Hall Greenland – what the future could be like
The crises inherent in capitalism – and what transitions might look like
The old is dying and the new cannot be born: in this interregnum
a great variety of morbid symptoms appear.
The future confronting humanity is either socialism or barbarism.
The future is already here, it’s just unevenly distributed
That most acute analyst of capitalism, Karl Marx, did not expound a unified theory of capitalism and its crises and his remarks on what leads to its periodic crises expressed as recessions or depressions, or even revolution, are scattered through his work.
The main one, and the one that was popular among my parents generation – I came from a left-wing Labor family with catholic connections both to the Communist Party and the Trotskyists – was the over-accumulation/over supply on one hand and inadequate demand/under-consumption on the other. This was the widely received explanation of the Great Depression of the 1930s and the 1890s.
Simply put, workers have a contradictory role under capitalism – they must simultaneously be producers paid as little as possible and consumers purchasing as many commodities as possible. This leads to consumer demand falling short of the value of what is produced and capitalism – in the absence of new markets –stalling and/or falling over a cliff because it cannot sell what has been produced and realise a profit.
This explanation is very much in vogue for the current stagnation in capitalist economies. Stagnant wages and austerity in the US, Japan and Europe are clearly a drag on those economies by depressing demand. We have joined the queue now – wages rose by next to nothing last year and now penalty rates have been cut. We are living with the first wage cuts in a generation at least.
The problem of inadequate demand was hidden for the past two or three decades by the astronomical growth in government, private and household debt – that bolstered otherwise lagging demand. But as we know credit was extended to people and countries that couldn’t repay, and to compound the damage all kinds of financial products were spun off those loans until the revelation that the debts could not be repaid led to a banking crisis and brought on the GFC.
We are now in the situation where the old credit/indebtedness solution is not working despite giving money away to the banks at record low interest rates – this easy money is being used by the 1 per cent to pump up the share market and fuel a property boom. It is not reflating the economy as a whole.
This thesis that capitalism has entered a period of long, even endless stagnation is now approaching conventional wisdom. Wolfgang Streeck is perhaps the most persuasive of those putting this view. His picture of the current crisis is multi-dimensional revolving around stagnation, oligarchy, corruption, depletion of the public sector and international disorder. He argues that all the old remedies or escape routes are no longer available. But his analysis starts from the basis of underpayment of labour, leading to inadequate demand, leading to stagnation.2
I note too that Jim O’Neill, the former chief economist of Goldman Sachs, is now advocating wages growth as the key to ending stagnation.3 How that’s going to happen in the absence of a free and powerful union movement, god only knows. He was also canvassing helicopter drops of wads of free money into people’s bank accounts. As we know from the Rudd government’s response to the GFC, that stimulus works for a while but soon fades.
It was this kind of periodic over-supply/under-demand crisis that Keynes was responding to when he argued that the role of government was to manage and bolster demand so that ups and downs, stops and starts of capitalism, not to mention poverty and deprivation, could be a thing of the past.
In the three decades that followed WWII, what the French call the trente glorieuses, the application of Keynesian economics – along with a powerful union movement – certainly bolstered wages, credit and demand and the economy went gangbusters in these decades.4 In Australia, for instance, real incomes trebled in the 25 years following WWII and by the 70s the wages share of National Income or GDP in Australia [and this was fairly typical] was over 60 per cent – it’s under 50 per cent today.
That reality led to what has been dubbed the full employment profit squeeze crisis of the 1970s when a powerful labour movement, in conjunction with the hikes in the price of oil, inflation and big sending/big taxing governments, squeezed profit margins (and the rule of capital) so much that it provoked a counter offensive by capital that drove labour’s power and share of GDP downwards in the 1980s.
Breaking the power of the unions was not the only thing that freed capital from this profit-squeeze crisis – globalisation, and the technological developments accompanying it freed capital from some of its previous constraints. As Streeck says, the result was that markets were no longer within states but states within markets.
The third kind of crisis that Marx predicted for capitalism was the increasing mechanisation or automation of production – what he called ‘the rising organic composition of capital’ – which would have pretty much the same results as the first variant of crisis.
This spectre of accelerated automation appears to be haunting the world right now with all kinds of respectable economists and research institutes predicting a coming wave of automation allied with artificial intelligence wiping out swathes of semi-professional and professional white collar jobs.5
If this is right – and the hypothesis is by no means certain – it will destroy the main social support for capitalism which is the careerist and consumerist middle class. They are the people who have bought the capitalist dream of work hard and consume hard and for whom it works. For now.
