Yves here. This is a very strong form criticism of the notion that capitalism has helped the poor. I have some problems with his argument. One is that he attempts to deny that labor organization is part of capitalism. The capitalists may hate hate hate it but labor attempting to set its price and terms is philosophically a lot like (as even Adam Smith decried) merchants colluding in what we would today see as oligopoly or monopoly behavior.
One way to read Karl Polanyi’s The Great Transformation is that the operation of unfettered capitalism become so destructive to societies that it elicits pushback to moderate its operation, in a dialectic of sorts.
A second issue is that is it hard to envisage how a system without markets to set prices would allocate goods and influence investments. Famed investor Jim Rogers, in his book Investment Biker, had visited the USSR in 1994 and so memories of Soviet practices were fresh. He gave several examples of how administered prices has been wildly off and had produced great distortions in demand and production.
Your truly has not attempted to read systematically about how the USSR performed under communism. However, the USSR and China were both the only two significant economies to industrialize within a generation, something no capitalist country had done. That success of Communist Russia freaked out Western policy-makers, since it suggested a command and control economy could out-do a free enterprise system. It is also the reason economists became the only social scientists to have a seat at the policy table. Government officials came to believe they needed their guidance to steer the economy better so as to compete with those Commies.
Your truly read of a study, but sadly I cannot find it given the state of search, that the Communist system, particularly of production targets for various sectors and entities, worked well for about a generation. Then bureaucrats started gaming the system by finding ways to make their targets unduly low and other scheming like hiding inventories. Our reader GM, who lived in his early years in one of the Warsaw Pact states, claims that Communism was much better than capitalism for 95% of the population, that free housing and free health care were very important benefits. However, a significant portion of the 5% met with people from outside the USSR for work, as Putin did on his KGB assignment in Germany; Eugene Luttwak has described dealing with and even dining often with him then. Those elite professionals and bureaucrats got a sense of how their standard of living was lower than their peers in the West (Luttwak seemed to find it important to say what terrible suits Putin wore then). GM claims that that resentment was a significant driver of the turn against the Communist system. I can’t corroborate that and would be curious to get informed reader input.
By Richard D. Wolff, professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to millions via several TV networks and YouTube. His most recent book with Democracy at Work is Understanding Capitalism (2024), which responds to requests from readers of his earlier books: Understanding Socialism and Understanding Marxism. Adapted and excerpted from Richard D. Wolff’s book Understanding Capitalism (Democracy at Work, 2024); produced by Economy for All, a project of the Independent Media Institute
From its beginnings, the capitalist economic system produced both critics and celebrants, those who felt victimized and those who felt blessed. Where victims and critics developed analyses, demands, and proposals for change, beneficiaries, and celebrants developed alternative discourses defending the system.
Certain kinds of arguments proved widely effective against capitalism’s critics and in obtaining mass support. These became capitalism’s basic supportive myths. One such myth is that capitalism created prosperity and reduced poverty.
Capitalists and their biggest fans have long argued that the system is an engine of wealth creation. Capitalism’s early boosters, such as Adam Smith and David Ricardo, and likewise capitalism’s early critics such as Karl Marx, recognized that fact. Capitalism is a system built to grow.
Because of market competition among capitalist employers, “growing the business” is necessary, most of the time, for it to survive. Capitalism is a system driven to grow wealth, but wealth creation is not unique to capitalism. The idea that only capitalism creates wealth or that it does so more than other systems is a myth.
What else causes wealth production? There are a whole host of other contributors to wealth. It’s never only the economic system, whether capitalist or feudal or slave or socialist. Wealth creation depends on all kinds of circumstances in history (such as raw materials, weather, or inventions) that determine if and how fast wealth is created. All of those factors play roles alongside that of the particular economic system in place.
When the USSR imploded in 1989, some claimed that capitalism had “defeated” its only real competitor—socialism—proving that capitalism was the greatest possible creator of wealth. The “end of history” had been reached, it was said, at least in relation to economic systems. Once and for all, nothing better than capitalism could be imagined, let alone achieved.
The myth here is a common mistake and grossly overused. While wealth was created in significant quantities over the last few centuries as capitalism spread globally, that does not prove it was capitalism that caused the growth in wealth. Maybe wealth grew despite capitalism. Maybe it would have grown faster with some other system. Evidence for that possibility includes two important facts. First, the fastest economic growth (as measured by GDP) in the 20th century was that achieved by the USSR. And second, the fastest growth in wealth in the 21st century so far is that of the People’s Republic of China. Both of those societies rejected capitalism and proudly defined themselves as socialist.
Another version of this myth, especially popular in recent years, claims capitalism deserves credit for bringing many millions out of poverty over the last 200 to 300 years. In this story, capitalism’s wealth creation brought everyone a higher standard of living with better food, wages, job conditions, medicine and health care, education, and scientific advancements. Capitalism supposedly gave huge gifts to the poorest among us and deserves our applause for such magnificent social contributions.
The problem with this myth is like that with the wealth-creation myth discussed above. Just because millions escaped poverty during capitalism’s global spread does not prove that capitalism is the reason for this change. Alternative systems could have enabled an escape from poverty during the same period of time, or for more people more quickly, because they organized production and distribution differently.
Capitalism’s profit focus has often held back the distribution of products to drive up their prices and, therefore, profits. Patents and trademarks of profit-seeking businesses effectively slow the distribution of all sorts of products. We cannot know whether capitalism’s incentive effects outweigh its slowing effects. Claims that, overall, capitalism promotes rather than slows progress are pure ideological assertions. Different economic systems—capitalism included—promote and delay development in different ways at different speeds in their different parts.
Capitalists and their supporters have almost always opposed measures designed to lessen or eliminate poverty. They blocked minimum wage laws often for many years, and when such laws were passed, they blocked raising the minimums (as they have done in the United States since 2009). Capitalists similarly opposed laws outlawing or limiting child labor, reducing the length of the working day, providing unemployment compensation, establishing government pension systems such as Social Security, providing a national health insurance system, challenging gender and racial discrimination against women and people of color, or providing a universal basic income. Capitalists have led opposition to progressive tax systems, occupational safety and health systems, and free universal education from preschool through university. Capitalists have opposed unions for the last 150 years and likewise restricted collective bargaining for large classes of workers. They have opposed socialist, communist, and anarchist organizations aimed at organizing the poor to demand relief from poverty.
The truth is this: to the extent that poverty has been reduced, it has happened despite the opposition of capitalists. To credit capitalists and capitalism for the reduction in global poverty is to invert the truth. When capitalists try to take credit for the poverty reduction that was achieved against their efforts, they count on their audiences not knowing the history of fighting poverty in capitalism.
