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Joe Guinan © 2003


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Objections to a Capital(ist) Strategy

"Workers with a stake in a pension fund will be less likely to yearn for the day of capitalist collapse than the class warriors of the early twentieth century."

                                                                 -- Robin Blackburn, Banking on Death. [1]

Lenin (in a remark that is not nearly famous enough) once said that "when we are victorious on a world scale I think we shall use gold for the purpose of building public lavatories...meanwhile, when you live among wolves, you must howl like a wolf." [2] The same attitude is at the heart of many of the proposals for Market Socialism (particularly those by self-identified Marxists) with regard to market transactions, profit and loss, the accumulation of capital, and so on. Unless and until we can develop a viable set of institutional alternatives that adequately solve the design problems of economic planning without the use of market forces, limited markets will have to be included in any honest socialist model.

It is at this point that such proposals will almost certainly arouse passionate resistance, both from the anti-capitalists of the new movements for global justice and from the still-active remnants of older socialist traditions. By suggesting that we get down and dirty with capitalist institutions, Market Socialists are opening themselves to Mao-like charges that they are "capitalist roaders," thereby running smack into the powerful traditions of utopian rejectionism and fear of ideological and moral contamination that run deep on the Left, a reluctance to risk the 'purity' of complete uncompromising opposition to the historical violence of capitalism. These instincts are extremely healthy, and perhaps find their most eloquent expression in Che Guevara's reported remark to Eduardo Galeano (in Days and Nights of Love and War):  "He told me that when he was president of the central bank he had signed the bills with the word 'Che' to poke fun, and he told me that money, that shit-awful fetish, should be ugly." [3]

There is every reason to proceed with caution. Market Socialism has many design features that point to potentially undesirable outcomes. Economists have argued that worker-owned enterprises will lead to underinvestment. (Economists being economists, they have also argued worker ownership will have a marked tendency to overinvestment). Inequalities will persist. In the absence of preventative legal structures, some past cooperatives have displayed the unfortunate habit of pulling up the ladder after themselves, hiring new workers on a wage basis rather than an ownership one, thus making the transition back to capitalism in the space of less than a single generation. There is also the question of free-riding: what is to stop worker-owners, any more than capitalists, from maximizing profit by passing on pollution costs and other negative externalities to the wider community? Not least, our new institutions run the risk of all worker ownership models in that they can lead to 'enterprise egoism' and/or ruthless self-exploitation.

There are answers to these problems. "What does it mean," asks James Lawler, "to say that workers will exploit themselves more efficiently in cooperatives? Will a worker-owned enterprise decide to move to Mexico and work for one-tenth previous wages in order to amass ever more capital?" [4] Countervailing incentives, where needed, can be built into the system. Retaining community control over investment through a public bank, for example, or even community control over the fixed capital in enterprises (in effect renting out the means of production to self-managing groups of workers) can help ensure there are no externalities, the local community being the ultimate universal owner. In any case, none of these problems will be as severe as they currently are under capitalism: workers, as Frances Fox Piven acknowledges, "are likely to be better corporate decision-makers, simply because worker interests are multifaceted, going beyond a singular preoccupation with the bottom line and the short-term to include concerns with, for example, job security and community well-being. This is the old promise in proposals for worker ownership..." [5] Finally, a strong dose of decommodification should be included in the model with regard to public space, the environment, health care, education and all the other crucial ingredients of a flourishing Commons: "only this can 'neutralise' the floating electric charge of capital by tying it to the 'earth' of mutual or public property, which can no longer be bought and sold." [6]

But, while we need not embrace every exotic innovation or new product from the financial services industry, our Market Socialist economy should not be shy about borrowing 'what works' from capitalism. Just as capitalism itself was a sixteenth-century development of institutions that had grown up in the cracks and interstices of the old feudal order, so it is that the economic institutions and arrangements of the next economic system will, in all probability, come from late capitalist innovations. To some degree there needs to be a return to and reeducation in the categories of a more sophisticated Marxism. As Robin Blackburn points out, "while [Marx and Engels] advocated state ownership of the transport system and central bank they did not propose the suppression of all market relations":

