Sunday, August 9, 2015

Postcapitalism - Alternatives

In reviewing some of the criticisms of Paul Mason's book Postcapitalism, I see the following typical types of criticism:

1.) Pure, bilious, spittle-flecked, hate-filled, ad hominem attacks: Leftie!” Marxist!””Trotskyite” Does anyone take Mason seriously? Just another leftie reptile. Mandy Rice Davis applies.

2.) You can’t complain about the system if you are relatively comfortable. You are making money off of your criticism, therefore you are not "pure." Have you noticed how rich these Lefties are who constantly tell us that we are all evil and capitalism is dying?...One thing that a champagne CultMarxist / Trot like Mason will never do is to refer to the mean and cynical campaign of psychological, cultural and demographic terrorism that the Left/ Capitalist alliance has been waging against its own historical populations in the West over the last 50 years using the power of the state and media and academia.

So you must completely unplug from the system before you criticize it? That means that anyone who criticizes the system would have to basically become the Unabomber (minus the bombs). I heard Marx once lived in a city and bought stuff with money. His work is hereby invalid.

3.) You don’t have a better system completely worked out yet. That is, there is no replacement on the docket to plug in as a wholesale replacement, so your criticisms are invalid.

Note that these three criticisms were exactly the same ones leveled at Russell Brand and pretty much anyone who criticizes where capitalism has been going over the past few decades. That should tell you something. These are the standard tactics to silence and discredit critics. And there are viable alternatives, about which more below.

4.) Communism failed suckas! However, at no point is Mason advocating communism. There are a lot of just-so stories about trying to control the market like these:
The 16th Century the siege of Antwerp is my favourite. The population didn't like the increase in prices demanded by those that ran the Spanish blockade to provide food. The city's burghers decided to restrict the prices to their normal level. The population starved.

In my younger back-packing days I hitch-hiked through S.America. In Pinochet-era Chile I was told about the time of his predecessor Allende, a chatterati icon. One tale was about chickens, yes chickens. He declared that at, say, 30 pesos (can't remember the figure) they were too dear and commanded that they be reduced to 20 pesos. No one could produce them at that price so they disappeared from the shops overnight, after which they could only be obtained on the black market. As this market carries a risk, its prices factor in a premium, so they now cost 60 pesos. So instead of being freely available at 30, they were now scarce at 60.

We've had people commanding bread prices to go down and creating famines for hundreds of years before Marx and it appears they want to continue doing it for hundreds of years afterwards as well.
Defying the all-powerful Market is like defying God - prepare to be inflicted with plagues and starvation! None of which has anything to do with Mason's thesis as far as I can tell. I don't see him advocating controlling prices or centrally-planning the economy, unless I'm unaware of it. This seems to be just a knee-jerk reaction.

This passage from the Telegraph review illustrates a very common misconception:
The problem is that, while IT is clearly creating new markets, the so-called “sharing economy” – which includes eBay and the Airbnb room rental service – is almost entirely commercial. Far from outmoding capitalism, IT is making it more efficient. Barter trade happens, of course, and social media is helping it grow. But such transactions will only ever be marginal. Would “the sharing economy” turn invention into innovation? Would it manufacture the hand-held gizmos that harness technology, or generate the electricity to charge them?
Is someone who rents out their space in Airbnb truly a capitalist just because there is a monetary exchange? It gets back to what I said earlier--people think either that any use of money invalidates the thesis of postcapitalism, or that any use of money is by definition capitalism. But innkeepers in the Middle Ages rented out rooms for travelers. Were they capitalists?

Note that Uber/Airbnb (incorrectly labelled sharing) produce nothing. They just connect buyers and sellers. They are middlemen and take their cut. But it seems hard to imagine ever-increasing profits from that.

Even critics admit that a lot of “value” is not captured in economic statistics and if we included those we would be much better off than the statistics show.

Richard Woff has an essay where he considers what capitalism is.
Because capitalism is so regularly defined as "a market system," we may consider first the actual nonequivalence of capitalism and markets...capitalism was neither the first nor the only system to utilize markets as its means of distributing resources and products. In the slave economic systems that prevailed in various times and places across human history, markets were often the means of distributing resources (including slaves themselves) and the products of slaves' labor....The same logic applies to feudalism. In many times and places across European feudalism...products of feudal enterprises (called "manors") were sold in markets to serfs and lords of other manors. During the 20th century, for example, feudal latifundias in Latin America sold their products on world markets. The presence of a "market system" does not distinguish capitalism from feudalism...