While crises cause misery and waste, they do not necessarily lead to revolution and the new society. In Marx’s view, revolution is very much a life cycle one or birthing one. The new society would grow within the body of the old, and when a certain point arose when it could grow no longer in the host, it would burst forth and create its own new economy and society.
In the Preface to A Contribution to a Critique of Political Economy, Marx wrote ‘at a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production … From forms of development of the productive forces these relations turn into their fetters. Then begins the epoch of social revolution.’
In the 1960s this theory of revolution of Marx’s was rediscovered. Even before the events of 1968, there were thinkers who had come to the conclusion that it was capitalism’s own development that would be its downfall. A crisis in success, if you like.
The thinking went like this: By creating a workforce with a continuously rising educational and cultural level, prosperous and with expanding expectations, a workforce interested in quality of life as well as levels of consumption, capitalism was engendering a working class of blue- and white-collar workers capable of taking over the running of society and re-orienting it to a new way of life.
It was a return to Marx’s classic formulation of revolution as flowing from the clash between the growing forces of production – the new confident, well educated working class and all the productive possibilities of an increasingly automated and science and technology-based economy – and the relations of production – the old hierarchical system of private ownership and management.
For the ’60s would-be revolutionaries there were four key elements in this new society that a new, brighter working class would bring about.
First, it would be based on grassroots democracy – at work, in schools and universities, in communities, in the professions, in every sphere and at every level of the economy and society. This was time when there was much talk of self-management, workers control and workers participation.
Second, it would involve he expansion of free time. We would need that time to undertake all the projects and new ways of living that we were now contemplating. This was the age of alternative life styles.
Third it would be just and egalitarian. Women’s liberation, gay liberation and self-determination for the first peoples would be essential parts of the new dispensation.
And fourth, it would be critical of consumerism and protective of the environment. Recall that it was the late ’60s and early ’70s that saw the appearance of urban environmentalists, the Green bans and the campaign to save Lake Pedder in Tasmania.
Those familiar with Paul Mason’s work will recognise the same approach.6 Mason detects the emergence of a new economy – thanks to the information technology revolution – within capitalism today.
Information driven technology, or automation, makes an abundance of free or low-priced goods possible, in Mason’s view. In addition, it expands free time which is essential for real human freedom. Likewise the new information-driven technology encourages new forms of economic life – collaborative and sharing. And where Marx saw the organised working class – produced by capitalism – as the force, the midwife, that would abolish the old and inaugurate the new, so Mason sees networked humanity, the product of this new stage of capitalism, as the agent, the midwife to the post-capitalist future.
In classical Marxism – though not in Mason’s work - this liberation of the new within the old would be via revolution. The argument about radical reforms versus revolution is as old as the labour movement. In today’s conditions it strikes me that there is a lot of truth in the argument that radical, genuinely social democratic reforms will be as difficult to achieve as revolutionary transformation. 7
I come now to what is being called eco-marxism.8 Marx himself was periodically aware of the ecological dimension. But a new school of eco-marxists has been more systematic about the scattered insights of Marx and Engels.
What is central to this expanded understanding of capitalism is that labour is only one part of what capitalism sucks into in its mode of production – it is only part of Nature which capitalism latches onto.
Capitalism is then a way of organising nature. Just as capital pursues cheap labour so it does with the rest of nature with disastrous results. Its pursuit of cheap food has undermined the productivity of the soil. Ransacking the Earth for cheap raw materials has led to the serious depletion of our ecological treasury. The drive for cheap energy has resulted in dangerous universal carbon pollution.
In other words, capitalism destroys the basis for its own ecological surplus or profitability as well as the liveability of the planet.
I hasten to add that the eco-marxists are in a way just catching up with insights various anarchist theorists have had for decades prior to them. For my generation it wasn’t just the odd eco-marxist like Alan Roberts in Melbourne9 who woke us up to the link between capitalism [and bureaucratic socialism for that matter] and ecological degradation: it was thinkers from the anarchist tradition like Murray Bookchin who argued that a society built on domination of human by human would inevitably carry those practices over into nature as a whole with disastrous results.
In summing up the first part of this survey – it is conceivable that a working and middle class losing faith in the performance of capitalism, combined with the spread of ecologically awareness, connected and networked, awake to new technological possibilities, could provide us with the agency for creating a new society – a globally ecologically sustainable society of free and equal people.