Recent claims that capitalism overcame poverty are often based on misinterpretations of certain data. For example, the United Nations defines extreme poverty as an income of under $1.97 per day. The number of poor people living on under $1.97 per day has decreased markedly in the last century. But one country, China—the world’s largest by population—has experienced one of the greatest escapes from poverty in the world in the last century, and therefore, has an outsized influence on all totals. Given China’s huge influence on poverty measures, one could claim that reduced global poverty in recent decades results from an economic system that insists it is not capitalist but rather socialist.
Economic systems are eventually evaluated according to how well or not they serve the society in which they exist. How each system organizes the production and distribution of goods and services determines how well it meets its population’s basic needs for health, safety, sufficient food, clothing, shelter, transport, education, and leisure to lead a decent, productive work-life balance. How well is modern capitalism performing in that sense?
Modern capitalism has now accumulated around 100 individuals in the world who together own more wealth than the bottom half of this planet’s population (over 3.5 billion people). Those hundred richest people’s financial decisions have as much influence over how the world’s resources are used as the financial decisions of 3.5 billion, the poorest half of this planet’s population. That is why the poor die early in a world of modern medicine, suffer from diseases that we know how to cure, starve when we produce more than enough food, lack education when we have plenty of teachers, and experience so much more tragedy. Is this what reducing poverty looks like?
Crediting capitalism for poverty reduction is another myth. Poverty was reduced by the poor’s struggle against a poverty reproduced systemically by capitalism and capitalists. Moreover, the poor’s battles were often aided by militant working-class organizations, including pointedly anti-capitalist organizations.
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Amends in advance all … its just this framing of the term Capitalism as in toto. A simple wiki et al look shows there are many variants of Capitalism, hence saying all the social dramas are just due to Capitalism is not very accurate. Same goes for big social terms like socialism and communism, ideological tripwires everywhere for rusted on sorts.
Currently I would describe the situation as Corporate Share Holder Democracy aka Plutocratic influence on the body politic above the one vote unwashed participation game.
Per se a conversation I had this week with a client, well heeled but low key, noted her Geneticist Daughter and Husband in a previous comment days ago. Whilst sharing some of my fine coffee beans with her she told me how, in a pod cast, cant remember the name, anywho … how the bloke was talking about Marx …
In it from a reasonably conservative view the man said that one of Marx biggish deals in his baseline was the way industrialism stole originality away from anyone not in the wealth class. You could not as a family or as an individual create in the way before, had to circumvent bottlenecks and financial hoops by others to create anything from an individual stand point …. it had to make your backers money without them lifting a finger. I digress.
At the end of it all and banging on about Marx, society et al, I said I was a feral Capitalist, brought on a huge laugh from the old girl.
The thing is, the Plutocracy has a vested interest in keeping this lie going. They are the ones who are making huge amounts of money rent seeking off the rest of society.
Since WW2, arguably the best system for turning a nation from poor into wealthy has been the East Asian model, first practiced by Japan, later South Korea, Singapore, and later China (when I say China, I include Taiwan and Hong Kong).
It is a far more state dominated capitalistic model than the capitalists would like – especially the “state dominated” part.
If anything, China under Xi has been cracking down on the rich. China has seem some of the most rapid economic growth and far better than any of the liberal capitalistic nations.
https://www.theguardian.com/world/2021/aug/18/chinese-president-xi-jinping-vows-to-adjust-excessive-incomes-of-super-rich
The rich desperately don’t want that.
At least now more people are talking about Marx now that the Western elite have failed the people of the West so badly in their greed.
Russian Empire was fastest growing economy in Europe pre-1914 and essential for British exports after McKinley Tariff cut out U.S. market. Chair of Russian at Leeds University was funded by Roberts of Salts Mill to encourage Russian studies. Siemens was huge in Russia and Singer had a major plant in St Petersburg.
Without German attack on Russia it would have been a major dominant player. Stalin had to import Ford to built the Kamaz truck plant in a copy of River Rouge.
Post-WW2 it was German tech that kept the system going as with USA. Japan developed rapidly as did Korea using U.S. tech like the transistor and DRAM to outpace USA. Read Sutton on just how much Western tech went into Soviet Russia from R-R Nene jet eingingest in 1946 to IBM and German and Austrian machine-tools
The fate of the Russian Empire without communism would have been that of Brazil — a resource appendage to the West with limited independence.
Maybe they do get nukes eventually, which Brazil never did, and that would have elevated it a notch, because the Russian Empire always aimed to be strong militarily, but it would have more likely been like India, not like the USSR. Or maybe by that point elite corrosion would have been so deep that even that does not happen.
Yes, and where were the local equivalents?
The USSR did develop such, the Russian empire did not.
What you don’t get is how thoroughly decadent the 19th century Russian elites were. They were always at a fundamental disadvantage compared to their Western counterparts — the climate in Russia sucks, so the available agricultural surplus is much lower than in Western Europe. Meaning that once you feed the people, there is a lot less left to accumulate capital and to fund the elites’ desired consumption levels. In addition, the West acquired colonies with huge wealth to loot. Russia meanwhile expanded into frozen emptiness, which held immense riches from a modern perspective, but at the time those were inaccessible and not as useful as now. The UK got to loot all of India, Russia meanwhile had Yakutia. You get the idea.
But the Russian elites wanted to be equal to the Western elites. Not much has changed in that regard to this day. So what was the solution? Well, we squeeze the peasantry to the absolute biological survival limit and forgo investment into local development in order to fund our lifestyles. And despite that the nobility was still going bankrupt on a mass unprecedented scale towards the end.
What was different in the USSR?
First, elite consumption was curtailed to barely above that of the commoners. Which left enough surplus to invest in local development, plus everyone was still squeezed hard, especially in the 1930s. But it was done with the deliberate goal of becoming an independent center of development. Which was achieved, at least temporarily.
Second, the very idea of having elites that would then compete for status with those in the West was done away with for the period between the revolution and roughly 1970. Purges helped enforce that — they made sure nobody was in power for long enough for feudal tendencies to develop. Once the purges ended, it all degenerated very quickly.
Was that a net positive for most people. You bet.
Would it have been done voluntarily by the imperial elites? That’s just laughable.
This may not be the most compelling data point, but yours truly has seen a decent number of European palaces by virtue of having to squire my mother about on holiday.
When we went through the complex in St. Petersburg which includes the Hermitage (which is the smallest of the three palaces), all I could think was, “No wonder there was a revolution. If the peasants had seen this, they would have wanted to kill the czars.” The scale and wasteful display are very hard to describe adequately. Gross is a starter…
Yes, exactly, and I’ve had that thought myself too — most people only see the splendor and the vast art collections, but then you think about how many poor peasants died of starvation to make that possible, and you look at it completely differently.
This was my reaction upon visiting Vienna for the first time just this past Spring — I was overwhelmed by a combination of astonishment mixed with revulsion at the dizzying array of dynastic and imperial monuments and wondered aloud to my wife how many lives must have been impoverished over the centuries to erect these monuments to aristocratic ego.
