The disease that is capitalism (2009)

Book Review from the October 2009 issue of the Socialist Standard

What’s better – treating the symptoms or dealing with the cause?

When a person is ill a competent doctor will attempt to identify all relevant symptoms: high temperature, site of aches and pains, loss of appetite, heart-rate, blood pressure, etc. etc. Following diagnosis, treatment will be offered in the form of dietary advice, physiotherapy, drugs, surgery or some combination of these or other remedies. If the aim is to cure the illness and prevent its return then the causes of the disease will need to be identified and eliminated. Effective treatment can only follow correct diagnosis of the cause. The doctor will seek to understand family history, working conditions, living conditions, e.g. is the patient living in an area threatened by any form of pollution, etc. Regular check-ups and preventive care are the surest way to avoid the onset of serious illness and an appropriate regimen leading to a healthy lifestyle will more likely ensure non-return of the previous disease.

 Political commentary on and diagnosis of society’s ills, however, tend to focus on discussion of how to treat the symptoms with scant regard to eliminating the causes. Reform rather than structural change. There continues to be a plethora of books published both criticising and offering reforms to the capitalist system; so many, in fact, that it points to the fact that there is a large audience of readers dissatisfied with the status quo, knowing the current system doesn’t work for them. An audience aspiring to structural changes?

 One World, Ready or Not – The Manic Logic of Global Capitalism by William Greider (US writer on economics and politics over several decades, contributor to The Nation and former editor of Rolling Stone) is one such book. Greider succeeds brilliantly in proving his contention that the global economy is sowing “creative destruction” everywhere by explaining symptom after symptom of capitalism’s failure of the majority. What are some of the symptoms of the disease that is capitalism? Widening gaps between haves and have-nots; rising poverty nationally and internationally; rising unemployment – ditto; no lasting gains from union activity extending over a century; a ban on unionised work in many countries; more temporary workers replacing former permanent positions; increasing poverty, hunger and homelessness; declining health care for many; serious environmental problems, etc. etc. Greider exposes all these symptoms and more with detailed background evidence and numerous examples from most parts of the globe.

 The book is a fine resource of investigation and enlightening statistics including details of interviews with workers, corporate CEOs, government officials and economists. Common cures (reforms) recommended include regulating finance capital, increasing, decreasing or shifting the weighting ratio of tax from one sector to another, regulating trade differently, implementing and honouring stronger workers’ and human rights, the restructuring of the World Bank, the IMF and central banks. Greider’s recommendations here can be likened to increasing the dose of palliative medicines without treating the cause. Implement radical reforms of the system in an attempt to rein in the most divisive runaway aspects of capitalism (the most invasive aspects of the disease) but leave the system in place and hope it won’t run amok again or get hijacked by more pesky capitalists at a later date.

 Treating only the symptoms, i.e. reforming the system, is ultimately doomed to failure in society as in the patient. Capital has no interest in that which is not in its own interest. Governments are limited in their ability to implement reforms anyway as they are pulled in various directions by the power of capital’s demands and the need to appease their constituents enough to remain in power in the short term. Greider’s proposed reforms are laid out with the caveat that he has no expectations that any of them would be implemented (in his case by the US government) and with the additional observation that much of what the government does is useless or harmful to broadly shared prosperity. In other words it allows or even encourages the disease to spread. Markets, money and money markets don’t play by rules endorsed or understood by consumers.

“Whilst claiming to promote human freedom capitalism profits concretely from the denial of freedom, especially of the workers employed by capitalist enterprise.”

“Consumer boycotts can be an effective way to mobilise the political issue but the true target should be the systems of human repression.” – There – he said it!

 Social consequences are largely ignored by capital. Evidence of this is everywhere from the countries with the richest economies to dirt-poor nations with all populations exploited or deliberately abandoned for economic reasons by local and global capital. More families and individuals are impoverished, hungry and made homeless each successive year in countries from Africa, Asia, Europe to the Americas and the general public are afraid that they, too, may fall victim to the disease as they tighten their belts and try and take precautions; but they have been taught to see capitalism as a system “too big to fail.” They have also been taught to be afraid of considering the alternative of dismantling the system and they continue to shout “reform.” Yes, they willingly keep taking the palliative medicine rather than working together to eradicate the disease for the benefit of themselves and future generations.

