The “Fixing Capitalism” Headfake

It’s not hard to see why young people are embracing socialism. It isn’t simply that they can see a probable grim future under capitalism as they know it: more and more low-wage, high surveillance jobs versus more budget and psychological stress as most also have higher fixed costs (rentier housing costs, student loan payments, even more “asset lite, rent heavy” systems, ever-escalating health care costs). And that’s before getting to the need for war-level mobilization to address climate change.

The officialdom has been shaken out of its Versailles 1788-level complacency by much-derided “populist” revolts, and more recently, 1848-like revolts, including a general strike in France.

It has been revealing, and not in a good way, to see people who ought to know better serve up tepid reform programs. They seem to have forgotten the lesson of Karl Polanyi’s The Great Transformation, that the operation of a market society was destructive to society because it commodified people (labor) and what we would now call the environment (natural resources). The result is more material wealth along side more social breakdown such as births out of wedlock, poor care for the elderly, shallow personal and community ties, and a rapidly accelerating climate/pollution/garbage crisis.

Polanyi looked at the period from 1815 to the start of what was then called The Great War. He found that reformers who opposed the socially destructive aspects of capitalism did not stop the march of the extension of the market economy into more and more aspects of life, but that they merely threw some sand in the gears.

But the coercive nature of capitalism has only gotten more intense in the neoliberal era as social safety nets have been gutted. As we pointed out in 2013:

One issue I’ve long been bothered by is the libertarian fixation on the state as the source of coercive power. The strong form version is that the state is the only party with coercive power (and please don’t try denying that a lot of libertarians say that; there are plenty of examples in comments in past posts). Libertarians widely, if not universally, depict markets and commerce as less or even non-coercive.

What is remarkable is how we’ve blinded ourselves to the coercive element of our own system. From Robert Heilbroner in Behind the Veil of Economics:

This negative form of power contrasts sharply with with that of the privileged elites in precapitalist social formations. In these imperial kingdoms or feudal holdings, disciplinary power is exercised by the direct use or display of coercive power. The social power of capital is of a different kind….The capitalist may deny others access to his resources, but he may not force them to work with him. Clearly, such power requires circumstances that make the withholding of access of critical consequence. These circumstances can only arise if the general populace is unable to secure a living unless it can gain access to privately owned resources or wealth…

The organization of production is generally regarded as a wholly “economic” activity, ignoring the political function served by the wage-labor relationships in lieu of baliffs and senechals. In a like fashion, the discharge of political authority is regarded as essentially separable from the operation of the economic realm, ignoring the provision of the legal, military, and material contributions without which the private sphere could not function properly or even exist. In this way, the presence of the two realms, each responsible for part of the activities necessary for the maintenance of the social formation, not only gives capitalism a structure entirely different from that of any precapitalist society, but also establishes the basis for a problem that uniquely preoccupies capitalism, namely, the appropriate role of the state vis-a-vis the sphere of production and distribution.

What struck me about Heilbroner’s discussion, as if he was tip-toeing around the issue, and it was not clear whether because he could not formulate a crisp description of the power relationships, or that it was clear to him but he really didn’t want to come out and say what he saw.

Ian Welsh ventures where Heilbroner hesitated to go:

The fundamental idea of our current regime is one that most people have forgotten, because it is associated with Marx, and one must not talk about even the things Marx got right, because the USSR went bad. It is that we are wage laborers. We work for other people, we don’t control the means of production. Absent a job, we live in poverty. Sure, there are some exceptions, but they are exceptions. We are impelled, as it were, by Marx’s whip of hunger. It took a lot of work to set up this system, as Polanyi notes in his book “the Great Transformation”, but now that it has happened, it is invisible to us.

The desperation and indignity of the capitalist system is due to its exploitative nature. Yes, subsistence farming is often desperate if you have bad growing conditions or live on marginal land. But recall that before the enclosure of the English commons, the typical English peasant could work for a few hours a day, including occasionally having to make things like roughhewn shoes, and could faff around the rest of the time.

I don’t mean to single out Martin Wolf of the Financial Times, but an earlier this week, How to reform today’s rigged capitalism, was like Hamlet without the Prince. It followed up on an earlier article, which focused on what he saw as the causes of rising inequality: falling productivity growth, stagnating innovation, rising debt levels and finanicization, concentrated corporate power, which in turn fosters rentierism and tax evasion.

Notice what was missing? The fall in labor organization and bargaining power. The deliberate and successful attack on a muscular and effective state. It may seem hard to believe, but as recently as the 1960s, people went into public service not for the revolving door opportunities but to make a difference and in senior positions, for the prestige.

Needless to say, resetting the balance of power between workers and capital, by improving labor rights and strengthening social safety nets, is barely to be found on Wolf’s list of fixes. It’s another form of trickle-down economics. Make markets work better and the little guy will benefit. From his article:

My September analysis of “rigged capitalism” concluded that “we need a dynamic capitalist economy that gives everybody a justified belief that they can share in the benefits. What we increasingly seem to have instead is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy.” So what is to be done?

The answer is not to overthrow the market economy, undo globalisation or halt technological change. It is to do what has been done many times in the past: reform capitalism….