"Some anti-capitalist activists may find [this approach] objectionable, since it seeks to appropriate institutions and practices which they regard as inimical to their project. Yet there has always been strong currents within the historic anti-capitalist traditions--Marxism, anarcho-syndicalism and social democracy--which have identified a progressive side to the complex organisation of capitalist society. Indeed, Marx's idea that socialism could only be built on the basis supplied by capitalism has yet to be faulted." [7]

If this fails to convince, then there are also some hard questions that need to be put to antiglobalisation activists. For example, if their vision of an alternative society is to include, say, intercontinental air travel, or the benefits of medical science, or the options and amenities of metropolitan city life as we have come to know and enjoy them, then by definition we are already talking about some form of modern industrial civilisation, albeit perhaps one that is built on genuinely democratic institutions in order to more fully humanize the necessary economies of scale. From here one must tread carefully so as not to tumble helter-skelter into the most tepid kind of reformism. The challenge rings out from Thomas de Zengotita's clarion call to progressives, in his electrifying piece in January's Harper's magazine, to find our way back to the Enlightenment:

"Have you actually become (or were you always) just a liberal after all? Were your pretensions to radicalism mostly a matter of style, of self-image? Have you been working for the realization of something beyond bourgeois democracy--or have you just been aiming for reform? If what your politics really envisions is Global New Deal meets Respect for Diversity, that's one thing. That means you are a liberal. That means you basically accept a world system of private enterprise and technological innovation and consumer culture, and you want to see it managed so that no one is excluded, the environment is protected, free expression flourishes, and so on. And you can be very active in all sorts of obvious ways, if this is what you are. If, on the other hand, you are a radical, the ironic implication is this: there isn't much to do right now to distinguish yourself from liberals. Toss a few rocks at Starbucks during the next WTO meeting if you want, but don't mistake such gestures for genuinely radical responses. What radicals should be doing right now is studying and thinking. You need to put in your ten years in the library, the way Marx did. You need to be figuring out what makes human beings tick and what, if any, direction is to be found in history. And I don't mean some half-assed sci-fi anarcho-Gaia nonsense...I mean serious study, working toward an alternative to a global bourgeois democracy. What radicals need most right now isn't action but theory." [8]

From a different perspective, our comrades on the "Revolutionary Left" may be expected to reject out of hand the kind of model I have been tentatively sketching, on the grounds that by preserving the market we have failed to go "beyond capital" and are still colluding in the tyranny of dead labour over living labour. This is an honourable position. But they, too, need to answer some difficult questions. Not least of these is what role they see for revolutionary politics in a nonrevolutionary situation (if they acknowledge such a possibility). Historically, the Revolutionary Left in such situations seems to occupy a position on the furthermost left of the "spectrum of the possible," the range of immediate political issues of the day. In practice, this puts them at the forefront of the fight to organize and extend (or, more often, defend) welfare state protections, an extremely valuable role given the abject failure of Social Democrats to rally to the defence of their one signal achievement.

But this strategy has a fundamental weakness: waiting around for the revolution while practicing a purely defensive politics aimed at preserving what's left of social protection means, in effect, watching while the welfare state bleeds to death, infected with a particularly nasty condition known to economists as 'Baumol's Disease.' William J. Baumol, an economist at NYU, has shown that certain labour-intensive goods and services inevitably suffer from "cost disease" since they do not and cannot participate in the ever-increasing productivity gains of the wider economy. Unless the workers in these "stagnant services" are to suffer a dramatic decline in their wages, these sectors will consume an ever-growing share of GDP. [9] Not coincidentally, the services most afflicted (health care, education, etc.) are precisely those that, over the course of the last century, migrated to the public sector--usually as the centrepiece of Social Democratic programmes. If they are to be maintained even at current levels of service provision, their defenders will have to run faster and faster in order simply to stand still, necessitating an ever greater tax burden on the income of the middle class that is difficult to sustain politically over the long haul. Those on the Left whose basic commitment is to funding the welfare state through taxation of income cannot but find themselves firmly on the horns of this dilemma.

