We must Occupy the economy

The roller coaster ride of the world economic crisis continues. Elections in Greece and France have shifted the political ground slightly to the left, with a Socialist majority in France, and the spectacular result obtained by SYRIZA in coming second in Greece with about 27% of the vote. But the Eurozone crisis stumbles on and the 'free' market fundamentalists, the architects of the broken economic system, are still in the driving seat. Banks are bust and, under the current system, there is nothing to look forward to apart from years of economic stagnation at best. Meanwhile in the UK, millions are being pushed below the breadline by the governments cuts in benefits, tax credits, and increases in rents.

In 1966, the Marxist economist Paul Sweezy wrote a book, with Paul Baran, called Monopoly Capital, in which he said that the natural tendency of monopoly capitalism was economic stagnation, as capitalists struggled to use the surpluses of capital accumulation, and that they could only achieve this by increases in spend on marketing and defence spending, and increasing debt. Was Sweezy right? Its certainly true that US defence spending in WWII ended the Great Depression, and that a mountain of debt has been used to keep capitalism going in the past 30 years or so.

So what do we do? The market fundamentalists have no answer. They are like the mad person who repeats the same actions over again in Einsteins famous quote:

"Insanity is doing the same thing, over and over again, but expecting different results"

Einstein: described the madness of market fundamentalists

 
So we need an economic alternative. But what is that alternative? Neoliberalism, over the past 30 years has put commercial interests above democratic sovereignty. This has happened globally through organisations like the WTO and the European Union. We need to reverse this process and re-assert democratic control of our economy. This economic change must put governments in charge, actively planning and managing economic development, allow local decision making and create a mixed economy based on  genuine sustainable development to deal with ecological crises and halt endless growth. In the longer term the only answer to the domination of private commercial interests is to put the economy in the hands of the 99%. How can we do all that?

Firstly, we need to nationalise the bust banks that are hoovering up resources which need to be spent on creating jobs. Its a scandal that the UK's bust banks have been bailed out but are still in private hands. This must end, some banks must fold, and we need banks to be broken up to provide finance to small businesses, and local and regional banks which can focus on reviving local economies;

Secondly, we need to take the creation of credit out of private hands and put it under democratic control. Debt creation is too great a power to be left in the hands of private enterprise - this is what caused the current crash;

Thirdly, we need to take control of the big utilities such the energy and water companies, and sectors which rely on massive public subsidy to continue such as the railways;

Fourth, we must institute a programme of investment in our economy to create jobs through green quantitative easing and a Green New Deal;

Finally, and most importantly, we must break the power of the corporations by mutualising the economy, providing the finance to set up co-operatives and giving employees the power to buy-out the companies they work for and control them. This latter measure is crucial in putting economic power into the hands of ordinary people. We need to create a new culture of doing business in which people work together to create successful mutuals which are focused on local communities. Co-operatives have a better success rate than companies and they don't outsource downsize, or export jobs overseas.

Its a little known fact but there was an expansion of mutuals in the USA during the last Great Depression and there are many successful co-operatives both in the USA and here. It is a sector that is already growing. 130 million (yes that is million) people in the USA are now involved in mutuals and if you want to find out more detail read this previous post. You should also take a look at Gar Alperovitz's excellent book 'America beyond Capitalism' which gives practical examples of how the 99% in America are taking control of their economy from the bottom up by creating co-operatives. This is economic democracy in action and something we should celebrate.

Think it can't happen? Well, we have to make it happen. Its likely that the failure of the global banking system is going to mean that states are going to have to take a much bigger role in managing the economy now that the failures of the market have been exposed, and that people are going to be much more willing to trust democratic control and planning after they have experienced the privations of neoliberal austerity. If we want to really cure the malaise of neoliberalism and avoid the stagnation of monopoly capitalism we need to participate in the most important occupation of all, we need to Occupy the economy.

