When Systems Crumble: Looking Beyond Global Capitalism

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Above Photo: Is the employee-employer relationship of capitalism crumbling, just like feudalism did before? (Image:Jared Rodriguez / Truthout)

As global capitalism staggers painfully, unevenly and dangerously in the wake of its 2008 collapse, its critics divide into two broad camps. One commits to fixing or reforming a capitalism that has somehow lost its way. The other finds capitalism irreparably inadequate and seeks transition to a new and different system. The two camps see many of the same faults: how capitalism relentlessly deepens inequalities of income, wealth, power and access to culture; capitalism’s instability (those socially costly cycles it never managed to prevent); and its consequent injustices. Sometimes the two camps can ally and work together. However, at other times — such as now — the camps become more wary of, disaffected from, and competitive with one another. Adding complexity these days, the critics favoring system change are also redefining — for potential recruits and for themselves — the new system they seek.

Parallel divisions among critics also emerged in the crumbling of slavery and feudalism. As slavery declined, in the US as in the many other places it had existed, one group of its critics focused on improving slaves’ lives. It sought better diets, housing and clothing; more respect for slave families; and less violence toward slaves. Such critics wanted to reform a slavery that was too harsh. Another group of critics, diverging increasingly from the first, saw the problem as slavery itself. It wanted system change expressed in the demand for “abolition,” for social transition via emancipation, to a regime of universal individual freedom.

As the feudal economic system and the absolute monarchies that characterized late feudalism declined in Europe, critics of both split similarly. One side wanted to ease feudalism’s harsh edges: lords should be more accommodating to serfs, less rapacious for rents and other feudal dues imposed on serfs. The reformers of the feudal economy often partnered with the reformers of feudal monarchies. The latter favored councils or parliaments that could advise monarchs, constrain their powers via constitutions, and so on. On the other side were critics who responded to late feudalism’s accumulating problems, injustices and breakdowns by advocating the end to both feudal economic relationships and monarchies. They fought for economic freedom (ending serfs’ obligations as enforced by tradition, the church and the lords’ power) and its political correlate, a more or less democratic republic (ending monarchy).

Ideological Splits Intensify as Capitalism Declines

As contemporary capitalism declines now in its old centers (western Europe, north America and Japan), the split among its critics intensifies. Capitalism’s 2008 global meltdown, the government bailouts chiefly of big private businesses that had caused the crisis and the austerity policies that made the public pay for the bailouts stimulated surges of criticism. Yet another stimulus has been the behavior of capitalism’s mainstream advocates, the neoclassical economists controlling academic departments for as long as they can, and their former students who became status-quo-favoring politicians and journalists. As celebrating private capitalism becomes ever harder, strident extremism by capitalism’s defenders (expressed in various market and “free enterprise” fundamentalisms) frequently results.

The Keynesians, marginalized since the 1970s, returned after 2008 with renewed vigor to “save capitalism from itself” (Hillary Clinton). Paul Krugman, Joseph Stiglitz and many others keep enumerating how government must intervene to make modern capitalism work for all (“be great again?”). Government interventions, they warn, are the only way to regain the economy’s levels of performance and popularity before the 2008 meltdown, which exposed private capitalism’s accumulated, and by then, extreme fragility. The Keynesians want government to stimulate demand via deficit spending on labor-intensive projects, to redistribute income via tax policies, to run green New Deals, and so on. For the Keynesians, the neoliberal program of privatization, deregulation and globalization associated with Reagan, Thatcher and their successors failed to learn the lessons of the 1930s Great Depression. Thus, their neoliberal capitalism has taken the world economy down since 2008.

The debate pitting neoclassical/neoliberal economists against Keynesian adversaries is hardly new. It has informed oscillating policy regimes since the 1930s. Most participants on both sides speak and write as if their debate is the core issue of economics and always will be. It may be relevant that their academic and policy careers depend on that.

However, across capitalism’s entire history, it always generated critics who went further than reformers of capitalism and their arguments about economic policy interventions by government. Such critics found the debates between neoclassicals and Keynesians of secondary or less relevance. They believed that capitalism’s problems were so deep, so intractable and had so deftly evaded successive reformers’ (including Keynes and Keynesians) solutions that basic system change was needed. The term “socialism” is problematic to use in this context because it has taken on too broad a range of meanings. For example, many reformers of capitalism, including many Keynesians, refer to themselves as “socialists,” much as their political enemies often do. Likewise, many systemic critics of capitalism who reject Keynesian reformism insist on the label “socialist.” Much the same multiplicity of meanings applies to “communist.”

