IS A HUMANE CAPITALISM POSSIBLE?
Economic Reform Australia Newsletter, Sept, 2001.
In the last Newsletter John Hermann asked whether " a less rapacious capitalist model operating within an adequately regulated framework might be satisfactory." The question is extremely important because it requires us to clarify our thoughts about where we are, what globalisation is about, why we are on the brink of catastrophe, and especially what we should be working for.
There is now a strong, indeed dominant tendency on the "Left" to assume that globalisation is inevitable, that the market system is to be accepted and that the goal must be to work for a humane, re-regulated capitalism, or "social-democracy". The "Third Way is about the acceptance of globalisation and capitalism but with the assumption that they can be made humane ( "civilised" in Mark Lathams terms.) Many within the anti-globalisation movement are only out to re-regulate capitalism, for example calling for fair trade. Fotopolous calls these people "Left reformers" and distinguishes them from the currently small minority on the Left who believe that it is a fundamental mistake to assume that capitalism can be civilised and who insist that the goal must be to replace the system. Fotopoulos, and I are in the latter camp.
As I see it globalisation and the current state of capitalism must be understood in terms of the "problem of surplus" which was focal in the account of Baran and Sweezy in Monopoly Capital (1966.) The crucial, indeed mortal problem for capitalism is to continually find ever increasing opportunities for the investment of the ever increasing volume of capital doubling at 20 year intervals even in the 1980s. Globalisation is basically the result of this problem. The increasingly urgent need to find investment opportunities has led to immense pressure to break down and get rid of all restrictions, tariffs, protection, standards etc., blocking the access of the corporations and banks to sales opportunities and markets, to forests, land, minerals and cheap labour.
The result has been immense damage to the welfare of most of the worlds people, to economies, to social cohesion and to the ecosystems of the planet because the corporations, banks, shareholders and shoppers from the rich world have now taken much of the wealth and income generating opportunities previously kept out of their reach. For instance NAFTA has enabled the markets that little Mexican grain producers once had to be taken by Carghil. The Structural Adjustment Packages have enabled many Third World firms to be taken by rich world corporations and much Third World land to be converted from subsistence crops to exports for our supermarkets.
A satisfactory world economy could not be achieved unless all that takeover was not just terminated but reversed. Corporations would have to get out of vast areas of Third World agricultural land and forests and fisheries so that local people could get the benefit from those resources. They would have to close many mining operations because if they were conducted satisfactorily the costs would be far higher than they are now. So it is not just a matter of regulating from here on. Twenty years of take over and plunder under globalisation would have to be wound back, meaning that an astronomical volume of investment would have to be scrapped, or reinvested somewhere else. Lets assume this land is transferred to the millions of hungry Filipinos who could then grow food for themselves. Lets further assume that all around the world
many similar actions were taken to stop inappropriate corporate activities and return productive capacity to local people. This would be to confiscate an enormous amount of capital and corporate investment with surely catastrophic consequences for rich world economies. If on the other hand the land etc was bought back from the corporations (with what?), then what could the corporations do with all that capital? Where could they invest it? And also note the massive amount of regulation that would be needed to keep capitalism civilised. This would require huge increases in bureaucracy and therefore in taxation to administer the necessary regulation. Where would the tax revenue come from, because corporations wont pay much tax these days.
Note the reciprocal relationship here; the more you get rid of the problems capitalism generates the more you have to regulate and control. If you regulate sufficiently to eliminate all the big problems then there wont be much capitalism left at all because it is capitalism that generates the big problems. It is a system based on the patently idiotic assertion that if we leave production, distribution and investment decisions to the very few who are super rich and own all the capital ( about 1% of the worlds people own more than half of all capital now), then things will work out well for people in general, for the poorest 3-4 billion, for society and for the environment. A mountain of evidence contradicts this assumption. If you start regulating such a system with a view to preventing it from generating impoverished masses, festering cities, depleted public assets, shredded ecosystems etc., then by the time you have eliminated these effects you will have a basically regulated economy, not a capitalist economy.
In my view a satisfactory economy could have a large role for private enterprise, in the form of small firms, and for markets, but only if both are under firm social control. ((Privately owned small firms are really only the tools people buy with which to produce a steady income from their own labour. This is quite different from capital, which is money invested to make money without doing any work.) In a satisfactory society the major production and investment decisions could not be left in the hands of private firms or people with large amounts of capital. In other words it would then not be a capitalist society. (What the best alternative might be is of course quite problematic but it would not have to be a big-state socialist society.)
The biggest nail in capitalisms coffin comes from the limits to growth analysis of the global situation. Several separate lines of argument each support the conclusion that the present levels of production and consumption on this planet are far higher than can be sustained. Australias per capita footprint is about 8.5 ha of productive land, but the global average available is around 1.5 ha. Our CO2 emissions are more than 10 times higher than the level needed just to stop the greenhouse problem becoming worse. These sorts of figures indicate that we have already probably exceeded sustainable levels of production, consumption, investment, industrialisation, trade and GDP by a factor of ten.
If this limits analysis is valid a sustainable world order and a sane economy must operate with a minute fraction of the present volume of production, sales, and investment, and the volume must not increase over time. This simply means that most of the present factories would have to close, most of the investment and capital would have to be somehow written off. Top priority would have to be put on ensuring that extremely scarce resources were applied very effectively to meeting needs. This means there must be an extreme level of deliberate social planning and control contrary to the profit motive; when profit determines production needs are ignored and the demand of the rich is attended to. It hardly needs to be said that nothing remotely resembling capitalism is compatible with such requirements. (Nor is socialism as has been mostly envisaged and practised, since it has also taken growth and industrialisation and high living standards for granted.)
The foregoing argument does not mean there is no way out of the trap we have got ourselves into. In my view it would be very easy to imagine and to build a sustainable, just and attractive alternative economy if enough people embraced the principles of The Simpler Way. (See http://www.arts.unsw.edu.au/socialwork/trainer.html).
It is disappointing that so many of the people opposing globalisation and economic rationalism do not realise that trying to reform capitalism is utterly mistaken. What we have to be about is a transition to not just a non-capitalist economic system but to a very different culture in which the driving forces are not individualism, competition, growth and acquisitiveness. If we do not make this extremely big and difficult value change within a few decades we will probably find our selves in a very nasty new dark age.