Can Capitalism and Democracy Coexist?

November 11, 2014 7:00 PM

In a wide-ranging discussion about democracy, capitalism, and the American body politic; Chris Hedges interviews political theorist Sheldon Wolin in eight parts. (via) (previously)

Part 2 - Wolin and Hedges discuss the breakdown of democratic institutions throughout the 20th century

Part 3 - Wolin and Hedges continue their discussion of the threats faced by democratic institutions

Part 4 - Wolin and Hedges discuss the concept of "inverted totalitarianism" and its relevance for understanding contemporary politics

Part 5 - Wolin discusses his time in the academy and the role of universities in post-war United States history

Part 6 - Wolin and Hedges continue their discussion of the threats faced by democratic institutions

Part 7 - Wolin and Hedges continue their discussion of the threats faced by democratic institutions

Part 8 - Wolin and Hedges conclude their interview with a discussion on the problems of revolution and power

posted by AElfwine Evenstar (38 comments total)

Spoiler: No, they can't (episode 1, 6:00).
posted by No Robots at 7:24 PM on November 11, 2014 [4 favorites]

This post wins the award for most tags
posted by Noisy Pink Bubbles at 7:28 PM on November 11, 2014

I'm guessing the conversation is over before it began.
posted by cmfletcher at 9:21 PM on November 11, 2014 [3 favorites]

Of course it can; it has in Europe and North America for centuries. Democracy and plutocracy cannot exist. Capitalism, of course, can regress into plutocracy, but so far it's the only economic system that has ever co-existed with democracy. (Yes, Europe is capitalist. The means of production lies in private hands.)
posted by spaltavian at 8:05 AM on November 12, 2014

I should amend that to acknowledge that tenuous forms of democracy have co-existed with might be termed cartelized or "state capitalism" in Imperial Germany; post-occupation Japan became increasingly democratic while "picking winners" in a capitalist structure.
posted by spaltavian at 8:15 AM on November 12, 2014

For the past century, all nations have operated on the basis of state capitalism:

Since mankind are not yet prepared for socialism and democracy, they must go through a period of discipline under state capitalism and fascism. Hence, state capitalism and fascism are inevitable. And because they are inevitable, history is entirely on the side of state capitalism and fascism. History speaks a language so clear and distinct that only the intellectually blind and the morally degenerate can fail to see the signs of the times.--Harry Waton

Political democracy and economic democracy are inseparable. That is the essence of socialism.

I am glad that Wolin is still here to speak out. I am grateful that his students, particularly Cornel West, are furthering the project of democracy.
posted by No Robots at 8:21 AM on November 12, 2014 [2 favorites]

Your leading sentence is just ridiculously ahistorical. "State capitalism" has a meaning, it doesn't just mean "bad" capitalism. The United States, which arguably has the most problematic capitalist practice of major Western powers, does not have caterlized industries and does not at all resemble what essentially was a permanent war-time economy of Imperial Germany, or the "everyone gets a turn" system of post-war Japan. I think you'll find a common liberal critique of the Bush administration was that the full economic, moral and cultural force of America was not bent towards prosecuting the war; their point being that it's an admission it wasn't a war directed to protecting American security.

It is, of course, de rigueur for critics of capitalism to tie it fascism but it's fallacious. (Though I congratulate you on not using the standard complete misunderstanding of the word "corporatism".) Fascists are quite uninterested in disputes between what passes for "left" and "right" in the current mainstream politics of Europe and North America. Fascists have little ideological stake in intervention in the market; and when in power have shown no principled consistency on intervening in economic affairs. They're the ultimate pragmatists on the subject as their goal is entirely a political project. The Nazis quite aptly summed up their own goals with the slogan "1789 is abolished"; their goal was to overthrow modernity and replace it. The danger in America these days is backsliding into the aristocratic capitalism of the 19th century which, while bad, looks nothing like any fascist economic practice, even at their most laissez faire. Invoking them in the comparatively petty differences within the liberal tradition remains absurd and shows a lack of understanding about what fascism represented. I can forgive the writer you quoted for being wrong on basically every level; given the storm clouds he saw in 1939. But it's bad history, bad political science and bad economics.

Political democracy and economic democracy are inseparable. That is the essence of socialism.

That is a tenet of socialism; and much like your belief that the Left cannot achieve anything until they all convert to Christianity, it's not convincing just by saying it. That's even accepting a term like "economic democracy" makes any sense, which of course it does not, outside of maybe a commune. The term you're shying away from is, of course, state property, and you might as well be forthright about. Both the church fathers and Communists were.

Alternatively, if you're actually talking about the democratically regulated capitalism of Western Europe, when you say something like economic democracy, then I would say you're putting way too much revolutionary import into the Value Added Tax.
posted by spaltavian at 10:21 AM on November 12, 2014 [3 favorites]

I guess you didn't want to take a look at that Harry Waton piece. Here is another pertinent passage:

Now, state capitalism will necessarily assume in different countries different aspects, just as private capitalism assumed in different countries different aspects; all depending upon economic and historic conditions and the degree of development of the nation. It is certain that state capitalism in this country [the United States] will not be as crude and brutal as it is in Soviet Russia and Nazi Germany. And this state capitalism is nothing else than the beginning of socialism. Stalin and Hitler made the wonderful discovery that socialism can be realized in one country, though all other countries may yet be in a state of private capitalism or even feudalism. And so, Stalin tells us that in Soviet Russia they already realized socialism, and now are building for communism; and, likewise, Hitler tells us that in Nazi Germany they have realized socialism. In both countries we have national socialism. All right, if the Stalins and the Hitlers prefer to call it socialism, we will accept their words, and we too will call it socialism. But a name does not change the character of a thing. Call it socialism, if you like, but it is state capitalism. Marx made this perfectly clear. Socialism means nothing less than the abolition of the wages system, the abolition of exploitation, and the abolition of the proletariat. Since, however, in Soviet Russia and Nazi Germany we have the wages system, exploitation and the proletariat, we have in these countries state capitalism, and this state capitalism is the beginning of socialism.