Effects of the Collapse of the Soviet Union

Adding complexity to the now growing number of capitalism’s systemic critics is a historic change in many of their arguments and foci. Before and after the Soviet (1917) and Chinese (1949) revolutions, the system-change critics had favored a much greater role for government in the economy than anything proposed by the Keynesians. Government was not merely to regulate capitalist enterprises but also to socialize them, to convert them from private into state-owned, state-operated enterprises. Likewise, beyond merely regulating market exchanges, government central planning was itself to distribute resources and products. The system-change critics sought to replace private enterprises and markets with state enterprises and planning. Capitalism and socialism were thereby systemically defined and differentiated. The 20th century’s systemic struggles and debates pitted the virtues and benefits of private enterprise and markets against those of public enterprises and government planning.

The 1989 collapse of the USSR and its Eastern European allies, and subsequent changes in the Peoples Republic of China (PRC) provoked many system-critics of capitalism to rethink their analyses and refocus their strategies. The transition from private enterprises and markets (capitalism) to public enterprises and planning (socialism/communism) had proven unsustainable. More importantly, the genuine economic and social gains that had been achieved were accompanied by serious failures that compromised what system-change critics had promised and expected. The traditional concept and goals of socialism/communism established in the USSR, PRC and beyond had proven significantly problematic.

Giving the state apparatus so central a role in the economy reinforced an excessive concentration of state power in politics, and culture too. Likewise, substituting state officials for private boards of directors left enterprises’ authoritarian internal organizations too little changed. The mass of workers resented and often undermined that organization, thereby frustrating the industrialization goals set by the state and eventually, the state-dominated system as a whole. Slowly these problems fostered an understanding that the concept of socialism/communism, and thus the goals of system change beyond capitalism, needed change.

In this new view, the capitalist system had not changed — or at least not changed enough — by making private enterprises public and distributing resources and products by plan instead of market. Inside workplaces, the same hierarchies of control, the same basic divisions among employers and employees, managers and managed, had remained. Thus, the actual transitions accomplished were from a private to a state form of capitalism. Those changes in the form of capitalism were mistaken for change to a system other than capitalism.

Rekindled Interest in Worker Cooperatives

Often, via reengagements with Marx’s writings, system-critics refocused their general attention on production, and more specifically, on the organization of the enterprise. Capitalism was redefined as a specific relationship among participants in producing goods and services. Much as slavery was defined in terms of slaves and masters and feudalism in terms of lords and serfs, capitalism was to be defined in terms of employers and employees. What became the crucial issue and focus was that relationship inside enterprises and not the secondary matter of whether the employer was public or private. What defined capitalism was the employer-employee relationship; what defined the preferred other system — whether called socialism or communism or neither — was a radically different relationship.

Posing the question of the exact nature of another system with a production relationship radically different from capitalism’s led many critics to rediscover worker cooperatives (sometimes called producer cooperatives). They were enterprises whose internal organization was not divided into employers and employees, i.e. different groups occupying different positions with some deeply opposed interests. For capitalism’s systemic critics, worker cooperatives entailed enterprises organized democratically — all workers would have individual, equal voices in making all enterprise decisions. What to produce, how and where to produce, and what to do with the enterprise’s net revenues or income would be decided democratically and collectively. Such enterprise organization constituted a genuinely different post-capitalist system.

Many system-critics of today’s capitalism are thus focusing increasingly on an economic transition from hierarchical capitalist enterprise organization to enterprises organized more horizontally as democratic worker cooperatives. Workers become their own directors, replacing corporate boards of directors elected by shareholders, and workers’ self-directed enterprises succeed capitalist enterprises in both private and public spheres (the relative proportions varying with the histories and preferences of different countries). The transition from capitalism to a specific next system — as the preferred solution to the problems of global capitalism today — is centered on the transformation of workplace organization as the key missing element that undermined previous efforts to move beyond capitalism (i.e., traditional socialisms and communisms).

When systems crumble and their critics divide into the two camps, the reformists usually prevail before the system-changers have their opportunity. In the longer run, we know from history, both the slave and feudal systems (the slave-master and the lord-serf workplace relationships) were largely abolished. Is capitalism, the employer-employee relationship, now also crumbling?

  • RoloTomassi

    An excellent essay, one that gets to the core problem of our wage-slave reality in the Corporatist United States.
    It is the way forward…but I fear that truly lasting systemic changeover to such a worker-owned system will require much blood be spilt in the effort to bring it into being.
    Where such policies have been implemented, the proof of a superior system is unquestionable…and that is a danger seen and recognized by corporatist oligarchs worldwide. They will be ready for the fight.