First, competition…

Second, finance….

Third, the corporation. The limited liability joint stock corporation was a great invention, but it is also a highly privileged entity…

Fourth, inequality. As Aristotle warned, beyond a certain point, in­equality is corrosive. It makes politics far more fractious, undermines social mobility; weakens aggregate demand and slows economic growth. Heather Boushey’s Unbound spells all this out in convincing detail. To tackle it will require a combination of policies: proactive competition policy; attacks on tax avoidance and evasion; a fairer sharing of the tax burden than in many democracies today; more spending on education, especially for the very young; and active labour market policies, combined with decent minimum wages and tax credits. The US has poor labour force participation of prime-aged adults, despite unregulated labour markets and a minimal welfare state. It is possible to have far better outcomes…

Finally, our democracies need refurbishing. Probably, the most important concerns are over the role of money in politics and the way the media works. Money buys politicians.

In other words, the main approach is to try to level the playing field more in markets, with some addition policies to address inequality more directly. But they are still way short of giving power more directly to the lower orders, either though better labor rights (the vagueness of “active labour market policies” leave me unconvinced that Wolf is out for more influential unions; it sound more like cracking down on Amazon warehouse sweatshops) and more direct provision of government services so that workers are less desperate when they go out to seek employment.

Contrast Wolf’s remedies, which are at best necessary but far from sufficient, with pre-fascist Germany and Italy. I’m citing these examples not to recommend the particular programs but to illustrate how far the needle has moved to favor capital. This is from a must-read article that I have also flagged in Links today, The Economy of Evil:

Before the rise of Fascism, both Italy and Germany had a robust social safety net and public services. In Italy, the trains were nationalized, and they ran on time while serving rural villages in 1861. The telecom industry was nationalized in 1901. Phone lines and public telephone services were universally available. In 1908, the life insurance industry was nationalized. For the first time, even poor Italians could ensure that their family could be taken care of if they died a premature death.

Between 1919 and 1921, Italy went through a time of worker liberation that has been dubbed as Bienno Rosso. Italian workers had formed factory co-ops where they shared the profits. Large landlords were replaced by cooperative farming. Workers received many concessions: higher wages, fewer hours, and safer workplace conditions.

Similarly, in Germany, Otto von Bismarck nationalized healthcare, making it available to all Germans in 1871. Bismarck also provided old-age pensions as public social security. Under Otto Von Bismarck, child labor was abolished, as well as providing public schools to all children. Germany inherited a national railway system from the Prussian empire. Germany’s Social Democratic Party grew strong during 1890s. In response, the Kaiser implemented worker protection laws in 1890. After World War I, the Social Democrats’ influence was strong. Germany had an active union membership. This created a robust safety net: “Decree on Collective Agreements, Worker and Employees Committees and the Settlement of Labor disputes” allowed for collective bargaining, legal enforcement of labor contracts as well as social security for disabled veterans, widows, and dependents. In 1918, unemployment benefits were given to all workers in Germany.

The author describes how Mussolini set out as a matter of policy to shrink government, privatize public services, revoke rent controls and government protection in rural areas. Hitler later engages in massive privatization of government services, deregulation (including revoking the power of government to set minimum wages and workplace conditions), elimination of social services, and destruction of unions, including sending union leaders to death camps.

What is disconcerting about this history is that neolibealism looks like slow motion fascism. As the author points out:

Fascism isn’t the merger of corporations and government that is too vague, and too easy to confuse. Fascism is government functions being replaced by private corporations. Fascism is when the public good is replaced by private profit.

In other words, the real battle over capitalism is over making the pursuit of profits the driver of society. We may be too far beyond an event horizon with our environmental meltdown to make the needed changes soon enough. But the end state, whether you call it a rebooted social democracy, some form of socialism, or emasculated capitalism needs to have workers and the government as strong enough actors to leash and collar businessmen.

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  1. Mary Wehrheim

    I have no idea how all this will actually end. Our ability to organize into groups has been our saving grace as well as our downfall. Throughout the ages, with our motivated reasoning and over 100 cognitive biases we have proven to be reliable, trusting marks for the predator head-hunter class who herd us into Plato’s cave.

    With the ultimate collapse of our ecosystem in our near future there are many variables as to how, where, and at what speeds it will all hit the fan. Into each new scenario a new group of predators always manages to rise up and through force and guile lead people over a new cliff.

    The social world seems locked into a state of frenzied denial. Those who see the problems ahead think capitalism, which is based on growth and exploitation, can be tweaked to make new stuff to fix it. Just make the corporations “nice” again through stake holder efforts. The impeachment kayfabe, the obsessive celebrity culture with everyone wanting their own moment to go viral, the skinner box addiction to buying more stuff and strangle in debt while much of the population flails about in constant work for poverty wages as deaths by despair mount.

    All this destruction culturally orchestrated to put more $$$$$$ notations into the off shore accounts of a few. They live in huge whitened sepulchres. We are Lear on the health surrounded by madmen.

    -We can do nothing and silently slide into the abyss.

    -We can fight each other while ignoring the real sources of destruction as is our usual. Like the culture war stuff.

