Capitalism: Not With a Bang But With a (Prolonged) Whimper

By Jayati Ghosh, Professor of Economics and Chairperson at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi. Cross posted from Triple Crisis

It is probably obvious to everyone that global capitalism is in dire straits, notwithstanding the brave talking up of output recovery that now characterises almost every meeting of the international governing elite. Even so, discussions of the end of capitalism still typically seem overstated and futile, not least because those hoping and mobilising for bringing in an alternative system are everywhere so scattered, weak and demoralised. In effect, capitalism is the only game in town, which is why even in its current debilitated and even decrepit state, it fears no rivals.

But maybe that is really not the point. Maybe economic systems can die without actually being killed by other competing systems. “How will capitalism end?” is the title of a brilliant book by the German thinker Wolfgang Streeck. (Verso, London 2016, published in India by Juggernaut Books.) It provides a cogent and persuasive critique of the nature of contemporary capitalism, and describes its ongoing extended demise, without surrendering to any optimism that as it fails to deliver even in terms of its own logic, all the nastiness and injustice it has generated must inevitably change for the better.

As may be fitting for a work with this combination of scope and profundity, it is difficult to pigeonhole either the author or the book into simple disciplinary categories. It straddles economics, politics and sociology, with forays into moral philosophy: in other words, political economy at its best. But even if it is beautifully written, it makes for tough reading – simply because the message is so stark, at once depressingly dystopic and terrifyingly plausible.

Streeck’s basic argument is this: capitalism is disintegrating, but without anything to replace it. As an economic regime, it is increasingly unable to deliver on its own promise of continuous expansion within a largely stable society. This disintegration is coming about not because of any external threat or combined socio-political opposition to it, but because it has been too successful for its own good, and so has to confront the contradictions generated by its success. In effect, contemporary globalised capitalism has managed to overrun and conquer its opponents (such as associations of workers that could reduce capital’s bargaining power, democratic accountability that might give rise to regulatory structures that limit or constrain its activities and its profits, collectivities that voice the requirements of the larger social good, and so on) to the point where it is now almost completely untrammelled. So there are no checks and balances of the kind that in various periods in the past have generated both less economic volatility and more social stability.

In purely economic terms, this “success” means less expansion of demand for products that the system must keep coming up with in terms of its own logic. It also means less ability to create new sources of demand, as financialisation and credit bubbles also appear to have run their course, despite almost endless injections of synthetic liquidity through very loose monetary policy. In socio-political terms, this generates more widespread despair, alienation and individualised responses that threaten the very basis of functioning societies. In an almost textbook extension of the biological argument of the prey-predator relationship, capitalism has killed off all its prey, to the point that its own very existence is now threatened.

This is particularly evident in global capitalism’s ability to encroach onto and incorporate the three areas that Karl Polanyi had described as “fictitious commodities”: labour, land (or nature) and money. Polanyi described these as fictitious because laws of supply and demand cannot fully apply to them and so complete commodification will destroy them or make them unusable. Yet these are precisely the areas in which recent capitalist expansion has been most “dynamic”. As the institutional safeguards that had earlier prevented them from being fully commodified have been eroded, the process has reached a critical threshold that must generate crises of different kinds: economic, social and political.

This reflects a deeper concern: at least for the advanced capitalist societies of the west, the shotgun marriage between capitalism and democracy that was performed in the middle of the 20th century after the Second World War, now appears to have ended. Streeck speaks of “an endemic conflict between capitalist markets and democratic societies” in the longer term, (page 73) which was only briefly overcome during that period. The conflict is now resolved in capital’s favour, as that social contract is now effectively being transformed into one in which economic power is political power, with one-dollar-one-vote replacing one-citizen-one-vote. Associated with this, there has been a shift in the nature of states in developed countries (Streeck spends much time on those in Europe in particular) from the classical “tax state” that taxes the rich to redistribute downwards and provide essential services to the people; to the “debt state” that loses some of its ability to tax and seeks to provide services through enhanced public debt; to the “consolidation state”, for which fiscal austerity is the driving force, and which is fundamentally antithetical to democracy. It is now almost commonplace to note that “turning the economy over to a combination of free markets and technocracy makes political participation run dry” (page 141) – and it provides easy explanations for the rout of social democracy and the rise of rightwing anti-establishment forces. But despite these reactions, “the arenas of distributional conflict have become ever more remote from popular politics” (page 93).

This weakening of social, political and institutional constraints on capitalist advance has generated five systemic disorders, according to Streeck: stagnation, oligarchic redistribution, the plundering of the public domain, corruption and global anarchy. In turn, the symptoms of this decay are exemplified in the advanced capitalist countries in three broad tendencies. First, there is a persistent decline in rates of economic growth, often described as “the new normal” or “secular stagnation” – which matters crucially because capitalism exists in order to expand in economic terms. Second is the fact that this decline is accompanied by a concomitant and persistent increase in indebtedness, across households, companies and governments, because so much of the relatively anaemic growth of the recent past has had to be generated by credit expansion. These two features are strongly related to the third: the massive increases in income and wealth inequality within capitalist societies across the world. Falling growth, rising debt and increasing inequality are hardly news any more, but taken together they point to a morass from which the system cannot extricate itself without fundamental transformation.

But as there is no new social order, or groups able to mobilise to provide an alternative order, waiting in the wings to succeed it, what humanity will experience instead is an age of entropy. “Before capitalism will go to hell, then, it will for the forseeable future hang in limbo, dead or about to die from an overdose of itself, but still very much around, as nobody will have the power to move its decaying body out of the way” (page 36). This long period of systemic disintegration will be one “in which social structures become unstable and unreliable… devoid of reasonably coherent and minimally stable institutions capable of normalising the lives of its members and protecting them from accidents and monstrosities of all sorts” (page 36).

So the end of capitalism is a process, not an event – and it is likely to be a long process, possibly even spanning centuries. The individualised societies of this unhappy interregnum must generate survival strategies of people who are forced to improvise to fill the gaps that are created by the absence of a meaningful social contract, to ensure what is then valorised as “resilience”. Streeck identifies four such responses: coping, hoping, doping and shopping. “Coping” involves individual exertion rather than organising collective action – and “tends to come with a social construction of life as an ongoing test of one’s stamina, inventiveness, patience, optimism and self-confidence” (page 42) in the face of increasingly insecure and fragile material conditions. “Hoping” must accompany this, but is once again an individual attempt to imagine a better life for oneself eventually – even when this hope is imposed on the collective as in the “American Dream” (or perhaps in the more recent evocation of the “Chinese Dream”). When these are not enough, “doping” or substance abuse becomes significant – not just in the more obvious performance-replacing consumption of those designated as failures, but in the performance-enhancing dependence of the achievers, whether in sports or the finance industry. Finally, the importance of “shopping” in capitalism is well known, as is the strategy of expanding markets by creating wants beyond needs. But socially obligatory hedonistic consumerism does more than fulfil this economic function; it also fits in with these societal responses by making an individual’s status and social interactions dependent on consumption in various forms.

Streeck presents what is essentially a very Northern perspective, rooted in the recent history and milieu of advanced capitalism. There are those who would argue that capitalism in emerging markets – particularly in Asia – still have the scope to achieve something of the dynamism that prevailed in the core countries a few decades ago. Certainly, the form of “Xi Jinping Thought” so recently sanctified in China appears to rely on the optimism that state-led authoritarian capitalism can overcome these deficiencies. Streeck dismisses such a possibility without further elaboration. But it is also true that many of the most disconcerting features of advanced capitalism, especially the commodification of land, labour and money, are increasingly evident in such emerging markets, and are likely to play similarly negative roles even for capitalist accumulation in future.

Given this unsparing critique, it is somewhat surprising to find that, among others, the Financial Times of London (widely perceived as the voice of the global financial elite) awarded it as the best book of 2016.  But self-knowledge need not always lead to self-consciously driven change. Certainly, nothing in the behaviour of major international financial players or large global companies generally suggests that there has been a rethinking of their actions simply in order to ensure survival into the future.

So it is a bleak picture indeed, which can only be leavened for readers of this book with the knowledge that structures and institutions that are created through human agency can also be dismantled by them, and that even the full knowledge of current processes can contribute to wider social demands to reverse them.

Originally published in the Frontline.

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100 comments

  1. Michael

    In the article the author claims it may take centuries to evolve away from neo-classical economics. I believe it will be much shorter. As pointed out by 15,000 climate scientists we only have a few years to take corrective action before the climate goes into a runaway state.

    The head of United Planet Faith & Science Initiative, Stuart Scott, believes the root of the problem is neo-classical economics since it makes the assumption that the planet’s resources are infinite, and the ability to destroy the planet without consequence is also infinite. There is no measure in this paradigm for the ecological costs of capitalism.

    Dr. Natalia Shakhova and colleagues from the University of Alaska have been monitoring methane eruptions for a number of years and claim there will be a 50 gigaton methane eruption in the East Siberian Arctic Shelf within the next ten years, since as of 2013 the amount of methane released from this area had doubled since previous measures. Dr. Peter Wadhams of Cambridge University calculates that should this occur, the average global temperature of the planet would increase by .6 degrees Celsius within a decade.

    It is predicted that this will cause an drastic jet stream disruption creating drought, flood, and heat waves that will make food production for 7 billion people impossible. There will probably be a population crash along with accompanying wars.

    Additionally, inasmuch as we are already 1.1 degrees Celsius above preindustrial levels this would put us close to 2 degrees Celsius and on a path to a runaway climate. We currently have no via means of removing excess methane nor CO2 from the atmosphere, although it is assumed in the IPCC models that geo-engineering is employed to keep us below both 2 and 4 degrees Celsius of warming.

    IMHO we are nearing an inflection point of survivability. What happens within the next 5 years will determine the chances of human civilizational survival. Everything else is just rearrangement of the deck chairs.

    Stuart Scott has proposed an immediate action item to draw global attention to this problem. He proposes to nominate The Club of Rome, Herman Daly, and Pope Francis for a Nobel Peace Prize in Sustainable Economics. This may be a “Hail Mary Pass”, but right now we need anything we can get.

    See below for information and the action item.

    https://www.youtube.com/watch?v=4dSe1vCHUto

    http://www.upfsi.org/nobel-peace-prize-for-sustainable-development/

    Reply
    1. Saddam Smith

      Yes.

      Perpetual growth is impossible. Pursuing it at all costs piles up misery for future generations, and that future is transitioning from ‘right around the corner’ to ‘upon us’. Capitalism is endemically growth based. It has to be transcended or it will continue to cause damage to planetary ecosystems such that civilisation will have no chance of recovery likely for millennia.

      But we have to want it, we have to reach some kind of global tipping point as a species that will include not really knowing how to do it. There’s going to be a lot of guess work. All proposals will seem ‘wrong’ or ‘flawed’. What is not going to happen is the penning of some perfect alternative that everyone agrees with. It’s going to be messy und highly uncertain. All we get to do is make it as survivable as possible.

      Reply
      1. Castalia

        “Perpetual growth is impossible.”

        I’m not so sure about that; at least from the capitalist’s point of view: Since destruction can be a source of growth (in a GDP sense) then perpetual growth becomes possible through endless cycles of production-destruction.

        Reply
        1. Mel

          There’s also the land-grab in Intellectual Property. I don’t know how it will play out in the end, but for now we’re inventing lots of new reasons for billing people. And without necessarily a lot of real resources being used up.

          Reply
          1. Saddam Smith

            And this sounds very vague. Everyone charging everyone else for everything, more and more, forever, doesn’t sound like a viable system. And it too would have its limits. Would humans want to breed into that kind of a mercenary, pure-business world?

            Reply
            1. The_Wabbit

              “Would humans want to breed into…” Probably won’t “want” to, but the decision will not be ours. Just ask our livestock.

              Reply
        2. Saddam Smith

          That would be a kind of crude or brutish steady state. I think it is part of how capitalism keeps going, but capitalism’s global scope now makes deliberate destruction less and less containable/controllable via repeating world wars.

          Reply
    2. tongorad

      I believe it will be much shorter. As pointed out by 15,000 climate scientists we only have a few years to take corrective action before the climate goes into a runaway state.

      Seems to me that corrective action would require global consensus, cooperation and coordinated action on a scale not ever before seen. Something approaching a global state.
      The prognosis is beyond grim.

      Reply
      1. ger

        The few that control near one half of all world wealth have no intention of reaching
        ‘global consensus’. Perhaps the time is near when the last standing ‘capitalist’ can proclaim himself/herself as the ultimate capitalist that controls all wealth…. for what it is worth!

        Reply
        1. lyman alpha blob

          Excellent idea! That’s along the lines of VT Senator George Aiken’s suggestion in the 70s that the US declare victory in Vietnam and go home.

          So can we declare that Jeff Bezos wins capitalism and make him leave?

          Reply
        2. Synoia

          IMHO we are nearing an inflection point of survivability.

          We are past that point. Consider the remediation necessary: The abolition of fossil fuels.

          Instant starvation, because we are dependent on food distribution. Modern cities cannot survive without fossil fuel driven distribution of food.

          There is no plan, scheme, or dream to avoid the catastrophe. That appears to have required action in the ’70s.

          Reply
            1. Dwight

              while the cooling effect of aerosol removal is immediate and could trigger positive feedbacks that cause further warming. Again, quite the predicament, in my layman’s understanding.

              Reply
      2. Thor's Hammer

        In the brief period when weak and hairless homo sapiens have risen to a position of dominance in the planetary echosphere they have failed to develop social institutions capable of collectively addressing the power of their technology to destroy the functioning echosphere of their home world.

        However they have developed one social activity unique to their species: WAR. And with the unlocking of the secrets of the atom, nuclear war has become the only human action that can instantly halt the rush toward the cliff of global disaster.

        Consider its benefits:

        1- Population control:
        The sustainable homo sapien population level of the planet in the absence of technological systems to capture and store solar energy or burn ancient fossil fuels is probably well under 1 billion. Burning irreplaceable fossil fuels has enabled that population to balloon to seven + billion— a level that can only result in further degradation of the planetary life support system and eventual collapse toward a lower sustainable population.

        A nice “nuclear exchange” between heavily armed nations like Russia and the US would overnight eliminate the population explosion problem by vaporizing several billion people and most of their industrial system. The residual radiation would have beneficial effects upon fertility, slowing the rate of population replacement.

        2- Nuclear Winter:
        Historically new biological epochs have been ushered in by the effects of giant asteroid impacts. Humans may be socially undeveloped, but their individual minds have accomplished incredible feats of logic and creation. Among those is the ability to mimic the impact of an asteroid impact by triggering a few hundred hydrogen bombs. No other human action is remotely capable of reversing the course of industrial civilization virtually overnight.