  • Jon

    Good work, Prof. Wolff. Indeed the system is brittle–hard but fragile. Of relevance is the relatively peaceful break-up of the USSR, that state capitalist dinosaur that would have anguished Lenin in its last decades. How might such an end to THIS empire happen? Secession and fragmentation needs to be on the political activist’s table.

  • Peter Baldwin

    Perhaps it might be more palatable and productive to explore new forms of enterprise if we delineated free enterprise, which tends to allow an individual the freedom to learn, grow, and spiritually evolve and is thus a sacred right worth preserving, from capitalism, which tends to be predatory, consumptive, and promotes divisiveness. I turned my business into a cooperatively run partnership with the workers and it is going well and is also a way to “pass the baton”.

  • Jon

    Excellent move, Peter! We need go embrace eco-socialism that has a place for small business and especially worker-owned enterprises. Socialism means empowerment of the workers, not a heavy handed state bureaucracy, as the ruling class would have us believe. What you propose is fully compatible with the kind of socialism I want to see pevail as these economic dinosaurs go extinct.

  • DHFabian

    The reason the US is a lost cause: The discussion (liberal and otherwise) remains mired in the notion that our deregulated capitalism is actually so successful, that everyone is able to work, there are jobs for all, therefore no need for poverty relief. During the years of this administration, the liberal discussion can be summed up as a pep rally for the better-off, the middle class, with an occasional “BLM!” for good measure, both of which have only more deeply divided us.

    In reality, not all can work (health, etc.), and there aren’t jobs for all. We’re 20 years deep into a war on the poor, and it has taken a very heavy toll. The last time we had a middle class that was so oblivious to US poverty was probably back in the 1920s, just prior to the Great Depression. Contrary to the occasional angry denials, “BLM!” is followed with “and the lives of white poor people don’t.”

    We’re only more deeply divided and subdivided while the right wings of both parties continue to implement an agenda that does, indeed, meet the definition of “fascism.” Since the US itself is an economic entity, it makes sense that our form of fascism would be class-based, rather than based on nationality, ethnicity, etc. We have actually stripped the US poor of a list of fundamental civil and human rights (per the UN’s UDHR), and this has clearly been fine with Americans, liberals included.

  • DHFabian

    It takes money and skills to make money. Efforts to merely try to preserve what remains of the middle class are, frankly, pointless. If we had sense, we would look at the policies and programs that actually did take the country to its height of wealth and productivity, from FDR yo Reagan, legitimately updating and restoring that agenda. With our years of focusing exclusively on trying to protect the advantages of the middle class, the middle class itself has been getting phased out. It’s impossible to save and rebuild the middle class (necessary to maintain the US itself) without legitimately addressing poverty

  • DHFabian

    Yes, very nice for small groups of the better-off, but having no impact on the overall economy/country. The US is way past the point where a little nip and tuck that appeals to (especially upper) middle class people can have any impact whatsoever.

    An entire chunk of the US population remains shut out, and for fairly complex reasons, this continues to sink the economy while deeply pitting Americans against each other. It takes money and skills to make money (now that most of our family-supporting manufacturing jobs are gone). Those who need the education and skills training to build a large enough workforce to maintain America’s economic viability, don’t have the time or money to pursue such luxuries.

  • DHFabian

    Russia isn’t doing very well in the aftermath of the breakup, as it has essentially implemented the same decaying capitalism that we have here. Like the US, Russia has a poverty crisis that the better-off ignore. Tensions continue to rise in both countries, “under the radar” of the bourgeoisie. History shows what happens to capitalist countries when a large enough portion of the population (surrounded by the better-off, living so comfortably) no longer have any chance, anything left to lose.

  • DHFabian

    Here’s where our middle class have a massive “blind spot.” In real life, not everyone can work (health, etc.) and there aren’t jobs for all. The US shut down/shipped out a huge number of jobs since the 1980s, ended actual welfare aid in the 1990s, creating a growing chunk of the population with no incomes, and no chance (note: You can’t get a job once you no longer have a home address, phone, etc.). What do you think happens when the rent comes due? Rage and hopelessness have only continued to quietly grow, and we don’t know if/when it will finally explode.

    Meanwhile, poverty has continued to grow, the middle class continues to shrink, jobs continue to be shipped out, as the US continues to make itself unsustainable.

  • Jon

    Fabian, where do you get the idea that I advocate only “a little nip and tuck!!” Never in the last 50 years have I thought that was adequate. A huge misrepresentation on your part. Your persistent emphasis on the poor is acknowledged and validated by all of us seeking a dramatically improved (not merely reformed imperialism!!!) world. We don’t need to be told 100 times what we already know! Please try to say something original next time!