    -We can have mass non-violent protest which will be met by hellfire when we block the predators’ money-making spigots. Those “protectors of our freedoms and safety,” the police and military, will be unleashed to fulfill their true purpose which is to protect the property/wealth of the predator class.

    Quo vadis? Where are we marching?

    1. Krystyn Walentka

      Mary, you can help end capitalism now! Just take yourself out of it as much as possible. Own a house? Sell it! Use Amazon, Facebook or Gmail? Delete it! Have an IRA or stocks? Cash it out! Know someone who needs help? Barter or help for free! Hear someone spouting idiotic memes about capitalism? Challenge it!

      In short, being a socialist will give permission for others to be socialist as well.

  2. Steve H.

    The recent Scientific American article “Is Inequality Inevitable?” didn’t really provide anything new to the literature. But the platform was important, with msm reach from a relatively objective source.

    Inequality is inevitable, and must have work done to offset it. Odum did a pretty good job of outlining the thermodynamics of resource (wealth) concentration. The flatlining horizontal of wages:gdp that started in 1972 is the titration curve of the solution provided. “Ends realized are nothing more than means expressed.”

    I’ve been digging into the maths of cooperation and the commandment to love. It is insufficient to limit the means to verbs. To feed, to listen to, to heal, fail in the long run when done as transactions. The how of the way determines the path outcome. Without the relationship, and the adverbs influencing the action, there is no buildup of the social capital necessary for sacrifice. Without the will to sacrifice, the double-weighting of loss aversion leads to a universal perception of injustice.

    That, in turn, justifies greed. And greed can turn every win-win to win-lose.

    1. diptherio

      That article struck me as some of the best mathematical economic modeling I’ve ever seen, with only Keen’s work coming close to it in value.

      Inequality is natural, but is not caused by differences in ability but rather by chance and the vagaries of statistics. We see that Billie Holiday was right: “them that’s got shall get/them that’s not shall lose,” and that this is the case regardless of how hard people are willing to work. You’d think this would sound the death-knell for any talk of meritocracy, and display the absolute necessity of wealth-redistribution policies to all and sundry…but no. The truth of things, as always, is far too radical to be accepted, even by our “far left” politicians.

      Another implication of that research, though unaddressed in the article, is that the same wealth concentration dynamics will occur in any economy organized on the basis of pairwise transactions between self-interested agents, even if those transactions take the form of barter, timebanking, or other alternative forms of transaction. Surely, that should be food for thought for those of us who tend to advocate for such alternatives. I think this points to the dire need for an understanding of economics predicated on the goal of meeting human needs, rather than an understanding that places most of it’s focus on the conditions under which pairwise transactions take place…and that would be truly revolutionary, imho.

      1. @pe

        The rest of the work (follow cites) is really nice — and of course it goes into SIAM and such, rather than economics journals. In one they show that almost all euro countries sit right on the the transition state to oligarchy — except for the Netherlands, who sit safely in the non-egalitarian zone. It would be interesting to see the time evolution of the parameter sets, would have significant political implications for systemic stability.

    2. Olivier

      The SA article is indeed fascinating. For those who want to dig and would enjoy more of the same, it is a good example of a line of research called econophysics. More specifically econophysics is the branch of statistical physics that deals with social and, in particular, market phenomena. It is fairly recent but not that recent: I think the term was coined in the 80s of the former century.

      This may be nitpicking but it is wrong to associate this kind of modelling with mathematics, in spite of the occasional article in, e.g., SIAM: it is very much a physics thing. Of course there is maths involved but culturally maths and physics are very different.

      1. GramSci

        Stephen Grossberg wrote of the “rich-get-richer” effects of symmetry-breaking in his neural network papers dating from the early 1970’s.

  3. Sound of the Suburbs

    You missed the real estate boat millennials.
    Life used to be so easy, you could sit on your backside and property just went up in price.

    That’s the way the cookie crumbles.
    Keep working hard millennials, my life of leisure depends on you paying your rent.

    Why are they turning to socialism anyway?
    Capitalism is great; I’m living the life of Reilly.

    (I am being sarcastic)

    1. Joe Well

      And for Zoomers, even worse.

      And after them, even worse.

      In the 90s movie Reality Bites, they said the American Dream of the 90s was a stable minimum wage job. And it got worse! At least they had low rents and abundant housing.

      Oh well, at least they can sell their blood.

      If you’re an old who got thrown off the gravy train you don’t even have that lifeline.

    2. Krystyn Walentka

      HA! Yes, this. This is why I am going back to living in a Van no matter the suffering. So many rich, over 65, people in this town renting ADUs for insane prices, not becasue they need to, but becasue they can. I spoke with an older man here, owns a Victorian house with 3 apartments outright, no mortgage. He let it slip that his costs are at most $1000 a month yet he was complaining that he could not get people to rent one of the 400sq/ft units with a “half kitchen” for $900/month. His defense was “That is what others are charging”. Yet he lets units stay abandoned for month at a time. I told him flat out that the problem was that he was greedy.

      1. Joe Well

        Krystyn, thank you.