How might we mobilise that force for change?
1. An ethical problem
I’ll start with the hard part.
As internationalists and egalitarians, we fight for a future in which all inhabitants on the planet have equal access to a good life. But we know that if our Western consumerist lifestyles were extended to the rest of humanity we would need the resources of three or four planet Earths. So that is not a possible future.
Back in the 1970s, we were much taken with the claim attributed to J K Galbraith that, with equal sharing, everyone on Earth could have a standard of living equivalent to an American household of 1941. That struck us as an acceptable level of frugal comfort. More recent calculations are that everyone could – on the basis of solar power providing the same amount of energy as fossil fuels do today – enjoy the standard of living of a French or Japanese household of the 1960s living in, say, Lyon or Kyoto. As Benjamin Kunkel observes, ‘that’s a rather stylish utopia’.
It would, of course, demand a global sharing movement that would involve material or consumerist sacrifices in countries like our own. This is a cultural revolution we should not be afraid to name or own. It was certainly part of the original Greens’ thinking summed up in the slogan popularised by Ted Trainer, ‘Live more simply so that others may simply live’.
The importance of this acceptance of a less materialist lifestyle cannot be emphasised too much. The weakness in Greece in the current ongoing crisis is cultural as much as anything else. The majority cannot contemplate leaving the Euro, despite all the pain inflicted on them in its name, because they fear that it would mean leaving the modern, consumerist, cosmopolitan lifestyle.
Incidentally, the availability of a universal basic income may lead to a less consumerist style of life for many and help us towards that globally egalitarian life. Large and generous increases in genuine foreign aid, opposition to wars and the reversal of the despoliation of the global environment can only help too.
2. Expansion of democracy
An enlarged democracy will be central to any transition. By enlarged I mean the numbers of participants and the scope of democracy.
I say this for a number of reasons. The first is that all revolutions are marked by a veritable explosion of democratic participation and mass confidence. That’s what revolutions are.
The second reason is that it is only mobilised public opinion that can shift government and limit the power of capital and regulate markets. The Bentley blockade on the north coast of NSW that stopped fracking in 2014 is my favourite example of this in our recent history. A referendum established the will of the people. Then thousands of citizens at Bentley enforced it, over-ruling the rights of private property, the drive of the corporation, and the call of the markets – in brief, democracy over-rode capitalism.
So it is not just the enlargement of participation that we need to be aiming for but the subjects that democracy can decide. It is one of the aims of neoliberalism, as it was of classic liberalism, to take economic decisions out of the realm of government and democracy. That’s the rationale behind deregulation, de-unionisation, privatisations, the independence of the central bank and global economic institutions. We need to champion the extension of democracy into these forbidden fields. The most heartening thing about the recent Australian penalty rates decision is the acceptance by Labor, under Greens pressure, that parliament and government have the right to intervene in the labour market.
As well as a right to general democratic control of the economy, we need also to be championing democracy in the firm or institution or locality as against the boss, the bureaucrat or developer.
What also needs to be cultivated are those manifestations of a new and different economy, such as democratic cooperatives and collaborative work, as suggested by Paul Mason. This can be done most immediately in the field of renewable energy and housing. There are some of these experiments scattered across Australia, but they are small in number and limited in ambition.
This cooperative and enlarge participatory democracy is the spine of the emergence of the new within the shell of the old capitalism.
I know that this enlarged democracy will worry some people, as it did Oscar Wilde who once said ‘the trouble with socialism is that it takes up too many evenings’. There are of course ways of lessening and spreading the democratic burden, such as drawing lots, rotation and term limits. The Athenians solved these problems for us 2,500 years ago.
3. Enlarged public sector - this involves not just an end to privatisation but nationalisations or re-nationalisations.
If the market and its inescapable imperatives – ceaseless expansion, price competition, increasing profitability and reducing costs – are at the heart of capitalism and its ills – ecological damage, increased inequality, instability and insecurity – about which there can be little doubt, then a reduction or elimination of the dominance of the market is an essential element in a non-capitalist or socialist alternative.
We live in a time of accelerated marketization or expansion of markets. This is taking place via privatisation of public assets and services. Hospitals, care for the disabled, forests, public transport, education, public housing – these are all being privatised in New South Wales and elsewhere around the nation. Goods and services which were formerly rights based on need, freely or affordably available and under some degree of democratic control, are now increasingly conditional on income, provided by private businesses, subject to the market and the bottom line.
