Friday, 16 November 2012

Why capitalism can't save us. Review of 'After Capitalism'. Part 2.1

2.6 billion people are living on less than $2 a day, many major cities are surrounded by sprawling slums of misery, carbon emissions are rising faster than they were in 1990, Arctic sea ice is melting more rapidly than anyone anticipated and unemployment and poverty are rife in many countries. A list of bad things happening in the world is not difficult to compile. But why are these manifestations of present and future suffering the responsibility of the economic system – capitalism – now predominant across the globe? Are they not, as is commonly argued, regrettable but inevitable facets of life arising from flawed human nature?

You can’t persuasively criticise capitalism by waving your arms and saying how awful things are. As Schweickart says, to be convincing you have to show a causal connection between the structures that define capitalism and these bad features. “A serious critique,” he writes in After Capitalism, “must show that these negative features would not be present or would at least be far less prominent, if certain structural elements of capitalism were altered and that such alterations would not have other worse consequences.”

I want to examine five such negative features of capitalism that Schweickart highlights in his book. I will add a sixth. The features are examined from the point of view of some living in a developed, democratic capitalist country. That’s not intended to pass over the often far worse circumstances of poorer countries. It’s simply what I know most about and have experience of.

I also want to talk about the positives of capitalism. Why, beyond the quiescence of careerism or powerlessness, it still commands a grudging adherence. I was going to do that in this post but it would be too long, so it will appear in a following post, shortly.

Here is Schweickart in debate (and he does, as the presenter says, have amazing eyebrows):

First, the negatives.

1 Inequality

This feature would not, perhaps, have occupied such a stellar position twenty years ago. It was once believed that eventually everyone in the world would live like a middle class American, says Schweickart. “No-one believes that now.” Now, not even middle class Americans live like middle class Americans. In 1960, the US, the average pay of chief executives compared to all workers was 42-1. In 2007 it was 344-1. At Walmart, the US’s biggest employer, it’s 900-1. In the 1970s, Britain was one of the developed world’s most equal countries, now it is one of the most unequal. Inequality between rich and poor countries is even more extreme and worsening.

Capitalism has always involved great economic inequality. After the Second World War this characteristic was restrained, in western countries, by high taxation of wealth and collective bargaining. But both those elements have waned.

Schweickart asks a basic question. What’s wrong with inequality? Let all the children grow tall and some taller than others, Margaret Thatcher used to say. A rising tide lifts all boats was the mantra of the Right in the ‘80s and ‘90s. The trouble is that the tide isn’t rising. It is, literally rising, but not in a wealth sense. Wages have been stagnating in the US for 30 years and have been dropping in the UK since 2003.

The problem, says Schweickart, is that the structures that generate this inequality also generate desperate poverty and compromise democracy. Great and concentrated wealth at the top of society enables those that have it to skew the political process in their interests.

But we can add that inequality has two other effects. One is that, as the book The Spirit Level showed, problems, such as mental ill-health, incarceration, obesity and violence, increase in intensity the more unequal a society becomes. Secondly, inequality played a big part in causing the economic paralysis afflicting the US and Europe. A “wall of money” at the top of society has been used for destructive speculation. While inadequate income in society at large has both caused the crisis (the original credit crunch was precipitated by Americans not being able to meet mortgage repayments) and made exiting recession very difficult.

2 Democracy (lack thereof)

We, in the West, have free elections and a choice of parties to vote for. If enough people want to form anti-capitalist parties and seek votes, no-one will forcibly stop them. In France they have them in name. Therefore, we live in democracies.

Not so fast. The formal accoutrements of (representative) democracy does not mean we have democracy in content. Schweickart says we live in polyarchies.

A polyarchy exists where a country has free elections and a multi-party system but one class is dominant and its view and needs predominate. These views are propagated through party funding, lobbying, and the use of think tanks that create and mould public opinion.

But there is a deeper reason for the constrained democracies we live in. That is the formidable economic power of the owners of the economy and everyone else’s material dependence on maintaining their confidence. “A capitalist economy is ingenuously structured,” says Schweickart. “Almost everyone has an interest in maintaining the spirits of its ruling class …. So long as the basic institutions of capitalism remain in place, it is in the rational self-interest of almost everyone to keep the capitalists happy.”

And when the capitalists aren’t happy they can indicate their displeasure in very powerful ways. In August 2012, UK Conservative chancellor George Osborne reversed a £2 billion tax rise on the oil industry after companies responded to the rise by cutting production by 18%, and thus revenues to the UK Treasury. 

The writer Dan Hind has said the public is only audible when it echoes governing assumptions. If people think unemployment benefits are too high, they entrench government policy. But if they think tax should not be cut for the rich, they are instantly mute.

Even at its theoretical best, capitalist democracy only applies to the political system. The economy can only be influenced indirectly. Under Schweickart’s plan for worker controlled enterprises and social control of investment, democracy is extended to the workplace.

3 Environmental Degradation

“Only a madman or an economist could believe that exponential growth can go on forever in a finite world,” so spoke the late economist Kenneth Boulding who is quoted in After Capitalism. But capitalism believes, if it 'believes' anything, just that.

This is the inherent environmental flaw in capitalism. It grows. “Capitalism is enormously productive,” says Schweickart. “Every year, enormous quantities of commodities are produced that, when sold at anticipated prices, generate enormous profits, a large fraction of which are reinvested back into the economy in anticipation of still greater production and still more profits.”