        I hope I am not being a jerk when I say in other countries groups of people just take over long empty apartments as squatters. I know that isn’t an option for you, I’m jist windering why it doesn’t happen more in the US.

      2. SteveB

        Perhaps if rather than attacking the man as being greedy, you simply explained that instead of losing 2 months rent due to vacancy, his yearly income would be the same if he charged $750 and had occupancy for a full 12 months. You might have made him think about it.

  4. DJG

    Many thanks for this valuable synthesis: I think that it is important to get syntheses like this out into the world, because so much of decadent capitalism seems to rely on shoddy analyses and deeply shallow Executive Summaries. This synthesis is also a good corrective to the program of the Democratic Party, which now seems to consist of planned failure, support of the surveillance state, and media fiascos on the order of Hillary Clinton’s daily “Let them eat the little brioches” statements, Boot Edge Edge burnishing his résumé, and Biden engaging in zombie Tourette’s outbursts. (Meanwhile, the Republican Party wallows in the free-market nihilism and Evangelical-Fundi apocalyptic nihilism.)

    Quibbles: It is Karl Polanyi. Check spelling.

    Quibbles: While I am very much in favor in more attention being paid to agriculture and also encouraging more people to live on the land and tend to its needs, I also doubt the statement that medieval peasants worked a few hours a day. Farm work is demanding–every day. It may not be regular eight-hour days, given the demands of planting season and the harvest. But the cow doesn’t turn off and requires attention each day, as do the chickens, sheep, ducks, and pigs. Even relatively “self-assured” crops like olive orchards require pruning, turning over of the soil, and a demanding harvest up in the branches. And as Patience Gray points out, farm women would then go foraging for edible plants… That said, I agree that ending the tyranny of the office job, the “service” job, and the delivery-driver job is a goal for all of us.

  5. vegeholic

    Karl Polanyi’s critiques of market fundamentalism are compelling. Please fix spelling of last name!

  6. Daniel Raphael

    The best piece I’ve read thusfar by the site’s founder–and as close as she’s ever come, in my awareness, to acknowledging the need for socialism. Take the ultimate sentence in the piece–why not simply delete it and write “Working people need to rule themselves, democratically and cooperatively; they do not need a separate class of ruler/owners, nor do they need a coercive state to command them.” That’s been the goal of socialists all along.

    1. Dirk77

      I can’t speak for Yves, but her sentence: “resetting the balance of power between labor and capital…” to me means that the battle between labor and capital is forever. If there is one lesson from the 20th century it is that neither “pure” capitalism or socialism work, and everyone can give up believing there is a utopia out there for us. That’s not how humans are and searching just creates suffering. As MLK said: communism forgets that people are individuals and capitalism forgets that people are social. So, some mixture will be better. I don’t know what the mix is, but if everyone could agree on that, we’d all be at the beginning of a more constructive social experiment.

  7. salvo

    Fascism isn’t the merger of corporations and government that is too vague, and too easy to confuse. Fascism is government functions being replaced by private corporations. Fascism is when the public good is replaced by private profit.

    is settler colonialism a form of fascism, too?

    A global dimension to the frenzy for native land is reflected in the fact that, as economic immigrants, the rabble were generally drawn from the ranks of Europe’s landless. The cattle and other stock were not only being driven off Cherokee land; they were being driven into private ownership.

    1. Yves Smith Post author

      No, fascism requires the muscle of the state. Native land expropriation was driven in part by the state but also regularly by well-armed or otherwise ruthless groups.

  8. Frank Little

    I recently read The Coming of the American Behemoth: The Origins of Fascism in the United States, 1920–1940 and it casts the New Deal liberalism of FDR in a much different light than we usually see it today. Many people on the left in the US are eager to recast those reforms as something like the groundwork for socialism when this book argues that it was pretty much the opposite. Maybe it seems pragmatic to do so now, but it’s obvious in retrospect that the only reason these reforms were agreed to was the threat of more organized socialists and communists (though of course many fought them at the time like they do now).

    The author does a good job of tracing the influence of fascist political economy in inter-war America beyond the relatively small and obscure blackshirt-type groups. They may have held rallies in Madison Square Garden but did not end up being very influential in US politics compared to what big business was able to achieve before and even during Roosevelt’s presidency. May be tough/expensive if you can’t get it through a library like, but I thought I’d recommend it because reading The Economy of Evil reminded me of the issues raised in that book. The author draws from Marxists and communists from the era, who were quite aware that the New Deal was an attempt to patch up capitalism after a crisis, not a move to something else.

    1. New Wafer Army

      Hi Frank, thanks for posting. I looked at the review of the book that you linked and it does not say that the embryo of fascism was contained in FDR new-dealism. It says:

      Drawing from a range of authors who wrote during the 1930s and early 1940s, Roberto examines how the driving force of American fascism comes, not from reactionary movements below, but from the top, namely, Big Business and the power of finance capital.

      I would be interested in hearing how you extrapolated FDR as an instigator of fascism in America from this. The new deal did save capitalism but that is very different from saying that it precipitated fascism.

      1. Frank Little

        I never said FDR was the instigator of fascism in America, merely that the New Deal reforms were a far cry from the alternative to capitalism that some on the left today would make them out to be.

