ParEcon Questions & Answers
Why not Capitalism as a Vision?
If we lived in feudal times, capitalism would be a vision. It would have some merits and some debits as compared to the past, but it would certainly be about the future. But we do not live in feudal times. We live under capitalism. Capitalism is not the future, it is not a vision. Capitalism is now, and it is an abomination. Capitalism, indeed, is what we seek to escape by way of new vision. Capitalism imposes invidious inequality, abject alienation, punishing poverty, unrelenting indignity, riotous individualism, crass commercialism, and bloody war. Who would call that a vision other than the masters of capitalism, that is?
Saying we should have a better capitalism isn't empty. There can be better and worse incarnations of capitalism, just as there can be better and worse dictatorships, prisons, and plagues. But to say a better capitalism would be a vision...well, this q/a presupposes that we don't believe in that. This q/a aligns, instead, with the following related sentiment from Noam Chomsky:
Capitalism is the name for an economic system. Contemporary societies are not only capitalist, but typically also patriarchal, racist, and politically authoritarian. In these questions and answers we address economics and seek an alternative to capitalism. Those who are satisfied with a violent and crass economy, a commercial economy, an ugly economy, a rat race economy, an impoverished economy, a slovenly economy, an unjust economy, an inefficient economy, a class divided economy, an inhumane economy, admittedly have no need for a new economic vision. They already have what they seek. For those who reject all that, however, capitalism is not an economic vision. It is the reason we need an economic vision.
Perhaps we should be less dramatic about it. Capitalism employs private ownership and markets. It remunerates property, power, and output, and, as a result, has produced some of the widest disparities of income and wealth found in human history. The division of labor within capitalism is hierarchical. Capitalists rule workers while coordinators occupy the terrain between labor and capital, partly administering on behalf of capitalists and partly trying to enlarge their own interests at the expense of both capitalists above and workers below.
Within this broad rubric there is certainly variation. Workers may or may not have unions and other forms of organization to aid in manifesting their preferences—and the same can be true for the coordinator class that may have amassed greater or lesser means of accruing wealth and power unto itself at the expense of either capitalists or workers. At its most oppressive, there is the cut-throat capitalism of robber barons with gigantic, unrestrained corporate power dominating all social choices and options. At its least oppressive, there is an ameliorated system of capitalism called social democracy in which laborers and consumers have considerable local and state power and use it to ward off the worst outcomes of markets and private ownership.
In any case, the basic model called capitalism because of its intrinsic tendencies of private ownership of means of production, hierarchical corporate divisions of labor, and competitive markets, not only doesn’t facilitate solidarity, diversity, equity, and participatory self-management, it violates each of these values producing virtually the exact opposite. Here is the famous economics John Maynard Keynes on the topic of capitalism and beyond:
Reducing that perplexity is the aim of parecon.
Of course, there are endless sources on the ills of capitalism...here is a brief additional summary, for those wanting more imediately, excerpted from the book Realizing Hope:
Participatory economics, or parecon for short, is a proposal for the defining features of a post capitalist economy. Economies incorporate an almost infinite array of components. Two different societies, whether France and Mexico or the U.S. and South Africa, even if they have the same type of economy, certainly won’t have the same exact economic attributes.
Instead, two societies, even when both are capitalist, will have a myriad of economic differences ranging from population numbers and skills, to resources and infrastructure, to different specific industries, organizational approaches, secondary economic institutions, and class histories and relations. And the same will also hold for other economic types than capitalism, including participatory economies. Different societies with participatory economies, say a future France, Mexico, the U.S., and South Africa, will have different features beyond the few shared ones that define the economic type.
Capitalism’s first defining feature is private ownership of the means of production. A few percent of the population own almost all industry, machinery, resources, and farmland. They have ultimate say over the disposal and use of this property. They accrue income and wealth, or what are called profits, due to the property’s productivity.
Capitalism is also defined by corporate workplace divisions of labor and authoritative decision making. Beneath the owners, about 20% of employees of capitalist workplaces do mostly conceptual and empowering tasks for their jobs while the other 80% do mostly rote and obedient tasks. The former make many decisions and impact social choices. The later make few decisions and mainly obey orders. Decisions are made using different means and methods for different situations, but with the means and methods always conveying authoritative power to a relative few people from among the 20% empowered workers, plus conveying even more authority to the economy’s owners.
People’s income in capitalist economies comes mostly from their bargaining power. We get from economic output what we can take. A very important contributor to bargaining power is ownership of property because it conveys rights to profit. Also important to one’s bargaining power, and thus to the income one can take, is the control one has over needed assets or skills, the value of the output one generates, one’s social attributes like gender and race, and one’s organizational affiliations such as union membership.
Another defining feature of capitalism is that the amount of any particular good or service produced and the relative valuations of different products are largely determined by markets. Buyers and sellers each aggrandize themselves essentially oblivious to impact on others. I sell at the highest price I can the least costly items I can. You buy at the lowest price you can the most valuable items you can. We fleece each other. Competition drives growth and determines valuations. Prices account for the preferences and bargaining power of direct buyers and sellers, but not of people who aren’t directly involved in specific transactions but are affected nonetheless, for example by associated pollution. In market exchanges, as the famous and quotable baseball manager Leo Durocher put it, “nice guys finish last.”
Beyond commonly shared private ownership of means of production, corporate workplace organization, authoritative decision making, remuneration for bargaining power, property, and output, and market allocation, myriad variations in secondary institutions, population, local history, and impositions from other parts of society distinguish different instances of capitalism from one another.
Referring to capitalism, John Stuart Mill, one of the foremost philosophers of the nineteenth century wrote, “I confess that I am not charmed with the ideal of life held out by those who think that the normal state of human beings is that of struggling to get on; that the trampling, crushing, elbowing, and treading on each other’s heels, which form the existing type of social life, are the most desirable lot of human beings.”
John Maynard Keynes, arguably the most influential economist of the twentieth century wrote: “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
Warren Buffet, one of the richest capitalists in America wrote, not about capitalism as a whole but just as revealingly about a particular industry: “I'll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It's addictive. And there's fantastic brand loyalty.”
Charles Dickens summarized both the vagaries and even more the narrowness and unforgivingness of capitalism when he wrote: “Annual income twenty pounds, annual expenditure nineteen pounds and six, result happiness. Annual income twenty pounds, annual expenditures twenty pounds ought and six, result misery.”
The great Latin American writer Eduardo Galeano, explained how capitalism has nearly all its valuations upside down: “From the point of view of the economy, the sale of weapons is indistinguishable from the sale of food. When a building collapses or a plane crashes, it’s rather inconvenient from the point of view of those inside, but it’s altogether convenient for the growth of the gross national product, which sometimes ought to be called the `gross criminal product’."
And in my own view Capitalism is a thug's economy, a heartless economy, a base and vile and largely boring economy. It is the antithesis of human fulfillment and development. It mocks equity and justice. It enshrines greed. It is unworthy of humanity.
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