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It’s the System Stupid

Structural Crises and the Need for Alternatives to Capitalism

Hans G. Despain teaches political economy at Nichols College, where he is the Chair of the Department of Economics.

On Thursday, December 13, 2012, The Guardian announced Queen Elizabeth finally received an answer to her question—“Did nobody see this coming?”—about the 2008 financial crisis.1 While she was touring the Bank of England, Sujit Kapadia, one of the bank’s economists, informed Her Majesty that financial crises are a bit like earthquakes and flu pandemics: rare and difficult to predict. An impressive answer indeed. Brilliant for its vagueness, spuriousness, and obtuseness.

However, Kapadia is simply wrong not to have explained that many economists, financiers, and regulators anticipated and predicted the financial collapse.2 Additionally, metaphors of natural disasters are highly misleading. Financial crises are not inevitable occurrences, but historical, human-created, and contingent phenomena.

Her Majesty had asked: “Did nobody see this coming?” Perhaps she could have also asked three more questions: Does nobody see the suffering and socioeconomic injustices of oligopolistic-finance capitalism? Does no one see that the problems are structural and systemic? And is there no alternative to a system that generates continuous “quadruple crises”—the socioeconomic, political, environmental, and personal/psychological?3

The conventional wisdom is “There Is No Alternative,” or TINA. For this reason most Americans simply acquiesce to capitalistic social relations and, like Sisyphus, are resigned to performing eternal tasks while enduring the “endless” quadruple crises generated by a pathological system.

The most extraordinary aspect concerning the absence of an alternative is that it is fallacious. The capitalistic system itself must be transformed. To put it into a slogan: Capitalism Is No Alternative, or CINA.

Four recent books provide radical and practical alternative visions for both the workplace and the economy more generally. Rick Wolff’s Democracy at Work: A Cure for Capitalism (2012), David Schweickart’s After Capitalism (2011), Gar Alperovitz’s America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy (2011), and Dada Maheshvarananda’s After Capitalism: Economic Democracy in Action (2012). One important aspect shared by each of these books is that each was either written, or expanded and reissued, in reaction to the crisis of 2008 and the Occupy movement of 2011. All four books provide highly practical calls to action which are capable of transforming the economy and democratizing the workplace.

Before describing this exciting and inspiring work, two points should be underscored. First, these four books are merely the tip of the alternative-society iceberg, and focusing on them specifically is merely a way to put at rest the misconception of TINA and the correctness of CINA. Second, CINA literature has always involved disagreement and debate, but unfortunately, none of the four authors provided other alternative models to CINA besides their preferred one. The intention here is to provide an overview for the existence of highly innovative and practical responses to the economic collapse and ensuing protests. These turbulent last four years are only a beginning to a revolutionary era of transformation away from capitalism. Each of these books is very well-written, well-reasoned, and well-argued, and all of them offer practical models to CINA.

Alperovitz underscores the fact that in capitalism there is a “democratic deficit.”4 In the United States it is proclaimed that there is a democracy in the political realm. But once an individual enters the economic realm—when we enter the typical workplace—democracy is abandoned and totalitarianism runs supreme. Even within the political realm, oligopolization and political lobbying have put at peril any sense of a democratic process, and citizens have almost no say in government.5 Wolff reminds us that democracy is inconsistent with the production of surplus-value in capitalism and the profit motive.6 Schweickart and Maheshvarananda both maintain that democracy is not possible in capitalistic labor relations, or in financial markets under the hegemony of oligopolistic financial enterprises.7 Thus, there is not only a “democratic deficit” but a “democratic contradiction” within the capitalistic mode of production.

All these authors also underscore the social pathologies generated by capitalism. For example, in the United States one in four workers are employed in low-wage work with no benefits, no health care, no retirement, and no paid sick days or leave for family caregiving. One in two workers make less than $25,000 per year.

Each of these authors point out that the processes of concentration and centralization generate not only massive inequality in income and wealth, but also in opportunity, education, and quality of life. Furthermore, economic inequality has generated political inequality, and has given rise to noxious levels and forms of political lobbying, business predation, venomous forms of rent-seeking, and the emergence of the Predator State.8

Most investments in contemporary capitalism are highly speculative and short-term, rather than productive and long-term. Debt is ubiquitous. Furthermore, there is a strong tendency in capitalistic production to either ignore or exploit the natural environment.

Wolff, Schweickart, Alperovitz, and Maheshvarananda each present practical and detailed blueprints for democratizing the U.S. workplace. They each provide alternative models to socioeconomic pathologies that constitute the ontology of capitalism. These four alternative models are not incompatible with each other, but rather highly complementary.