        In the early part of the book Roberto traces a number of instances where Big Business and finance capital pursued an agenda that resembles fascist political economy in the years leading up to FDR, namely the supremacy of finance capital over the economy and the absolute hostility to not only labor organizing but immigrant labor in particular. When I said inter-war America I am including the 1920s as well as FDR’s presidency and, at least in Roberto’s book, the parallels with overtly fascist regimes are (imo) most clearly seen in the period before FDR.

        What makes his book interesting is his extensive use of primary sources, primarily Marxist writers at the time, who see FDR as trying to re-establish American business (and by extension capitalism) in the face of crisis. FDR does break with his predecessors on many things, (e.g. passage of the NLRA), but much of his agenda initially was to restore the integrity of US financial institutions and the growing role of the US in the global economy. This included widespread crop destruction in order to raise prices and restore US exports, even while many in the US were starving. I had never heard about this, but many were quite upset at the time.

        The primary sources are especially helpful because I think they help to get around the great memory wipe that happened following World War II. In the years leading up to the war some politicians in the UK and the US were very supportive of fascism because they saw it as the alternative to communism. Once the true extent of Nazi atrocities was revealed there was a concerted attempt to minimize the extent to which some Allied powers were openly sympathetic and even informed fascist ideas (Hitler’s American Model is also a good read on this topic). This is not to say everybody back then was either a fascist or a communist, just that ideas which would later be associated with the worst Nazi war crimes were much more commonly held than we are now led to believe.

        Not sure if that is what you were interested in and I’m willing to accept that others may not share my interpretation of his work, but that’s where I was getting with my comment.

        1. GramSci

          The Russian bomb was a godsend to western fascists since it allowed them to convert a masses-favoring philosophy into a mass threat.

          1. Procopius

            Before the Soviet nuclear test, the Establishment and the Pentagon were overjoyed at the prospect of “conquest on the cheap.” No longer did you need millions of soldiers to conquer the world, a few atomic bombs would be enough. Some of them never got over that, and many now seem to think “winning” a nuclear war will be easy. After all, the two oceans are still effective moats. They can act as highways for invading small, weak countries like Saddam’s Iraq or Vietnam, but they make it logistically impossible to conduct an invasion of a large country like America or China. Nevertheless, they don’t protect against ICBMs, and most Americans have never given thought to what would happen if just two or three nuclear warheads hit New York.

          1. Frank Little

            Glad it was helpful, I’d definitely recommend the book if you’re interested. It is well worth reading, particularly for his treatment of the 1920s. Your comment made me look back through those portions and while most history books lead readers to find parallels to the present day, in this case they are very striking.

            Though portrayed as the “Roaring ’20s,” they were really only good for a small number at the top, with everybody else either struggling on stagnant wages or going into debt. Businesses pushed for early versions of “right to work” laws and some of the harshest immigration laws to-date in US history were passed then. It was also the time when then-Treasury Secretary Andrew Mellon coined the phrase “trickle-down economics.”

            Can’t remember who but someone predicted that the Trump presidency would look a lot like the Harding/Coolidge/Hoover Republicans and after reading that book I have to say I agree.

    2. PhillyPhilly

      it’s obvious in retrospect that the only reason these reforms were agreed to was the threat of more organized socialists and communists

      Absolutely. FDR only made those reforms because he had a knife to his throat. American cities in the Depression had armies of unemployed workers who were quickly being organized by the socialists and communists.

  9. MisterMr

    “[…] by much-derided “populist” revolts […]”

    My problem with such populist revolts is that they are not at all revolts against capitalism, rather they are revolts by people who believed (rightly or wrongly) that the system was working for them, and when they realised that this isn’t the case they started revolting.

    But these revolts are aimed to reinforce the system, not to change it, hence the apparent contradictions in them (because they are in fact reinforcing the same system that is causing the problems that they are trying to reinforce the system against).

    1. Left in Wisconsin

      One of the better social scientific points I’ve ever seen made that gets to your argument is the distinction made by Beverly Silver between “Marxian” protest and “Polanyian” protest. She argues IMO convincingly that these are fundamentally different acts – Marxian protest is worker-led, oriented toward changing power relations, and has a greater likelihood for success (but no guarantee) because these workers have some economic leverage. (Though it can just as easily lead to capital-labor deals or “accords” rather than fundamental change.) Polanyian protest is cultural, expressing displeasure with or opposition to social changes that leave aggrieved parties worse off than they used to be. This kind of protest has a much lower likelihood of success because social change is hard to reverse and mostly because they have no leverage to compel action on their behalf, or even knowledge of what kinds of actions might improve their situation.

      The book where she makes this argument is now 15-20 years old but the logic of the argument is that now, at best, only Chinese workers and similarly-situated have Marxian power now because everyone else is vulnerable to some form of outsourcing.

      One additional point I would make is that politicians have become skilled at faking appeal to Polanyian protesters through words while doing nothing to actually ameliorate their condition.

  10. Peter

    When we discussed the role of capitalism in the 1960 at German universities the central point that we referred to was the concept of “alienation” as analysed by Marx or “Entfremdung” of the worker from his work under capitalistic conditions of production.