Mind you, this was my first visit to mainland Europe, and the only large city I saw on the trip prior to Vienna was Budapest. So I don’t have much experience to calibrate the extent to which Vienna itself represents the zenith of this sort of excess. Certainly a lifetime spent in North America nor a couple of brief visits to a considerably more humble Ireland during the past 40 years hadn’t prepared me for what I saw in Vienna.
That’s what I think every time I go to Vegas.
I remember wondering where they got all the money to construct such marvels and then checked what was left in my own wallet and got my answer.
Great segue from Vienna to Vegas.
Ditto
eg, stay away from France. Versailles makes the greatest Hapsburg palaces look like kennels, and their Renaissance summer homes on the Loire are only the grossest concentration of what privilege can do with enough peasants. I was angry to see all that as a youngster 50 years ago. Now I realize it’s, alas, culture. Still fascinates me that republican France can inculcate pride in palaces. Not in the good old days of 1792!
Duly noted, thanks!
I had the same thought this May visiting the palaces of Vienna. It only gets worse in Paris , e.g., the palace of Versaiiles. Let them eat cake, indeed.
Well, then…even if by some chance the Russian elite didn’t compare their condition to the elite of other countries, relics of elite grandeur remained all around them in Russia.
Am I incorrect for inferring that the grotesque displays of wealth and privilege which you witnessed in St. Petersburg were attempts by the Russian aristocracy (the Czars being the pinnacle thereof) to ape similar excesses by their (often literal) cousins in Europe? I was under the impression that the cultural influence of the French in particular (the Germans somewhat less so) was considerable where both fashion and fashionable ideas among Russian nobles were concerned.
As far as I can tell, the scale was much worse in Imperial Russia. Vienna (decried above) is tasteful by comparison. The art in the St. Petersburg palaces is overwhelming. Guides rush you through entire rooms-ful of works by very very important painters to stand you in front of one considered particularly special. Catherine the Great bought Impressionists in lots as large as a hundred, as in in bulk.
Well thank you for clarifying, then. Under current circumstances I don’t anticipate that I will be able to visit St. Petersburg very soon to see for myself the extent to which the scale of wasteful opulence is so very much greater there. :(
But maybe I can find some videos online to give me some idea as to how it might compare with Versailles or other such places.
The Russian Ark, enjoy:
https://www.imdb.com/title/tt0318034/
If she was buying Impressionists, she really was well ahead of her time!
LOL. It was always my understanding that the Hermitage’s magnificent Impressionist collection had been expropriated by the Bolsheviks from francophile Russian industrialists and merchants during the Revolution, in particular when Sergei Shchukin and Ivan Morozov fled Russia. Most of the Impressionist and post-Impressionist works were not transferred to the Hermitage Museum until 1948.
The rapacious acquisitiveness and greed of elite castes is a thread that runs throughout human history. I was taught in college that this elite greed is the main driver of the micropolitics of domination that forms the core of political economic systems of all stripes…
Diderot did the selecting.
They have a great collection of Matisse. I had abandoned the group I was with (do I really need to listen to accounts of Greek myths of Biblical stories?) and when I met up with them, I had to take them to the Matisse room, as our guide couldn’t find them….
Have you tried Buckingham Palace? No wonder there was a revolution….
You make some valid points.
Singer was the first modern multinational with plants across the continent for a US invention. Siemens held 90% market share on lighting in Russia. The Czarist period had factory workforces significantly bigger than in Germany or U.K. which created a Proletariat in urban centres.
Kholkoz secured grain to export to fund imports of machinery on a far grander scale than under Czars but famine was not unheard of. Let us not forget Lenin counted on a Spartakist revolution in Germany to industrialise Russia for the Bolsheviks – Noske suppressing the Spartakists and the Freikorps left USSR with a problem only solved by helping Germany circumvent Versailles Treaty with secret military deals and Rapallo Treaty
The multi-storey Art Nouveau Singer building in St Petersburg, capped with a domed tower and sculpture of a globe, stands in prime position on the main artery, Nevsky Prospect. It was turned by the USSR to another purpose. When I visited in 1994, a main branch, possibly the headquarters, of Dom Knizhy, “The House of the Book”, a ramshackle warren of a bookshop of great cultural importance.
No quibbles with most of your comment, which is a great summary. Still I wonder if by now one should say “The climate in Russia sucked”. I have the impression they think they are doing very well out of climate change – never mind the methane and the sinkholes as the permafrost melts.
They are doing very well now.
But we are not talking about now, we are talking about history going back centuries.
The best book on the Soviet collapse, in my view, Revolution from Above, by David Kotz with Fred Weir, supports GM. They argue that the system was dismantled “by its own ruling elite…in pursuit of greater wealth and power.” [x and further discussion pp.110-115]
I didn’t know about this book. Now I am looking at it, and it seems to get the real story quite right. And that’s from 1997.
Which is interesting — it means that in the West there were some people who were openly talking about what actually happened quite early.
On the other side of the former Iron Curtain people didn’t really figure it out until quite some time after that (the internet had to enter people’s lives seriously for information to began to spread widely, otherwise the mainstream media in retrospect clearly kept a tight lid on such discussions).
“Maybe they do get nukes eventually, which Brazil never did”
really just a side note but a fascinating historic episode:
Brazil never did. Yet they attempted to get German tube technology for uranium enrichtment (I believe for gaseous diffusion method) in the early 1950s secretly in order to make themselves independent on that sector. The secret tube shipment was discovered by British port authorities in Hamburg´s port however and reported and confiscated.
The Brazilian man in charge was Admiral Alvaro Alberto whose son studied in NYC at the Rensselaer Polytechnicum under former famed German nuclear bomb scientist Paul Harteck who had left his post as professor in Hamburg around 1951 (interesting life).
Via this personal connection the deal between Harteck´s colleagues in Germany and the Admiral who was a special envoy appointed by the Brazilian president had been agreed on without any knowledge by then German Chancellor Adenauer or other official state authorities.
Eventually Alberto went to London then Washington begging to get those tubes back. But to no avail. US had zero interest in giving up leverage. They instead offered US-made NPPs to Brazil. To suppress the proliferation (and with that possible loss of control) was one major goal of “Atoms for Peace”.
p.s. Brazil had no intention for WMDs – which would have changed the game possibly as you point out – however on a purely scientific level tubes and enrichment eventually could lead to weapons´ grade material. When Brazil did fathom SSBNs for real in the 1970s I believe that was under US control and the military dictatorship.
As a former GDR citizen I would support the notion that soviet people of all levels of society were worse off MATERIALLY. And that was probably true on all societal levels, compared their western (US?) counterparts. That does not mean the quality of live was worse in every sense. The Soviet Union had and Russia still has excellent scientists, engineers and other professionals in their respective fields of education. And a broad, meaningful education is a very underrated source of immaterial wealth (and to second order possibly material wealth derived thereof).
I reject the claim of China being a socialist country. To me it seems merely a capitalistic society with strong guidelines enforced by the KP. But the inherent autocratic and technocratic tendencies might just make it fail where others failed before.
