Beating the right and the coming European event horizon
“Event Horizon: (n) A spatial boundary around a black hole inside which gravity is strong enough to prevent all matter and radiation from escaping.”
As the European economy teeters on the brink of collapse, now is surely the time to ask how to make sure we don’t get our arse handed to us like we did after the banking collapse of 2007/8. And, in a sense, perhaps we will have a challenge.
Since the credit crunch, there has been a battle to control the narrative around what went wrong. The left has pointed at banks and/or capitalism. We have used evidence including the collapse of the banks and the fact that they had to be bailed out, etc. The right has blamed nurses. Or, rather, specifically, they have blamed spending too much money on them – and on teachers, and on disabled people, etc. They haven’t bothered presenting evidence, because they are in charge, and he who controls the present controls the past.
And this battle of ideas has been roughly matched. On the one hand, when reminded, people remember the collapse of RBS and Fred the Shred. In the struggle of memory against forgetting, the collapse of our major banks is a pretty decent reminder of what went wrong. But on the other hand, the government has done an impressive job of repeating lies about public spending until people believe them.
It’s been pretty roughly matched – until now. What happens when Europe collapses into a black hole? My fear is that such an event will be so huge, and will impact so much on our collective psyche, that few will look back at 2008 as its starting point. Looking back from 2015, will Lehman brothers be obscured by the event horizon of Greece, Italy, Spain..?
And the risk with this, of course, is that it is a much less simple story to tell. When the banks collapsed, it was easy to point fingers at capitalists and so at capitalism. With Europe, the right have been preparing their ground for more than a year. Profligate spending is, we are told, to blame. Of course, we know this to be a lie. Talk to a left wing analysit and they will give you one of the many reasons: Greece has gone through round after round of austerity in recent years; their economy imploded because of their Euro-inflated housing bubble; there is massive tax dodging – and so on. These points are, of course, all true. But we haven’t settled on one, and none is clear enough to shout through the head wind of corporate and Conservative propaganda.
Of course, the solution to this dilemma isn’t too complex. Politics is about more than a battle of ideas. People are being squeezed, and they can see that the current economic system is failing them. Ponder this ICM Poll:
“You may have seen or heard that there are currently protests against capitalism and the financial system around the world, including on Wall Street in New York and in the City of London. Which one of the following statements do you most agree with?
The protesters are naive; there is no practical alternative to capitalism – the point is to get it moving again: 38 per cent
The protesters are right to want to call time on a system that puts profit before people: 52 per cent.”
That’s right – according to this ICM poll, 52% of British people support the occupations when they are described as anti-capitalist – even when the alternative option given hardly requires you to be a full throated neo-con.
And so here’s my question: As Europe collapses, does the simplistic banker bashing which has been a convenient explanitory window have to be put on the back burner? And as this crisis of capitalism washes into people’s homes, is it time to start naming the beast? After all, 52% of the people of Britain is a pretty powerful coalition.
No prizes for guessing I agree with Thomas rather than Keshav. I didn’t want to give my age away – but I lived through the last round of nationalisations and remember all the problems. I would rather have John Lewis than British Steel andy day. I don’t have too much faith that they would be any better a second time around. Thanks for a brillliant discussion though..
I’m not advocating socialist revolution. I think socialists should try and bring about these changes through democratic means; nationalizations, redistributions etc. should only happen if a majority of people support them. Yes, this still means the majority imposing a different economic system on a minority who don’t want it, but that’s democracy – and it doesn’t seem more authoritarian than perpetuating the status quo, which (in our hypothetical world in which socialists actually win elections!) a *majority* of people don’t want.
I completely agree that growing a collective economy creates a cultural/political shift which gives people the confidence they can run the economy themselves, etc., and this is one reason we should support the growth of co-ops. I just don’t think the growth of the cooperative sector, on its own, can redistribute wealth and power, and it certainly can’t do so in time to prevent the ecological & resource crises of the next 40 years.
I actually think such sudden massive structural change is even less viable, and demonstrably so given the historical precedent. Your talking about imposing an economic and ideological system on lots and lots of people (and this includes plenty of the 99%) who do not want it, which will only be possible through a distinctly authoritarian manner – something I certainly can’t support, even if I’m rather keen on collectivism, and I’m not atypical in that.