In parts 1 and 2 of his book, Wolff details the perpetual historical crises of capitalistic development, and the contradictory action of the government in wake of the crisis of 2008. In the third part, Wolff argues the “cure” is worker’s self-directed enterprises (WSDE). Wolff describes how these enterprises will work internally, and fit within market economies in particular, and in modern society in general. He explains how they extend democracy and give workers far more control, self-efficacy, and responsibility for their lives. Finally, he offers a very practical policy strategy to help brings these enterprises into being.

Schweickart’s book may be the most impressive in its combination of practicality, critique of TINA, argument for CINA, and accessibility to the layperson. According to Schweickart, because of the failures of capitalism (i.e., CINA), “counterprojects” are always present as a “challenge to capitalism.”9

Schweickart offers a moral and ethical critique of capitalism, along with presenting the negative socioeconomic effects the dynamics and (law-like) tendencies produce on human beings within the system in the form of inequality, unemployment, overwork, poverty, economic instability, and environmental degradation. Schweickart argues that his alternative model to CINA constitutes “Economic Democracy,” supports workplaces that are “worker self-managed,” offers social control of investment with socialist savings and loan associations, and sees the government as the “Employer-of-Last-Resort.”

Schweickart maintains his model is fully capable of overcoming the moral and ethical problems of capitalism, as well as the negative economic effects of its dynamics. For Schweickart the historical “counterprojects” of capitalism are historical proof of capitalistic failure. In the last several pages, Schweickart demonstrates that his “counterproject” is not utopian but a practical historical result of the failures of capitalism and CINA.

Alperovitz understands capitalism, as well as the “too big to fail” and “too big to succeed” oligopolies, as inadequate for the needs of most people. For him, CINA is the social reality for the majority of people. However, he is less interested than Wolff and Schweickart in detailing the historical facts of capitalistic failure, and far more interested in demonstrating how Americans are reacting to the failure. Alperovitz believes that given the political impasse, whereby the system neither “reforms” nor “collapses” in crisis, there is a (potential) economic revolution underway, in the emergence of “worker-owned firms.” He considers the economic impact and political capacity of these endeavors, and explains how these worker-owned firms change the lives of workers, democratize communities, improve the environment, and promote ecological sustainability.

The United States has 29,000 cooperatives, and the National Cooperative Business Association says they employ over 2 million people, own more than $3 trillion dollars in assets, generate $500 billion in revenue, and pay $75 billion in wages and benefits. There are also hundreds of worker-owned firms, analogous to the Mondragon Corporation of Spain, emerging as viable alternatives to hierarchical, undemocratic, oligopolistically dominated, capitalist enterprises.

Alperovitz urges that we embrace and nurture these enterprises and help to “rebuild” a “pluralistic commonwealth” on the basis of smaller and more human-orientated, worker-owned firms. He maintains that they have the potential to renew a sense of community, and believes they demonstrate that the production process and activity of “business” can be beneficial to workers and community. Finally, worker-owned firms generate values of cooperation, communal responsibility, and social ethics, in addition to personal pride, achievement, and worth.

Maheshvarananda’s book outlines the failures and pathologies of “multinational corporate” capitalism. He argues that Prabhat Ranjan Sarkar’s PROgressive Utilization Theory, or PROUT economics, already exists as a well-developed alternative to both capitalism and state socialism. PROUT has important similarities with both Marxism and Participatory Economics, but its real philosophical basis is in Tantra Yoga, with influences from Hinduism, Taoism, and Buddhism (especially Zen).

PROUT’s economic principles are that: (1) all citizens deserve the minimum requirements of life of food, shelter, clothing, medical care, and education; (2) employment is guaranteed; (3) the progressive use of science and technology and a federal institution geared toward research and development should be promoted; (4) the federal political system must include decentralized planning at the level of the local economy, with balanced development of what is needed by local citizens; (5) a three-tier economic system that supports privately owned small businesses, cooperatively owned medium and large businesses, and government-run large industries must be created; (6) “decentralized self-sufficient” local economies should be maximized; and, (7) crucial to PROUT, are the cooperatively owned businesses.

The cooperatively owned businesses referred to must be locally owned and run. They are meant to replace the above socioeconomic pathologies, and would be the largest part of a Proutian economy. According to Maheshvarananda, they will radically transform class relations, class struggle, and generate new perspectives on class.