Why we can and must build our own economy

UK companies are sitting on a cash pile of about £750 billion, and EU companies have about €2 trillion stashed away. So why on earth is our economy struggling? There is plenty of cash to get the economy moving and create the much-vaunted 2.5 million private-sector jobs that George Osborne has been promising us. Why isn't this private-sector job creation happening? Apparently, it's because firms don't want to invest due to a lack of "confidence" (sic!). The problem is that neoliberal austerity policies are reducing the share of national income for working people and depressing demand in a consumer-capitalist society. This is confirmed by a quote from the following article in the Wall Street Journal which states:

".... that policies aimed at further depressing the share of labor in national income will further undermine economic growth. He [SimonTilford] suggests increasing corporate income won't help spur investment while squeezing households by cutting wages will damp growth." [my italics]

In other words, neoliberalism is self-defeating, as I argued in a recent post. Erm... but isn't our government meant to be doing what the private sector - the market - wants? If the corporations and banks want austerity, why haven't they any confidence? What this situation clearly illustrates is that capitalism always wants to have its cake and to eat it. They want austerity to make us pay for the crisis and to trash the welfare state, but they also want us to be able to buy their products!

If we can't rely on either governments or the private sector to lift the economy and produce the jobs that we so desperately need, what are we going to do? Well, we can forget the banks and the corporations because they are not going to help us. They are part of a failing neoliberal economic system which is essentially exploitative and destructive, a system which is eating the planet, and in the process, destroying the prosperity of most of us, of the 99%. As capitalism gobbles up the planet's resources, cannibalises the public sector, and indulges in an orgy of financial and property speculation in order to try and maintain its falling profitability, millions of people are suffering globally. Not just people in the so-called third world, but people in the once-prosperous west, and nowhere has this become more obvious than Greece, which is the front-line of neoliberal austerity.

But one of the starkest outcomes of this crisis is in the modern home of capitalism itself, the USA. Detroit, the motor city, and once-great powerhouse of American capitalism has been devastated. Paul Craig Roberts has written about this in The Ruins of Detroit :

"Detroit’s population has declined by half. A quarter of the city 35 square miles is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be. President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them?"

Capitalism at work: economic devastation in Detroit

But amongst the ruins of Detroit, at the grassroots, economic activity is stirring. This is a grassroots revolution. People are beginning to come together and realise that if they want a better economy they are going to have to do it for themselves, and they are starting to rebuild from the ground upwards through co-operatives like the Evergreen Co-op. What's so inspiring about this re-birth is that it is community-focused and lead not by overseas investors or the 'entrepreneurs' of neoliberal myth, and hungry for a buck, but 'ordinary' citizens, and what it shows us just how extraordinary us ordinary people can be. Here is an extract from the recent Re-imagining Work in the Motor City conference:

"In another discussion, participants acknowledged that relying on political and economic leaders to lead was a fruitless endeavor because they have forgotten the people they are supposed to represent. A “we have to do it ourselves” attitude permeated the conference in a recognition that representative democracy is in serious decline. Besides, they said, societal change usually occurs at the grassroots level—and rigid social class distinctions and hierarchies have no place in the new economy we are envisioning". [my italics]

People in Detroit have realised an essential truth - that capitalism dis-empowers all of us. The system is designed to make us think that we need the super-managers and capitalists, that without them, we just couldn't survive. This system is designed to keep us in our place and to keep them in the luxury that only they can afford. But as a result of this crisis, in which whole communities have been abandoned, this myth has been busted, because more and more people are beginning to understand that 'they' need us, but we really don't need them.

But its not just in Detroit that this phenomenon is happening. All over the USA, people are beginning to turn their backs on capitalism and the banks and find their own solutions by building their own economy. According to Gar Alperovitz in his New York Times article entitled Worker Owners of America Unite:

"Some 30 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions."

The politicians and corporations who control our economy want us to believe that it can be restored, but only on their terms, and they are resorting to ever more desperate means to try and continue as if the great crash of 2008 never happened. In the process, through neoliberal austerity, they are making the poorest pay for the crisis, but they're also beginning to scrape the bottom of the fossil fuels barrel with tar sands extraction and shale gas exploitation, both of which are environmentally destructive. These are acts of desperation, meant to prop up a failed system which has run its course.