The matter of fact is that the only societies of humans that managed to stay within their natural boundaries longer term have been some indigenous societies. They obviously developed but not remotely as explosive as technocratic societies have managed recently (or in the past).
I agree with the criticism to accredit all of todays “wealth” either to the few super rich humans nor to Capitalism as a system of coordinated human organisation. It is ridiculous not to view our current level of development as a derivative of hundreds, if not thousands, of years of interactions of Gaia’s systems including humans and their various endeavour’s. Some of which yielded spectacular results for hundreds of years before they ultimately failed. It’s no different now, except we went global for the first time and also for the first time the narrative that we are going to technologically innovate our way out of this or perish is dominant among most of the people who hold power in one form or another.
To compare communism, socialism and capitalism as to which system reduced the poor man’s plight the most overall, the most effectively or whatever is akin to choosing to play Mozart, Vivaldi or Bach on the sinking Titanic. The choice of only western classical music was intentional.
None of the above managed to reduce poverty in terms of human and planetary flourishing meaningfully for more than a few decades and this comes at the apparent cost of catastrophic changes on this planet of geological proportions.
They were, but the context is always forgotten.
First, the United States has 3-4% of the world’s population but uses 20% of the resources. How is that achieved? By looting the rest of the world. Who was the Eastern Bloc looting? Nobody, in fact the center (Russia) was subsidizing the periphery, both internally within the USSR and then the USSR as a whole was subsidizing the rest of the Warsaw Pact. Up to a limit, of course.
Second, Eastern Europe was always severely underdeveloped, and then it was hit hard by WWI, and utterly destroyed by WWII. Western Europe, aside from Germany, was largely spared, and even Germany was hit nowhere nearly as hard as the USSR. The US was completely untouched. And WWI barely did any damage in the West — the trench warfare stalemate had that paradoxical effect of limiting the destruction to a small part of northern France and Belgium. Meanwhile Eastern Europe descended into a series of brutal civil wars.
So the Eastern Bloc had to simultaneously catch up with the West while recovering for the catastrophe of WWII.
And yet people expected lifestyles to be equal? It did fantastically well everything considered.
I wonder how different the condition of the working class was in Soviet Russia or in Northern England in 1945? Neither could have expected an indoor toilet or unrationed food, let alone a car. But the Russian would have had a holiday and public transport and free medical and education etc. No wonder the NHS was created in 1948. Capitalism had to see off the threat of Communism.
Of course, in the next twenty years, individuals under capitalism never had it so good ™, the White Heat of technology, the Mini, Concorde, the Beatles, the pill and the Summer of Love. But gradually the state provision of healthcare and housing and education was capped and then rolled back.
The material conditions of the USSR did not improve as markedly but everything remained free….
So I don’t by the argument that 1945 was uniquely dreadful in Eastern Europe. The UK and Ireland were in the same depths. I think the interesting thing is how Germany, France and Italy won the peace after losing the War – precisely because they were stood back up as client states to fight the USSR (whereas UK still needed to be stripped further of hegemony).
The rest of Western Europe + Sweden sold guns to both sides.
“As a former GDR citizen I would support the notion that soviet people of all levels of society were worse off MATERIALLY.”
Have you heard of siege socialism? It still exists in Cuba, DPRK, some form in Iran and Russia now…
Yes, China is not a socialist country. If China were truly socialist, why would it have a stock market? The myth that “China is socialist” is nothing more than CCP propaganda to justify its one-party dictatorship, but it has been widely accepted and not refuted because it was convenient for Western ideologues who wanted to invoke the threat of communism.
Lest we forget Capitalism in France and Germany was State Capitalism and Dirigiste. Germany in 1870s funded its expansionism via Gold Reparations imposed on France after 1870 defeat which France paid more rapidly than Germany managed after 1918 – Tufnell again France floated Bonds in London
Even U.S. Capitalism was highly protected by Union tariffs on goods U.S. did not even produce as if tariffs could be used on place of income tax to fund the Federal Govt (oh sorry that is Trump‘s new idea)
Your latter paragraph about the forgotten (memory holed?) protectionist period of development in the US is dealt with in detail by Michael Hudson in his America’s Protectionist Takeoff 1815-1914
https://www.goodreads.com/book/show/10074353-america-s-protectionist-takeoff-1815-1914
“Free Trade” (which most here at NC realize ain’t free) is invariably promoted within empire from the metropole at the expense of the periphery. You can see this in the relative position of policymakers and its evolution over the past couple of centuries in the UK and the US, particularly compared to the nations which had to industrialize after WWII — Ha Joon Chang is very good on this where Korea is concerned in his Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism among others.
https://www.goodreads.com/book/show/1032019.Bad_Samaritans
Honestly I just want to read more of Yves’s very interesting reflections on the topic, not the article itself.
Aaaw, how kind!
Reader GM is wrong. I have also lived in one of the Warsaw Pact countries, and vast majority of the population did not believe that, since they were comparing with results of social democracy capitalism in Western Europe.
Having said that, Warsaw Pact countries had good education and relatively good health care, both free for their citizens. Most of them did not have free housing for majority of citizens. While these advantages were clearly missed in 1990s, when Warsaw Pact countries suffered, it was primarily because of admission to European Union that Warsaw Pact countries were able to achieve much better standards of living.
I did not do GM’s remarks justice. He did not say they thought they were better off during the Warsaw Pact years. He said they came to realize after the USSR fell how important the massive social support of Communism had been, notably free housing, free health care, free education (if limited to the more accomplished at advanced levels) and that they realized that all of those freebies they had devalued because they were not very glamorous still put them net ahead once they had to pay for these things and found how comparatively not affordable they were.
Perhaps he will weigh in and elaborate.
If GM is primarily referring to a country (or countries) that used to be part of USSR, and comparison was done primarily between 1990s and 1980s (or 1970s), then GM has a good point, and I need to amend my comment for this.
The non-USSR countries from Warsaw Pact (Poland, Hungary, Czechia, Slovakia, Romania, Bulgaria, etc) were in a better situation in 1990s, primarily because 1990s years were a disaster for most (all?) countries that used to be part of USSR. Not that these non-USSR countries in former Warsaw Pact were in a good situation in 1990s.
However, it should also be said that Warsaw Pact countries had some significant achievements in the 1960s, 1970s, 1980s. For example, Romania in 1989 had a much larger metro network in Bucharest compared to all China, to South Korea. The problem was that overall standard of living was clearly lower than in France\Germany\Italy, and even compared to Yugoslavia
I am not certain of the country GM referenced, but I can comment on the Warsaw Pact years in Hungary. Yes, education (better quality than in the US) and healthcare had been free, but not the housing. The government built most of the housing and was relatively easy to get. No down payment, just sign the contract for 20-25 years and move in. Was it a better system than the US has? Yes, for the majority of the people it had been better. Including myself, who had a condo and also a car; having a car was a big deal back in those days. Life had been pretty good on Hungary in my time there, probably the country was better off than most Warsaw Pact countries. At least that’s what they were telling me in Czechoslovakia, Poland, Romania and Russia back in those days.
