by From Peter Radford We hear it all the time. It is a relentless drum beat on the left. Capitalism, we are told, is in crisis. This crisis is manifested in all sorts of ways. We – meaning those of us on the left – need to prepare. We need to counter attack. We need to seize this moment and retrieve from the mess whatever we can. Democracy, in various forms depending on who is writing, is our way forward. Only through democracy can we save society from the crisis in capitalism. Really? Where, exactly is this crisis? This occurs to me because at the same time leftist writers are proclaiming the existence of crisis they are often, simultaneously, proclaiming the ever increasing divide in social inequality as defined by income or wealth. Capitalists are doing quite nicely I would imagine if these concerns over inequality are correct. Which they are. So, where, exactly, is this crisis? If capitalists are taking and ever increasing share of the national income, if they are accumulating an ever increasing proportion of the national wealth, and if they have managed to wrestle effective control of the ship of state from the majority of ordinary folks, how can they be in crisis? I would argue that things look pretty dandy if you’re one of them. There is no crisis in capitalism if you are a capitalist. You’re on a winning roll. You are loving life.
Topics:
Peter Radford considers the following as important: Uncategorized
This could be interesting, too:
John Quiggin writes RBA policy is putting all our futures at risk
Merijn T. Knibbe writes ´Extra Unordinarily Persistent Large Otput Gaps´ (EU-PLOGs)
Peter Radford writes The Geology of Economics?
John Quiggin writes Suggestions for a small experiment
from Peter Radford
We hear it all the time. It is a relentless drum beat on the left. Capitalism, we are told, is in crisis. This crisis is manifested in all sorts of ways. We – meaning those of us on the left – need to prepare. We need to counter attack. We need to seize this moment and retrieve from the mess whatever we can. Democracy, in various forms depending on who is writing, is our way forward. Only through democracy can we save society from the crisis in capitalism.
Really?
Where, exactly is this crisis?
This occurs to me because at the same time leftist writers are proclaiming the existence of crisis they are often, simultaneously, proclaiming the ever increasing divide in social inequality as defined by income or wealth. Capitalists are doing quite nicely I would imagine if these concerns over inequality are correct. Which they are.
So, where, exactly, is this crisis?
If capitalists are taking and ever increasing share of the national income, if they are accumulating an ever increasing proportion of the national wealth, and if they have managed to wrestle effective control of the ship of state from the majority of ordinary folks, how can they be in crisis? I would argue that things look pretty dandy if you’re one of them.
There is no crisis in capitalism if you are a capitalist. You’re on a winning roll. You are loving life.
It’s the rest of us that have a problem. We are the ones mired in crisis. We don’t have a crisis of capitalism. We have a crisis because of capitalism. That’s a big difference.
Capitalists, of course, being driven solely by their ability to accumulate riches, are probably complaining even though they are rolling in money. That’s who they are. That’s why they succeed. They are single minded. They exist for wealth. They measure themselves by their wealth. They adopt any and all stratagems to accumulate more. They oppose bitterly and stubbornly anything that slows their accumulation of wealth down. And, as we all know, they will twist rules, cheat, and generally cause mayhem to get their way.
Above all else they hate sharing. Sharing, you see, just isn’t the way you accumulate wealth. Sharing is a limp and pathetic idea adopted only by losers who aren’t tough enough to win. Capitalists aren’t losers, so they don’t share. Which is why they cannot abide redistribution. If there’s one thing that will rally a group of capitalists and stop them tearing away at each other, it’s the prospect of a democratically designed effort to redistribute their hard-earned and righteously amassed wealth.
Which is why capitalists despise democracy. And it is why they constantly propagate the idea that social programs supported by redistribution are a kind of leeching or inefficiency imposed on the sleek capitalist machine that will, inevitably, slow growth down and eventually undercut our ability to pay for them. They toss the word ‘entitlement’ about as a nasty epithet – as being entitled wasn’t as aspect of citizenship.
Anyway: back to the non-existent crisis. Ben Tarnoff reminded me of it in his article in the Guardian titled: “Donald Trump, Peter Thiel and the death of democracy”. Here’s the paragraphs that caught my eye:
This may sound like dystopian science fiction, but it’s also a perfectly reasonable political objective for someone of Thiel’s class position. It’s easy for liberals to dismiss Thiel as a “comic-book villain”, but this caricature obscures the fact that Thiel is a sophisticated thinker – and a perceptive one. His central observation, that American capitalism is facing a crisis, is unquestionably correct.
The past four decades of economic data make that crisis clear. Since the 1970s, the US economy has enjoyed far lower levels of growth than it did during its midcentury golden age. From 1920 to 1970, real per-capita GDP grew by a staggering 2.41% a year on average. From 1970 to 2014 it slowed considerably, to 1.77%. The slowdown in labor productivity has been even starker.
Thiel is acutely aware of these numbers. He is, in fact, obsessed with economic stagnation. Over the long term, stagnation doesn’t just threaten capitalism by limiting growth; it also runs the risk of turning people against capitalism, as their wages and living standards deteriorate. This is already happening, as the popularity of the Bernie Sanders campaign made clear. A Harvard survey from April found that a majority of millennials now say they reject capitalism; a third say they support socialism. The precise meaning of this poll is arguable, but it’s clear that young Americans, who make less money than their parents did at their age and have higher rates of poverty and unemployment, are moving left.
It’s safe to assume that Thiel is paying attention. The next American electorate will be more nonwhite, more working-class, and more leftwing. And they’re likely to demand more democracy, not less – not only from the political system, but from the economic system as well. That sets them on a collision course with elites like Thiel.
Note the key words: “… His central observation, that American capitalism is facing a crisis, is unquestionably correct.”
Unquestionably correct?
Despite all the empirical evidence that the share of capital of our total wealth is rising beyond its historical norms? How, exactly is this a “crisis”?
Well, as it turns out, it is crisis for capitalists like Thiel only in the sense that their greed demands more and that sharing is somehow morally wrong.
Now my point is simple: we ought to stop this old fashioned repetition of the notion that there is a crisis in capitalism. There isn’t. Capitalists are dong very well. Indeed if they weren’t we wouldn’t be talking about them. No. Not at all. The crisis Ben Tarnoff is trying to get at, and I think he is a good example of the problem we have in describing it, is one of democracy.
We have a crisis of democracy.
Capitalism is rampant and on a successful run. People like Thiel are complaining because they feel entitled to more and are concerned that a resurgence in democracy would hamper their ability to accumulate even greater riches. Tarnoff says this quite clearly in his article. What he ought to have emphasized more is that capitalists want to take advantage of our currently weakened democratic state to consolidate their position. In other words they want to kick democracy while it’s in the gutter. Framing this conflict as a crisis for capitalism is both antiquated and misleading. If we are to rally the people to fight back, they need to know why they are fighting. It is our loss of democracy that provides the rallying cry. Who cares about capitalists?
One last thing: tossing around GDP numbers spanning decades and pointing to the slowdown in growth as a crisis for capitalists also muddies the waters. It is a problem for all of us. Growth is what allows us to allocate more resources to things we like without having to resort to force or politically difficult argument. So slower growth is a problem for democracy too. More to the point: we need growth to be sustainable and not environmentally toxic, so making growth a purely capitalist issue sidelines democrats from needing to engage the topic constructively and leads too many left of center thinkers to view growth as a negative.