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Dustbin of history?

from David Ruccio

Back in April, Raumplan and Cascina Cuccagna organized an exhibit for Milan Design Week titled “Capitalism is Over.” The basic argument was that, while capitalism may have worked in the first few decades of the postwar period, during the “Golden Age” of capitalism—when “the demand for products and everyday objects rose to never before attained summits”—since the late 1970s, growth has slowed down and “following the neoliberal theories, governments promoted policies that fostered the expansion of financial profits and lower wages.” Their example was Olivetti:

The historical Olivetti attitude to resilience and innovation suffered a fairly marked setback during the crises of the Seventies, which reduced investments in the production sector and initiated the financialized economy that today is reaching its full development. The growth of profits corresponded to a loss of identity and of the centrality of production’s contents, that became increasingly interchangeable. Although since the Eighties Olivetti’s revenues and number of employees has steadily increased, it is also clear that the progressive dematerialisation of its core business doomed the company. Olivetti gradually lost its productive and innovative bent and became essentially a financial investment vehicle.

Martin Kirk makes much the same argument in a recent Guardian column, supplemented by the idea that people—especially young people—have lost faith in capitalism. 

Why do people feel this way? Probably not because they want to travel back in time and live in the USSR. For millennials especially, the binaries of capitalism v socialism, or capitalism v communism, are hollow and old-fashioned. Far more likely is that people are realizing – either consciously or at some gut level – that there’s something fundamentally flawed about a system that has as its single goal turning natural and human resources into capital, and do so more and more each year, regardless of the costs to human well-being and to the environment.

Because that is what capitalism is all about; that’s the sum total of the plan. We can see it embodied in the imperative to increase GDP, everywhere, at an exponential rate, even though we know that GDP, on its own, does not reduce poverty or make people happier and healthier. Global GDP has grown 630% since 1980, and in that same time inequality, poverty and hunger have also risen.

As I have argued before (e.g., herehere, and here) capitalism has a real growth problem. The premise and promise of capitalism are that it “delivers the goods.” It did, for a while, and now it seems it can’t—which has many people looking beyond capitalism.

To be clear, there’s a reasonable argument to be made that we would all be better off with less or no growth. That’s certainly true for our natural environment, in terms of issues such as global warming, pollution, and so on. Fewer resources would be extracted; less energy would be needed, thus lowering the level of greenhouse gasses; and, in general, less environmental damage might be caused by our economic activities.

My argument, however, is about the predominant economic system in the world today. It is capitalism that has a slow-growth problem. And that’s because growth is both a premise and promise of a particularly capitalist way of organizing our economic activities.

It is a premise in the sense that capitalists—the capitalist class as a whole, not necessarily individual capitalists in one enterprise or another—can collect and utilize for their own purposes more surplus-value when capitalism is growing—when productivity is high, when more commodities are being produced, when the economy as a whole is growing. There’s more surplus available, even if workers’ wages are rising, and each member of the capitalist class can get their aliquot share of that growing surplus.

So, growth is a problem both for capitalism—since, in its absence, it makes it difficult to extract more surplus—and for us—since, in the drive to create more growth, we are forced to suffer through more inequality, poverty, and destruction of the social and natural environment.

It’s time then, yes, to accept the idea that capitalism deserves to be placed in the dustbin of history—and, at the same time, to begin the process of imagining and creating an alternative set of economic and social institutions.

  1. August 4, 2017 at 11:58 am

    Good point (or good question…).
    The owners of Capital and their executive managers, of course, do not share that perspective. Even if there are occasional rumors («wishful thinking»?…) that some of those owners and/or some of their executive managers have started to share the idea «capitalism needs a major overhaul or even to be overcome» (or something like that…).
    I usually refer to the current state of affairs of capitalism as a «zombie economy»…
    It keeps moving, but without a conscious purpose.
    The basic thesis I subscribe to is manifold:
    1..Mankind has always produced an annual surplus.
    2. The decision of what to do with that surplus used to be in the hands of the «Prince».
    3. The emergence (and predominance of the «Merchants») gave a boost to the creation.of surplus and the need for both geographic and demographic expansion. Also – critical point – the decision of what to do with the surplus moved from the hands of the «Prince» to the hands of the «Merchants».
    4. At the turn of the XIX to XX century (the «End of the Frontier» and/or «The Boer Wars»), the system reached its planetary limits of physical expansion.
    5. In order to continue its peculiar process of «accumulation», the system has needed bouts of destruction of what’s been previously accumulated.
    6. Current wars no longer fulfill that requirement (of recreating opportunities for accumulation) and «Capital» (in its finance form) became a parasite (of tapeworm type…) that just goes on living at the expense of its host.