Nobody ever said that people thought they had it good.
That is a fundamental part of the problem — a cargo cult developed that saw everything “Western” as vastly superior, while there was zero appreciation for what was achieved and produced locally.
Especially in the generation born around and immediately after the war, which didn’t know how things were before communism. This was also the generation that then brought down the system.
The ones with the most objective assessment were those born in the 1910s and 1920s, who then lived the “before”, “during”, and “after”. It is very informative to hear what they thought (sadly there are almost none of them left by now).
Also, there was a huge difference between the GDR, Czechoslovakia, Hungary and Poland, which had a well developed local bourgeois class, and southeastern Europe and the USSR, which had been almost entirely peasant societies before communism.
In the former it wasn’t 5% that were net losers, it was more like 10-15%. So that made for much stronger opposition. But, of course, their peasantry and working class had had it just as bad as everywhere else, so on balance it was a vast net positive there too. Then it was the same problem everywhere — those 5% (or a bit more) were the urban educated classes, the surviving heirs of previously wealthy families, etc., and they were later joined by the new bourgeois class that developed within socialism (especially the upper managerial elites and higher echelon party functionaries). Those people both stood to benefit from a transition back to capitalism (as they were in positions to transform political power into ownership of property, and there was a lot of property to loot), and they were also the ones who wrote the history, and continue to shape perceptions.
The voice of the peasant, who went within a generation from bare subsistence-level survival, to building a nice house, not having to worry about the next day, and seeing his children and grandchildren become rocket scientists and computer engineers, you never hear when the history is narrated.
Your last paragraph is very important. In addition here in the West our discourse about this subject has been additionally polluted by the widely distributed opinions of the aristocrats who escaped the revolutions (or their brainwashed descendants) who yearn for their former privileges.
This reminds me of the excellent and thought-provoking documentary film about China “Shoot for the Contents” (1991) by Trinh T. Minh-ha which, inserted through the film, includes two generations of Chinese women discussing the Cultural Revolution from a similar position as described above, the elder remembering “corpses in the streets” before the revolution and encouraging the frustrated younger woman to appreciate the simple gain of radically fewer peasants dying, rather than focus exclusively on her and others more current post-revolution struggles (btw, these segments are shot in b&w in a large room where the women stack and in-stack unmarked boxes as if speaking over factory work).
A still of the ‘factory’ conversation can be seen here: https://www.wmm.com/catalog/film/shoot-for-the-contents/
If memory serves (I think I last saw it in 1995 or so), the filmmaker also interviews Chinese men but will all-female interpreters—and the interpretations happen in real time after the interviewee is finished speaking—so the non-native-speaking audience is ‘hearing’ the language spoken without interruption, another of many layers questioning cultural interpretation in the film.
The newer generations mostly simply have no idea how things actually were once upon a time and what they have gained. It’s what brought down the USSR. Notice which generation did it — the one born in the 1940s, who didn’t remember how bad things were without communism.
Which brings us to how capitalism preys on ignorance.
It’s simple logic that a system that creates extreme inequality by design will be bad for the vast majority, thus it is in the best interest of the vast majority to not support that system. By definition the 99% will not belong to the 1%, and the only way for the 99% to be better off than under communism is if there is such looting of other territories or of the stored negative entropy wealth of the planet that the pie is rapidly growing and whatever redistribution happens still leaves people better off then they were before. But, also by definition, because nothing can grow forever in a finite system, that can be only be a temporary condition. Which is precisely the story of the last roughly hundreds years.
Thus the capitalist system relies on the masses being too ignorant about history (how the world actually was previously) and about how the world works in biophysical terms.
Sorry mate, but the rents paid to the state were a fraction of the salary of one of the household members. And housing was built on a massive scale. And then after 1990, they were allowed to buy those properties. My mom payed something around $1,900 to own her apartment, with 2 bdrms, 2 balconies, 1 bathroom, quite well built and that will last and doesn’t look like the social housing you see in UK movies or French movies, or Harlem… Based on that, Romania still, after 33 years of Capitalism, tops the list of countries with the highest home ownership in the world.
My basic argument would be that ever major world economy is in effect running a form of state capitalism and has been for more than a century. In the USSR and China they tried very hard to minimize the capitalism part of it and in the US they tried very hard to minimize the state portion, but everyone is essentially running a variation on the same playbook. I have strenuously argued for years that the state and the marketplace are in any way separate entities is a pernicious myth and should rather be seen as two interlocking parts of a larger machine.
I am not naive enough to think this system has any chance of being done away with, so the only real question left is how to find ways to use it to better manage the economy and produce more equitable outcomes. Obscene inequality exists primarily because we have let it, and we could change or alter the laws and tax code at will to drastically reduce it, we (more accurately the current powers that be) simply elect not to. There has always been an elite and there will continue to be one, but we can at least compress society economically so that the disparity isn’t so absurd.
This is essentially the position outlined in Branko Milanovic’s Capitalism, Alone: The Future of the System That Rules the World
https://www.goodreads.com/book/show/44326335-capitalism-alone
And every word you have written here is, to my mind, precisely correct.
Thanks for the recommendation. I’ll have to check it out.
see also his Substack:
https://branko2f7.substack.com/
It’s hard not to see the British Empire as state capitalism since it required a massive navy to maintain it as well as a corps of Oxbridge trained bureaucrats to run it. As the cliche goes, socialism for the rich has always been a thing since they have the power to make it so.
In the larger scheme science and technology have obviously had the most to do with changes in standard of living for the formerly agricultural poor. But the capitalists would say, with some justice, that their system created that technology that the Soviets and Chinese then copied and used although they are finally reaching a stage of development where they can invent their own. Even the Soviet a-bomb was based in part on stolen technology.
While one hates to be a mealy mouthed fence sitter it could be that both selfish and altruistic motives are required–in a balance–to produce functioning societies. Unfortunately at the moment we live in a world out of balance.
Some inventors were capitalists, but not all inventors were capitalists. And we know that inventions happened throughout human history, regardless of the ‘economic system”. While some article in the past claims that the factory type of productivity was devised on Dutch fishing vessels in 1400s, I would truly like to know how the Chinese “factories” for producing silks and China were run as well…
Thus, in my opinion, efficient production and invention is not necessarily a product of capitalism, but a product of higher and higher competition between nation states.
The capitalists can make that argument, but my retort is sure…but they’re just running a different version of state capitalism and always have been. Research has often been funded by government grants or military research, just for starters.