        3- Biodiversity:
        One of the effects of homo sapien’s planetary dominance is to create an ongoing extinction event where half the planet’s species are threatened with elimination. Species may exist for millions of years with little change if their environmental niche remains intact, but the ability to mutate into a different form is vital in a changing world. The post-global holocaust world will be bombarded with radiation that will trigger billions of mutations that will enable adaptation to the newly developing biosphere.

        Thor, God of Thunder:
        Even Thor isn’t insane enough to actually favor global nuclear war as a solution to humanity’s problems! But following the course we are now on leads to an outcome every bit as catastrophic.

        Reply
        1. andy

          Not sure about nuclear winter. Nuking a few hundred cities might not do it because there isn’t enough stuff to burn, it won’t burn hot enough, and some of what would burn will get buried under the rubble of stuff that won’t burn. Some large forest fires and volcanic eruptions send particles into the upper atmosphere at rates close to what a nuclear exchange might produce.

          Reply
    3. Vatch

      He proposes to nominate The Club of Rome, Herman Daly, and Pope Francis for a Nobel Peace Prize in Sustainable Economics.

      I agree about the Club of Rome and Herman Daly, but it’s too soon for Pope Francis to be honored for sustainability. First he needs to remove the Catholic Church’s opposition to artificial forms of contraception, then he can be honored for sustainability. I’ve been told by people who know more about Catholicism than I do that he can’t do that on his own, and that there’s a conservative Church bureaucracy that must be dealt with. I don’t understand that; I thought that when the Pope issues a proclamation ex cathedra, he’s infallible, and I don’t see how a bureaucracy could stand in the way of infallibility. But as I indicated, I’m not well informed on the way that the Catholic Church operates.

      But no prize for Francis until the opposition to contraception is eliminated.

      Reply
    4. Oregoncharles

      Thank you. Excellent action item. I’ll try to get the Oregon and national Green Party to sign on (Oregon I can do; national up to others). I’ve already endorsed it myself.

      Reply
    5. Lord Koos

      The whole idea of geoengineering the climate scares the crap out of me, the risk of unforeseen consequences seems high. One resource we have plenty of is hubris.

      Reply
  2. Jamie

    And why would one be surprised the Financial Times should celebrate a work that essentially says to the elites that they can carry on as they are for centuries with no competing power anywhere on the horizon? If the elites were going to be deterred by all the negatives of their success so aptly described here, they would have sought alternatives long ago. No, the take home message to the elites is, “everything’s fine”. So, of course, the Times loves the book.

    Reply
    1. OpenThePodBayDoorsHAL

      The title asks the wrong question: How Does Capitalism End?
      It should be asking: When Will Capitalism Begin?

      We currently live under Crony Corporate Socialism, where the most profitable companies in history (oil & gas) receive billions in socialist handouts. Where companies in abject bankruptcy by any measure (banks in 2009) are handed hundreds of billions of dollars in socialist giveaways. Where government diktats like pharma purchasing rules (Medicare Part 5 anyone?) protect vast fortunes of crony socialist pharma companies and their other-worldly crony socialist billionaire shareholders, who in turn are protected from free-market capitalism by tax laws enabling offshoring of their capital and crony socialist policies by the central bank enabling them to hollow out their crony socialist corporate balance sheets with free debt they use to buy back their shares.

      The people already have Capitalism writ large, with features like creative destruction, bankruptcy, and free-market consequences on things like wage competition. So the question is: when will the big end of town get Capitalism too?

      Reply
      1. nonclassical

        … “socialist”? (follow the $$$$); as Naomi Klein describes, “Shock Doctrine-Rise of Disaster Capitalism”…guys whose ideology still dictated today (see trump-republican tax cuts) explain succinctly their intention:

        “The term neoliberalism was coined at a meeting in Paris in 1938. Among the delegates were two men who came to define the ideology, Ludwig von Mises and Friedrich Hayek. Both exiles from Austria, they saw social democracy, exemplified by Franklin Roosevelt’s New Deal and the gradual development of Britain’s welfare state, as manifestations of a collectivism that occupied the same spectrum as nazism and communism.

        In The Road to Serfdom, published in 1944, Hayek argued that government planning, by crushing individualism, would lead inexorably to totalitarian control. Like Mises’s book Bureaucracy, The Road to Serfdom was widely read. It came to the attention of some very wealthy people, who saw in the philosophy an opportunity to free themselves from regulation and tax. When, in 1947, Hayek founded the first organisation that would spread the doctrine of neoliberalism – the Mont Pelerin Society – it was supported financially by millionaires and their foundations.

        When the term re-appeared in the 1980s in connection with Augusto Pinochet’s economic reforms in Chile, the usage of the term had shifted. It had not only become a term with negative connotations employed principally by critics of market reform, but it also had shifted in meaning from a moderate form of liberalism to a more radical and laissez-faire capitalist set of ideas. Scholars now tended to associate it with the theories of economists Friedrich Hayek, Milton Friedman and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan.[

        The movement’s rich backers funded a series of thinktanks which would refine and promote the ideology. Among them were the American Enterprise Institute, the Heritage Foundation, the Cato Institute, the Institute of Economic Affairs, the Centre for Policy Studies and the Adam Smith Institute. They also financed academic positions and departments, particularly at the universities of Chicago and Virginia.”

        https://www.youtube.com/watch?v=hA736oK9FPg

        Reply
      2. Massinissa

        So was the robber baron era also ‘too much socialism for the rich’? Or does capitalism just have a tendency towards monopolies and concentration of wealth and power, with the post ww2 era being an exception rather than the norm?

        Reply
        1. OpenthepodbaydoorsHAL

          The labels mix people up, the point is that the 1% do not currently have free market capitalism, no matter how much they bloviate about it.

          Reply
          1. Massinissa

            Then… Where exactly has ‘free market capitalism’ ever existed, and how is referring to what we have as ‘socialism’ helpful at all when it isn’t ‘socialism’ either?

            Reply
      3. Dirk77

        Give it up HAL. Yours is a purist trick already employed by communists for years to excuse what went on in the USSR, China and elsewhere. If we aren’t living in that pure capitalist world you yearn for it is because it is impossible. I’m not a big fan, but MLK once said that communism ignores that people are individuals and capitalism ignores that people are social. In other words neither is compatible with the complexity of human nature. Is there a middle way? I’ll bet on that before anything else.

        Reply
  3. Mel

    That phrase

    hope is imposed on the collective as in the “American Dream”

    somehow reminded me of Arnold Toynbee’s distinction between creative vs dominant minorities. In starting up a New Thing, a creative minority presents ideas that are just too good to pass up. People join up because they agree, and are eager to give it a try. With the minority established in charge, should they ever run out of hot ideas, what can they use besides force?
    I’m willing to believe that the imposition of the American Dream, back then, wasn’t a forcible or unwelcome kind of imposition. Not like now, when it’s worn out and isn’t working any more.

    Reply
  4. Left in Wisconsin

    Good review of an excellent book.

    My one complaint is that the book is really about the end of the industrial capitalism, complete with social contract, that dominated the global north in the mid-20th century. Surely capitalism over the centuries has gone through numerous cycles or phases in which capitalists have been able to develop structures to weaken working class organization and disrupt working class life. And working people have responded to those developments with renewed efforts and new forms of organization to fight back, though not surprisingly sometimes this fight back takes a long time to gain traction.

