitz conceives a region as the equivalent of a large-population state such as California or Texas, or a group of states such as New England, seeing such large states or groupings as the equivalent of stable, midsized European Union countries such as the Netherlands.

Underlying this advocation of regionalization is the idea that decentralization is more conducive to local democracy. To support his argument, he cites U.S. Supreme Court decisions overturning federal laws in favor of state powers and the increasing assertiveness of state governments in challenging federal laws.

But here we should pause for further thought. That trend, if anything, is stronger than when America Beyond Capitalism was originally written in 2005, but these Supreme Court decisions have been ideological and political pronouncements backing conservative attacks on federal protections, not legal decisions or responses to popular pressure. Frequently, the court strikes down state laws that provide protections beyond federal law but that are opposed by the Right on ideological grounds.

Both political devolution, as a concept, and Professor Alperovitz’s contention that democracy can’t flourish unless it is strong at the local level are sound, but it is at our peril that we fail to distinguish properly between the current conservative campaign to impose an extremist agenda masquerading under the guise of “states’ rights” and a genuine grassroots movement to promote local control and progressive change.

The heart of America Beyond Capitalism’s concept of economic and political democracy is the “Pluralist Commonwealth.” The author, in broad strokes, provides an interesting, worked-out conception of gradually bringing large-scale corporations under public control through acquisitions of their stock. There is a clear goal in mind:

“The schematic model … prioritizes a variety of strategies to undergird local economies and thereby establish conditions favorable to nurturing local civil society associations and to increasing local government’s power to make meaningful decisions. Partly to achieve such local democracy objectives — but for much larger reasons as well — the model also projects the development over time of new ownership institutions, including locally anchored worker-owned and other community-benefiting firms, on the one hand, and various national wealth-holding, asset-based strategies, on the other. These would ultimately take the place of current elite and corporate ownership of the preponderance of large-scale capital.” [page 70-71]

These ideas come with a freely offered, and appropriate, caveat that the details need to be worked out. Nonetheless, the strategy of carrying out a program of bringing large corporations under public control through acquiring controlling blocks of their stock could have been articulated with greater clarity. At the national level, a new institution given the generic name “Public Trust” is conceived to “oversee the investment of stock on behalf of the public, as state and other pension boards commonly do today.” Proceeds could be directed toward individuals, local or higher-level governments, or funding of public services.

Professor Alperovitz projects that:

“Over time, a fundamental shift in the ownership of wealth would slowly move the nation as a whole toward great equality directly — through, for instance, worker-owned enterprises; and also indirectly — through a flow of funds from the larger asset-based strategies and investment on behalf of the public.” [page 71]

The capital needed to acquire the stock of large corporations would be assembled from higher taxation of elite incomes and from setting up public banks that would loan money that would accrue from profits and dividends of stock held by them.

“The Pluralist Commonwealth structurally tethers large-scale firms at the top by lodging stock ownership in a Public Trust entity accountable to (and open to scrutiny by) the public — and it steadily expands four major vectors of activity and structure (robust community democracy, steadily increasing free time, greater citizen equality, regional decentralization) that over the long haul offer expanding opportunities for democratic control from the bottom. Additional elements of the model include new public chartering requirements, the addition of specific stakeholders to corporate boards, and the democratization of corporate structures from within.” [pages 73-74]

In addition to the gradual assumption of control of large corporations envisioned above, the book also advocates worker-owned cooperatives (which can be anchored to local institutions such as hospitals and universities that can steadily buy the cooperatives’ goods and services); companies owned by municipal and state governments (utilities and banks are common examples that provide lower rates and profits to their communities); and community-development organizations (which operate a variety of businesses that plow proceeds back into their communities).

Each of the examples in the above paragraphs already exist, and can be expanded. City-owned power companies are already common and generally offer lower rates than traditional companies. A network of cooperatives anchored to local institutions have been successful in Cleveland, and larger, freestanding cooperatives exist in a myriad of industries.