I really liked the bit in episode 5 where Wolin and Hedges talk about how the Cold War set back the development of socialism in the United States. There's been a century-long delay, but now we should be set.
posted by No Robots at 11:32 AM on November 12, 2014

For the past century, all nations have operated on the basis of state capitalism:

Neither of your quotes define this term, but the second quote makes it a little more clear that Waton is using the (anarcho-communist/libcom) definition of state capitalism as a centrally planned economy, where the means of production are owned by a bureaucratic state. This approach contrasts the economies of nominally communist countries, eg., the Soviet Union with an ideal or true communism, where the concept of ownership doesn't even apply ("the land does not belong to us, we belong to the land" sort of approach). The term comes from a political-economic analysis that falls strongly on the side that capitalism and (true, participatory, not bastardized representative) democracy cannot coexist.

Regardless of our opinions on the un/desirability of state capitalism, or its relationship to democracy, it is not an accurate description of much of the world economy, either at present or historically.

It is also different from a fascist economy, where the means of production (as well as the state, effectively) are still owned by private interests.

In other words, I do not think that term means what you think it means, to both of yous.
posted by eviemath at 12:36 PM on November 12, 2014 [1 favorite]

Oh, I don't really care how the capitalists try to define their way out of the conundrums in which they find themselves. The bottom line is that capitalism has been extinct for over a century. It is just cranky wishful thinking to hold otherwise. Unfortunately, this wish has a predominant effect on society, resulting in the prolongation of the period of state capitalism, and the forestalling of the transition to socialism.
posted by No Robots at 12:45 PM on November 12, 2014

so far it's the only economic system that has ever co-existed with democracy

This ignores quite a lot of history, even including post-Industrial Revolution Western history, with examples of democratic decision making in the context of, eg., the anarcho-syndicalist economy of the anarchist-held regions of Spain during the Spanish Civil War, the more libertarian communist experiment of the Paris Commune, or numerous more local (and thus sometimes longer-running, due to escaping external aggression) experiments.
posted by eviemath at 12:45 PM on November 12, 2014

No Robots, are we working with the same definition of capitalism? An economic system in which rents, i.e. profit, can be collected from ownership of the means of production, whether by private individuals, corporate legal entities, the state, or whoever holds the ownership?
posted by eviemath at 12:48 PM on November 12, 2014

I'm not too interested in the definition of capitalism. Here is the definition of socialism that I gave above from Waton: "Socialism means nothing less than the abolition of the wages system, the abolition of exploitation, and the abolition of the proletariat." That these conditions are constrained by government means that we are in a state capitalist system.
posted by No Robots at 12:54 PM on November 12, 2014

eviemath, the examples you gave were all ephemeral. I'm admittedly not equipped to debate how democratic besieged quasi-states like the Paris Commune and bits of war-torn Spain really were; was there really a democratic civil society in place? They may have been aspirationally democratic, but that's kind of a different story than the question posed in the FPP.

More lasting examples would go back to classical history, when "democracy" didn't mean the same thing as it does now.

As for "state capitalism", I think I'm pretty clear on the definition. While the one you give; "state = rent collector"; is the most straightforward definition and even possibly the best, being inclusive of situations where property remains in private hands but the government directs credit, investment, picks winners, or has direct collaboration to serve specific ends are also frequently used. Like I think I make clear above, I prefer the term "cartelized" for situations like Imperial Germany (especially in the years before WWI), but my use of it as an example is uncontroversial.

I hope my description of the Second Reich as "tenuously" democratic is straightforward, but to be clear: Germany had a more open franchise than Britain in 1914 (much more so) and there was multiparty elections, though it was all highly regulated, and the regime was clearly illiberal.

No Robots: I'm not too interested in the definition of capitalism.

Then on what possible basis are you making incorrect pronouncements like "the bottom line is that capitalism has been extinct for over a century"? State capitalism does not exist in the United States. It does not exist in Western Europe, (though the period Dirigisme in France, which is over, was arguably an example of it).

There's certainly nothing "inevitable" about it in a capitalist system, (less intervention has been all the rage since 1980) and it looks nothing like the actual specter that haunts capitalist systems: plutocracy.

Socialism means nothing less than the abolition of the wages system, the abolition of exploitation, and the abolition of the proletariat." That these conditions are constrained by government means that we are in a state capitalist system.

None of those are what socialism "means"; those are the hoped for results of Socialism, which is public ownership of the means of production. That the government "constrains" this is a function of enforcing contracts and protecting private property. Even the libertarian fantasy nightwatchman state would be "state capitalist" under this definition, which should demonstrate how ridiculous it is.