A parallel argument applies to "free enterprise." The capitalist enterprise is more or less "free" to set the prices, quantities and qualities of its outputs; organize its labor processes; choose among available technologies; and distribute its profits. But much the same has often applied to slave plantations and feudal manors...Likewise, capitalism has persisted when markets were subordinated to other mechanisms of distribution. For example, during World War 2, ration cards distributed by the US government fundamentally displaced the market system for distributing many goods...

Whatever distinguishes capitalism from such other systems as slavery and feudalism, markets and free enterprises are not it. Nor will competition or the extent of government intervention serve to differentiate capitalism from other systems. The competition among capitalist enterprises had its parallels in competitions among slave plantations, feudal manors, feudal guild workers and so on. Competition varies in its forms and intensities among capitalist enterprises depending on the context and conditions of each industry across time and space. ...Finally, government intervention into an otherwise "private" sector of the economy has also been a variable feature of all economic systems.
Critics of Capitalism Must Include Its Definition (Richard Wolff)

Dr. Wolff does not believe that capitalism absolutely requires growth:
Marx is often quoted - wrongly in my view - as affirming that growth was a necessity for capitalism. I [don't] read Marx that way; in fact Marx's analysis shows quite clearly and explicitly how capitalism can and often does go through periods of no growth or contraction (business cycles or crises). Not only do these not end capitalism, they often function to prepare the ground for the next phase of capitalist growth and expansion.

In my view, the reason why the idea developed that capitalism needs growth is more political and ideological than economic. Capitalism tends to increase the gaps between rich and poor and this can create a systemic vulnerability unless the poor have at least an absolute improvement in their standards of living even as they fall further behind the rich. Economic growth allows that to happen: the poor get an ever-smaller share of an ever larger pie. So if growth stops, that offset to capitalism's growing inequality is unavailable and that is what worries capitalist's defenders and emboldens its critic to hope that the frustrated poor undermine capitalism.
What is the relationship between capitalism and growth? (Richard Wolff)

His conclusion is that what distinguishes capitalism from other economic systems is not growth but distribution of the surplus. In a slave system, the slaves produce the surplus, which is appropriated by the masters. In a feudal system, the serfs produce the surplus, which is appropriated by the lords. In a capitalist system, workers produce the output which is appropriated by owners/entrepreneurs (or government).
So then how should we define capitalism to differentiate it from alternative economic systems such as slavery, feudalism and a post-capitalist socialism? The answer is "in terms of the organization of the surplus." How an economic system organizes the production, appropriation and distribution of its surplus neatly and clearly differentiates capitalism from other systems.

While the capitalist, feudal and slave organizations of the surplus differ as described above, they also share one crucial feature. In each system, the individuals who produce surpluses are not identical to the individuals who appropriate and then distribute those surpluses. Each system shares a basic alienation - of producers from their products - located at the core of production. That alienation provokes parallel class struggles: slaves versus masters, serfs versus lords, and workers versus capitalists. Marx used the word "exploitation" to focus analytical attention on what capitalism shared with feudalism and slavery, something that capitalist revolutions against slavery and feudalism never overcame.

The concept of exploitation serves also to differentiate socialism clearly from capitalism, feudalism and slavery. In a socialism defined in terms of surplus organization, the producers and the appropriators/distributors of the surplus are identical; they are the same people. In such socialist enterprises, the workers collectively appropriate and distribute the surplus they produce. They perform functions parallel to those of boards of directors in capitalist corporations. Such "workers' self-directed enterprises" (WSDEs) are unlike slave, feudal and/or capitalist enterprises. WSDEs represent the end of exploitation.
So Dr. Wolff’s idea is not to end growth or innovation, just exploitation, making the producers of the surplus the same people who get to keep it and decide how and where it is directed. His concept to accomplish this is the Worker Self-Directed Enterprise (WSDE). So the fact that there are no alternatives just isn’t true.