 Greider’s final chapter includes some notes on possible surgery and examples of individuals giving out preventive advice; promoting true sustainable development; evidence from environmental technologists which confirms that saving the world is possible at such time that there is steady-state equilibrium with the natural world. This surgery is possible but not on any agenda to be undertaken by the monetary, for-profit, capitalist system.

 What needs to be recognised much more widely is that the whole set-up (capitalism/the free-market economy/monetarism) is one enormous scam against those who produce the wealth, whether globally or locally. Those who produce the wealth are currently all part of a huge lottery; this year, this place, I’m in work; next year, some other place, maybe you’ll be in work. But, just like a game of chance, some manage to stay lucky and others never get a look in. If you are one of the multitude who has needed to work in order to live, you have been duped. The causes of the disease have been identified. It’s time to remove them completely. Only a structural change will do.

Janet Surman

Blogger's Note:

William Greider's book had previously been reviewed in the October 1999 issue of the Socialist Standard. I thought it rang a bell.

Why we need global change (1999)

Book Review from the October 1999 issue of the Socialist Standard

To solve the many problems confronting humanity what is needed is a change in the basis of world society from existing class ownership to a world in which the Earth’s resources have become the common heritage of all.

Think globally, act locally, say the Greens. Anyone who follows the news cannot help but think globally. World hunger, financial crises, currency fluctuations, global warming, the hole in the ozone layer, world poverty, trade disputes, war and the threat of war—all these are global problems. But act locally to deal with them?

Local action may be appropriate to protect some local tree or stop rubbish being dumped in some local back yard, but LETS schemes as the answer to world financial turmoil, buying Third World honey as the answer to world poverty, cycle lanes as the answer to global warming? That’s either a joke or a cop-out. Clearly, all these problems can only be solved by global action. We are up against a global system which can only be effectively and lastingly dealt with at that level.

Global capitalism

Globalisation is not just a recent phenomenon; it has been going on since the beginning of capitalism. Historian Immanuel Wallerstein has argued that capitalism has always been a “world-system” in the sense of being a network of many countries producing for a single world market, none of them powerful enough to dominate it and all of them having to submit to its pressures. In this sense capitalism is the world market and the history of capitalism is the history of the development and spread of the world market since it came into being in the 1500s.

What subordination to the world market means for capitalist producers in individual countries is that they are under non-stop pressure to produce ever more cheaply by introducing ever more efficient machinery and techniques of production. The result has been continuous technical and technological advance, a continuous development of the world’s capacity to produce wealth such that by the turn of the century it could be said that a sufficient plenty for all people on Earth could have been produced had global capitalism then been replaced by a society of common ownership and production to meet human needs not profit. But it wasn’t.

Capitalism continued. So did the growth of the world’s wealth producing capacity but in the century that is now coming to an end global capitalism also engendered two world wars and several world slumps, and still today millions of people on the planet go to sleep hungry or lack access to clean water or medical care or decent housing or education. All of which is a damning indictment of global capitalism.

As the American journalist William Greider has put it in a recent book:

For several decades the world’s capacity to produce food, for instance, has far exceeded the entire human population’s need for nourishment. Yet the stockpiles of unused foodstuffs pile up unsold each year in producing nations while somewhere else in the world hundreds of millions of others are malnourished, if not actually starving to death. The paradox is explained away easily enough in market terms. Indeed, the market insists that feeding impoverished people would be harmful to them, indulging their backwardness and postponing their eventual self-sufficiency. That answer may satisfy the marketplace, but for humanity it constitutes another great, unanswered question. Capitalism, for all its wondrous creativity and wealth, has not yet found a way to clothe the poor and feed the hungry unless they can pay for it (p. 468).

The title of his book—One World, Ready or Not: The Manic Logic of Global Capitalism—neatly sums up the socialist case against capitalism. Capitalism has brought into being “one world” as far as the production and distribution of wealth is concerned, but humanity is not ready to cope with this since it has not yet created the appropriate social arrangements and institutions; instead, the one world that has come into being is governed by the manic logic of production for profit rather than the human logic of production to meet people’s needs, with disastrous results.