Waton is making a point along the lines of 1984, with centrally planned economies being the problem of "state capitalism". That is the reverse problem most liberals (and this FPP) are talking about; with plutocrats trying to buy the government.
posted by spaltavian at 1:33 PM on November 12, 2014 [2 favorites]

The bottom line is that capitalism has been extinct for over a century.

News to me.

This would really only be true with a very idiosyncratic definition of capitalism, which is why we're all wondering what your working definition is.
posted by Noisy Pink Bubbles at 1:43 PM on November 12, 2014

Sorry, messed up that last bit. Wanton is making a point along the lines of 1984, but thinks it's a good thing, as it will bring about socialism. Better to say he is echoing Engels; once the state takes over the market, it will become a communist anarchist utopia via magic.
posted by spaltavian at 1:44 PM on November 12, 2014

Okay, okay. Here is Waton on capitalism:

The present social order rests on private capitalism, but private capitalism can no longer function, it can no longer meet the social requirements, it can no longer employ the working class and the accumulated capital, and therefore it no longer has any historic reason for existence. In this country alone, tens of millions of workers have been and still are out of employment and had to be sustained on state relief; billions of dollars are hoarded and lie idle, because there is no longer any room for their safe and profitable investment; production is curtailed, products are destroyed, inventions are held back, and machines and factories are idle, business is groaning under an ever- increasing burden of taxation, the government is piling up mountains of debts, and on the top of all this the government is compelled to spend billions of dollars on war preparations. How long can such a system exist? Mene, mene, tekel, upharsin: private capitalism was weighed in the historic balance, it was found wanting, and it was decreed that it be retired from the stage of history. Private capitalism is dying, and in the near future it will be dead. It will either die peacefully and get an honorable burial, or it will die through wars and revolutions. With the death of private capitalism will also die all political and social institutions resting on private capitalism and organically bound up with it. And what is true of this country, is even more so true of all other countries. And just as nature abhors a vacuum, so history abhors a hiatus. What system shall take the place of private capitalism?

Waton goes on to talk about how Roosevelt established state capitalism under the name of the New Deal. Waton is well work reading, folks.
posted by No Robots at 1:56 PM on November 12, 2014

spaltavian, I'm quite happy with calling the situation that you describe "cartelized", and, indeed, would not call the economy of Imperial Germany state capitalism. Nor, if I am reading correctly, would Walton, or anyone with a similar political alignment. My understanding is that, in Imperial Germany, individuals or corporations owned (at least some of) the means of production, not (solely) the state.
posted by eviemath at 3:09 PM on November 12, 2014

Just to be clear, this post is about Sheldon Wolin, in which I have intruded discussion of Harry Waton.
posted by No Robots at 3:19 PM on November 12, 2014

Waton goes on to talk about how Roosevelt established state capitalism under the name of the New Deal.

Which is why I said I could forgive him, speaking in 1939, for being completely wrong. The ideas that capitalist societies were mixing in communism and were headed to some kind of command economy; and that liberal democracy was being passed on by history throughout the West was a common fallacy.

But Roosevelt didn't create "state capitalism", and certainly not with the New Deal. A better example would be the wartime economy a few years later, but state direction of the economy to those unprecedented levels has not happened again, and indeed has receded massively and consistently since then.

The exigences of depression and total war surely brought about greater intervention in the economy, but it shrank away after the crisis. And it never looked like the way you are using state capitalism. Or more accurate, it didn't look any more like state capitalism, as under your formulation any government that recognizes private property is a state capitalist society.

"The present social order rests on private capitalism, but private capitalism can no longer function, it can no longer meet the social requirements, it can no longer employ the working class and the accumulated capital, and therefore it no longer has any historic reason for existence."

He's quite clearly talking about the Depression there, and he's quite clearly wrong, as the greatest increase in economic prosperity in American history was just a few years away.

But true to Marxist form, he talks about "historic reasons for existence" like that's self-evidently convincing or meaningful. History follows trends not stages. The Depression didn't undo capitalism in the West because no one undid it; Marx's pronouncements on how history "must" happen are just wishes. Political processes were able to ameliorate some of the worse aspects of capitalism then, and have been able to restore them since 1980. But any "dictatorship of the proletariat" brought about in the West will just be a dictatorship; just like it was in Russia. Stalin sure as hell didn't think Marxist history applied to him, and neither would any huckster who convinces everybody to shoot their boss tomrrow.
posted by spaltavian at 4:02 PM on November 12, 2014 [1 favorite]

yea, i'd say that capitalism can be compatible with democracy, it's just particular forms of political economy extant now like corporatism (or corporate rentierism or crony capitalism) that give rise to plutocracy, as wealth has 'accumulated' -- thru "tricks and traps" like elizabeth warren describes -- in the hands of the 'wealthy', by definition! (or fiat ;) while the poor get saddled with debt peonage and denied the vote...

so how might one go about the euthanasia of the rentier?

one way is to rein in the financial 'industry':
-How Financialization Leads To Income Inequality
-Frenzied Financialization: Shrinking the financial sector will make us all richer

finance is of course extracting huge rents out of the economy incommensurate with the value it adds to society, but what do you replace it with, if anything?