  2. August 4, 2017 at 12:40 pm

    It will change incrementally. Parts of the capitalist economy are truly immoral. Denying employment for 8 to 12 million workers as is done here in the USA by the Fed under the “dual mandate” is an example of the immorality. That has to change and the proposal for a job guarantee program as presented by the MMT school will eventually be enacted for social as well as economic reasons. The other big change will occur when there is a general understanding of Ben Bernanke’s two options for governments to fund programs either by debt or by money. The US did have a healthy mix of the two options but over the past few decades money funding has essentially disappeared and only debt financing is done now.

  3. August 4, 2017 at 1:00 pm

    I know merchants and bankers have convinced a large portion of the population that capitalism is the source of the expansion of production and wealth the west has experienced over the last 300 years. With the help of many economists, of course. I do not agree with this conclusion. History supports my contention that the twin changes toward democracy and technological expansion were the prime factors in the increase of wealth and production. Admittedly, technology and capitalism are linked, as many technological changes were the result of the needs of capitalists. Also, democracy overcame monarchy and other authoritarian rulers with the help of capitalists. But neither of these places capitalism as the major or a major factor in the growth of either wealth or production. Damned good propaganda by capitalists, however. For me, this means the problems created by capitalism far outweigh its benefits for humanity. So, placing capitalism in the dustbin-of-history is not just morally justified, but also pragmatic. We’ll all be better off for it.

  4. The Arthurian
    August 4, 2017 at 11:55 pm

    As an alternative to “Capitalism is Over”, recall what Time magazine wrote more than 50 years ago: “Keynes did not despair of capitalism as so many other economists did.

    From the post: “The basic argument [of the ‘Capitalism is Over’ exhibit] was that … since the late 1970s, growth has slowed down and ‘following the neoliberal theories, governments promoted policies that fostered the expansion of financial profits and lower wages.'”

    And then: “It’s time then, yes, to accept the idea that capitalism deserves to be placed in the dustbin of history—and, at the same time, to begin the process of imagining and creating an alternative set of economic and social institutions.”

    In other words: neoliberal theories could not solve the problems of capitalism, so we should give up on capitalism.

    No. We should give up on the neoliberal theories.

    • August 5, 2017 at 1:15 pm

      My position is that capitalism was never needed from the first instance it was put forward as a solution to our problems of stability, durability of human culture, via the distribution of physical and virtual resources. Capitalism was a notion (first offered in liberal philosophy) that businesses and merchants needed certain rules and structures to survive and provide benefits to society. First, merchants and businesses did not need this “special treatment.” Democracy was sufficient for them to exist and be successful. Second, capitalism, whatever its form has created more harm than benefit for most humans. Capitalism is as they say in political analysis “a solution looking for a problem.” It benefits a few, harms many, and screws up both democracy and technological innovation. Why keep it? I admire Keynes. But he erred in his analysis of capitalism. It didn’t need reform to change it. It needed to be ended.

  5. August 5, 2017 at 4:37 pm

    My reaction to this is that the American contributors have too short a timescale, though Charles – mentioning unemployment – seems to be knocking the nail on the head. I agree very much with the thesis of F-S, and that zombie capitalism “keeps moving, but without a conscious purpose”. However, capitalism doesn’t have a purpose. Capitalists do, and – this is the crux of Charles’ concern about unemployment – the would- princes and their hangers-on define themselves by what they are able to do with all the capital they accumulate: build themselves fine public buildings, houses, castles to defend themselves and empires to acquire what in their own countries are the exotic riches of other countries. The unemployed (this applying more to men than to women, who can often identify themselves as mothers and carers) are left barely able to achieve anything, and liable to identify themselves (some shamefully, some brazenly) as a beggar, thief or prostitute.

    Where I live in Britain, we have not merely Norman and Roman remains but an Iron Age fort within walking distance, tin and copper mining going back to the Bronze Age in Cornwall and Cumberland, and Stone Age flint tools and arrow-heads being turned up from time to time (if usually in the flatter, chalkier east). The Dover cliffs visible from France invited maritime explorers, who curiously brought stone building via the treeless islands north of Scotland and west of Ireland long before the Romans built their villas here and walled off wild Scotland. Christians, harassed by a succession of pagan maritime invaders from eastern and northern Europe, survived on the remnants of Roman cultivation until the Norman conquest in 1066, whereafter the farming and building techniques of Benedictine monasticism created surplus and fine community (church) buildings on a large scale. Sadly, the success of mass production and export of wool sowed the seeds of capitalism, leaving agricultural workers unemployed and by 1513 volume 1 of More’s “Utopia” describing social unrest in a supposedly Christian land in which “sheep ate men”. When King Henry VIII’s matrimonial misadventures left him deeply in debt, the monastic organisation was destroyed and its capital (masonry and cultivated land) seized by would-be-princes to build themselves fine houses and surplus-producing estates.