    Interregnum, yes. End of capitalism, I don’t think so.

    Reply
    1. el_tel

      I don’t know if this answers your core issue but the first thing that sprang to mind was the 7 year debt jubilees that were apparently common during the before common era (BC) among empires and referred to in the bible. It seems like “elites” realised how capitalism concentrated wealth and if they were to keep their heads they had to allow an “escape valve” via debt jubilees to keep the masses happy. If I’m over-simplifying I’m sure someone will correct me, but there seemed to be an understanding that capitalism couldn’t be indefinitely unfettered even then.

      Reply
      1. Anonymized

        If they wanted to keep their empires, you mean. States need people to grow food, man their armies, run the bureaucracy, etc. That’s hard to do if a large number of your population has sold themselves into slavery to pay off their debts. David Graeber said in Debt: The First 5000 Years that this was the reason for the collapse of the contemporaneous Roman, Chinese, and Indian empires. This is also a huge factor in the ongoing collapse of the American empire.

        Reply
  5. Croatoan

    The absence of capitalism is Anrchism. Not in the chaotic sense, but in the natural order sense.

    Time to stop worrying and planning and just wait for it to happen. If you are lucky it will all get sorted out while you are still alive.

    Reply
    1. Saddam Smith

      Also yes. Although I think one should be active in the way suggested by Graeber: act as if you are already free.

      Finger crossed! :-)

      Reply
    2. Joe Renter

      It does not look good the the planet or it’s population, that is a given. However there will be an event that is no less than the biggest game changer that has happen in history. This blog is really not open to things of a spiritual nature, but the event will be of that realm. In a nut shell it is the return of Christ, or the World Teacher. He comes for all the people just not the historical followers of Christianity.
      He first priority is to stop the needless starvation of millions and the second is to save the planet from ecological disaster. Yes, we only have a few years to save this planet, let’s work on it on an individual level as well. Consume only what you need, not what want. Sharing is the bottom line.
      The new economic model will be three fourths socialism and one third capitalism from what I understand. Fear not.
      Here is a great site for this information… http://www.share-international.org/

      Reply
  6. nonsense factory

    The various forms of capitalism are very different from one another, and lumping it all together is a bit misleading. We could at least divide it up into three forms, perhaps local, industrial, and financial:

    (1) Local capitalism: Here we are talking about small commercial banks and credit unions that acquire their capital via deposits from local community members. They loan money out to community members for things like auto and home purchases, small business development, yearly loans to farmers to buy seed and fertilizer, etc. Similar structures have existed for millenia. Markets in such communities are diverse and have many players (such as a local farmer’s market, etc.).

    (2) Industrial capitalism: Here we are talking about the growth of factory production and mass manufacturing, it which large sums of capital are required to finance industrial development over the long term. Notably, the Soviet Union was able to create similar scales of industrial development without going through the mass capital mobilization scheme. When Marx talks about capitalism and workers, this is what he’s describing. Unlike local capitalism, geared towards individuals in small communities, here we have things like company towns, where everyone works for the same massive corporation. Markets tend towards monopolization or cartels, and workers can only gain comparable power over their wages and working conditions by unionizing into similar-sized unions.

    (3) Financial capitalism, aka the modern nightmare, what brought down the global economy in 2008. This is the murky realm of investment banking, international capital mobility, currency trading, etc. Its goal is to exert control over all other forms of capitalism, local and industrial, via means such as leveraging nation-states against each other. This is probably the most dangerous and disastrous form capitalism has ever taken, because in this format, ‘capital set free’, it can flow into and out of different regions on the planet, stripping wealth and leaving disasters in its wake, but never having to accept the consequences. The simplest way of dismantling this form is nation-state regulation – tight restrictions on cross-border capital flows, isolation of investment banking by rules like Glass-Steagall (preventing the investment bankers from controlling local economies), and construction of industrial corporations in which the financiers are not allowed to be the decision-makers (for example, corporations in which the majority shareholders are the employees).

    It’s really the financial capitalism system that’s the worst player of all, and that needs to be dismantled immediately, because it does far more harm to planetary ecology and human civilization than any other form.

    Reply
    1. Jeremy Grimm

      This post presents a bleak all-encompassing vision of TINA! I am reminded of Zinn’s quip that Soviet Russia provides a very bad example of Communism. The Neoliberal economic juggernaut provides a very bad example of Capitalism — actually I can’t regard Neoliberalism as Capitalism or even resembling a notion of Capitalism.

      Reply
      1. Michael Fiorillo

        Really?

        With absolutely everything now subject to and defined by market forces, I think of neo-liberalism as a pure, two hundred-proof distillation of capitalism.

        Reply
      2. David May

        Capitalism = steal, lie, cheat and kill to make a buck. Neoliberalism = steal, lie, cheat and kill to make a buck. I fail to see the major difference between the two.

        Reply
      3. nonsense factory

        Of course there are alternatives, but ‘capitalism’ is just not a very precise word. Adam Smith’s era was very different from the late 19th century Robber Baron era, and today’s global financialization system is even more extreme (the ‘vampire squid’ Goldman Sachs era, as Matt Taibbi memorably put it). The most general concise definition of capitalism I’ve seen is from Ha Joon Chang:

        “So what is the capitalist economy, or capitalism? It is an economy in which production is organized in pursuit of profit, rather than for one’s own consumption (as in subsistence farming, where you grow your own food) or for political obligations (as in feudalist societies or socialist economies, where political authorities, respectively aristocrats and the central planning authority, tell you what to produce).”

        As others note, the mass insanity that capitalism tends to inspire, i.e. that money can do anything, ends up running civilization over the cliff of physical reality and ecological destruction. What good is money if you’re lost in the desert without water? Given the choice of a million dollars or a few gallons of water and a map back to civilization, the diehard capitalist takes the money and dies of thirst.

        Those who think they’ve got the right economic theory to solve the world’s problems, those are the ones to be most suspicious of – because, as Ha Joon Chang again notes:

        “From the central planning in the former socialist bloc (and their ‘Big Bang’ transition back to capitalism), through to the disasters of ‘austerity’ policies in most European countries following the Great Depression, down to the failures of ‘trickle-down economics’ in the US and the UK during the 1980s and the 1990s, history is littered with radical policy experiments that have destroyed the lives of millions, or even tens of millions, of people.”

        If theres’s one thing that people should come to grips with, it’s that the economic health of human civilizations is entirely dependent on the ecological health of the planet’s various life support systems – trees and algae making oxygen, etc. Destroying your local life-sustaining ecosystem to make a buck is just suicidial – but this is what international capital thrives on, because they think it’s some else’s problem – an ‘externality’ – but with global warming and other planetary-scale issues, this fantasy comes crashing down.

        Reply
        1. JTMcPhee

          That local and global destruction is only “suicidal” if the SHTF while the looter doing the destruction is still alive, and not insulated by his or her vast wealth and “people.” If dead and gone, departed this mortal coil at a ripe old age, in vast comfort and with caring nurses and doctors and aides to attend to the indignities of decrepitude, thanks to those non-survival skills at looting, it’s not suicide. More a form of mass homicide.