at the end of this VC talk on 'mobile eating the world' there's an interesting aside about how finance departments in various non-financial enterprises grew in importance up until the global financial crisis (think GE capital) and they posit that software + 'sensors' (censors?) could eventually 'eat' finance and how ultimately (presumably) all companies will utilize mobile/software/'intelligence' services in their organization to the degree now that all companies use 'computerization' or lighting and electricity for that matter (because costs have fallen thru competition to the extent they're considered commodity utilities... to be regulated as such?)

in other words, they're suggesting that in the still nascent war between wall street and silicon valley, finance will be transformed just like every other oligopolic sector has fared so far when confronted with digital reality amenable to network economics and information rules... but by what and for whom?

izabella kaminska writes:

There is, we feel, a somewhat naive presumption in cyberspace and increasingly finance-space too that just because society now has computers to solve this age old problem, this age old problem — hitherto deemed unsolvable — can suddenly be resolved.

On that basis, what none of the enthusiasts seem to appreciate is that what we’re really dealing with is the latest re-enactment of the story of Animal Farm. That is, we’re putting a huge amount of effort into forging a socialistic and meritocratic value system, whilst overlooking how the process transfers power from one set of oppressive overlords to an even more ruthless sort.

Don’t get this blogger wrong. We certainly admire and support any attempt to forge a fairer consensus-based decision system to defend everybody’s human rights and intellectual capital. But the fundamental factors remain the same; if you remove the payoff from such a system, you also remove the incentive structure that keeps the whole thing intact.

The critical paradox at hand is and always will be the fact that without a payoff, the cost of participation (i.e. proof of work, energy and computational time) is too great to keep those who don’t have a direct interest in the outcome of the consensus being achieved interested, putting anyone other than “interested parties” off from defending the scheme.

With a payoff, meanwhile, control inevitably flows to the most cost-efficient player, creating an efficiency arms race that eventually concentrates power in circles that invest the most.

What’s more, none of these factors change if the blockchain is opened up to additional uses. In fact, the greater the value of the assets that depend on the outcome of the consensus formation process, the greater the incentive to corrupt the system.

Which leaves only two possible paths for an honest system.

One involves the creation of a super-sized blockchain which uses a fee-based structure to to keep miners incentivised to defend the system.

The second involves the creation of many task-specific blockchains, the defence of which appeals to miners precisely because they benefit from the decisions arrived at and are thus prepared to bear the cost directly.

But even with these two options major problems remain.

With the first, there’s the incremental cost of having to compensate a network of miners to do the same job that a single party can do just as well but at a fraction of the price — all it needs to do is persuade people it can be trusted to do the job reliably. If that entity is a well managed government (which already represents the interests of the public ) all the more likely it will be trusted to that job.

The problem with the second scenario, meanwhile, is that the blockchains would need to be so incredibly task-specific to be worth the cost, time and effort of individual participation, they would inevitably lead to blockchain prioritisation. They would hardly be able to guarantee equal distribution of costs between engaging participants either. Eventually, defending every single blockchain relevant to one’s life would become such a great burden that a market for specialist proxy agents that charge fees would emerge, once again skewing the whole process and leading — you guessed it — to a conventional specialist-focused division of labour.

Sadly, we think, there is only one thing relevant enough to all humanity that can provide the sort of incentives that could make blockchain economics work. That one thing, not to be too dramatic, is life itself.

Though life already is the endless and energy-exhausting process of computing multiple inputs so as to arrive at group-wide consensuses both on a modular and collective basis.

That’s because on the modular front, just like with a task-specific blockchain, life is made up of people (nodes) continuously having to arrive at a consensus over how they deal with their mutually shared, interactable and observable reality. On the collective basis, meanwhile, just like with a super-sized blockchain, people depend on a shared consensus regarding the truths that underpin the wider unobservable reality instead.

but as we've seen a "shared consensus" is tenuous, esp when lobbyists, 'think tanks' and media 'properties' are all out there trying to establish their own ministries of truth in the brave new 'reputation' economy:

-The Cult Deficit
-Beyond Groupthink
-The Philosophy Of Nay-Sayers
-A Skeptic's View of Today's Religion
-Management: How to Create a Cult Atmosphere in Which No One Questions You

reputations eventually collide with reality of course and they either survive or break apart, with the possibility of revival:

In FDR’s era, as now, there was a paradox: America was a capitalist country, yet capitalism under theManagerial-revolution-1941 (1) New Deal no longer resembled what it had been in the 19th century. And socialism in the Soviet Union looked nothing at all like the dictatorship of the proletariat: just “dictatorship” would be closer to the mark. (If not quite a bull’s-eye, in Burnham’s view.)

Real power in America did not rest with the great capitalists of old, just as real power in the USSR did not lie with the workers. Burnham analyzed this reality, as well as the fascist system of Nazi Germany, and devised a theory of what he called the “managerial revolution.” Economic control, thus inevitably political control, in all these states lay in the hands of a new class of professional managers in business and government alike—engineers, technocrats, and planners rather than workers or owners.

The Managerial Revolution, the 1941 book in which Burnham laid out his theory, was a bestseller and critical success. It strongly influenced George Orwell, who adapted several of its ideas for his own even more famous work, 1984. Burnham described World War II as the first in a series of conflicts between managerial powers for control over three great industrial regions of the world—North America, Europe, and East Asia. The geographic scheme and condition of perpetual war are reflected in Orwell’s novel by the ceaseless struggles between Oceania (America with its Atlantic and Pacific outposts), Eurasia (Russian-dominated Europe), and Eastasia (the Orient). The Managerial Revolution itself appears in 1984 as Emmanuel Goldstein’s forbidden book The Theory and Practice of Oligarchical Collectivism.