Greider does not write as a socialist but he does employ, perhaps unknowingly, a quasi-Marxist approach. Here is how he presents the effects of what defenders of capitalism see as its most positive side—the non-stop technological development it brings about:

There is another dimension to the technological revolution, however, that is seldom discussed in the business books: the gathering vulnerability of an industrial system that is ruled by persistent excess supply. The same technological imperative that continuously reduces costs and improves quality has also generated a seemingly permanent and expanding surplus in the productive capacity of the world. Crudely stated, the technology competition leads companies to invest in more output of goods than the global marketplace of consumers can possibly absorb. New factories, designed to produce more from less, naturally increase the capacity for production, but the output potential expands faster than older less efficient factories are being closed. This underlying imbalance is compounded by the accelerating drive for globalization, as firms both modernize and rush to build new production in the developing markets. A perverse syllogism is thus at work, company by company, sector by sector: the burdensome presence of overcapacity quickens the price competition and threatens market shares, but the only obvious response is to create more new capacity—that is, to build new factories that will be more cost-efficient than one’s rivals . . . From a managers’ point of view, the challenge is to make sure that the market’s overcapacity becomes the other guy’s problem, that some other firm will be compelled to swallow losses in sales and close down its factories (pp. 103-4).

Marx, too, noted capitalism’s tendency to develop productive capacity without regard for the fact that consumption under it was limited by what people could afford to pay for; that, under the competitive pressures of the world market, capitalist firms were obliged to develop productive capacity irrespective of whether or not market demand was growing at the same pace, with the inevitable result that sooner or later one industry would overproduce in relation to its market triggering off a slump during which the least efficient firms were eliminated, so bringing market demand and productive capacity back into line.

But what sort of system is it where potential plenty represents a problem? And where there can be talk of “excess supply” when so many humans’ basic needs, let alone proper facilities for a decent life for all, remain unmet? Answer: a system which has solved the technical problem of how to produce plenty for all but which is incapable of delivering it because production is tied not to people’s needs but only to what they can afford to pay for.

Financial mania

Capitalism is not just industrial capitalism. In fact capital is not interested in producing things as such; it is only interested in profit expressed in money terms. Investing in the production of goods and services is an inconvenience which it has to go through in order to achieve its aim of ending up with a greater financial worth than it started with. Thus the purest form of capital is finance capital and, from the capitalist point of view, the most convenient way to make more money is to do so by financial dealings of one sort or another. It’s an illusion of course. It’s production, not finance, that makes the world go round. The financial world cannot go on feeding off rising paper asset values for ever. Reality must intrude at some point. But capitalism without finance capital is inconceivable; so too, therefore, is capitalism without financial crashes.

As Greider describes it:

Across many centuries, this story of finance capital’s capacity to become deranged in pursuit of higher returns has played out again and again in different forms of manias and crashes. Eventually, as history informs us, the disorders may be corrected in a grim, violent manner—a great war or a great depression. These events will destroy financial capital on a massive scale and thereby restore a balance between the demands of old wealth and the needs of new productive enterprises. This sort of resolution produces vast human suffering and political upheavals, of course, but also clears the way for capitalism’s next expansive era (p. 227).

Greider thinks that the world is now heading for another such financial crash but he is not writing as an opponent of capitalism. He quotes the British Labour MP Denis MacShane (“For years, socialists used to argue among ourselves about what kind of socialism we wanted. The choice of the left is no longer what kind of socialism it wants, but what kind of capitalism it can support”) and seems to agree with him. In any event, he describes himself as a “global Keynesian”; in other words, as someone who wants to employ failed Keynesian techniques of “market demand management” on a global scale so as to try to avoid global capitalism plunging the world into another global depression or war or both.

If you haven’t considered properly the socialist alternative of abolishing the world market and its manic logic, and setting up non-market institutions, at world, regional and local levels, to co-ordinate the production and distribution of what people all over the world want, this might well appear to be the only solution. After all, if global capitalism ignores the hungry, the homeless and the needy because, not having any money, they don’t constitute a market and so don’t count, why not just to pump more money into the system so that such people can come to count for capitalism? The winner of the 1998 Nobel Prize for Economics, Amartya Sen, who has written very clearly on the cause of famines (collapse of purchasing power not of production), also describes himself as a global Keynesian.