Growing a collective economy from the bottom up first of all puts some of the wealth back in the hands the people – so to speak – and, more importantly, creates a gradual cultural and political shift that makes it possible to further the top down task of restraining capitalism (even more), and thus put (even more) wealth in the hands of the people. This is what I mean about meeting in the middle.
It would certainly take an age to achieve this, and it wouldn’t be at all easy, yet it’s still much more viable than waiting for socialist revolution, and distinctly more stable after the fact.
To answer the most important point first: I don’t think growing co-ops from the ground up is a viable strategy for redistributing wealth and power (although co-ops are great, and we should support the co-op movement). You can’t redistribute wealth through voluntary exchange. The 1% who own 40% of the wealth will find ways to invest their wealth, grow it and hand it down to their kids. Suppose the poorest 80% own 10% of the UK’s non-housing wealth. If we persuade them to put *all* their wealth into co-ops, the co-operative sector will cover 10% of UK businesses. How could it expand further to buy the means of production from the other 90% of private companies? Why would the richest 1% voluntarily give up the 40% of UK capital which they control, in return for only 1% control of of (one member-one vote) co-ops? Suppose private companies grow at 3% per year and co-ops grow twice as fast, at 6% (due to their inherent advantages, plus tax breaks) – it would still take three quarters of a century for co-ops to even control *half* of the country’s capital! The only way to spread the wealth, as far as I can see, is for the authorities to transfer ownership from the few to the many – whether through progressive taxation, or nationalization, or some other kind of compulsory redistribution (e.g. the factories are seized and then turned into co-ops).
Re. the ICI example, no, I personally don’t think that unexpected redistribution of wealth is intrinsically unfair to the people it makes worse off. Yes, redistribution is bad for the little old lady since her wealth has fallen, but it’s good for the other people who (in many cases through no fault of their own) haven’t saved a huge amount for retirement; and again, I don’t think you can redistribute wealth voluntarily.
I agree that competition can be useful, as can prices, incentives, and many other characteristics of capitalism that socialists would like to do away with if they were not so useful. I think it might be possible to introduce some elements of competition even in the democratically planned sector of a socialist economy (‘competition between plans’, in some sense), but the details have yet to be worked out. As I said, those of us who support democratic planning need to spend much more time thinking about these issues.
I think the idea, of a grassroots movement which grows co-ops and mutuals from the ground up, which ultimately buy up the means of production from the private companies is a much better idea. A government which gives advantages (grants – tax breaks) to such organisations over the private companies – especially if they are providing green solutions – might be the way to make this happen……Maybe Bright Green should start a co-op?
@Keshav – If, lets say ICI, were taken away from its shareholders and given to everybody, would this not also be intrinsically unfair, in the first instance, for the little old lady whose life savings (after a lifetime of working as a nurse) were in shares in the company? Or whose pension company had invested her pension in shares in the company? I can see that the answer here may be that she needn’t worry about her pension, or her care in old age, because the state will take care of it in a socialist country – but you can see why she might find it unfair. Perhaps she was planning to cash in her some of shares to visit her daughter in Australia for the first and only time in her life Will the state pay for that?
Or would there be some mechanism for compensating the share holders? There is also the problem of the difficulty of doing things efficiently without any competition to sharpen things up. (I know it can happen with private monopolies as well – but that doesn’t make it a good thing).
@lupin – yes, I was thinking of compulsory redistribution of large-scale, privately owned means of production; either carried out by the state (or, if you prefer, by some post-revolutionary organization fulfilling the role of the state), or carried out ‘from below’ (through factory occupations etc.) and endorsed by the state.
P.S. If you’re interested, the book I mentioned by Cockshott & Cottrell is free to download: http://ricardo.ecn.wfu.edu/~cottrell/socialism_book/. Another excellent essay is Diane Elson, “Market Socialism or Socialization of the Market”, New Left Review 172 (Nov-Dec 1988).