    This main point of critique by Marx, who however saw the essential necessary role of capitalism to free the productive forces from the limiting feudalistic system seems today to be completely ignored by those who defend and those who critique capitalism.
    What, then, constitutes the alienation of labor?

    First, the fact that labor is external to the worker, i.e., it does not belong to his intrinsic nature; that in his work, therefore, he does not affirm himself but denies himself, does not feel content but unhappy, does not develop freely his physical and mental energy but mortifies his body and ruins his mind. The worker therefore only feels himself outside his work, and in his work feels outside himself. He feels at home when he is not working, and when he is working he does not feel at home. His labor is therefore not voluntary, but coerced; it is forced labor. It is therefore not the satisfaction of a need; it is merely a means to satisfy needs external to it. Its alien character emerges clearly in the fact that as soon as no physical or other compulsion exists, labor is shunned like the plague. External labor, labor in which man alienates himself, is a labor of self-sacrifice, of mortification. Lastly, the external character of labor for the worker appears in the fact that it is not his own, but someone else’s, that it does not belong to him, that in it he belongs, not to himself, but to another. Just as in religion the spontaneous activity of the human imagination, of the human brain and the human heart, operates on the individual independently of him – that is, operates as an alien, divine or diabolical activity – so is the worker’s activity not his spontaneous activity. It belongs to another; it is the loss of his self.

    1. New Wafer Army

      I think Marx got this largely wrong. From my experience in many blue and white collar jobs, most people are relatively happy with a ‘decent’ wage. Work also fulfills a strong social need and, if you’re lucky, a sense of satisfaction, pride in a job done well. I enjoyed waiting and bar work. Most of the time. I could make an industrial wage in a weekend. I took pride in my job and enjoyed interacting with people. I never felt myself alienated from my labour; I was happy to leave what I produced behind after the end of the shift. Keeping a restaurant going is tough work and I would never have wished myself in my boss’s position.

      However, I do think the more autonomy one has, the better. Workers’ coops are a great idea. I just don’t see Marx’s theory of alienation as the main problem of capitalism. Please feel free to correct me.

      1. Peter

        Marx did not actually get it wrong, considering that he wrote from his era in the mid 1900’s when the conditions most of the time with some few exceptions were atrocious and he analysis it correctly.
        I was born in 49 so had enough contact with the generations born from before the turn of the last century and heard the stories of the conditions in factories from before WW2.

        The main critique regarding alienation at my time of becoming politically and socially aware was still the existence of the alienation between the labourer and the product, where the labourer still was just an extension of the machine he operated – just look at pictures of car factories where often one or two tools where needed to execute the same repetitive action.
        This changed especially in car factories in the seventies when work groups build assemblies of components or complete vehicles making the work more interesting.

        Where you are definitely right that especially after the war when work was remunerated much better than before induced some pride and loyalty to the factory – but that is my point – this whole package does not exist anymore to the most part, and even had faded away before the 2008 crash already and it seems to me that most of what is left is back to the past.

        Definitely worker Coops – who are not a recent invention and found their place in Germany after WW2 – only to be soon destroyed again by the occupying forces helping the old Nazi factory owners back to their possessions – for a few years founded by the solders returning from the field and rebuilding with their hands.

        I tend to the anarchist model – socialist anarchist – where free producers cooperate freely without private property of the means of production.
        This was what Marx was striving for, total autonomy of the worker free to choose what to and when to work, productive property commonly owned and accessible to everyone. The step of state owned common ownership was just a step to this state of a true classless society.

        If this is ever possible I doubt as it demands a sense of responsibility, maturity, social awareness and a lack of greed that would make a cooperative structure of society possible without governance by some authority.

        1. New Wafer Army

          Thanks for the reply, Peter. You are quite right about Marx getting it right about his own time. I must apologize for not taking my personal blinkers off and being too fixated on my own experiences to the exclusion of other times and other peoples realities!

    2. mpalomar

      An interesting point, the paradox of industrial capitalism’s ability to produce abundant surplus necessary for a workers paradise and the alienation deriving from the effects of mechanization and mass production.

      Two points: 1 the prime nature of the alienation seems to me to be when human activity is engaged in an abstracted process where the end result on the factory line is a widget instead of the whole watch or whatever the final product.

      I’ve found my worst jobs were those that were broken down into small, mindless and repetitive tasks; Adam Smith’s pin factory. The more satisfying work for me was taking raw material to a useful end state, carpentry for instance.

      2. This super productive industrial model and its accompanying alienation was why the worker must own the means of production so that her sacrifice is minimalized in time commitment and maximized in monetary reward.

      1. Peter

        re point 1 and 2 – that is what Marx thought the point when man becomes part of the machine, alienated from himself and nature

  11. Eclair

    Fossil fuels have enabled us to capture the services of a non-human servant, someone who does my laundry, washes my dishes, provides heat to cook my food, drives me to far-away places, digs my ditches, moves my blocks of granite.

    Giving up fossil-fuel use, absent some (hand-waving here) miraculous substitute, gives us two options. One, we return to a master-slave system, where an army of lower-class workers serves the needs of a small luxury class. Or, two, we evolve into an egalitarian society where everyone works, where the successful hunter shares the meat, where there is no ‘unemployment,’ no ‘homelessness.’