          A few people get to fork over vast numbers. And potentates of the past had their wives and dogs and servants killed and suck in their tombs with them. The scale has changed. I wonder which of the mass looters will be the first to get the Ides of March treatment, and who will wield the weapons…? And whether that will catalyze further spasms of similar stuff, once the taboo is broken…

          Reply
        2. Saddam Smith

          Exactly. Economics sees nature as a subset of the economy, a pool of resources to be exploited. I understand this error as reflective of a generalised hubris that is one part of the civilisational vector that sees mankind as somehow apart from and therefore able to perfect nature as it would a machine.

          Reply
    2. nonclassical

      …financials yes, which is what we are coping with here-NC…but it wasn’t end of Glass-Steagal led to Wall Street $600 trillion (defined by Robert Johnson, Brooksley Born) “derivatives”…it was same “player”; texas senator (Senate Banking Chairman) phil gramm, who loosened “Commodities Futures Act” (as well as ending Glass-Steagal) legislation allowing frauds = paper debt.

      If we “follow the $$$$”, here (FDIC) is where it ends up (for now), which should provide real perspective on how capitalism ends:

      “JPMorgan Chase shrewdly parks virtually all of its vast derivatives holdings in its commercial bank subsidiary. In the event of a collapse, the bank can use its deposit base to pay off the derivatives, while leaving the Federal Deposit Insurance Corporation to reimburse depositors if their money runs out. This is not a trivial technicality. JPM is the world’s largest purveyor of derivatives. Its total contracts have a notional value of $72 trillion—and 99 percent of them are booked at its FDIC-insured bank. In the event of failure, sorting out the claims and counterclaims will be a costly nightmare for the FDIC. The bulk of the contracts are “plain vanilla” derivatives used as standard hedges against price or currency changes. The exotic derivatives, however, are dangerous—the kind that suddenly blew up in Dimon’s face some weeks ago, when his bank swiftly lost at least $3 billion on one complicated market gambit, with maybe more losses to come.

      We are “insuring” other big boys of banking in the same way. Citigroup has nearly all of its $53 trillion in derivatives in its FDIC-insured bank; Goldman Sachs has $44 trillion parked at an FDIC-backed institution. After Bank of America purchased Merrill Lynch, BofA began transferring the securities firm’s derivatives to the FDIC-insured bank, which now holds $47 trillion in contracts. When Senators Sherrod Brown and Carl Levin, among others, complained that regulators’ acquiescence in these transfers contradicted Congressional instructions in the 2010 Dodd-Frank reform law, the Federal Reserve, the FDIC and the Treasury Department’s Office of the Comptroller of the Currency refused to answer their objections. This matter involves “confidential supervisory” and “proprietary business information,” the three agencies responded in unison.”

      https://www.thenation.com/article/why-fdic-insuring-jamie-dimons-mistakes/

      Reply
  7. Juliania

    I have one suggestion for remaking capitalism:

    Treat the word ‘consumer’ as we treat the ‘n-‘ word, understanding that it is basically just as offensively slave-oriented. Use the word ‘customer’ instead. And, above all, no money in politics!

    We don’t need a new social order; we need to go back to the old one.

    Reply
    1. Massinissa

      The one that was a historical aberration?

      Sorry, but we are heading back to what was the norm in the 1890s. This isn’t some new thing. This is just what happens when Capitalism has nothing restraining it.

      Reply
      1. JBird

        Yes, but what’s truly scary is that it took over forty years to finally rein it all in. I don’t see us having another four decades.

        Reply
          1. JBird

            Mere bagatelle.

            I’m thinking climate change. Wait until the two Floridian senators and twenty seven representatives on the Hill are missing a state. :-)

            Reply
  8. Jim Haygood

    fiscal austerity … is fundamentally antithetical to democracy
    decline is accompanied by a concomitant and persistent increase in indebtedness, across households, companies and governments

    Streeck can’t have it both ways, whingeing that ‘austerity is b-a-a-a-a-d-d-d-d’ while direly pointing out that indebtedness is going up.

    It’s largely the perverse incentives built into universal democracy coupled with a fiat-currency welfare state, which produce the pathologies of which Streeck complains. This is a disease of Big Gov, not capitalism.

    Rusticating central banksters to dip sheep, muck stalls and dig irrigation ditches with their bare hands would be a good start in curing our ills. :-)

    Reply
    1. lyman alpha blob

      My take was that austerity is bad because it causes personal indebtedness to go up, which as you know is very different than sovereign debt.

      As long as we have a capitalist system using fiat currency, why not allow it to work to the advantage of the majority of the population and not just the rentiers? T

      Tell Mnuchin to fire up the printing presses – the private sector needs to turn a profit!

      Reply
    2. Oregoncharles

      I like the last sentence; if we’re feeling generous, we could let them wear gloves.

      For the rest: you have a point, in that it failed to distinguish between personal or corporate vs. sovereign debt.

      And of course, even in MMT sovereign debt can be a trap, if it’s out of proportion with the available resources.

      It’s been almost 50 years since we adopted purely fiat currency, and so far our problems are mostly that we don’t take full advantage. With it, there’s no reason to have federal debt at all – unless those who claim that it’s the basis of our money are right.

      Reply
    3. The Panopticoin

      You got it the wrong way around. In a profit-based economy (aka capitalism), you have the choice between scylla and charybdis: Either you need ever-increasing debts, on a global scale, to feed the profits. Or, you can reduce the income of the vast majority. (Austerity) Big Gov certainly helps with variant (A) , leading to “economic growth”, although for obvious reasons pretty unstable. (In the short term, it leads to credit Booms and debt Busts, when it is realized that people cannot meet their obligations) (B) leads to a deflationary race to the bottom. So: Big Gov and Fiat Money are there to run a profit-based economy while creating economic growth, to enrich the wealthy. It just does not work out (for almost everybody) in the long run. ;)

      Reply
    4. Steven Jennings

      I think you have missed the point.
      In the book he makes clear that the debt is growing due to reduced tax incomes which are linked to tax evasion and reduced top tax rates, that are allowed because of the very fact of neoliberal capitalism.
      He is not saying that MMT wouldnt work or that there are no solutions, he is saying that the solutions can not be implemented becasue of the total dominance of neolieralism and the fact that the lunatics (big finance) control the asylum.

      Reply
    5. templar555510

      Hang on a minute Jim . It was Henry Ford who was the first person to recognised that in order to expand the market for his cars had to pay wages commensurate with making those same cars affordable by his workers. Call that enlightened if you will, but most of his fellow capitalists didn’t follow suit. And thus the workers had to wrest their share of the profit from production to which they had contributed massively from the capitalists . But the capitalists resisted with the power at their disposal ( cash to buy off politicians for example ) so the workers with the power at their disposal by organising themselves into unions fought back and wrested some of that profit from the capitalists via government. This tension lasted roughly from 1945 until 1980 since when what you call ‘ Big Gov ‘ has been the plaything of ‘ Big Corp ‘ . Unless I have misunderstood you Big Gov is a fiction peddled by aged fantasists who dream the dream of a golden age of capitalism which never existed. The welfare queens are all on Wall Street and Silicon Valley.