[...]

After all, the managerial Soviet Union is gone, and the capitalist U.S. has not only survived but thrived for decades in what is now a globalized free-market system. While the political theory of The Machiavellians doesn’t depend on The Managerial Revolution—it’s surprising, in fact, how little connected the two books are—his reputation must surely suffer for getting such a basic question wrong.

Only he didn’t get it wrong—for what is the political and economic system of China if not what Burnham described in The Managerial Revolution? Engineers, industrial planners, and managers have led China for decades, with unarguable results. Indeed, several East Asian economies, including those of American allies Taiwan, South Korea, and Japan, are managerialist. As Burnham predicted, these economies have been highly successful at controlling unemployment and raising standards of living.

The American ruling class, by contrast, has pursued a largely anti-managerial policy, ridding the country of much strategic manufacturing. Such industry—including shipbuilding and semiconductor fabrication—is now overwhelmingly based in Asia. The U.S. hybrid system, transitioning from capitalism to managerialism, outperformed the Soviet Union. Whether it can outperform the next wave of managerial revolution is very much uncertain.

i would submit that many of the political battles we face now are to maintain control over or usurp the power of the financial system -- a reputation system that distributes investment and income within the economy -- thru which modern-day managerialism is practiced because, as people have noticed, the current crop of 'managers' (or anti-managers as it were!) aren't doing too well. the question then is, who is? would you really want silicon valley politically ascendant? (maybe over wall street, big oil, etc?) how about abenomics or scandinavian models? and you can go down the list of places with diverse populations that are actually happy with their gov't :P

anyway, lemme just leave by pointing to an intriguing proposal by miles kimball: The Paperless Economy - "How governments can and should beat Bitcoin at its own game."

To make it possible to end recessions quickly and to end inflation forever, a government needs to take the following steps:

1. Establish official government-sanctioned electronic money in a way that makes the use of electronic money as convenient and seamless as possible. This involves setting the stage for private innovation in electronic payment systems by giving full legal tender status to electronic money in all government-insured bank accounts and in other accounts that are officially certified as backed 100 percent by reserves held at the central bank.
2. Dethrone paper currency from the exalted legal status it was given (very controversially) in the late 19th century, by giving anyone, at any time, the right to refuse payment in paper currency, unless a contract explicitly calls for payment in paper currency. Further demote paper currency by abolishing the guarantee that a paper dollar (or euro, or yen, or pound) will always be worth the same amount as an electronic dollar. But make sure that it is easy for people to convert paper currency into electronic form and vice versa.
3. Search in the nooks and crannies of the legal code and government agency regulations and policies for places where it is assumed that interest rates are always zero or positive or where it is assumed that paper currency has a special status—and root those assumptions out. (For example, make it clear that people can’t show up with suitcases full of hundred-dollar bills to settle their taxes.) Encourage businesses to do the same with their business plans and their accounting.
4. Give the central bank the authority to make interest rates negative, including making the interest rate on paper currency negative when necessary, by using the fact that a paper dollar is no longer guaranteed to be worth the same amount as an electronic dollar.
5. Require the central bank to bring its inflation target down to zero over the course of 15 years and to forever afterward keep the value of a dollar in terms of goods and services within an unchanging narrow band. This should be revised only when necessary to take into account improved ways of measuring the value of a dollar (or euro or yen or pound).

It has become traditional for U.S. Treasury secretaries to periodically repeat the mantra that “a strong dollar is in our nation’s interest.” I would add one word to the mantra: “A strong electronic dollar is in our nation’s interest.” A strong electronic dollar is one that works smoothly in transactions, empowers monetary policy to bring a speedy end to recessions, and keeps its value over time with no concessions to inflation.

The path to a strong electronic dollar will require bureaucratic and political fortitude. But the economic principles involved are clear. The rewards at the end of that path—the taming of the business cycle and the end of inflation—insure that some nation will blaze that trail. (My bet is on the United Kingdom.) Then the rest of the advanced nations will follow.

But make no mistake: Giving electronic money the role that undeserving paper money now holds will only tame the business cycle and end inflation. Fostering long-run economic growth, dealing with inequality, and establishing peace on a war-torn planet will remain just as challenging as they are now. But every time one set of problems is solved, it allows us to focus our attention more clearly on the remaining problems. It is time to step up to that next level.

posted by kliuless at 4:48 PM on November 12, 2014 [1 favorite]

He's quite clearly talking about the Depression there, and he's quite clearly wrong, as the greatest increase in economic prosperity in American history was just a few years away.

That passage could have been written today. Capitalism had a stay of execution by virtue of WWI, WWII and the Cold War. Time is up now.
posted by No Robots at 5:40 PM on November 12, 2014

World War I dramatically hurt capitalism; ending the first period of globalism. Capitalism had no pending execution that needed staying in 1914.

That passage couldn't be written today; it was written a time when 25% unemployment and the collapse of the global financial system just occurred. Neither of those things happened in the recent crisis in America because of political steps taken, that weren't taken in 1929-30. Politicians could have done the opposite in either case; nothing was "inevitable" due to Marx's timeline.