    Where I think Ken, in modern America, particularly misses the point is that his continent wasn’t even discovered by his capitalist ancestors until 1492. Mass production requires mass transport. Europe’s miniscule trade with the Far East was by camel train. Britain’s wool trade was able to thrive because the English Channel is narrow; its local trade was coastal and up rivers, because without central planning and slaves to maintain them the Roman roads had fallen into disrepair. What made modern capitalism possible were the compass, growing understanding that the world was spherical, use of Cartesian coordinates in map-making and the development of sailing technology for exploration and long-distance transportation. Colonisation and mass production by slaves followed, long before canals and railways opened up inland markets, and air transport and container ships world markets, for mass production largely by machines.

    It seems to me, then, that today’s insane pursuit of material growth is driven by successive generations of would-be-princes and don’t-want-to-be-slaves seeking capital as a measure of their own success, thoughtlessly profiting from enslavement of others to serve first mass-production machinery and now robotics. The way out of it is therefore to change the motivation, manning and machinery, and more particularly the financial system which has turned responsibility for slaves into freedom to pick and choose between prostitutes. [I use that word again deliberately: reflect on its definition].

    As Charles says, “over the past few decades money funding has virtually disappeared and only debt financing is done now”. Logically, that is fine so long as we all have the means to pay off our debt, but the debt isn’t the finance, it is what we bought with it: that part of the surplus we have had BEFORE we have earned it (all of us when we are young). With machines and bulk transport doing the bulk of our work, few of us can now earn our keep in traditional productive employment, so something is going to have to give, not least the principle of payment for selective employment by capitalists as a means of keeping down the human population, which is taking down our whole ecosystem with it.

    Timesharing our work is one way forward, but insofar as we are what we do, it doesn’t resolve the human need for self-identification by development and recognition of one’s skills. A credit card system can ensure “to each, according to his needs”, but how to get “From each, according to his ability” when we have to develop those abilities by using them? By timesharing and sharing not just our work but our care and maintenance, education and artistic activities too?

    “Motivation, manning and machinery”. To minimise transportation and commuting I see credit ‘given” and ’employment’ split between regionalised mass production and distribution primarily of materials and educated workers (these shadowed by apprentices), localised finishing and maintenance in artisan workshops with the likes of 3D printing, voluntary caring in and for the community, and motivation by means of rewards rather than profits for dedicated and reliable as well as outstanding work in the community. But the possibility of largely localised production will remain what it is unless mass production and distribution of small scale capital equipment (of high and low as well as Schumacher’s intermediate technology) becomes the objective of a central government willing to counter with free credit the contrary tendency of damaging capitalist growth and centralisation (fraudulently achieved by indebting others with fake money).

    Editor: will David Ruccio actually read our comments? If so, in light of his last paragraph here it would be good to see his comments on this and the recent Hazel Henderson response.

    • August 6, 2017 at 10:08 am

      Dave, I agree with your comments about the factors that allowed the development of modern economies. Long-distance control and transportation, from sailing to air transportation; expansions in navigation, exploration, and map making; improvements in communications technologies; along with such political changes as expanded slavery, colonization, and national and international markets were all parts of the invention of modern economies. But none of this process requires capitalist ideas, capitalist structures, or capitalist rules. No one better chronicles how these rules, ideas, and structures impacted the invention of modern economies that Charles Dickens. He chronicles the transition from the old world of the wealthy obligated to generous benevolence, even if the benevolence is sometimes oppressive and cruel. That changed with the invention of large finance and the limited liability company, capitalist ideas and expectation that penetrated the political and technological changes that were creating the modern economy. These capitalist additions destroyed the sometimes oppressive and but also benevolent “wealthy person.” In the words of Dickens scholar, Humphry House, the wealthy (as represented by Mr. Meagles in “Little Dorrit”) “has no longer the same freedom, scope, and innocence of the Christmassy people. He is relatively powerless in circumstances which can lure even the staid Arthur Clennam (the kindly middle-aged character in “Little Dorrit”) into speculation.” The wealthy are made into slaves of capitalism. Capitalism is made the only acceptable form of economic life and economic thinking. That situation has only gotten worse in the years since 1850.

  6. Craig
    August 5, 2017 at 6:15 pm

    For the most part we have forgotten Wisdom and its mental process, the integration of the truths, workabilities, applicabilities and the highest ethical considerations in what appear to be opposing perspectives/policies, and the political, psychological and cultural fragmentation we see looming up around us is evidence of this. The false and obsessive dualities of capitalism and socialism must be integrated to the point of thirdness-greater wholeness….or we’re going to have real trouble eventually.

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