For my part, when I say capitalism I simply mean economic policy focused on individuals which encourages competition between those individuals, as opposed to socialist economic policy being focused on a population generally, and requiring cooperation within that population.
I actually think capitalism is inherently unfair, because unchecked competition is bound to lead to the exploitation of others (as in our current grotesque system), but then I also think socialism is inherently authoritarian, because it must broadly discourage or stifle individuals for the sake of the whole population (as in the Soviet Union).
It’s probably not surprising then that I think the ideal point is somewhere between the two, which is why I think we should work inward from both directions.
In the wake of the potential European collapse written about in Adam’s article above, individuals will be more and more in favour of reigning in capitalism severely, from the top down.
Meanwhile, collective/cooperative businesses already exist that are kind of miniature examples of socialism, so if more socialists could be encouraged to just play a little ball in the already omnipresent capitalist system, we could be building a collective based economy, from the bottom up.
Ugh, I’ve rambled. These are just my opinions, which are of course mailable. Thank you all for the lovely discussion.
Ah – thank you. Now I know what you are talking about. Just one more set of questions. Would there be any compulsion involved in taking private property away from its current owners and giving it to everyone? If so, which kind – and if not – how will the transfer be achieved?
I will try to read the books you recommend.
By “capitalism” I mean a society where some people privately own the means of production (factories, land…) and use this capital together with hired wage labour to produce things which they sell in order to make a profit. My working definition of socialism is: a society where all the people collectively own the means of production and use these resources to produce things which have social value. This begs the question: how exactly do 60m (or 7bn) people collectively decide what to do with all these resources? Personally, I would be in favor of a `socialist mixed economy’ with a mix of democratic planning, workers’ cooperatives, consumer coops, and individual producers competing in regulated markets, other commons-based systems, etc. If the people who collectively own the means of production want to temporarily delegate ownership/control of particular factories to the workers who work there, and to let them sell their products in a market, that’s fine. If people want to create institutions like money, insurance, etc., that’s fine too. So to answer your question, the “we” in my statement is “we the people”, all 60m (or 7bn) of us, but in practice we will probably need to temporarily delegate control of these resources, either to government bodies or private coops etc.
I admit we don’t have a good blueprint (or even a sketch) of how socialism could work, yet. Socialists (and other anti-capitalists) need to do a much better job seriously analyzing how an alternative economy could work, answering the critiques of intelligent critics of socialism like Hayek, and explaining how it could avoid the problems with the Soviet economy. (Unfortunately many socialists have the odd idea, sometimes attributed to Marx, that such analysis is utopian fluff which can wait til after the revolution.) The best book of this kind is Alec Nove’s “Economics of Feasible Socialism”, though Nove is much more pessimistic about the scope for non-market socialism than I am. “Parecon” and Cockshott & Cottrell’s “Towards a New Socialism” are also interesting though they have some problems imho.
I think I need a definition of capitalism first before I can take all this in. It seems to me that most if not all of the activities that come under the heading of capitalism – money, banking, markets, insurance, currency exchange – are pretty basic human behaviours – and on the whole practical and helpful things, when done honestly. I presume you are saying that all these things should carry on but be done by someone other than the handful of people that do them at the moment. (Or are you?) Do you mean that the government should take charge of all these functions? That sounds worrying….. and Keshav – who is the ‘we’ in your statement “we have to take control of these resources?” If you mean a different group of individuals then I rather think that’s been tried hasn’t it (in the Soviet Union) and they turned out to be just as corruptible as the previous lot. Or do you mean mutuals and co-operatives? And would you enforce collectivisation? …As Stalin did? Believe me, as a green I want to see a better way of doing things – I understand about resource depletion – but I am nervous of your anti capitalism.
The best anti-capitalist argument, for me, is the simplest. We have people who want to work but can’t, empty factories and buildings, but at the same time there is useful work people should be doing. We have to retool our economy – in the next ten years! – so it doesn’t destroy the planet for humans. We have to wipe out poverty and deprivation, in our own country and (much more) across the world. None of these things are free, but they can be achieved with human labour and physical resources. The problem is, the people who control these resources – the capitalists – are leaving them idle. They are asleep at the wheel. They have proved over and over again that they are completely incapable of using society’s material and human resources to save the world from poverty and ecological crisis. So we have to take control of these resources, and do it ourselves.