Beyond that, you have no argument, you're just insisting on things with absolutely nothing to base them on.
posted by spaltavian at 6:53 PM on November 12, 2014

because of political steps taken

That would make it state capitalism, no?
posted by No Robots at 7:33 PM on November 12, 2014

No, of course not. You're making the argument of the far-right; where any regulation or intervention is impending socialism.
posted by spaltavian at 8:02 PM on November 12, 2014

Maybe it's just a question of perspective. I'm colour-blind. Where you see greenbacks, I see red banners.
posted by No Robots at 8:20 PM on November 12, 2014

Regulation =/= ownership.
Taxation =/= ownership.

I suppose one could argue that a tax rate of 100% on all income from capital ownership (profits off of financial transactions like sale of stock, rent collected by landlords, any business profit) would effectively be the same as state ownership of all capital assets, which is what is meant by the term state capitalism.

"Economics for Everyone: A short guide to the economics of capitalism" by Jim Stanford, economist for the Canadian Auto Workers (and pro-socialist!) gives a good and approachable explanation of economics terminology.
posted by eviemath at 4:04 AM on November 13, 2014

To focus on titular ownership is to miss the true locus of power and control. Here is Harry again:

Again, the state may become the absolute owner of the land and the mechanism of production and distribution, as it is in Soviet Russia; or the state may content itself only with the absolute control of the land and the mechanism of production and distribution, it is state capitalism just the same: for he who absolutely controls the means of life actually owns them, although nominally they belong to private individuals. Again, the power of the state may be concentrated in the hands of one dictator, as in the case in Soviet Russia; or the power of the state is concentrated in the hands of a dictatorial oligarchy, as is likely to be the case in this country, it is state capitalism just the same, for even a dictatorial oligarchy is governed by an absolute dictator. Clothed with unlimited political and economic power, the state becomes supreme and absolute. A supreme and absolute state cannot tolerate any independence of the people. The state will subordinate to its rule all religious, intellectual, political and social institutions and functions; the state will dictate what to do, how to do, what to think and what to believe. The only right that will be reserved to the individual will be the right to work for the state upon terms and conditions determined by the state, and the only freedom that the individual will be permitted to enjoy will be the freedom to live and die for the state.

The fact is that the state has effective ownership of all property. That is the nature of the global system of state capitalism in which we live.
posted by No Robots at 8:05 AM on November 13, 2014

"or the state may content itself only with the absolute control of the land and the mechanism of production and distribution,"

This isn't happening. The state does not have effective ownership of the all the property, and that isn't the nature of the global system of capitalism. I don't know where you are getting this from. Nothing Waton described there came to pass, and in fact, we have moved in the opposite direction- and brutally fast since 1980 at that.
posted by spaltavian at 8:46 AM on November 13, 2014

The Left has been cold-cocked by the Right’s appeal to values: order, stability, prosperity, duty, piety and honour. The Left, to make itself competitive, must re-establish its own foundational values. It needs to see itself in the context of history, as part of a movement of emancipation that goes back thousands of years. It must reclaim its own heritage, and make itself the embodiment of mankind’s maturity. It must extinguish homo politicus, and give birth to homo socialis.
posted by No Robots at 9:03 AM on November 13, 2014

And that explains how capitalism is dead and all nations have been state capitalist how?
posted by spaltavian at 9:45 AM on November 13, 2014

It is capitalist rhetoric that survives, not capitalism per se. In order to squelch this pseudo-capitalism, it is necessary to start up a countervailing rhetoric of socialism. This must encompass the human condition in its entirety. It must reclaim for itself the values that capitalist rhetoric claims: order, stability, prosperity, duty, piety and honour. It must seek to elevate the intellectual/spiritual condition of the proletariat, so that the bourgeoisie with its rhetoric no longer distorts public policy. Only then will state capitalism give way to socialism.
posted by No Robots at 12:10 PM on November 13, 2014

It is capitalist rhetoric that survives, not capitalism per se. In order to squelch this pseudo-capitalism,

You haven't established this. Stop preaching for a moment and explain this, because that's where the disagreement is. Nothing Wotin said was inevitable in 1939 came to pass.

I accept you believe in the coming glories of socialism, I obviously don't, so we can drop that. Man, talk about "rhetoric".
posted by spaltavian at 12:19 PM on November 13, 2014

It is unfortunate that the names being bandied about here are so similar. Again, it is Sheldon Wolin (contemporary political theorist) and Harry Waton (early twentieth century Marxist theorist).

Nothing [Waton] said was inevitable in 1939 came to pass.

You seem to have trouble accepting that you live under state capitalism. That is the advantage that the far right has: they do accept that fact. Neo-liberalism is a fantasy of free markets and private ownership. It has no bearing on the real locus of power, which is the state.
posted by No Robots at 1:12 PM on November 13, 2014

You seem to have trouble accepting that you live under state capitalism.

You have trouble stating why you believe I live under state capitalism.

It's the lowliest of rhetoric to pull this of line of argument. Shall I counter that you are obviously clinging to outmoded notions of economics because it would be psychologically troubling for to admit you've wasted your time with such unreformed Marxism? Or shall we act like adults?