A final objection, one that will probably come from social democrats, is that the political momentum needed to establish Market Socialism--even if one were to 'begin small' by merely giving workers and communities real control of their pension assets, which could be directed into new economic institutions--far exceeds that necessary to push through a traditional Keynesian programme of 'tax-and-spend,' since it is bound to precipitate a tremendous countermobilisation by the current owners of capital. This is certainly true, in so far as it goes. But unanticipated moments of conjunctural political energy are not unknown: indeed, as Geoff Eley argues in his history of the Left in Europe, they are the only occasions when great constitution-making epochal change occurs, brought about through the inspiring spectacle of masses of people in political motion:

"...things fall apart. The given ways no longer persuade. The present loses its grip. Horizons shift. History speeds up. It becomes possible to see the fragments and outlines in a different way. People shake off their uncertainties and hesitations; they throw aside their fears. Very occasionally, usually in the midst of a wider societal crisis, the apparently unbudgeable structures of normal political life become shaken. The expectations of a slow and unfolding habitual future get unlocked. Still more occasionally, collective agency materializes, sometimes explosively and with violent results. When this happens, the formal institutional worlds of politics in a nation or city and the many mundane worlds of the private, the personal, and the everyday move together. They occupy the same time. The present begins to move. These are times of extraordinary possibility and hope. New horizons shimmer. History's continuum shatters…" [10]

What is certainly clear is that, on several occasions in the past when these ruptures have occurred, the Left, caught by surprise, has been entirely unprepared to harness them, and they have broken and dissipated like cresting waves. If such a moment were to occur at present, it would surely find socialists less prepared than ever to rise to the occasion with a concrete programme and a road map for getting there.

This need not be the case. Where actual experiments with alternative economic institutions have been attempted on the ground, they have been closely studied and a rich academic and activist literature has built up. We know, for example, about the successes and the difficulties faced by the Mondragon network of cooperatives in the Basque region of Spain; we know what worked and what didn't in the attempts at worker ownership in the former Yugoslavia. We know all about the practice of community development financial institutions in India, and, soon, we will have a fuller understanding of the implications of the participatory budget now being practiced in Porto Alegre, Brazil. This is only a start. We need the equivalent of Che Guevara's "two, three, many Vietnams," a rich proliferation of real-world experiments with new economic models and institutions. [11] We need to reanimate the idea of an alternative socialist political economy for the twenty-first century, based on values of justice, equality, democracy, solidarity and sustainability. The capitalists and their usual pack of running dogs and apologists will no doubt scorn and resist each and every one of our attempts along the way. In return, we need only the simple determination that, whatever else may happen, they shall not impoverish our imaginations too.

[1] Robin Blackburn, Banking on Death, Or, Investing in Life: The History and Future of Pensions, (London and New York: Verso, 2002), p. 513.

[2] V.I. Lenin, "The Importance of Gold Now and After the Complete Victory of Socialism," Pravda, November 6, 1921.

[3] Eduardo Galeano, Days and Nights of Love and War, (New York: Monthly Review Press, 2000), p.  59. Che, of course, did not let his distaste stand in the way of operating Cuba's monetary and banking systems.

[4] James Lawler, "Criticism of Ollman," in Bertell Ollman (ed.), Market Socialism: The Debate Among Socialists, (New York: Routledge, 1998), p. 142.

[5] Frances Fox Piven, "A Response to Richard Freeman's 'Solving the New Inequality'," Boston Review, December 1996/January 1997.

[6] Robin Blackburn, Banking on Death, Or, Investing in Life: The History and Future of Pensions, (London and New York: Verso, 2002), p. 502.

[7] Ibid, pp. 516, 524.

[8] Thomas de Zengotita, "Common Ground: Finding Our Way Back to the Enlightenment," Harper's, Vol. 306, No. 1832, January 2003, p. 44.

[9] Ruth Towse (ed.), Baumol's Cost Disease: The Arts and Other Victims, (Aldershott: Edward Elgar, 1997).

[10] Geoff Eley, Forging Democracy: The History of the Left in Europe, 1850-2000, (Oxford: Oxford University Press, 2002), p. ix.

[11] Ernesto Che Guevara, "Message to the Tricontinental," in John Gerassi (ed.), Veneceremos! The Speeches and Writings of Che Guevara, (London: Panther Modern Society, 1969), p. 583.




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