Maheshvarananda, much like Wolff, Schweickart, and Alperovitz, believes that the activity needed for the democratization of the workplace and economy is already underway. Maheshvarananda offers many existing examples of Proutian enterprises. Most of these are the same discussed by Schweickart and Alperovitz, including the Mondragon cooperative in Spain and Evergreen in Cleveland. However, Maheshvarananda also offers extensive details of cooperatives in Venezuela, where he has founded a PROUT research institute.

In addition to mending the social pathologies of capitalism, he explains how Proutianism promotes leisure, spirituality, and a new humanistic ethic. He also insists that a transformation away from capitalism is urgently needed for environmental production and a new Agrarian Revolution to save the planet and human life. In this sense, Maheshvarananda is far more ambitious than Wolff, Schweickart, and Alperovitz, and is sure to be far more controversial for left-wing theorists and activists.

Wolff, Schweickart, and Alperovitz have developed models of WSDE, economic democracy, and worker-owned firms as emergent realities, but have given less thought toward the longer term goals. Maheshvarananda has in mind a very long-term alternative to capitalism. It requires not only transformation in the workplace, but transformations in the political dimension. On the one hand, it could be argued his vision is far more remote, while on the other hand, once the transformation within the workplace begins, the ripple effect could be massive and sudden. For this reason Maheshvarananda’s perspective can be understood in highly practical terms and can be seen as complementary to the works of the other three. Indeed Maheshvarananda’s second to last chapter is titled “A Call to Action: Strategies for Implementing Prout.” In his last chapter, “A Conversation with Noam Chomsky,” they discuss the importance of the Occupy Movement, raising consciousness of resistance, extending democracy and cooperatives, and limiting wealth accumulation within North and South America.

Clearly all four of these revolutionary thinkers believe the time to transform society is now, the time to democratize the workplace is now, the time to recognize CINA and finally absent capitalism from existence is now. These books are a call to, and for, action. Their call to action is radically consistent with systemic theories of capitalism, and with the understanding of capitalism’s normal state as stagnation, periodic financial collapse, and individual worker hardship. Although there is certain to be disagreement as to explanations of the quadruple crises of global capitalism and in the models of alternative societies to today’s failed system or CINA, there is no room to claim TINA!

Notes

  1. Rupert Neate , “Queen Finally Finds Out Why No One Saw the Financial Crisis Coming,” Guardian, December 13, 2012, http://theguardian.com; Sam Greenhill, “‘It’s Awful–Why Did Nobody See It Coming?’: The Queen Gives Her Verdict on Global Credit Crunch,” MailOnline, November 5, 2008, http://dailymail.co.uk.
  2. For a list, although incomplete, see Tracy Alloway, “Who Saw It Coming and the Primacy of Accounting,” FT Alphaville, July 13, 2009; Hans G. Despain “Book Review of Foster and Magdoff, The Great Financial Crisis,” Journal of Economic Issues 42, no. 4 (December 2009): 1075–77.
  3. The “political” crisis includes wars, terror, and protests. See Hans G. Despain, “Economic Policy and the Rise of Global Violence and Terrorism,” The Humanist: A Magazine for Critical Inquiry and Social Concern, July 2004, 26–30.
  4. Gar Alperovitz, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy (Takoma Park, MD: Democracy Collaborative Press, 2011), 50.
  5. Joseph E. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York: W.W. Norton, 2012); James K. Galbraith, The Predator State: How Conservative Abandoned the Free Market and Why Liberals Should Too (New York: Free Press, 2008).
  6. Richard D. Wolff, Democracy at Work: A Cure for Capitalism (Chicago: Haymarket Books, 2012), 149.
  7. David Schweickart, After Capitalism (New York: Rowman & Littlefield, 2011), 152, 105; Dada Maheshvarananda, After Capitalism: Economic Democracy in Action (San Germán, Puerto Rico: InnerWorld Publications, 2012), 80.
  8. On political inequality, see Stiglitz, The Price of Inequality. Also for an even more sustained argument see Larry M. Bartels, Unequal Democracy: The Political Economy of the New Gilded Age (New York: Princeton University Press, 2008). The main thesis of Stiglitz, The Price of Inequality, is rent-seeking; see chapter 2. Also see Barry C. Lynn, Cornered: The New Monopoly Capitalism and the Economics of Destruction (Hoboken, NJ: John Wiley & Sons, 2011) for dozens and dozens examples of how oligopolistic firms supersede the constraints of the market and use their sheer size, vast resources, and endless political power to control and direct virtually every industry in the United States, effectively reinstituting the monopoly power of sixteenth-century feudalism. For the “predator state,” see Galbraith, The Predator State.
  9. David Schweickart, After Capitalism (New York: Rowman & Littlefield,2011), 5.
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