Friday, 24 April 2009

How to beat capitalism

Historically socialists have followed the' Marxist' model. By that I mean capture the power of the state and use it to control the means of production. By doing this you can put power into the hands of the people and liberate them from exploitation by the capitalist class. There are basically two ways of doing this: Revolutionary socialism or communism, and democratic socialism. Both have so far failed. Communism, in the Soviet Union, liberated workers and greatly improved the condition of women, but failed to find a successful alternative economic model and degenerated into a dictatorship rather than a 'dictatorship of the proletariat'. Democratic socialism, whereby socialist parties have come to power through elections, has simply failed to control capitalism, again largely because the parties failed to pursue an alternative economic model. I know some people will argue those parties weren't socialist but that's another argument too complex to go into in this post.

There is a pattern here. The key thing is the economy and the creation of money. Having a capitalist economy and a socialist government doesn't do much for most of the population apart from ameliorating the worst excesses of capitalism. It is certainly preferable to right wing 'free' market alternatives but it doesn't solve the underlying problem. For a long time capitalist entities like the big corporations have been more powerful than governments. Many corporations have turnovers which are larger than the GDPs of well developed nations. Now, through global entities like the World Trade Organisation (WTO) - in which secretive panels of 'experts' are able to overturn national legislation, they have formally elevated the right to make money above democracy, above all our democratic rights.

What the credit crunch has shown us is the true power of these capitalist entities. The mask has slipped. The 'free' market model has come unstuck through de-regulation and selfishness and greed - the twin engines of capitalism. We, the poor, the unemployed,the disabled, the low paid, and the working and middle classes, have been forced to bail out capitalism. The losses have been nationalised and the gains are still in the pockets of the people who brought the system down. That is socialism for the rich and the market for the rest of us.

In his book, The Great Transformation, written in 1944, the socialist economic historian Karl Polanyi explained how economies work. He said that they are 'embedded' in society. By this he meant that they are inseparable from the way we live. They are what we do. This may sound obvious but classical economists, such as Ricardo, have tried to separate the economy from society as if it exists separately in its own right. This is crucial because it allows conventional economists to ignore social and environmental concerns. They just don't figure on the balance sheet. Economists routinely ignore human suffering and environmental degradation caused by capitalism. This helps to give capitalism economic validity because it becomes simply about making money - forget about people and the environment. This is why economists are able to make ludicrous statements like - "It benefits all of us if production is moved to countries where labour costs are lower" - really? Does it? Who does it benefit? Not the people who have lost their jobs and the communities that are devastated. Of course there have been dissident economists like Marx and E F Schumacher who wrote 'Small is Beautiful - a study of economics as if people mattered'. But Schumacher and Marx have been completely ignored by capitalist academia and media.
Karl Polayni: realised that society and economy are indivsisble
Democratic socialists have made a similar error to the economists because they have assumed that politics is also separate from the economy. If you have political power you can change things. But as we have seen that is not true, not unless you change the fundamental basis of the economy. What socialists and progressives need if they are really going to change society is economic power. Capitalism can only be beaten economically. Therefore we need an alternative economic model and we need to start to build that model now. But what is an alternative economy? It is one where the means of production are owned and controlled by the people, and the creation of money is under democratic control.

For the means of production, there are basically two options: Nationalise industries or put them directly into the hands of workers to run and control themselves. Total nationalisation and state control, as in the Soviet Union  hasn't worked well because people are not empowered and often they have little incentive to produce anything. They end up still as workers controlled by bosses. The real alternative is economic democracy. This is something that can be achieved through co-operatives. By co-operatives I mean businesses owned and controlled by the people who work in them. Not possible? Think again. There are already many such successful businesses around. One example is the Unicorn Grocery, a worker owned co-operative in Chorlton, which is thriving. There are many other examples.

Some cynics will no doubt say that this can only happen on a small scale but I don't believe it. There is nothing to stop larger scale businesses from being run in this way. The co-operatives in Mondragon in Spain provide us with an example of large scale worker owned and controlled businesses. Even models like John Lewis and Gore-Tex, which are not wholly worker owned co-operatives in the sense that the Unicorn Grocery is, offer us a better alternative than voracious capitalists such as Tesco.