The truth is that we cannot rely on capitalism and its tame politicians like Obama and Cameron to help us. Essentially, we are on our own. But that, despite the hardship, gives us an opportunity, an opportunity to build an economy that we own and control ourselves. Such an economy needs to be co-operative and community based, supported by local banks and credit unions, which are subject to democratic control.

Co-operatives create wealth and employment, they are rooted in communities, they do not downsize or outsource jobs overseas. They build strong local economies that are resilient in the face of climate change. Best of all, there are no fat-cat managers or owners to cream off the bulk of the wealth that is created. That does not mean we should ignore political parties, we need to support and help build parties that are supportive of this kind of economic development. And we need to help to propel such parties, through the democratic process, into government. Then we can really get down to the business of rebuilding an economy that is truly our own.

For reference see: America Beyond Capitalism

Hierarchy is bullshit

Ever thought about why we need bosses? I have, and I've never been able to understand why we need them. What are bosses for other than to earn more than us and tell us what to do? But we don't need anyone to tell us what to do, and we certainly don't need them to earn more than we do!

So why do we have them? Because it's a great way of maintaining control and a great way of making us accept that we are worth less than we actually are. Now I guess some of us have worked for an inspirational boss at one time or another. But for every good boss, there must be a least a dozen poor ones. They tend to range from the ones who just aren't up to it to those who are careerists, desperate to climb the greasy pole, who see each job as a stepping stone to the top, and of course, some are just downright bullies.

So why do we put up with them? I'm not a psychologist but it's not too difficult to see why. We are socialised into it. As children we look up to our parents - the 'grown-ups' who comfort and protect us. Then we go to school and are trained to accept the authority of another grown up - the teacher.

When we finish education we are usually starting on the bottom rung of the ladder in a large organisation. We accept that those who've been there longer than us and have more experience and prestige. So it seems natural that we defer to them. But is it? Respect should be earned - not taken for granted.

The system works well for those at the top as we have seen recently in the banking debacle. These top bods claim they are special people. Without them businesses and organisations wouldn't be run properly - but ...er were the banks run properly? More recently we have seen Mark Thompson, Director General of the BBC, floundering over the Ross and Brand debacle. Do we seriously think that no one could have handled it better? I doubt it.

So why do we tolerate these people? - especially when there is plenty of evidence that we just don't need them. Let's go back to the start of this century when there was an economic crisis in Argentina. Years of corruption and privatisation lead to a run on the banks. While the rich took their money and ran, ordinary Argentinians were left in the lurch, unable to access their bank accounts. Businesses went bust, and in many cases bosses just abandoned their businesses, making the workers jobless.

But many of the jobless refused to give up - they took over the abandoned businesses and kept them going. Many are still successful today and still owned as worker co-operatives. Not all successful co-operative businesses start in this way though. The US company W L Gore and Associates is very successful, and it doesn't have any bosses. Don't believe me? Then read this article. You'll probably know the company because it makes Gore-Tex. In fact the company topped the UK Sunday Times "100 Best Companies to Work For" list for 4 consecutive years, 2004–2007.

The hierarchy that surrounds us is manufactured bullshit. There is nothing natural or desirable about it. It is maintained because it suits the purposes of those at the top who cream off the wealth from society and require us to accept less as a consequence. Attacks on this system are described as sour grapes or envy - but they would be wouldn't they? It's not envy to want social and economic justice and to rid ourselves of a 'class' of people who add no value to our lives but benefit from our labour and acquiescence to their authority.

Postscript: I don't usually add anything to a posting but there is an interesting article on the front page of Guardian Work today by Don Tapscott about inter-generational attitudes to hierarchy that is worth reading. I searched the website but couldn't find it so I can't make a link. here is a brief quote:

"Too many organisations are still stuck in the old unproductive hierarchy, which divides worlds into the governors and the governed. Most people above the age of 40 accept this..... The goal in a hierarchy is to move up, and have more people reporting to you"

Don believes that the 'net generation' have a different attitude to hierarchy - let's hope he is right.

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: 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 and were content to 'manage' capitalism through social democracy. 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 - or social democratic - 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 commercial interests - 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 indivisible

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 be 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. It's 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.