If we believe in the equal worth of every human being, this has to be stopped and reversed. That will involve nationalisations. Professor John Quiggin has recently resurrected the notion in connection with the electricity sector and columnist Van Badham has done so in regard to public transport in Melbourne. Senator Lee Rhiannon will argue the case for [re]nationalisations in a forthcoming pamphlet. These nationalisations, or re-nationalisations, can start with education, public transport, electricity and housing with the aim of making these goods free or at the very least abundant and affordable.
As Paul Mason said about British Labour’s promise to re-nationalise the railways: ‘The point of privatisation is to make things dearer, the point about renationalising the railways is to make them free.’
4. Shorter working week. Expansion of free time
The time we spend at work is, under even the best of circumstances, something we are constrained to do. I think Marx was right to say ‘freedom begins where socially necessary labour ends’ and that ‘wealth is disposable time and nothing more’. To freely do what we want with our lives as individuals and freely associated collectives requires free time. Throughout the 19th and 20th century, workers grasped this and the shortening of the working week was at the centre of the capital-labour conflict.
Whether that aspiration is still deep in the hearts of the modern worker has to be tested but I suspect it is. One of the reasons that modern employees accept ‘flexible’ employment, even casual or part-time or precarious employment, is that it holds the promise of more free time.
5. A degree of planning
We are fortunate to be living in a time when we have at our disposal tools to ascertain what impact production or investment decisions will have on the economy and our ecological world. Modelling and computer power, and feedback mechanisms already in operation in social media and logisitics can quickly inform us about trends and impacts. A leap to quantum computing would only make this truer. So comprehensive and rapid human awareness about our interaction with the natural world – and rational guidance or planning – are now within our reach.10
In a nutshell…
The economic and ecological crises will continue. But new material possibilities will continue to ripen within the shell of the old. People will continue to probe for a way out of a capitalism that only offers increasing social polarisation, insecurity, hollowing out of democracy and ecological ruin. Success is not assured. Antonio Gramsci’s summation of his own time appears apposite to our own: ‘The old is dying and the new cannot be born: in this interregnum a great variety of morbid symptoms appear.’ Trump and the rise of the nativist reactionary Right is one of those symptoms. A blasé, consumerist fatalism is another. But we can be a little hopeful, I end with this quote from Benjamin Kunkel:
More important than intellectual debates is a generational shift underway. Global capitalism or neoliberalism under US hegemony, or just the way things are going: call it whatever you like, it has inflicted economic insecurity and ecological anxiety on the young in particular. They emerge today from their schooling into job markets reluctant to accommodate them at all, let alone on stable or generous terms, and they will bear the consequences of planetary ecological disorder in proportion to the years lying ahead of them. In any genuine renaissance of Marxist thought and culture, it will probably be decisive that capitalism has forfeited the allegiance of so many people under thirty.11
- David McNally, Against the Market (Verso, London 1993) particularly chapter 6.
- W Streeck, How Will Capitalism End? (Verso, London 2016). A shorter version of his thesis can be found in ‘How Will Capitalism End?’, new left review, 87, May-June 2014, pp 35-64
- Sydney Morning Herald, March 9, 2017
- Jessica Irvine, ‘Seven reasons to smile about the economy’, SMH, December 19, 2016
- Peter Frase, Four Futures (London 2014) has an excellent discussion of these possibilities.
- Paul Mason. ‘The end of capitalism has begun’. The Guardian online, 17 July 2015
A more extended version in Postcapitalism (Penguin, 2016)
- See W Streeck, op cit, pp 234-235 in particular. For a contra view see ‘Revolution after Revolution’, chapter 15, 366-396 in Geoff Mann’s In the Long Run We Are All Dead (London 2016).
- See Benjamin Kunkel, ‘Capitalocene’, London Review of Books, March 2, 2017 for a survey of what he dubs ‘ecomarxism’.
- Alan Roberts, The Self-Managing Environment (Allison & Busby, London 1979)
- D McNally, op cit, pp 211-213. Paul Mason has an interesting discussion of modern planning in Postcapitalism, pp 271-292
- B Kunkel, Utopia or Bust (Verso, London, 2014) p19. Recommended for its lucid explanation of the various crises afflicting contemporary capitalism. Kunkel is a successful novelist and the quality of the writing is a cut above the usual.