This also solve the ownership problem - if the fruits of automation are shared by the workers instead of all going to a tiny class of hereditary capitalists, the system can adjust to automation without widespread immiseration. Remember., Luddites weren't opposed to technology at all, they were opposed to them starving to death because of it. Increasing automation tends to indicate a socialization and broad ownership of the means of production for the system to work, something Marx may have foreseen.
Confrontation - putting WSDEs forward as a systemic alternative to capitalism - could take ma[n]y forms. For example, labor unions could add the establishment of worker coops to their strategies vis-à-vis capital. When employers demand concessions by threatening to close enterprises, move them abroad, etc., unions could refuse and proceed instead to establish workers coops if and when the employers actually abandon enterprises. To take another example, localities could campaign for use of eminent domain to address both unemployment and poverty by organizing and supporting worker coops. The successful Mondragon Cooperative Corporation was born in a poor and unemployment-ravaged part of 1950s Spain. High school, college and university curricula could include both abstract discussions on how the US might do better than capitalism and practical courses for establishing worker coops...Eventually, when WSDEs had become widespread enough and an allied left had grown enough, they jointly could offer the American people a real choice never before available. They might choose an economy based on capitalist, top-down hierarchical enterprise organization or one based on WSDEs, or some mixture of both. If fair and open, I have little doubt where that vote would point.
This article by Gar Alperovitz also makes some good points. He refers to Schumpeter, who we've met before. The idea is that if the state owns and mages certain utilities and the fees from such management go to fund the state, meaning taxes can be reduced or eliminated. This makes sense especially well with so-called "natural" monopolies and essential services:
THE great 20th-century conservative economist Joseph Schumpeter thought the left had overlooked a major selling point in pressing the case for public — i.e., government — control over productive capital. “One of the most significant titles to superiority,” he suggested, was that public ownership produced profits, which means not having to depend on taxes to raise money.

The most well-known case is Alaska. The Alaska Permanent Fund, established by a Republican governor in 1976, combines not one, but two socialist principles: public ownership and the provision of a basic income for all residents. The fund collects and invests proceeds from the extraction of oil and minerals in the state. Dividends are paid out annually to all state residents.

Texas is another example of conservative socialism in practice. Almost 150 years ago the Texas Permanent School Fund took control of roughly half of all the land and associated mineral rights still in the public domain. In 1953, coastal “submerged lands” were added after being relinquished by the federal government. Each year distributions from the fund go to support education; in 2014 alone it gave $838.7 million to state schools. Another fund, the $17.5 billion Permanent University Fund, owns more than two million acres of land, the proceeds of which help underwrite the state’s public university system.

Similar socialized funds — sometimes called sovereign wealth funds — are common in other conservative states. The Permanent Wyoming Mineral Trust Fund, with a market value of more than $7 billion accumulated from mineral extraction, is almost a direct expression of Schumpeter’s doctrine: Socialized ownership has helped to eliminate income taxes in the state. In one of the most conservative states, Nebraska, every single resident and business receives electricity from publicly owned utilities, cooperatives or public power districts. Partly as a result, Nebraskans pay one of the lowest rates for electricity in the nation.

The list goes on. More than 450 communities have also built partial or full public Internet systems, some after significant political battles. Roughly one-fifth of all hospitals are also currently publicly owned. Many cities own hotels, including Dallas — where the project was championed by the former Republican mayor Tom Leppert. Some 30 states directly invest public funds in promising start-up companies.

Moreover, contrary to conventional opinion, studies of the comparative efficiency of modern public enterprise show rough equivalency to private firms in many cases...
Socialism, American Style (New York Times)

Compare this to the widespread looting privatization seen under neoliberalism. For example, see this: Where broadband is a utility, 100Mbps costs just $40 a month (Ars Technica)
“SandyNet” launched nearly 15 years ago with DSL and wireless service, and this summer it's putting the final touches on a citywide upgrade to fiber. The upgrade was paid for with a $7.5 million revenue bond, which will be repaid by system revenues. Despite not being subsidized by taxpayer dollars, prices are still low: $40 a month for symmetrical 100Mbps service or $60 a month for 1Gbps. There are no contracts or data caps.

“Part of the culture of SandyNet is we view our citizens as owners of the utility,” City IT Director and SandyNet GM Joe Knapp told Ars in a phone interview. “We've always run the utility on a break-even basis. Any profits we do have go back into capital improvements and equipment upgrades and things like that.”

SandyNet operates a lot differently from private Internet service providers, which generally sell Internet access in multiple cities or states.

“There's a lot more overhead there and they've also got investors that they're trying to keep happy by making sure their stocks are performing well and all that,” Knapp told Ars. “I get their stance and where they're coming from, but for us as a small municipal provider it’s a completely different mindset.”

Instead of giving dividends to stockholders, SandyNet focuses on keeping prices low for residents. “We're able to operate very lean because my service footprint is Sandy and my staff all live and work in Sandy, so we're able to operate in a different manner than a lot of those companies are,” Knapp said.

While many states have laws that restrict municipal broadband projects in order to protect private providers from competition, Sandy officials don’t have that problem.

“There were some efforts in Oregon, probably over a decade ago, to try to stop municipal Internet providers, but the Oregon legislature said no. They made us a safe state to have this kind of thing in,” Knapp said.
And, of course, Ellen Brown has written extensively about North Dakota's publicly-owned bank and how not only did they not experience the housing bubble crash, but they actually heleped the state's finances in the aftermath.