    Our choice. But the forces arrayed against the latter system are formidable and will not go down without a struggle.

    1. Wukchumni

      The only way to even out the playing field is for all money to become worthless, a different flavor of jubilee.

      It makes searching for fossil fuels fruitless, if there is no reward.

  12. Synoia

    and could faff around the rest of the time.

    Which included Church on Sundays, and visits to the pub where beer was sold at reasonable prices.

    For example 6p (1s 2p) for a UK pint, in the ’60s

  13. GregS

    The only way I see for change along these lines to happen is to get the goddamned money out of politics. Politicians should be 100% behind representing their constituencies, not some monied special interest. Until this happens, I do see any realistic chance of change. Political bribery should be an offense almost equal to treason and punished as such.

  14. Carolinian

    Thanks for the great post. As for as late as the 60s, how about as late as 1980 when Bush Sr. called Reagan’s market enthusiasms “voodoo economics.” Are they are all voodoo economists now?

    I have a notion that the turning point, as is so often true, was a war and in this case the Vietnam War. By forcing young people to fight and die in an unjust war the hawks destroyed faith in government and created a vast counter culture that the slumbering capitalists felt they had to stamp out. This may well be what broke the social contract that people like Bush Sr. and Eisenhower once thought was inevitable and unavoidable.

    1. GramSci

      As I suggested above, I think the turning Pont was the Russian A-bomb. That gave the US McCarthy and put the Messianic MIC back on steroids.

  15. Susan the Other

    Slipping into fascism one theft at a time. It seems there was a fine line between fascism and communism a century ago. In the struggle for equality and opportunity neither one really prevailed and into the vacuum stepped a bright new idea: free enterprise. When Hitler was saying private enterprise cannot exist in a democracy, Churchill was saying something more insidious: We must have free enterprise, not state control. So the definition slipped just enough to propagandize a free enterprise market. I can almost hear Mickey Rooney saying, “Hey, kids! Let’s all be entrepreneurs!” And through the 20th Century all the evils of private enterprise were blamed on “The Market” so that any reform was too indirect to make a difference. No? It was still the essence of theft, but it provided some trickle down. Little appeasements. When it came to the environment it was pure plunder. And it can safely be said that this new fascism, neoliberalism, was accepted as a public good for a long time.

  16. Science Officer Smirnoff

    from George Orwell’s March 1940 Review
    Mein Kampf by Adolf Hitler

    It is a sign of the speed at which events are moving
    that Hurst and Blackett’s unexpurgated edition of Mein Kampf,
    published only a year ago, is edited from a pro-Hitler angle.
    The obvious intention of the translator’s preface and notes is to tone
    down the book’s ferocity and present Hitler in as
    kindly a light as possible. For at that date Hitler was
    still respectable. He had crushed the German labour
    movement, and for that the property-owning classes
    were willing to forgive him almost anything.
    Both Left
    and Right concurred in the very shallow notion that
    National Socialism was merely a version of Conservatism. . .

    [emphasis added]

  17. Cafefilos

    George Monbiot is promoting the idea of reviving the commons as an alternative to nationalizing. One example would be to use fiat money or, even better, money from a land value tax, to buy up urban land and housing resources and give them to local community groups that would manage them as a commons. The income from rents would provide the commons with a self-sustaining means of support, while providing reasonably priced housing.

    Networks of these commons could eventually become another source political power, somewhat like unions.

  18. Hepativore

    For everybody here, I would like some clarification as well as a discussion of what people generally mean as an “end to capitalism” or turning to “socialism”. The reason being is that there are many different versions of both “socialism” and “capitalism”. In terms of ending “capitalism” are we talking about ending the production of goods by private parties, or a strong Democratic socialist system?

    Without wanting to sound like Elizabeth Warren as I disagree with her strongly on many things, I think that the most optimal system would still be a balance of both private and strong public institutions. That is similar to what what Kyle Kulinski on Secular Talk advocates. Basically, what you would see in a country like Denmark. Also, workers would also have the right to form worker cooperatives if they wanted to, but by no means out of obligation.

    1. Grebo

      There’s only one Capitalism, but many ways of trying to obfuscate it.

      Wage labour creates wealth using capital owned by someone else. Capitalism claims that ownership of the capital gives the owner the exclusive right to determine the distribution of the proceeds of the sale of that wealth.

      Socialism denies that right and offers various ways in which the workers may influence the distribution themselves.

      The system you favour is called Social Democracy. Capitalism is not eliminated but Socialism is permitted (and protected).

    2. Yves Smith Post author

      I agree that there are many flavors of capitalism. I regard “democratic socialism” of the sort you saw in the Nordic countries (and to some degree in Japan; companies are or at least were revered for creating jobs. Too much profit was actually seen as bad) as a form of capitalism.