But on a more basic level, without a state government to enforce property laws, issue and accept currency as payment for taxes, adjudicate disputes, enforce laws, and dole out punishments for breaking them, it makers no sense whatsoever to talk about a market and the very concept isn’t coherent on its own. Even if you hate the world state and set out to abolish it you would have to create an organization under a different name which would perform nearly identical roles. Ironically, rather than the capitalists, this was pretty much the exact problem the USSR ran into, with the party taking most of the same functionality as the state had in other circumstances.
Well that’s sort of what I said about the British empire but I think my point re our many inventions is that the profit motive has played a role that pure socialism may lag at. In other words it’s an argument that both pure libertarian capitalism and pure socialism have a skewed notion of human psychology and once you get beyond simple self preservation that’s the engine that makes the thing go. Perhaps both ideologies are out of date.
Might read Polanyi if you haven’t.
The Soviet nuclear programme may have been built on stolen technology. But I dont think it is very becoming to claim this as a victory for capitalism:
– The soviet missile programme was home grown to a far greater extent than the US missile programme, which literally hired a Nazi to teach them how to do it (Werner con Braun and all the other Operation Paperclip scientists squirrelled out of Nazi Germany before the USSR could get them).
– Other US thefts to bolster hegemony include the Japanese germ warfare data from Harbin and, if we consider the way Roosevelt declared he would not help Britain until her coffers were empty, the various technologies the UK surrendered in exchange for help (radar, jet engine etc.).
I think you misapprehend the British Empire snd how it was run. It was never a centralised structure. India under Raj ran itself and separately from London such as in Iraq where it was Indian Army troops that landed in Basra and it was India that held sway not London.
There were two Armies in The Raj being the Indian Army and the smaller British Army. It had completely separate government. I very much doubt it was staffed by Oxford or Cambridge graduates – indeed I doubt it had many graduates at all.
Much of empire was through takeover of private sector companies such as Africa Company or John Company. Britain never ran a centralised empire – it was much more autonomous and local
Obviously these are issues too complex to examine fully in any article this brief, but as someone who’s had any number of frustrating conversations with middle-class and working poor advocates of capitalism (many identifying as capitalists while controlling no capital), it’s an interesting line to pursue — much as the work in the Kropoktin through Greaber lineage allows a reframing of social history leading up to capitalism and the nation state.
Seems like this conversation would benefit from an attempt to integrate a the history of military conflicts driven by capitalism, separated as much as possible from those more in service of the Nation State, in order to more accurately conceptualize a poverty matrix that acknowledges poverty displacements resulting from climate change and conflict zones.
If, as referenced a few days back in another NC post, some 60% of the 500+ US military interventions recorded by the Office of Congressional Research (https://crsreports.congress.gov/product/pdf/R/R42738) have happened since the 60s, the link between late capitalism and neoliberalism seems likely, and integral to climate- and refugee-induced poverty.
Meaning, does a break-down of “poverty” against the development of modern economic systems begin with the extreme poverty of the slave trade as well? And the military conflicts supporting that trade? Where do African and North & South American pre-industrial indigenous cultures count in a “poverty timeline” in the two to three centuries they’re being (often literally) dragged into industrial economics to benefit early capitalists?
These questions are complicated by the often one-sided historical, anthropological, and paleontological record; and isn’t the same seems true any conversation of capitalism’s relationship to poverty that begins and locates itself in the West?
I think you’re onto something here, but I would encourage you to begin at the beginning where the serial exploitations of capitalism and industrialization are concerned — with the “enclosures” in the UK. Everything else follows from that playbook.
Brits stole everything from the Dutch…
Not in agreement. Dutch went mad on tulips and financialisation rather than moving coal in wagons on tracks as in Stockton or making pumping engines for tin mines
The Banking/financialization, the East India Company (the Nutmeg story…)
The Dutch didn’t have coal, but they reclaimed land from the sea, not small feat…
Yes I agree, enclosures movement one of the keystones — and thanks to Billy Bragg releasing ‘The World Turned Upside Down” for hipping curious, young ears to The Diggers.
Perhaps you’re familiar with Silvia Frederici and her compelling writing on micro-loans and contemporary witch hunts as methods of converting communally held lands in certain African countries (not able to dig out the source text right now for specific locations), especially lands traditional farmed/used by or passed down through women.
Also, as an organizer in upstate NY in the 1990s I witnessed similar attempts to “help” develop homes in the Onondaga Nation (specifically by a couple of independently-owned “non-traditional” Onondaga business families) which included running electric and other utility services onto sovereign Nation land. Something that seemed useful on the surface but which in effect would have both generated deeds for land that had never been deeded, debt on those parcels, and first-time documentation of Onondaga recognition of NYS as a governing entity having for over 200 years maintained the government-to-government relationship at the federal US level as set out in the 1794 Treaty of Canandaigua.
This happening almost simultaneously with the NYS gov Cuomo, along with the Clinton administration, recognizing Ray Halbritter as ‘leader’ of the Oneida Nation over the traditional leadership, to establish a Casino both to subvert federal-only sovereignty of the Oneida Nation (Halbritter eventually created Native NYS Trooper’s for example), while helping open the door for non-Native gaming in NYS, something still playing out.
All the above to say that yes, destruction of the commons key historically but also a continuing project in the US and abroad.
This reminds me of the excellent and thought-provoking film about China “Shoot for the Contents” (1991) by Trinh T. Minh-ha which, inserted through the film, includes two generations of Chinese women in discussing the Cultural Revolution from a similar position as described above, the elder remembering “corpses in the streets” before the revolution and encouraging the frustrated younger woman to appreciate the simple gain of radically fewer peasants dying (these segments are shot in b&w in a large room where the women stack and in-stack unmarked boxes as if speaking over factory work). A still can be seen here: https://www.wmm.com/catalog/film/shoot-for-the-contents/
If memory serves (I think I last saw it in 1995 or so), the filmmaker also interviews Chinese men but will all-female interpreters, and the interpretations happen in real time after the interviewee is finished speaking so the non-native-speaking audience is ‘hearing’ the language spoken without interruption, another of many layers questioning cultural interpretation in the film)
If we want to claim all the wealth created by capitalism, then we’ve got to point out all the poverty created by primitive accumulation, as well.
England’s industrial wealth was built on the back of the rural impoverishment created by the Enclosure process which involved a slow-rolling disenfranchisement of the rural population. If capitalism created wealth and reduced poverty for the urban working classes, it’s only because it fixed the problem that it originally created in the rural areas.
Arguably, that improvement in working class living standards was only made possible through the colonization and de-industrialization of India over a 200 year period.
Capitalism’s success needs to be netted against the destruction created. US prosperity needs to substract the harms of the genocide of Native Americans and the imported slaves from Africa.
People may not understand how important slavery was to the US economic model. Slaves were the #2 asset class (behind only real estate) in the country by the start of the US Civil War. Banks very much liked lending against hard assets like…people. The US would have struggled mightily to acquire enough foreign currency without earnings from king cotton.
I see you beat me to referencing the enclosures above (below? anyway, the timeline shows your post was first). Excellent.
I would point out only that white indentured servitude predated racialized slavery in North America — but they are of a piece where capital and human chattels are concerned.
This is an excellent summary!
You forget the Reformation and redistribution of land and gold from the abbeys. The aristocracy gained big farms in 16th century in England but had to wait for Napoleon in „Germany“ to redistribute monastic lands – of course German aristocracy let plebs pay compensation by way of Church Tax which was supposed to fade away in Weimar Republic only to be still in force together with Sekt Steuer to pay for Kaiser‘s Fleet
Prosperity of England (and Europe, and USA, and the NATO-west even now) is mostly stolen wealth from the natives of India, Africa and the Americas. The industrialization of the UK was basically an economic genocide of the Indias. It is estimated 150 million were starved to death in the almost 200 years of British rule. And another 15 million murdered in the Hindi speaking areas in “rebellion suppression” in 1857-1860.
That is why there is so much fear at the French being driven out of Sahel, and the global south not toeing the line on “Russia Russia Russia”.
The western establishment knows that once the global south is out of the (financial) cage, the cage is empty.
This is why post war UK is in a perpetual decline, and this why it is baying for a war with Russia – it wants to reestablish a colonial extraction regime there, which is what the oligarchy under Yeltsin was. Which is why Put1n is hated so much.
It can be argued that capitalism became a conceptual ideology in 1776 with Adam Smith. And it can be argued that democracy became a realistic conceptual ideology also in 1776 with the American revolution. This made ideological and real world sense since their fundamental function was to oppose and present alternatives to the monarchical, authoritarian systems of the day, and of past thousands of years. In the mid 1900s, the monarchical, colonial systems were replaced by authoritarian, totalitarian systems such as the Nazis and Communists. This opposition was defeated in roughly 1990. But, capitalism is not a bad idea for a political ideology. Capitalism is, and always has been in reality, features of a vibrant and progressive economy, but only features. Like any strong system, there must be strong guidelines, rules, laws, and strong regulation. Capitalism is great, if kept in its place by democratic regulation with concerns for all parts of the societal system, the strong and weak. The US, and others, has a mixed economy and will continue to need a system that combines the best of the American, Chinese, and other systems. The Industrial Revolution created the opportunity for prosperity and reduced poverty. Democracy must create a system of wealth production and distribution. The fundamental problem today, throughout the world, is deregulation.
Yes — as I try to explain to my less capitalism-skeptical friends (of which I have no shortage, drowning as I am in a sea of engineers — most of whom long went over to the “dark side” in finanz — in my social circle), capitalism is like fire: well regulated it can help you cook your food, work metals, and heat your house; unconstrained it can burn your house down along with all of your neighbours’ houses.
Smith would object to that. He wanted to be remembered for The Theory of Moral Sentiments, not The Wealth of Nations. And he decried both abuses by businessmen and colonial exploitation. So what sort of a capitalist was he?
The concept of ‘economist’ didn’t really exist in Smith’s time and he considered himself to be a philosopher if I’m remembering correctly. As you note, he certainly did not advocate for ‘capitalism’ as an ideology. He was simply describing the system already in existence as he saw it (kind of like MMT does!) and was often critical of what he considered its excesses and unfairness.
Well it was a branch of Moral Philosophy which is how we ended up with „Goods“ and „Utility Curves“ and „Preference“ until the Materialists moved in to determine everything was factors of production
A reference brought to me years ago by NC:
Capital as Power: A Study of Order and Creorder
By Jonathan Nitzan, Shimshon Bichler
Conventional theories of capitalism are mired in a deep crisis: after centuries of debate, they are still unable to tell us what capital is. Liberals and Marxists both think of capital as an ‘economic’ entity that they count in universal units of ‘utils’ or ‘abstract labour’, respectively. But these units are totally fictitious. Nobody has ever been able to observe or measure them, and for a good reason: they don’t exist. Since liberalism and Marxism depend on these non-existing units, their theories hang in suspension. They cannot explain the process that matters most – the accumulation of capital.
This book offers a radical alternative. According to the authors, capital is not a narrow economic entity, but a symbolic quantification of power. It has little to do with utility or abstract labour, and it extends far beyond machines and production lines. Capital, the authors claim, represents the organized power of dominant capital groups to reshape – or creorder – their society.
Written in simple language, accessible to lay readers and experts alike, the book develops a novel political economy. It takes the reader through the history, assumptions and limitations of mainstream economics and its associated theories of politics. It examines the evolution of Marxist thinking on accumulation and the state. And it articulates an innovative theory of ‘capital as power’ and a new history of the ‘capitalist mode of power’.
https://www.amazon.ca/Capital-Power-Study-Order-Creorder/dp/0415496802
Adam Smith gives you the date you want but Mandeville‘s History of the Bees shifts it a century earlier. Frankly I see Capitalism as Elizabethan England somewhat earlier with Drake raiding Spanish treasure galleons looting the Americas.
East India Company pre-dates Adam Smith as does Muscovy Company and the separation of ownership from management inherent in Equity and Trusts developed during Crusades.
If you think 1776 in USA represents „democracy“ you need to ask why Louis XIV was associated with funding it and just how oligarchic that rebellion really was – certainly not universally supported
Quite how poverty was alleviating in Americas by 1776 leaves one pondering but no doubt by 2076 it might be reduced in USA together with infant mortality
I think you have a typo. It should read Louis XVI. Louis XIV died in 1715.
Mea culpa !
The enduring fascination with Marxism can only be explained in terms of a religious meme. There has never been a successful Marxist government because Marx did not understand the social dynamics of leadership groups. When given absolute power, notionally in service to the proletariat, Marxist leadership cliques degenerate into cronyarchies, where personal relationships and marker trading lead to the enrichment of the governing elite and the mismanagement of the economy they incompetently control (e.g., the precipitous decline of Venezuela). While unregulated markets can do damage to society, central planning generally does much worse.
The core problem is that politicians trade in destructive simplifications of the complex dynamics of a global society. The public is told that the only choice is between Marxist poison and neoliberal jungle capitalism. Places like NC are tiny, widely-separated oases of rationality in a vast desert of ignorance and dogmatic stupidity. Politicians know this and act accordingly, pulling the levers of public irrationality to gain and retain power.
I recommend reading Marx’s Critique of the Gotha Program (it might take quite a number of readings), on which Lenin heavily relied in his State and Revolution, but in my humble opinion, he missed some of the critical finer points. Whatever, he certainly didn’t follow through with them. I blame Lenin, not Marx. Both the USSR and China were products of Lenin. But then he did admit he was not a utopian, which Marx was.
Yes, I value Marx as a classical economist (arguably the last) and as a critic of capitalism.
I don’t have a lot of use, however, for his political predictions, not least because I don’t really believe in the “inevitability” of much beyond the heat death of the universe — my understanding of human history and anthropology along with a healthy respect for Knightian uncertainty leads me to shy away from determinism and lean toward Graeber’s “there is ALWAYS an alternative.”