      Reply
  9. susan the other

    Streeck’s “bads” (the perversions of taxing, debt, austerity, inequality, stagnation, plunder, corruption and anarchy) are eternal. So is our inability to understand money. If money flowed as freely as air we could turn the amazing engine of capitalism to good uses. But the stumbling block is that capitalism requires profits – even though that whole thing is obviously absurd. Profits are a barbaric relic created by a compulsion to accumulate wealth by creating scarcity which makes money, the symbol of wealth, valuable – as Polanyi said, money is a fictitious commodity. But here we are, unable to understand true wealth because money has replaced it. How bizarre can things get? If we simply set an agenda to promote and create the things this world needs and create the credit to accomplish it we will survive and thrive. And all we have to do is distribute credit as fast as we can. Remember, “money” – aka credit – does not pollute and destroy. It is simply a means to an end.

    Reply
  10. Jack

    I think it is interesting that this post follows an earlier one on Unemployment. I almost responded to that one, but after reading this post as well, I decided to weigh in. I have been doing a lot of reading lately on the Colonial America economy. It is interesting how the American economy improved to the point that there was actually a higher standard of living in the colonies than in England. Part of this of course was due to the abundant and cheap resources. It was also easy to enter basically any field as there was little regulation and the means of production were readily available. And during that time Capitalism with a capital C was definitely practiced. The major change in my mind since then has been the creation and development of the corporate structure of business, to the point that corporations today dominate our society both politically and economically. In colonial times corporations were not allowed, except for very specific purposes and for a specific period of time, usually only 5 years maximum. And unlike in Europe, there was no “liability shield” for officers and shareholders. For the next 100 years this practice prevailed, despite repeated attempts by various business groups to throw off the limitations imposed by the states. Eventually as we know, the corporate strategists prevailed and here we are today. It no longer is one person, one vote, but one dollar one vote. I think capitalism is a fine system for most markets. I don’t think government should be run like a business. A business’ primary mission to make a profit and government’s mission should be to increase the common good, which are two contrary outcomes. I think it is wrong to label today’s economy as resembling capitalism in any way really. The US economy is oligarchic in nature to my mind. And as long as we allow corporations to function as they do, it will only get more so. Capitalism has already passed away.

    Reply
    1. MK

      no “liability shield” for officers and shareholders.

      Bingo – that plus the fiat Federal Reserve has left us in the sorry corporate state we are in now.

      If the board members and shareholders of GE could’ve gone to prison (or worse) for their nuclear reactor designs, as only one example, the entire world would be in a much better place.

      Reply
    2. Jeremy Grimm

      I’ve been listening to some of Chris Hedges latest speeches. It’s taken me longer than it should have — I’m coming around to agree with his view of the Corporate State wielding the Neoliberal club to stun and crush all opposition — as far more dangerous than just an aberrant economic system. The mechanisms of state monitoring of our communications, movement and lives — the brutal systems for enforcing rule from above — our police and military [increasingly there is little distinction between them] — the judicial dismantling of all our rights in the Constitution — promise a future of all-embracing totalitarian control more terrible and more frightening than any past totalitarian state could have dreamed of.

      Increasingly I take an awful solace in the looming implosion of our society as we run out of energy and as Global Warming brings about disasters beyond the ability of our wretched State and Empire to respond. I only hope we might avoid nuclear war, GMO created plagues, or some other horror I can’t presently conceive of.

      Reply
      1. Carla

        @Jack—superb comment. Thank you. Corporations claiming Constitutional rights they were never intended to have is rhe reason behind much of our current predicament I believe. That’s why I am an activist supporting a 28th Constitutional Amendment clearly stating that Constitutional rights are for human beings only, and money is not speech. BTW, the latter would not in any way restrict the freedom of the press guaranteed by the 1st Amendment.

        Reply
        1. John Wright

          But then you have the effective corporate speech by those who own the media (Jeff Bezos owns the Washington Post).

          There is a myth that we have a free press working for the commonweal. Instead, the press and media work for the elite in promoting such items as “must save the financial industry” and must go to war in Iraq (or other countries).

          Having freedom of the press is rather meaningless when the captured press simply defers to the powerful/wealthy.

          Reply
      2. JTMcPhee

        Re indistinguishable police and military: The imperial military’s operations in all their “commands,” like AFRICOM and SOCOM and the rest, are all about “training up”, https://www.democracynow.org/1997/5/23/us_military_special_operations_forces_training, and “rendering interoperable” https://www.rand.org/content/dam/rand/pubs/monograph_reports/MR1235/MR1235.chap3.pdf, all the local militaries and national police forces (and “militias,” and “moderate terrorists,” and “allies” like Israel and SA and such. All part of the in-your-face, whatchagonnadoaboutit overarching strategy of full-spectrum dominance over the whole planet, which is the stated doctrinal and strategic goal of the idiots who run the Imperial military: http://archive.defense.gov/news/newsarticle.aspx?id=45289

        Smart people with ambitions and that drive to dominate, or just take part in the Glorious Takeover of Everything, are lining up for the many “good paying middle-class jobs” and putative career paths within the horrorscape that the autonomous military juggernaut is building. https://www.careerbuilder.com/jobs-military-contracting

        Reply
    3. nonclassical

      Jack,

      Jack Beatty – “Age of Betrayal: The Triumph of Money in America, 1865-1900” discusses lucidly historical period you appear intone. It is quite other than “capitalism”; predatory capitalism at best, predating Wall Street-financialization;

      “Age of Betrayal is a brilliant reconsideration of America’s first Gilded Age, when war-born dreams of freedom and democracy died of their impossibility. Focusing on the alliance between government and railroads forged by bribes and campaign contributions, Jack Beatty details the corruption of American political culture that, in the words of Rutherford B. Hayes, transformed “a government of the people, by the people, and for the people” into “a government by the corporations, of the corporations, and for the corporations.”

      https://www.youtube.com/watch?v=hscXDworvCE

      Earlier U.S. “economics” was based upon slavery-as was Egyptian; whereby peasants, slaves, servants made up 80% of “society”…Rome appears have reduced this to around 200 per citizen, constituting 25%. Today, technology has substituted for numbers of “slaves”…

      (inclusion of climate change in perspective will certainly “change” technological aspect)

      Reply
    4. sierra7

      “I don’t think government should be run like a business. A business’ primary mission to make a profit and government’s mission should be to increase the common good, which are two contrary outcomes.”
      Give this poster the CEEGAR!!
      +1000

      Reply
    5. cnchal

      . . . A business’ primary mission to make a profit and government’s mission should be to increase the common good, which are two contrary outcomes. . .

      Bullshit. They are complementary outcomes.

      Reply
  11. John Merryman

    Finance is a circulation mechanism, just like government is a control and regulation mechanism. As such it is a public utility. The problem is that they serve very different functions. A good analogy is of the body’s central nervous system and circulation system.
    When communities were very small, economics was reciprocal, but as they grew, methods of accounting became necessary and that is what money is. It is the social contract commodified.
    When politicians control the money supply, they invariably find it convenient to inflate it, because that is easier than delivering on other promises. Yet when it is privately managed, it will be used to siphon value out of everything else. The problem is storing it, which is often as public debt. If the government threatened to tax excess money, rather than borrow it, then people would have to find other ways to store value. Since we tend to save for the same reasons, from raising children to retirement, building these as community functions, rather than trying to save for them individually, would lead us back to a reciprocal economy and bring the banks under control.
    Community banking.
    Three hundred years ago, no one thought “mob rule” could be made to work either.

    Reply
  12. Wyoming

    Michael above (November 21, 2017 at 11:01 am) touches on what are two important points but goes wheels way off the track by misquoting Dr. Shakova. (Those interested in what she has really said should delve into the subject a bit but suffice it to say the 10 years item is wildly inaccurate).