So, in short, there are alternatives to the Neoliberal looting that is now defined as the "free market."

These comments by "Coffee Connoisseur" to the Spectator article are actually quite insightful:
Capitalisms problem is that the cost of basic needs have risen to the point where many struggle to afford them, Whether it is Communisms inability to supply basic needs through lack of production or Capitalisms inability to supply them based on price to a section of society that is increasing in size, both systems fail to deliver what they fundamentally need to deliver and this is the problem Capitalism faces right now. Yes the GFC played a huge part in this but it doesn't change the fact that this is where we are. This is the problem that Capitalism needs to overcome or it will end up being replaced like every single system before it.

The thing that most commentators miss when they defend Capitalism at the moment is that they take the approach of (and I will use an extreme example to illustrate the point), because some people can afford to buy a Rolls Royce and the Rolls Royce company is prepared to make them to meet the demand that hey presto Capitalism and 'the Market' still work. This is no different in many ways to say that prior to its collapse Communism still worked because it had the ability to produce Ladas. This is exactly what the author has done here with the example of his friend letting out her apartment in competition with Hotels. It is at best an incredibly shortsighted view of things.

The further we continue with a system that is failing the worse things will become possibly to the point of total collapse. This may sound alarmist but then I have been working with building systems and fixing failing ones for over 20 years. I know the signs all too well and unfortunately It doesn't matter what the size of the system is, the same rules apply.

We have been sold that Austerity and privitization is the best way forward, yet the prices of the most basic needs are higher than they have ever been.
This places an even larger section of society into a position where they struggle to afford the basic needs and this is the challenge that to survive that Capitalism needs to overcome. If it can't it will fail just as Communism did. Consider that there were advocates of Communism saying that it worked even after it had failed and had been replaced.

If Capitalism 'works' yet a larger and larger section of society struggle to afford the just basic needs, then the question that must be asked is just who exactly is the system working for? Because at that point, for many it is not working any longer.

There are those who sit in Ivory towers who look down at the masses below gathering and say, I think we have a problem. Perhaps as the Author suggested Mason is one of them. Then there are those who sit in their Ivory towers saying that all is right with the world....I am sitting in an Ivory tower, what could possibly be wrong with with the world? I suspect that the author is one of those. The problem for people like that is that they don't recognise the magnitude of the problem until the moment the masses break down the front door and drag them into the street.
None so blind as those who cannot (or will not) see. Mason isn't talking about socialism and redistribution of wealth instead of Capitalism. He is talking about automating and finding efficiencies in our system so that we can restructure society and do away with unnecessary jobs.
The future Mason is talking about is far better than the real world dystopia many now face after the GFC. Take a look around its not all roses and wine gums out there.
Capitalism and the market are failing to deliver basic needs to more and more people in society. This isn't third world countries we are talking about. It is first world countries and its affecting people who have had a relatively decent standard of living in the past.
I assume you know why Communism failed? An inability to deliver basic needs. Well time to take a closer look because the very same thing is happening with Capitalism. The difference is the goods and services exist, its just that people can't afford them.
Sure we can continue down the path that we are on. But the end result is the majority in low wage roles struggling to afford and thus obtain the basics.
The market hasn't adjusted and its not going to. So long as some people can still afford to buy goods and services it won't adjust. That is a recipe for system failure. The question is how painful do you want it to be.

The crazy thing is what Mason is suggesting has been simply what many in IT have been doing for the past 20 years. The Automation isn't coming, its already here and it is about to reach never before seen levels.
There isn't going to be a recovery. Not now. not ever.

What Mason is saying and quite rightly so is that we should understand that and design a system around the technology to deliver far better outcomes than we have now.
The question is will we be smart enough to do so.

You quote Churchill but ignore the fact that we live in a very different world than the one we live in today. He was talking about democracy not Capitalism and rightly so.

If you actually do proper Systems Analysis on Capitalism it is a very very poor system given our technological capability. But then we are now in the 21st Century after all. Well some of us are.


  1. You have given a serviceable intro to practical alternatives to the fascistic corporate capitalism that exploits us now. The point that I think needs to be emphasized is the fact that corporate "inverted totalitarianism" as it exists globally today is the mortal enemy of democracy and self determination in general. See Sheldon Wolin's Democracy Incorporated for the best rigorous discussion of this.dynamic.

  2. I mak my meagre living on eBay, and the only reason it survives is rigid top down regulation.


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