You have given us non-sequiturs and stale Marxist rhetoric. Can you explain the basis for your assertion that we live under state capitalism? Can you explain the basis for your assertion that we currently have a "fantasy of free markets and private ownership"? Or is this just going to be another round of "wake up sheeple"?
posted by spaltavian at 1:35 PM on November 13, 2014 [1 favorite]

Let’s say that I get a pair of corrective glasses, and now I no longer see red banners but greenbacks. I say, “Gee, spaltavian is right. Everywhere capitalism is triumphant. Socialism is relegated to the dustbin of history. The state obeys the great owners. The mass of the people prospers, while various services deal with those unable or unwilling to help themselves.” All the same, I would still want to bring about socialism. Why? Because ultimately socialism is nothing more than the practice of loving one’s fellow man as oneself. Those who reject socialism say that this is no basis upon which to establish an economic and political system. And they are correct. But socialism is based on the idea that economics and politics are to be overcome, and a truly social order put in place. This is perhaps no more than a pious wish. But it is a wish that has motivated the greatest efforts in human history. There can be no doubt about its ultimate victory. The best we can do is to start to live it as though it was already accomplished. The basic elements to enable the advent of socialism have already been established, most importantly laws regarding the length of the workday. All that remains is for the workers to use their free time to educate and develop themselves intellectually. By liberating themselves intellectually, they make it easy to complete their material emancipation.
posted by No Robots at 2:30 PM on November 13, 2014

on the public/private 'ownership' issue it probably helps to break down what that means exactly -- possession, control, access, etc. -- and perhaps more relevant in terms of enforcement thru the judicial system (nominally under the rule of law) but more fundamental to me i think is the concept of 'if you can't fix it, you don't own it'. similarly, on the planned/market economy debate it might be better to look at it in terms of actual monetary/fiscal/regulatory/tax policies.

re: the monetary side of things
-Mehrling on Black on Capital
-Why Central Banking Should Be Re-Imagined
-The world according to modern monetary theory
-MMT vs Austrian debate post-mortem
-Money as a hierarchical system
-Political relationships
-On macroeconomic policymaking
-An Answer to Unemployment: A Jobs-for-All Bill (viz. Xi who must keep you employed)

also btw...
Reinventing Capitalism: Putting Soul In The Machine :P

There’s a void in our sense of meaning. We have come to regard “the Western System” as one in which the rich stoke artificial needs to suck money, blood, and spirit from the rest of us. We’ve been told that the barons of industry work overtime to turn us from sensitive humans into consumers—mindless buyers listlessly watching TV while growing obese on the hydrogenated fats, artificial flavors, chemical preservatives, and the cheap sugars of junk food. And some of that is true.

[graphic] Anti-capitalism poster by the early Marxist/Leninist artist Victor Deni, 1919. The vocabulary of Marx subtly dominates the way we see The Western System. This Marxist legacy unwittingly encourages a capitalist error–greed.

But the problem does not lie in the pistons of the Western Way of Life—it does not lie in industrialism, capitalism, modernism, pluralism, free speech, unfettered information exchange, and democracy. The problem lies in us—in you and me. It also lies in our bosses, in our corporate CEOs, in our intellectual elite, in our super-rich, and in our political leaders. We fail to see what’s under our nose—a set of moral imperatives and of heroic demands that are implicit in The Western Way of Being. We fail to see our magic, our gifts, and our utopian capacities.

But the problem does not lie in the pistons of the Western Way of Life—it does not lie in industrialism, capitalism, modernism, pluralism, free speech, unfettered information exchange, and democracy. The problem lies in us—in you and me. It also lies in our bosses, in our corporate CEOs, in our intellectual elite, in our super-rich, and in our political leaders. We fail to see what’s under our nose—a set of moral imperatives and of heroic demands that are implicit in The Western Way of Being. We fail to see our magic, our gifts, and our utopian capacities.

[...]

Business, commerce, and exchange, Bloom says, are at the heart of Western Civilization. We spend more time at work than at any other activity. Capitalism is what we do each day. But capitalism is not at all what we think.

Bloom’s Soul In The Machine: Reinventing Capitalism reveals a deeper meaning beneath what we’ve been told is crass materialism. It shows how profoundly our obsessive making and exchanging of goods and services has upgraded the nature of our species, has given it new powers, has endowed it with the equivalent of new arms, legs, ears, eyes, and brains. Reinventing Capitalism reveals the ethics, the morality, and the ideals implicit in what we think of as demeaning—in our labors and in our ways of selling them. It shows why what we have is worth living and dying for and why what we do will continue to ennoble the human race. Reinventing Capitalism explains why The Western System nurtures visions far more sublime than those of its enemies, whether those enemies are the global forces of militant Islam, the cynics who use capitalism to cheat, the postmodern anti-Globalist anti-Capitalists, the local Maoist guerrillas of Nepal, the Che-Guevarist guerrillas of Colombia, or the Neo-Indigenous-Culture Revolutionaries of Zapatista Mexico.

Reinventing Capitalism reveals an implicit code by which we live—a code that demands that we uplift each other. Though we don’t know it, capitalism condemns those who use it criminally. Capitalism punishes its thieves and charlatans—those like the wheeler-dealers of Enron who stuffed their pockets but failed to make the contribution they were paid to make.

oh and, fwiw...