The ever increasing consumption required by this process has been made possible in recent decades by consumer borrowing. Of course, as we are painfully aware now, capitalism doesn’t automatically grow and this tendency, in its environmental implications, will be considered shortly. But the significant point is that capitalism is a system without internal limits. In 2007, a British professor of engineering worked out that, based on an economy growing at three per cent a year, we would consume resources equivalent to all those we have consumed since the emergence of humanity by 2040.
This growth is manifested through the gradual exhaustion of natural resources, the steady encroachment of physical development into rural areas (happening now in the UK through the erosion of the “green belt”), and the release toxic by-products of production and consumption such as carbon emissions and nitrogen-based fertilisers used in farming.

What would defenders of capitalism say to the charge that the system is ecologically unsustainable? Firstly, and very loudly I imagine, they would point out that the environmental record of capitalism’s historical rival was terrible. Pollution under Communism was chronic. In the early 1980s, northern Bohemia in Communist Czechoslovakia had the worst air pollution in Europe. By 1983, 35% of all Czech forests were dead or dying and one third of all Czech watercourses were too polluted even for industrial use. Though the main environmental bane of Communism, it should be said, was pollution, not growth.

Secondly, a pro-capitalist would argue that, through capitalism’s association with liberalism and free elections, environmental activists can, externally, bring capitalism under control and make environmentally destructive behaviours unacceptable. Think of the film Erin Brockovich.

“Thanks to the efforts of determined environmental activists in virtually every advanced capitalist country, air quality is better now than it was two decades ago and rivers and lakes are cleaner,” writes Schweickart. “Environmental protection laws have been passed and “green” taxes and imposed in many countries.”

There are several points to make in response to the belief that capitalism is compatible with a flourishing environment.  Firstly, environmental activism can’t alter capitalism’s integral growth dynamic, it’s “grow or die” impulse, as the social ecologist Murray Bookchin put it. As a result the best environmentalism can do is ameliorate the worst effects. “Things getting worse at a slower rate”, is how the late environmental activist, Donella Meadows, described the situation.

Secondly, in the low or no growth world we are entering, environmental priorities are being sacrificed to meet the short-term need to revive growth. “We can’t be ambivalent about growth,” is how the UK government’s “planning” minister, Greg Clark, justified reducing regulations to make it much easier to approve building development in the countryside.

Thirdly, many polluting practices in western countries that have become culturally unacceptable have been exported to poorer countries, where people have less power to make their objections count.

Lastly, the experience of the 21st century has shown that when environmental activism directly confronts huge capitalist industries like oil, automobiles and mining, it does not win. The 1987 Montreal Protocol was the last successful international agreement to change capitalist behaviour. The protocol called for strict restrictions on chemicals that deplete the ozone layer (chlorofluorcarbons) and the results have been impressive. But, says Schweickart, the industries affected had substitutes to hand, and the protocol “should not lull us into thinking capitalism can accommodate all sensible environmental solutions.”

With climate change and carbon emissions it has been a very different story. There are cleaner ways of generating energy than burning oil and cleaner way of transporting people than using cars, says Schweickart. “But it is hard to envisage the transition to these cleaner modes that preserves the status and income of these giant industries,” he says.

But the problem goes deeper than corporate resistance, he argues. Phasing out chlorofluorcarbons did not affect consumption habits. “A transition away from carbon-based energy almost certainly would”.

The consequence of the conflict between environmental sanity and profit has been that many capitalist countries – most notably the US – have been unable to change course to ameliorate climate change. Not only this, a political culture has developed that denies the existence of climate change even when its effects become harder and harder to ignore.

This seemingly intractable problem is intimately related to the fake democracy examined in section two. In a 2011 report, the head of Greenpeace International, Kumi Naidoo, said that governments don’t take action on climate change because they have “captured” by corporations responsible for it.

These polluting corporations often exert their influence behind the scenes,” the report said, “employing a variety of techniques, including using trade associations and think tanks as front groups; confusing the public through climate denial or advertising campaigns; making corporate political donations; as well as making use of the "revolving door" between public servants and carbon-intensive corporations.”

Finally, what of the prospect that dysfunctional capitalism, an economic system that produces low or no growth, may, in an unintended way, be beneficial to the environment? Less destructive than a healthy capitalism that achieves growth of 3 or 4% a year. In 2009, because of the dramatic drop in economic activity, carbon emissions fell for only the fourth time in 50 years.

Less destructive, perhaps, but not less destructive enough. What western capitalist countries need, for ecological sustainability, is de-growth, not spluttering growth or GDP flat-lining. They need to reduce their consumption. And while growth proves elusive, politicians obsess about its resuscitation. Thus, environmental considerations lose any priority they possessed.

But equally significant is that a dysfunctional capitalism not sustainable. It was the end of economic growth in the 1980s and economic stagnation that doomed Soviet Communism. “If rich countries cease to grow,” writes Schweickart, “their own economies will implode – so will the economies of poor countries, increasing the level of poverty, increasing the level of environmental degradation that poverty entails, and decreasing the amount of funds available for environment damage control.”

Enough already

I realise this is enough for one post. In part 2.2, I will consider three other basic features of capitalism: Unemployment, overwork and instability.

In 1930, a very famous economist predicted that, in 100 years, inhabitants the US and Europe would work three hour days and fifteen hour weeks. Their main preoccupation would be how to occupy their abundant free time.


  1. The low or no growth world now seems to be a realisation dawning on the mainstream. Jeremy Grantham (, of investment firm GMO, now predicts growth in the US of under one per cent for the next 40 years.


  2. As if by magic the Conservatives illustrate perfectly the problem of growth eating into the countryside:

    Of course, everyone with their own house and garden isn't the only way, even if it wasn't too expensive. Communal living is necessary and possible:

    See also the work of Dr Jo Williams:


    and on co-housing:

  3. And on communal housing, I forgot this: