We have to talk about capitalism

The sense that the system which has dominated most the world for the past four centuries is in deep crisis is now widespread. Don Flynn says the question is, do we save it, or scrap it? 

In his work aimed at saving capitalism, the former US secretary for labour, Robert Reich, defines capitalism as free markets plus private property. The UK’s leading financial journalist, Martin Wolf, sees this as not only the foundation on which liberal democracy does rest, but excludes the possibility that it can subsist on any other.  

For Wolf, who expounds his argument in The Crisis of Democratic Capitalism, the virtue of the system is that it allows for the separation of the two major forms of power in society – economic and political – into separate and distinct domains, each governed by its own set of rules and conventions. In theory, this means that the two forms of power hold each other in check and prevent the defects of one from escaping from the terrain on which it is supposedly confined and contaminating the other. The individualism which flourishes in free markets is corrected by political power which requires a notion of public good, rooted in a collectivist ethic, to be a feature of the social order. On the other hand, enthusiasm for the equality of citizens is curbed by anchoring the rights of individuals in the sanctity of the amounts of property over which they assert monopoly control.   

All not well 

All of this suggests that a democratic form of capitalism is the best of all systems and efforts should be made to ensure it prospers across the world. But it is not in a good state of health at the moment. Developments in the US version of capitalism have seen the walls between the economy and politics severely battered, with the former breaking out of the room it had been allocated to intrude on government and the functioning of the state. In addition, there is an external challenge coming from another form of capitalism, decidedly illiberal and antidemocratic, but which nevertheless is fully endowed with the other supposed virtue of the system: its driving of innovation and rapid growth. If the liberal capitalism of the West goes to ruin any time soon then we can expect the authoritarian model being developed by the People’s Republic of China to take the helm.  

Wolf wants us to be concerned about the state of contemporary capitalism in order to heal its ills, but Bernie Sanders says, on the contrary, it should be making us angry. Aside from this, there is a very large overlap between their respective views on what they feel is wrong with the system. They both describe a situation in which capitalist corporations have fought back against the powers of government to regulate their activities, reaching a point at which the vulgar interests of CEOs and the people who cluster around them in boardrooms has become the determining feature of political life. The experience of the US, with its super PACs (political action committees) and billion-dollar budgets for corporate lobbyists, is taken as the nadir in both books, adding to the long list of other authors who have set out similar evidence of the insidious power of business interests emanating from the City of London and elsewhere.  

What to make of populism? 

Both authors hope for a revival of involvement in political life on the part of ordinary citizens, but it is at this point that Wolf gets into a bit of mess because of his deep aversion to the crudities of populism. Populism blurs the crucial distinction between the separate realms of where political and economic power are exercised. Its essence is, after all, nothing less than the mobilisation of the one resource that the ordinary citizen has – the capacity to act in concert with tens of millions of others in political activities in order to obtain a solution to the economic problems which oppress their lives. To be effective, populism requires that the walls which separate liberal society into its manageable components are dismantled in order that the exercise of power across the system is viewed as a totalising whole. Committed liberals like Wolf can only hear a drumbeat leading the masses towards authoritarian government of either the far right or the far left when populism becomes the organising feature of politics. 

Bernie Sanders has fewer reservations when it comes to getting ‘the many’ worked up over the state of their lives. It’s OK To Be Angry About Capitalism aims for exactly that end, bringing the American working class out onto the streets and organised into a new wave of trade union militancy – and, of course, voting for whatever left-wing candidates the Democratic party can be persuaded to offer the electorate. While Wolf would be happiest if all of the turmoil of politics of the last few years, with its mass rallies and social-media-generated anger, could be dialled back in order that sensible politicians, liberated from the influence of dirty money, could return to solving problems as they crop up on the basis of a sensible, whatever-works-best approach, Sanders wants to see more of the megaphonic mass chanting, only this time under the banner of left-wing reform rather than billionaire idolatry.  

Time for a New Deal 

Ironically, both draw their inspiration from the change to American capitalism under the presidency of Franklin D. Roosevelt, wrought under the impact of the 1930s recession and the years of the Second World War. They both quote word for word Roosevelt’s expression of pride in being, personally, the object of hatred emanating from “business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering”. Wolf notes with some embarrassment that the speech in which this statement was made was “demagogic in style and populist in content”, but no matter since it led to the New Deal, which provided the space for federal technocrats to do their magic healing. But Sanders sees the value of saying things plainly and in language ordinary people will relate to as being precisely the way to reconnect citizens with politics and revitalise enthusiasm for reform in ways that could never be achieved by technocrats and experts. 

Wolf’s book gives more impressive detail about the mess the modern capitalist system is mired in, illustrated with the insight you’d expect from a journalist who has been so hugger-mugger with the system for so many years. But the sheer extent of the horror undermines his faith that all could be put right with the “‘New’ New Deal” he sets out in the second half of the book. However sincere is his wish to save capitalism, the overhaul of the economic and political institutions he advocates goes well beyond anything the British Labour Party or the US Democrats seem prepared to contemplate in government. The example of British Labour, with its economic strategy to date hinging on getting institutional investors and venture capitalists onside to get a few more percentage points onto current lacklustre growth, doesn’t suggest any sort of appetite for anything like a reforming new deal of any sort. 

For Sanders, the energy he seeks to invoke by getting his readers angry about capitalism takes us to the point of asking, if it is so bad, should we be aiming to dismantle it and replace it with something better? For a politician best known for the considerable feat of being a democratic socialist elected to high office in a country where each and every form of socialism is demonised, it is disappointing that he says more about why this antipathy needs to be challenged and less about the contribution working-class socialist currents made to US progress in the past and what they have to offer for the future.   

Wolf sees democracy and liberal social values as being in dire danger in the current period, but his suggestions for a remedy seem pallid and uninspiring. He places his hopes in the re-emergence of a class of technocratically competent New Dealers which hasn’t yet shown itself anywhere on the contemporary landscape. How ironic will it be if the last best hope for liberal democratic government lies with the social forces advocating ‘for the many, not the few’ in a programme of radical reform which preserves individual liberty even as it overthrows oligarchic monopoly power over the economy? So much now rests on the success of the political project that seeks to make many more angry about capitalism.  

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