Even aside from whether a more regulated capitalism goes far enough (I don’t think it does), it’s not politically sustainable. As long as a small minority still owns and controls most of the capital, and produces for profit, they’ll find ways to weaken or evade regulations – or more likely, they’ll use their wealth to influence politics so the regulations don’t get on the books in the first place. The fragile post-war social democratic consensus (which in any case wasn’t radical enough) seems to have collapsed for this reason.
Hmm, mulling over this ICM poll, it dawned on me that it does that standard tricksy poll thing where they give two statements that aren’t necessarily mutually exclusive and ask you to pick one, but going by the wording of each it seems likely that many who answered differently would overlap significantly. You can think there’s no practical alternative to capitalism but still want it heavily regulated, likewise you can want an end to profits-before-people dominance but still wish to encourage individualism and competition.
Occupy outreach groups all over are finding broad support for their focus on economic injustice, in particular the idea that our current system needs brought to heel before it damages us further, but they’re also finding that very few people are keen on abandoning capitalism altogether. This is a big deal and it should be taken seriously. A kind of regulated capitalism would likely to be widely supported, even by plenty of people in thrall to evil tory media lies and stuff.
I think there are essentially two arguments for taking an anti-capitalist rather than a regulated capitalism position.
The first is the long-standing one developed by the marxist/anarchist tradition: that capitalism requires the production and reproduction of a class society in which most people have no option but to sell their labour as a commodity; that production and consumption becomes dominated by the requirements of capital to profit from the exchange of commodities; and that the demands of market competition leads to concentrated, monopoly capital, unemployment and extremes of wealth and power. Since, in this model, capitalism intrinsically involves an antagonistic and exploitative relationship between capital and labour (and capital and nature), and because of the requirement for competition and accumulation by capitalists, it is inherently unstable and prone to crises.
The second argument comes from an environmental/ecological perspective: the demands of capital to continually expand and increase production and consumption (that without 3% compound growth forever there is a crisis for capitalism) collides with the limits imposed by nature (non-renewable resources, capacity to absorb pollution and degradation); the destruction of biodiversity and ecosystems resulting from the need to adopt intensive, industrial methods of extraction, agriculture and production in a competitive market economy.
I think in the last twenty-odd years we have seen a convergence between part of the green movement and part of the left towards a radical, anti-capitalist outlook. Although there are plenty on the traditional left that have not really taken on the ecological agenda, and likewise many greens who cannot countenance an end to capitalism and are searching for strategies to regulate and reform it to prevent catastrophe.
The Green Party obviously includes both anti-capitalist and ecological moderniser strands, as does the Occupy movement, and it is here and in small independent groups (e.g. Red Pepper) that any real debate is taking place between the two viewpoints. The political parties (members and leaders) and the mainstream media are still trapped in neo-liberal orthodoxy (jobs can only be created from growth in private sector and ecological concerns are a lesser priority to be addressed when the economy is ‘fixed’).
The marxist account of capitalism/neo-liberalism has been well set out by David Harvey (The Enigma of Capital), and the green-marxist view by John Bellamy Foster (The Ecological Revolution). Both argue against the view that capitalism can be made benign by attempts to impose constraints on accumulation such as limits to growth (the steady state solution), or without directly challenging the power of a global capitalist class and its acolytes in the political elite.
Thanks Thomas – that was helpful on overspend. On business going elsewhere, my brother in law who works in this sector assures me that it happens all the time. It is quick and easy and companies jump ship in Europe at the slightest twitch of a taxation discrepancy. Ireland is an attractive destination for British companies at the moment. America may be different. I’ll ask him – there are different pressures at work there.
On abolishing capitalism versus cleaning up capitalism I’m with the latter – but I would like to hear the arguments for the former.
Oh, on the overspend issue, I think it depends on how you look at debt. The government were borrowing to spend because they were assured by the City that they’d have the income to pay off the debt, the problem only arose when the income didn’t materialise.