• Is the world approaching a crisis point, requiring a socialist or anarchist revolution? I debate a commenter: "I just don't know what it is. Is it some kind of socialism, anarchism, Marxism, or other such 'leftist' type of thing? I just don't think we're anywhere near there yet."
• If Democrats want to be the party of the people, they need to go full populist: "Middle-class tax cuts are fine. But income transfers are better."
• How Scandinavians can tax so much: "these countries also spend relatively large amounts on the public provision and subsidization of goods that are complementary to working, including child care, elderly care, and transportation. Such policies represent subsidies to the costs of market work, which encourage labor supply and make taxes less distortionary... Furthermore, Scandinavian countries spend heavily on education, which is complementary to long-run labor supply and potentially offsets some of the distortionary effects of taxation."
• We should pay teachers more: "It’s common to hear that teachers should be paid better — more like doctors and lawyers. In 2009, the Equity Project, a charter school in New York decided to try it: they would pay all their teachers $125,000 per year with the possibility of an additional bonus... Four years later, students at TEP score better on state tests than similar students elsewhere... Teachers at TEP also get more time to collaborate and played a bigger role in school decision-making than teachers in other jobs. Teachers were paired up to observe each others’ lessons and provide feedback, collaboration that experts agree is important but happens too infrequently. During a six-week summer training, teachers also helped set school policy."
• Governing With A Higher Purpose To Spur Innovation: "Simply put, to many figures on the political right the government is simply a source of corruption and inefficiency, and it’s most effective means of handling innovation is to leave markets to their own devices. The political left, on the other hand, typically retorts that state intervention is necessary for economies to generate innovation because the government is the only entity positioned to mobilize national resources for broader public purposes. But this right-left dichotomy misses the real problem... today’s governments around the globe are rife with crony capitalism, which has embedded corruption into the system. So how can the state manage its central role in the innovation economy if the state itself has become an instrument for facilitating corporate predation?"
• The Consequences of Money Manager Capitalism: "In the wake of World War II, much of the western world, particularly the United States, adopted a new form of capitalism called 'managerial welfare-state capitalism'. The system by design constrained financial institutions with significant social welfare reforms and large oligopolistic corporations that financed investment primarily out of retained earnings. Private sector debt was small, but government debt left over from financing the War was large, providing safe assets for households, firms, and banks. The structure of this system was financially robust and unlikely to generate a deep recession. However, the constraints within the system didn’t hold."

Today, the dominant financial players are “managed money”—lightly regulated “shadow banks” like pension funds, hedge funds, sovereign wealth funds, and university endowments—with huge pools of capital in search of the highest returns. In turn, innovations by financial engineers have encouraged the growth of private debt relative to income and the increased reliance on volatile short-term finance and massive uses of leverage. What are the implications of this financialization on the modern global economy? ...it means that finance has become central to the daily operations of the economic system... Another major consequence of financialized economies is that they typically generate repeated financial bubbles and major debt overhangs, the aftermath of which tends to exacerbate inequality and retard economic growth... we have yet to come up with a sufficiently robust policy response to deal with the consequences of our new “money manager capitalism.” The upshot likely will be years more of economic stagnation and deteriorating living standards for many people around the world.

• Government Risk and Private Sector Reward: "Prof. Mariana Mazzucato of the University of Sussex in the U.K. debunks the pervasive myth of a lumbering, bureaucratic state versus a dynamic, innovative private sector. In fact, as Mazzucato shows in her latest book, The Entrepreneurial State, the opposite is true. Typically the private sector only finds the courage to invest in breakthrough technologies after a so-called 'entrepreneurial state' has made the initial high-risk investments... But despite the fact that these companies directly benefitted from taxpayer-funded technologies, they and other high tech outfits have strategically 'underfunded' the tax purse that helped lead to their success. This is a troubling development. So how should the government recoup the benefits from the fruits of its research? And what role should the government play going forward in important areas such as clean tech?"
• Some thoughts on The Entrepreneurial State: "So just as it’s wrong to suggest that the state takes all the risks of innovation, it’s also wrong to say that shareholders get all the rewards: the public (as consumers) and the state (as tax-collector) do very well too. This matters because the idea of an unbalanced risk-reward nexus underlies some of the book’s most interesting policy recommendations."
• Inside Peter Thiel's mind: "I have a slightly different cut on the Snowden revelations. I think it shows the NSA more as the Keystone Cops than as Big Brother. What is striking to me is how little James Bond-like stuff was going on and how little they did with all this information. That’s why I think, in some ways, the NSA is more in this anti-technological zone where they don’t know what to do with the data they find. So they just hoover up all the data, all over the world. I think it was news to Obama that he was tapping into [German Chancellor Angela] Merkel’s cell phone. One way to think about this is that if the NSA bureaucracy actually knew what they were doing, they would probably need way less information. What’s shocking about Snowden is how much information they had and how little they did with it."

cf. Leviathan or the Philosopher King?: The role of the state, chapter 11 in Economics: The User's Guide by Ha-Joon Chang

the comparative economic history of development is also fertile ground!
posted by kliuless at 9:26 AM on November 15, 2014

Another writer people may want to look at is James Burnham, "arguing that whether ownership was corporate and private or statist and governmental, the essential demarcation between the ruling elite (executives and managers on the one hand, bureaucrats and functionaries on the other) and the mass of society was not ownership so much as it was control of the means of production."
posted by No Robots at 8:56 AM on November 17, 2014