  19. Telee

    I have social contact with American libertarians. These are some of the things I’ve learned.
    The first thing to eliminate is all forms of democracy. They are proud of the fact that they don’t vote and believe that democracy is a failure and is inferior to feudalism. Bumper stickers on their cars proclaim taxes are theft. Taxing the rich to deliver social benefits to the poor is seen as theft from the brilliant hard working people who have earned their riches to people whose lot is seen as proof that the poor are lazy, shiftless and undeserving of any aid. Aid in the form of community health centers should be abolished because when people get things for free they lose their initiative to better themselves as the rich have done. Markets have a greater “intelligence” than people and will yield the best results if uninhibited by regulations and taxes. The greatest evil is government tyranny. Global warming is not a concern. In one model of a perfect society insurance companies will run the society and control the police force. People who have contrary views will be removed from the society. They are armed and ready to fight to overthrow the government. Leaders such as Bolsonaro, Orban etc. are revered. Trump is a mixed blessing. They see democracy yielding a tyranny of the majority that suppresses the freedom of the wealthy whose wealth is seen as proof of work ethic, brilliance and honesty. Social Justice is synonymous with communism. etc.
    What could possibly go wrong?

  20. Barry

    Capitalism only works with the coercive power of the State, no matter what capitalists say.

    How far would ‘free markets’ have spread without regime change and other military actions, interventions by the ‘intelligence’ community, use of control over the payments system to carry out economic warfare, expanding definitions of intellectual property, and changing laws to suppress labor, make corporations into people and money into speech?

    It is the State and not the market that will kick you out of your home if you fall behind on payments to the mortgage company; the same state that let the mortgage company get away with violating laws about how to handle your deed.

  21. mpalomar

    Really great post. I was thinking just today that shortly we will be obligated to refer to our billionaire class as Lord Buffet and Lord Gates.

    Marxist theory had an early fracture line with the anarcho socialists like Proudhon and Bakunin over the usefulness of the bourgeois and a libertarian tinge that questioned the wisdom of the dictatorship of the proletariat.

    The reliable, go-to failing that capitalist reformers cite regarding communism is its manifestations as a totalitarian venture.

    Historically accurate it does not however take in to account the reactionary martial forces that have always risen in opposition to revolutionary redistribution of wealth and power by of the workers. This almost ensures that oppressive regimes emerge from the wreckage of class struggle.

    “Polyani found that reformers who opposed the socially destructive aspects of capitalism did not stop the march of the extension of the market economy into more and more aspects of life.” Those like Martin Wolf that believe capitalism is reformable should note Polyani, it is the nature of the beast to always reassert extreme inequality, to corrupt governance and regulation; it is the Sisyphus myth, one wonders whether it is our fate.

    In all likelihood it is indeed too late, captal seems content to burn the planet with the vague notion technology can be arrayed to fix or at least save the elite (depopulate) and create profits at the same time (win win). At this point in the ecocide it seems that the resistance may find reward perhaps only in the aesthetics of a dying but just and equitable society.

  22. Summer

    “The organization of production is generally regarded as a wholly “economic” activity, ignoring the political function served by the wage-labor relationships in lieu of baliffs and senechals. In a like fashion, the discharge of political authority is regarded as essentially separable from the operation of the economic realm, ignoring the provision of the legal, military, and material contributions without which the private sphere could not function properly or even exist. In this way, the presence of the two realms, each responsible for part of the activities necessary for the maintenance of the social formation, not only gives capitalism a structure entirely different from that of any precapitalist society, but also establishes the basis for a problem that uniquely preoccupies capitalism, namely, the appropriate role of the state vis-a-vis the sphere of production and distribution…”

    Part of the reason to be wary of the phrase “post-industrial.” Nothing “post-industrial” about today’s society.

    “What is disconcerting about this history is that neolibealism looks like slow motion fascism…”
    Neoliberalism was always fascism rebranded.

  23. Jeremy Grimm

    [@Mary Wehrheim December 11, 2019 at 8:19 am — I can’t get reply to work with my old browser]
    I think it is time for a new theory of economics and of society. Both socialism and capitalism carry too much baggage from the past. The 18th Century concepts a social contract and the nature of Humankind — and the axioms derived from them have proven inadequate and dangerous. The nature of Humankind is more complex than can fit into any of the philosophies I am know of. What economic theory or theory of society provides for the kind of emotions expressed by this line from the movie “The Martian”: “I love what I do and I’m really good at it … something big and beautiful and greater than me.” Left to the whims of ideologies these emotions have been exploited to build pyramids and cathedrals, create great works of art, put human footsteps on the moon, … and destroy other Humans and their civilizations. The existing concepts of Work leaves little room for artists, dreamers, and our pathfinders.

  24. RBHoughton

    What beautiful people you are at NC – deep gratitude for reminding us of The Great Transformation.

    1. GramSci

      Agreed. Hats off to Yves for this one. I also appreciated bringing up the Scientific American model, which reinforces my belief in the curative powers of progressive taxation.

  25. Jeremy Grimm

    You talk of the curative powers of progressive taxation but that notion leaves conundrums. We had progressive taxation. It was ‘fixed’ throughout the years as Neoliberal economics, ideology, and secular religion progressed and may be further repaired’ by our President and willing Congress and Courts. If progressive taxation is the ‘cure’ … there must be some other disease at work for which further cures are required.

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