If I put something on my (hypothetical) credit card because I have a steady job and can pay it off at the end of the month without any trouble, is that overspend? I’m inclined to think so, but it’s reasonable overspend, because my job is secure.
So whether you think government spending was reasonable probably depends on how steady a job you think speculative banking is, or at least how reasonable you think the government were to trust them.
Given how often the movement reminds everybody that it’s not anti-capitalist, I’m not sure you could, or should, read support for the movement as anti-capitalist. I mean, ‘call time on a system that puts profit before people’ isn’t an anti-capitalist statement, it’s worded so as to deliberately collect those who want full state socialism with those who (slightly more simply) want strictly regulated capitalism into one category.
@ Lupin I’m not sure I buy the oft repeated ‘if you tax us we’ll just go elsewhere’ line. The US has a much higher corporate tax rate but companies continue to do business there. Here in the UK the usual threats emerged when the banking bonus tax was to be introduced, then never really materialised because of course they still makes a killing even in a downturn.
I can understand how it’s a legitimate concern but it seems to be something they say a lot more often than they do. Stuff like closing tax loopholes and ringfencing high street banking are fair proposals, people want it, and it’s unlikely to cause some mythical exodus.
Yes, that was rather a long meandering post – sorry – but can someone please clarify – is it really the view of most people Bright Green bloggers that there is no such thing as an overspend on public services? – Because IF there is such a thing then how can you be so confident that none of the European countries has been overspending relative to the money that their economies generate (or would generate if the rich paid their taxes).
(Don’t get me wrong – I know that the bank collapse, house price inflation and failure of taxation are all crucial too.)
And on overspend and undertaxing — the usual argument is that if you increase taxation on the people who own or run the main businesses in a country the chances are they will re-register abroad. However much you may despise (and in many ways I agree with you) the greed and lack of morals of many of these (so called) wealth creators this is a real problem in the everyday life of government. At the moment all you need is a post box in Switzerland to register your company there. I know UK Uncut want to get on top of these loopholes, but until they do what are governments in fact to do? I agree that Greece & Italy could do better on collecting taxes, and this is seen as part of the solution but not all of it. I think it is fair to assume that even the most successful tax collecting possible won’t finance a super generous welfare state or pension system. These things must surely be trimmed as well. Are you saying there is no limit to the wealth of any nation? And what about the austerity that we need to save the planet? Where does that come in?
Thanks for your reply Adam. I’m not sure I quite get this yet. Surely there is a limit to how much a country can spend on public services, however laudable such expenditure may be. A rich country can afford primary and secondary schools for all its citizens, for example, but a poorer country may only be able to afford primary schools. If a poor country – that is a country with poor soil and resources and, as yet, a not very educated population borrows and starts spending a lot of money on, lets say a motorway network, then that is might be overspend. It is public expenditure, and it might ultimately result in benefits to the economy , but if it is done too fast it could lead to debt.
From David Malone’s blog
http://www.golemxiv.co.uk/2011/11/buckle-up-credit-crunch-2/
“There is a crisis and it is in Europe , but the ‘contagion’ is not at all what our cretinous media and brain rotted politicians are telling us it is. The contagion the markets are worried about is bank contagion. Nations’ borrowing woes are the radioactive material, but the banks built the bomb.”
Well, in very simple accounting terms, one person’s over spend is another’s under taxing – economics isn’t just a case of right or wrong. But of course it’s much more complex than that. What’s really happened is that our capitalist system has for the last couple of decades essentially stopped producing useful wealth. We handed cash to a tiny elite of ‘wealth creators’ and it turned out they were conmen and tricksters and thieves. Mostly they destroyed our wealth. So, if more of the economy had been allocated to them – ie, more to private rather than public spending, then we can assume they would have destroyed even more of it in the derivatives markets. Much better to invest in schools through the public sector. So, yes, much better to have more public spending and less private spending.
Can you really confirm that the causes of deficit do not include government overspending? We know about bank collapse and property value inflation and failure of tax collection – but NO overspend? Surely this can’t be true! We are told that Greek retirement age in the public sector was very low for example. Is that untrue? Isn’t it inevitable that inefficient governments will run up debts if they can get their hands on the money?