    The important points, however, are needed to bring the Streeck book into a more systemic and global perspective. This is the area that is almost always seriously lacking when economists start evaluating different systems. In that they leave most of the real world out of their analysis and thus miss the big picture and how reality tends to bite.

    1. Climate change is just starting to take that bite and being on an exponential curve this global degradation of living conditions (if I may call them such) is accelerating quickly. We have roughly 20-30 years before the actual effects are causing severe global disruption if those trends are not reversed (the total effects already baked into the cake are much worse but take time to occur). And most importantly here we are talking about these trends outside of the entire global system. Thus chaos is coming just from them as a standalone issue. But…

    2. At the same time we are overheating the globe the effects of the global population and its use of resources is quickly degrading the global carrying capacity of nature. Considered also as a standalone entity the figures on global carrying capacity show that we have already significantly lowered the capacity compared to prehistoric times. Just like with climate change trends the carrying capacity trends show that sometime towards mid-century we are going to have severe shortfalls in carrying capacity which will have global civilizational impacts. But…

    Items 1 and 2 do not occur in a laboratory vacuum but strongly interact with each other. And when the trends are going down (or reaching their limits) then they also strongly reinforce each other and this is to be feared and is what is happening.

    Capitalism makes things worse. As does our lack of urgency and action to stop damaging the climate. As does our use of the earths resources well beyond its ability to generate additional resources for us to use. Add onto the above the rapidly growing global population which is estimated to grow another 2 billion by 2050 along with those additional peoples needs for resources the picture gets worse. Then we are (via our global capitalist system) hell bent on increasing the affluence of hundreds of millions (a couple of billion?) more of the global population which will, of course, dramatically push the climate and carrying capacity trends in the wrong direction.

    Basic story. Train wreck. When? Good question. I would like someone to paint me a rational/logical picture that gets us past mid-century in recognizable shape. End capitalism, reduce affluence, degrowth, and dramatic population reductions are essential to any solution.

    Reply
    1. nonclassical

      …extremely relevant diaspora from wyoming…of course alternative involves “total global military domination”, which is – was theme of “Project For A New American Century” neocons…which is also “how we got here”…

      “The Project for the New American Century (PNAC) was a neo-conservative think tank (1997 to 2006) that had strong ties to the American Enterprise Institute. PNAC’s web site said it was “established in the spring of 1997” as “a non-profit, educational organization whose goal is to promote American global leadership.”

      PNAC’s policy document, “Rebuilding America’s Defences,” openly advocated for total global military domination. Many PNAC members held highest-level positions in the George W. Bush administration. The Project was an initiative of the New Citizenship Project (501c3). [1]

      In 2009 two of PNAC’s founders, William Kristol and Robert Kagan, began what some termed “PNAC 2.0,” The Foreign Policy Initiative.”

      https://www.sourcewatch.org/index.php/Project_for_the_New_American_Century

      Reply
      1. Jeremy Grimm

        A lot of the information and links at the PNAC sites sourcewatch.org points to are no longer there. It looks like PNAC picked up and moved to PNAC 2.0 the Foreign Policy Initiative at http://foreignpolicyi.org/.

        I thought we had nutcases running our government but I had no idea just how nutty they are. Government of the insane … by the insane … and for the insane.

        Thanks for the links!

        Reply
    2. Thor's Hammer

      Thor, God of Thunder has a Plan.

      Just encourage humans do what they do best— Fight wars with all the marvelous technology they have created. Sociopaths like Clinton and Trump are are the agents of the Future.

      Reply
  13. Summer

    That’s why I read the stock market highs as an indicator of fear more than bullishness.

    After the shenanigans of around 2008, there is absolute fear that more and more people lack belief. So, the complete divergence from economic fundamentals to keep a financial market propped up (more and more tricks and cons need to be legalized-not regulated) is an indicator of high insecurity.

    Reply
  14. Another Anon

    Two points, one thing I am wondering about is what happens when
    when inequality becomes so bad that even millionaires
    find themselves becoming screwed. For example say, the owner of a regional
    business who goes out of business because it is shut out of markets by
    national/international behemoths or a victim of predatory pricing, that is the bigger
    business is more able to keep prices down so again, the small business can’t compete.

    Second, surveys show that in the US socialism is more popular than capitalism among people under 30, shouldn’t that eventually influence developments ?

    Reply
    1. Thor's Hammer

      Popularity does not equal Power. There is no correlation between what “the people” desire and actual policy. While there are several clear paths to Collapse, I see none to political revolution.

      “If elections actually mattered they would make them illegal.”

      Reply
  15. Clark Landwehr

    Industrial capitalism was already doomed by 1900 with the closing of all frontiers. The transition to finance capitalism was already underway by that time. We have spent the last 100 or so years blowing through the trust fund. I think after 1970 we were already starting to take everything to the global pawn shop. The last silver candlestick is gone. Now we are desperately looking in the sofa cushions for quarters. I agree with others who say it won’t take centuries for capitalism to die. The collapse of environmental services, which really funds everything is happening too fast.

    Reply
    1. nonclassical

      ..as historically documented by Jack Beatty – “Age of Betrayal: The Triumph of Money in America, 1865-1900”:

      “Age of Betrayal is a brilliant reconsideration of America’s first Gilded Age, when war-born dreams of freedom and democracy died of their impossibility. Focusing on the alliance between government and railroads forged by bribes and campaign contributions, Jack Beatty details the corruption of American political culture that, in the words of Rutherford B. Hayes, transformed “a government of the people, by the people, and for the people” into “a government by the corporations, of the corporations, and for the corporations.”

      https://www.youtube.com/watch?v=hscXDworvCE

      Reply
  16. The Rev Kev

    Lots of great perceptive comments on this article today. My reading of the works of John Michael Greer seems to indicate that for the past two centuries we have been in constant economic expansion to the point that we cannot think of any other way to have an economy. We are now living in the era where this is grinding to a halt after running up against natural laws and physical limits and that from here on end we will be experiencing economic contraction as the new norm. Recoverable resources like oil, sand and other resources now find us on the wrong side of the bell curve. Lucky us!

    Reply
  17. RBHoughton

    The author mentions Trade Unions, Democratic Accountability and Popular Collectives as three institutions that should have confronted Capitalism but have not. I wish to add religion / spirituality as a former restraint that society finally disposed of in the last half-century.

    There is a form of understanding that physicists and mathematicians have revealed to us. It underlies the universe we live in and is more true than rationality derived from subject / object thought. It is a new understanding that incorporates uncertainty and luck and is palpably more real than our former ideas. We would likely find a way forward to a more just and decent society if humanity was to familiarise itself with this knowledge.

    Reply
  18. Marc H.

    The end of capitalism is when we no longer allow capital to rent human beings. How can we save our environment if we haven’t saved ourselves first?

    Reply
  19. Grebo

    I wonder if Streeck defines what he means by Capitalism. Reading all the comments it seems there is a large number of vague and contradictory ideas of what it is and, for me, only Marc H. gets close to the nub of it.

    Industry produces wealth by combining human labour with capital (which is machinery etc. not money).
    Capitalism (and Socialism) are fundamentally about how the surplus wealth is divided, surplus being what’s left after all the costs are paid.
    Under Capitalism the capitalist (who owns the capital) decides how to divide the surplus (ie. how much he keeps and how much the workers get).
    Under the various kinds of Socialism the workers get some say too, or instead.