A significant change in the political climate of the United States would be a pre-condition of the “Pluralist Commonwealth” coming to fruition. Citing an abundance of polls, Professor Alperovitz is optimistic that latent public support exists for such ideas. He also believes that the mounting costs of health care, Social Security and retirement in general will force a re-thinking of existing structures and ideas, bringing to the fore new concepts of ownership and control.

The “Pluralist Commonwealth” concept rests in part on the vast increases in wealth and productivity of the past century and a half to continue throughout the 21st century. That, too, should give us pause for thought. The author, on the one hand, unsparingly points out the unsustainability of U.S. consumption but on the other hand situates his wealth-sharing strategy within a forecast of the dramatic growth of capitalism to continue unabated.

He notes the sixfold increase in per-capita production during the course of the 20th century, and projects a similar sixfold increase for the 21st century that would result in a cornucopia of wealth for everyone. Is another such leap possible? Given that natural resources are, or are soon to be, dwindling, and that successive introductions of machinery tend to yield declining rates of increase in productivity, it is reasonable to doubt the mature capitalism of today will produce the same gains for another century. The ongoing stagnation of the advanced capitalist countries, and that the strongest growth is invariably found in developing economies, adds additional doubt.

Then again, there is no reason why the wealth that exists today shouldn’t be shared far more equitably; if the present-day per-capita income were merely to keep pace with inflation or rise slowly, there would be plenty to go around.

Earlier, I asked if the optimism behind the “Pluralist Commonwealth” is warranted. The thought that kept leaping at me is this: The program, particularly as regards to the steady acquisition of stock in large corporations so that control of them is wrested from executives and speculators and given to the public, is dependent on capitalists sitting back and letting their power be taken away. There is absolutely no precedent of any capitalist class acting that way, and none would willingly consent to it.

Such a peaceful evolution would require not only a suite of new laws, it would also require huge organization, mass mobilizations and a very large majority that would retain their energies and motivation for long periods of time, perhaps decades. As just one example, corporations would have to be forced to issue new stock that would be sold to the Public Trust — a system-altering concept that would require an extremely powerful movement. Such a movement can easily be conceived, and would be articulating a concrete goal that is tangible and imaginable as a linear evolution from present-day economic structures.

It is possible to argue that powerful movements are also a necessary precondition for a revolution to be successful. Could the aim be higher? Could a successful completion of an evolutionary program build momentum for still greater changes? That is unknowable today. But the “Pluralist Commonwealth” program has the concrete benefit of providing a positive program of change. If there is to be any meaningful change it will have to come as a result of great struggle.

That acknowledgment is not missing from America Beyond Capitalism. Professor Alperovitz writes that people must “confront the emerging logic that suggests that either economic pain and social decay will continue” [page 213] or that diverse groups begin work on long-term systemwide change. He is appropriately realistic on the need for a high level of activism and organization to bring his ideas to fruition, while at the same time offering a set of concrete goals. Although the precedents are not a snug fit because transcending capitalist relations threatens the roots of the economic system (and those who profit well from it) in a way that social movements do not, he draws on the experiences of past struggles to conclude on an optimistic note:

“Long before the civil rights movement, there were many years of hard, quiet, dangerous work by those who came before. Long before the feminist explosion there were those who labored to establish new principals in earlier decades. It is within the possibilities of our own time in history that — working together and openly charting an explicit new course — this generation can establish the necessary foundations for an extraordinary future and for the release of new energies.

It may even be that far-reaching change will come much earlier and much faster than many now imagine.” [page 240]

Regardless if the transcending of capitalism is accomplished through a revolution, through struggling to rebuild in the ruins after a collapse or through an evolutionary change as envisioned in America Beyond Capitalism, a long, organized struggle will be necessary. The sooner the task begins, the less dangerous and difficult (comparatively) the change should be: Organizing change today is a hard enough task; having to do so in conditions of total collapse would be a nightmarish task none of us would like to contemplate.

* Gar Alperovitz, America Beyond Capitalism, second edition [Democracy Collaborative Press, Takoma Park, Maryland, USA and Dollars and Sense, Boston 2011]