The beauty of the co-operative model is that we don't need a revolution or a socialist government to get started. There is nothing to stop people from starting co-operatives now. I have given examples in other posts such as the workers in Argentina who took over factories and started running them as going concerns during the economic crisis there.

In addition to this, we have to put the creation of money, and the control of its supply under democratic control. We need to ensure that only the state, through state owned banks, rather than private sector banks, can create money. Alongside this we also need to ensure that there are smaller local and regional banks. We also need a decentralised energy production system where locally owned companies generate energy from renewables, and a centrally controlled energy distribution system.

None of this means that we shouldn't bother with socialist or political parties or trying to get progressive governments elected. Changing our economic model isn't going to happen overnight. We need the support of governments who are friendly and can help with investment. In the shorter term nationalisation of the banks, railways, water, power generators, education and health is essential for moving us away from a capitalist economy. Its a long haul but this is the only way forward. You cannot beat capitalism politically - it has to be done economically. Socialists and progressives need to start thinking seriously about building a new economy and making it happen - now.

12 comments:

Anonymous said...

What is poor? Are you poor? Am I poor? I am the bigest wage earner at home on £20k. I drive an old car and live in what has been descibed as an economically deprived area (across the whole of the EU. I am not rich - and am being asked to bale out the banks.
How about you?

Joan

Howard Thorp said...

What is poor is a whole argument in itself. There are 2 billion people who earn less than $2 a day. Are they poor? - yes of course.

There are clearly poor people in the UK. I would say anyone who earns less than the average wage is poor. That is about £11 per hour for a 40 hour week.

Am I poor? No. But I'm certainly not rich either and I'm paying for the excesses of capitalism along with you.

Anonymous said...

I am poor then. We have been soled a real pup here in terms of what we are doing re the banks. But I am not convinced there;re enough people willing to fight- are too many people just fighting to save their jobs?
I'm a union rep and am about the lowest paid on my committee but I have a big job. I have stewards with me who talk a lot but don't deliver on their actions (and some of them earn twice asmuch as me, which makes me feel great - not...). So if the unions aren't engaged, where do the workers go from here? Any thoughts?

Joan

Howard Thorp said...

I have quite a good BC. Not political though. Very wary of ailienating the members.

Have you thought about joining a party like the Green Party? Sounds like you are a bit isolated. You would find people there who want to fight for real social justice. Something New Labour gave up on a while ago - though they still pretend to do it.

You're not in Unison are you?

Anonymous said...

Unite - sounds like Unison (but we're bigger)

:-)

Joan

Anonymous said...

Any views on this?

http://labourandcapital.blogspot.com/2009/04/lefties-vs-hedge-funds.html

Joan

Howard Thorp said...

I looked at this post and my conclusion is that Tom P is deluded if he thinks that hedge funds are 'OK' and that capitalism can ever be reformed so it becomes 'nice'

Anonymous said...

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C Lang said...

Good post, unfortunately if co-ops became threatening, larger companies or the government would kill them. I think the only way is for a large mass movement which we are a long ways from though long overdue for.

Great blog thank you very concise, intelligent. Take care of yourself. we need more like you.

C Lang said...

Good post, unfortunately if co-ops became threatening, larger companies or the government would kill them. I think the only way is for a large mass movement which we are a long ways from though long overdue for.

Great blog thank you very concise, intelligent. Take care of yourself. we need more like you.

whichfinder said...

Sorry Howard but your comments about socialism and communism having been tried and failed only serves to continue the confusion.

Neither socialism or communism (they mean the same thing) have been tried anywhere at any time. What occurred in Russia and elsewhere was a variant of capitalism; state capitalism to be precise.

Socialism/communism will be a world-wide system of society without nation states, buying or selling or any of the other paraphernalia of the market system where goods and services will provided for one purpose only; to satisfy people's needs.

http://www.worldsocialism.org/spgb/

Howard Thorp said...

I don't disagree with a word you have said. There never has been a 'communist' or 'socialist' society. Also the USSR communist 'model' became state capitalist. The whole debate about the Soviet Union is too long and complex to go into in a short blog post. Suffice to say there was an attempt to create a communist society which failed.