    All the other things that people identify with Capitalism flow from this.
    The encouraging thing about this view of Capitalism is that it shrinks down the target to something quite manageable.

    Reply
    1. Ligurio

      Because in socialism the means of production is itself understood as public and not privately held. The point of production and surplus in this picture is not reinvestment into more and more capital, but social use.

      Reply
      1. Marc H

        Yes Grebo! The target is small and right at the heart. Why must I sell myself and lose the fruits of my labor?
        Let’s imagine an economic system without human rental…..

        Reply
      2. Grebo

        Capital can be privately held in most kinds of Socialism, usually by the workers themselves, but Syndicalism and Codetermination at least are ways of putting up with capitalists.

        Reply
  20. John Wright

    To get an idea of current economic thinking, here is a link to an article about an economist who visited the recently heavily burned Sonoma County in Northern California and offered advice.

    “Much of the U.S. is experiencing a shortage of workers, Thornberg said, which is why he strongly opposes efforts to take existing protections away from millennial-age children of illegal immigrants.”

    ““We need them,” he said, prompting a burst of applause from the audience.”

    http://www.pressdemocrat.com/business/7653672-181/economist-to-sonoma-county-business

    The county already has very heavy commute traffic, so adding many more people to grow the economy could also decrease the free-time of current residents, a cost not captured in economic models.

    I suspect history will be most unkind to economists, who continue to tout economic growth as the solution to ANY problem while ignoring the added WW CO2 burden of economic activity.

    The prominence of Economics is fueled by cheap hydrocarbons and resources, and economics seems to not realize that economic growth and population growth may simply bring the severe climate change effects ever sooner.

    Reply
  21. JBird

    Much of the U.S. is experiencing a shortage of workers, Thornberg said, which is why he strongly opposes efforts to take existing protections away from millennial-age children of illegal immigrants.”

    A shortage of workers? Really?? Depending on how one slices, dices, and arrange the statistics the national unemployment rate is around 10%, and some areas double, or more, of that especially if you look for those who have completely dropped from the official economy. The official U-6 rate is 7.9%. I’m all for protecting children, even teenagers, but even any mildly deep, and honest, research would suggest that there are not any shortages.

    And you are right about the housing situation and the heavy traffic but good heavens any suggestions about building real housing makes the good people or better said property owners scream about the unwashed hoi polloi causing “problems.” Like maybe just slowing the increase in property values or just maybe reducing rents from extortionistic to merely extreme.

    Reply
    1. John Wright

      I’d like to see infrastructure be built first to accommodate any new anticipated growth.

      Imagine if we had requirements that increased population growth must not increase median commute times or increase the pupil/teacher ratio or decrease the park square footage/resident.

      Then those advocating for more growth in population/economy would be forced to plan/pay for infrastructure needs first.

      Recently a local politician, let’s call her Shirley, suggested that the Sonoma County burned out areas be “re-imagined” for higher density.

      A friend suggested that this politician should push for higher density housing in HER gated community.

      But that will never happen.

      As far as building more housing in CA to lower prices/rents, one commentator suggested that the entire USA is sustainable at about 100million people from a long term climate resource and other resource standpoint.

      Given that CA is approaching 40million, one could argue that CA population of the future may be lower than now and the model of “must build more homes” will not have its urgency.

      Reply
      1. JBird

        Longer than I have been alive the Bay Area population and housing costs have been gone up with a few plateaus and dips. It’s gone from renting a whole house on a couple of minimum wage jobs in San Jose to needing like 50k to rent a small closet size apartment somewhere where all those burnt out housing was.

        Actually we could use some high density housing in Marin, but the county’s State Assemblyman snuck in a provision that exempts the county from building such. It was an addition that bypassed the normal committees it would need approval from.

        Nice please work here but don’t expect a place to live.

        Reply
  22. Norb

    Throughout human history, economic activity has been based on competition and exploitation. With Fukushima slowly poisoning the Pacific ocean, and the myriad other slow brewing disasters leading to species extinction, some day it will begin to dawn on people that exploitation is not such a good thing. This awakening is happening in many people, it will happen last in the minds of those benefiting the most from the current system- if at all.

    Myriad acts of caring are the only defense and remedy to the destruction that surrounds us. It is an awakening- being born again. It is that, or die a cynic.

    Psychologically, we are all caught up in a war, and like most soldiers, we cannot fathom our own death- it is always the other guy that is going to get it.

    Somehow, breaking this spell of being in a state of constant war is the root to our survival- for humanity-it seems.

    Reply
  23. Whiskey Bob

    This article sounds similar to accelerationism and its prediction of capitalism collapsing due to the increasing contradictions it cannot resolve. I have read some accelerationist writings and I noticed they mostly fall within two camps: neoreaction and socialism. They both have their own theories of what will happen after the collapse of capitalism.

    From what I understand, neoreaction seems to embrace technological advances and their disruption of society. Technology transcends beyond what human and society can keep up with so this crowd seems to welcome the collapse to bring in a new future unrestricted to be shaped by this technology. There’s something of a libertarian bent so there’s meritocracy worship of the leaders of technology industries. All in all, neoreaction seems to want to outcapitalism capitalism.

    The socialism approach is interesting as it believes that it is the natural and rational course for capitalism to take to fully realize its social nature of disrupting the old individualistic mode of production before the industrial revolution. Production then was done on an individual basis and relied heavily on manpower. After the revolution, efficiency greatly increased from the complex formation of production with the addition of social characteristics. Capitalism relying on exploitation can only go so far as it ends up hanging itself by its own petard as the complex social system starts collapsing under the weight of its own contradictions. To become sustainable, capitalism must turn to socialism as a rational course of action.

    Personally I am for the socialist version of accelerationism, but I think the current ruling classes would prefer the neoreaction route as it further solidifies their power by increasing exploitation by doing away with some of the structures that produce contradictions (like democracy) instead of the socialist approach of resolving them.

    Reply
  24. Tuan Nguyen

    ” there has been a shift in the nature of states in developed countries (Streeck spends much time on those in Europe in particular) from the classical “tax state” that taxes the rich to redistribute downwards and provide essential services to the people; to the “debt state” that loses some of its ability to tax and seeks to provide services through enhanced public debt; to the “consolidation state”, for which fiscal austerity is the driving force, and which is fundamentally antithetical to democracy. It is now almost commonplace to note that “turning the economy over to a combination of free markets and technocracy makes political participation run dry” (page 141) – and it provides easy explanations for the rout of social democracy and the rise of rightwing anti-establishment forces. But despite these reactions, “the arenas of distributional conflict have become ever more remote from popular politics” (page 93).”

    Once again, a flawed analysis based on deep misunderstanding of the way the capitalistic monetary system ACTUALLY WORKS in reality. Taxes DO NOT redistribute income, nor do they fund services essential to the citizens. Governments, particularly in financial sovereign nations that issue their own currency, fund all essential services by just spending; they can BOOST the income of their citizens who work for a living by REDUCING THE INCOME TAX RATE. And no they will never ever run out of money to spend, because they are the ONLY ISSUER of the nation’s currency, so there are NO FISCAL CONSTRAINTS on the government’s spending.

    Reply
    1. Yves Smith Post author

      Ahem, taxes in the US historically have been pretty progressive, and even now are net somewhat progressive. In the US, it is the spending side that is regressive (subsidies to capital are greater than subsidies to the poor).

      Reply

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