Global Keynesians are more advanced than those Greens who advocate local action in the face of global problems. They at least realise that the solution requires action at world level. Their mistake is that the global action they propose is not up to it. The global inflation that would result would probably make matters worse; certainly the financial speculators would love it.

The answer to the problems that global capitalism has engendered is not a policy, even if pursued at global level, that would still leave intact the basic structures and mechanisms of capitalism. It is something much more far-reaching: a rapid and radical change in the basis of world society that will make the Earth’s resources the common heritage of all humanity so that they can be used to further the common human interest.

Adam Buick

Voice From The Back: Merciless global capital (1999)

The Voice From The Back Column from the February 1999 issue of the Socialist Standard

Merciless global capital

All over the world capitalists try to reduce workers’ wages as the most direct way of increasing their profits. International competition and the mobility of capital have made this “cost-cutting” more ferocious. In India last year the already low wages and poor working conditions were made worse by the government’s decision to scrap the laws which defended workers’ living standards: “NEW DELHI, Oct 21.—The government has admitted it is considering proposals for amending the country’s labour laws. An official release issued today announced that changes to the Trade Union Act, 1926, Industrial Disputes Act 1947, Payment of Wages Act, 1938 and Contract Labour (Regulation and Abolition) Act 1970, ‘are under consideration’. The statement accepted that the national information and technology taskforce had recommended extending working hours from eight to 12. It denied, however, that the proposal was being considered by the labour ministry. The report on the proposed changes in labour laws has meanwhile drawn strong reactions from the Left and trade union organisations. The move clearly indicated ‘the anti-labour policy of the government,’ said Mr Harkioshan Singh Surjeet, CPI-M general secretary. It was now obvious that the government was being dictated by big business houses,’ he declared.” The Statesmen, Calcutta, 22 October 1998.

No panic but . . .

An unprecedented meeting of world financial leaders is to be convened in Washington next month [January 1999] to implement emergency reforms of the International Monetary Fund and help head off a second bout of global economic turbulence. The move to hold a special session of the IMF’s policy-making interim Committee—the first since it was set up at the Bretton Woods conference in 1944—comes amid signs that the recent recovery in world markets is stalling, with fresh falls on world stock markets, profits warnings and job losses from multi-national companies, as well as fading hopes of restoring order to the Russian economy. The meeting will break the normal pattern of a twice-yearly IMF gathering and emphasises the concern at the fragility of the global economy in both the western countries and the developing world. Guardian, December 1998.

Death is good for business

Reaching a total of 46 billion dollars (270 billion francs), the world arms trade upped 12 percent in 1997 for the third consecutive year, according to the London Institute of International Strategic Studies. The Near and Middle East remain the topmost regional market, with the Far East as runner-up. In possession of 49 percent of these markets, the USA is the biggest supplier, followed by the United Kingdom, France, Russia and Israel. These figures could show a decline in 1998, due to the economic crisis compelling some states to revise their defence budgets. Le Monde, 24 October 1998.

Organise—please!

“On another note people were still throwing things at the cops from too far back and hitting demonstrators. People doing this have to be stopped as serious injuries happen”—from a report of a demonstration in the summer 1998 issue of an anarchist journal called Organise.

Can’t feed—won’t feed 

For several decades the world’s capacity to produce food, for instance, has far exceeded the entire human population’s need for nourishment. Yet the stockpiles of unused foodstuffs pile up unsold each year in producing nations while somewhere else in the world hundreds of millions of others are malnourished, if not actually starving to death. The paradox is explained away easily enough in market terms. Indeed, the market insists that feeding impoverished people would be harmful to them, indulging their backwardness and postponing their eventual self-sufficiency. That answer may satisfy the marketplace, but for humanity it constitutes another great, unanswered social question. Capitalism, for all its wondrous creativity and wealth, has not yet found a way to clothe the poor and feed the hungry unless they can pay for it. One World, Ready Or Not. The Manic Logic of Capitalism, by William Greider.