So while I admire some of Marx’s work, I am not a Marxist. But I remind myself also, neither was he …
with apologies to Mahatma Gandhi…
Mate,
You never heard of “siege socialism” in your lifetime, eh?!
But the Leninist approach to governing was as devoid of democratic input as the “democratic-capitalism” (one of the best oxymorons out there) world we live in.
The Leninist approach was centralized democracy through the vanguard of the proletariat, the inner party did vote and Lenin was outvoted at times (Stalin got ahead of that later). After the policy had been set, there could be no further dissent, internally or externally.
The Leninist/Stalinist approach was to thoroughly eliminate the local Soviets.
People were never asked after what they wanted…Centralized democracy is as big an oxymoron as democratic capitalism.
~The Leninist/Stalinist approach was to thoroughly eliminate the local Soviets.
Yup, but expropriate their name, because, donchaknow, it sounded democratic.
If you have not encountered it, Chris Pallas (writing as Maurice Brinton), a Brit self described Anarchist wrote of the so called October Revolution (it was a coup). In State and Revolution (September 1917), Lenin gave a rather anarchist twist to his thinking, alarming the Bolsheviks that he had thrown in with the workers demanding control (once in power he immediately reneged):
Maurice Brinton – The Bolsheviks and Workers’ Control
The State and Counter-Revolution
Marx spent almost all of his efforts describing capitalism, and how it actually functions as a system. For the most part he was dead on and his work stands the test of time. Comparatively, he spent very little effort structuring an alternative system, as far as the actual mechanics of how socialism should function. There are different paths to arrive at “worker control of the means….”, to say the least.
This brings us to the question- What makes a person a Marxist? It’s become a bogeyman term, but I would say that a Marxist is anyone who has studied Marx and uses Marx’s research, descriptions, and critiques of capitalism to further their own understanding (and I count myself among this group). This leaves the door open to calling pretty much anyone, some die hard capitalists included, a Marxist. I digress, but I hope the point is made.
As to your claim regarding “Marxist leadership cliques”- well, that is a problem with authoritarianism, less so than anti-capitalism. Authoritarian leadership always descends into corruption and cronyism- it does not matter if said authoritarian leadership is capitalist, such as in the western world, or if it is of the Soviet Communist variety. Just as wealth does, so authoritarianism breeds corruption. Money and power seek each other out, and lead you to the same place, once the dust settles. In a libertarian capitalist world, the rich libertarians will use their wealth to buy power, and in an authoritarian communist world, your communists will use their power to buy wealth (the examples of this are there to see- this is fairly common sense).
Even during Marx’s time, there were people who understood this, and you can even see it play out in the history of the International Workingman’s Association meetings where Bakunin pointed to the flaws in Marx’s ideas, and Marx, being inclined toward authoritarianism, tried mightily to have Bakunin ejected from the International.
There are answers to these problems, but most people are not ready to hear them yet, in my experience, but for those interested, Bakunin is a good start.
Like a babe in the woods who sometimes describes herself as an anti-authoritarian communist (because like a Rorschach test, what does that even mean, is she a liberal, or an anarchist?), I would say the ideal system would be found with a society of people who intrinsically knew when they had enough (materially, psychologically, and oh, gawd what else?) and would not rest when there was even one among them who did not. No one would take too much, it would be shameful. In other words, something like a society of selfless people. But then, with the present state of humanity, she would be dreaming. Endless growth on a finite planet is a cul-de-sac, no matter what the system.
Simulations have shown that communitarian societies could be as stable as those composed predominantly by psychopaths… What we are seeing now is the struggle to move from one equilibrium to another…
Where I am sympathetic to Wolff’s argument here is capitalism’s “stolen valour” where human wealth accumulation over the past 250 or so years is concerned.
Not a peep about fossil fuel exploitation? I think you’ll find that economic arrangements are rounding error after we take into account energy consumption as correlative (at the very least — my suspicion is that it’s causative) to wealth creation.
Fossil fuels are one of the two big blind spots of Marxism, the other being evolutionary theory.
The labor theory of value is complete nonsense if taken literally. It is the exact same mistake that conventional market capitalism fundamentalists make — to think that the economy exists separately from the physical world it is a part of. Well, it doesn’t.
See Nate Hagen’s with Steve Keen:
Steve Keen: “Mythonomics”
Sorry that I don’t have time to dig out the best segments, but both of them are onto your thesis.
Thank you!
In the Soviet Union, if you were a good worker or civil servant, you would have received raises, bonuses, promotions, and decorations, just like in our country today. The only thing that did not exist in the Soviet Union was the freedom to make and sell whatever you wanted. And that is the only essential difference between socialism and capitalism. As Adam Smith said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” People made and sold things for their own benefit, but in the Soviet Union, where this was not allowed, people were less motivated to work. That is why the Soviet economy stagnated and eventually collapsed.
People are not motivated to work in the West either.
What forces the regular working class grunt to wake up in the morning and go to the first of his two or three jobs is the threat of living under a bridge two weeks from today if he doesn’t.
Why wasn’t the communist worker similarly motivated? Because he didn’t face that threat.
Which is… gasp … a good thing.
So what if the economy stagnates? Infinite growth in a finite system is an impossibility. Which means that we have two choices — extinction or a transition to a much smaller steady state global economy. But that would be a “stagnant” economy under the current definitions, i.e. a “bad” thing, even though it is the only way to survive in the long run.
That is how much the assessment that the Soviet economy was “stagnant” is worth.
As long as they were able to keep up technologically to maintain strategic parity, that the internal economy was “stagnant” didn’t matter as much as you think. Life in the 1980s in the USSR was objectively (accounting for technological progress since then) quite a bit better for the average person than it is in the West today. Perceptions are a different matter.
And it wasn’t the economy that caused the USSR collapse, the causal relationship is the exact opposite — reforms that were on the table and would have solved what real problems the economy indeed did have were not implemented while reforms that rapidly accelerated the collapse of the system were, because the decision to dismantle the system had already been taken. When exactly is a big question — I have seen people with varying degrees of direct inside knowledge cite dates going as far back as shortly after Stalin’s death, but certainly by the early 1980s the decision appears to have been made.
And it was made because the people running things in the USSR found themselves in control of many trillions of real wealth while the system they ran condemned them to living in perhaps a 3- or 4-bedroom apartment somewhere in the center of the city, and perhaps being chauffeured around in a Chaika, i.e. luxurious compared to everyone else, but that was absolute poverty relative to their equivalenbts in the West. And they owned only the apartments, often not even that — whatever higher levels of consumption they enjoyed were conditional on them being in their positions. One they retired they were sent away with a regular pension. Nothing could be passed on to their progeny.
It really comes down to that — the ambition emerged to convert political power into ownership and to pass it on to one’s kids. That wasn’t possible under the existing system, so the system had to be dismantled, and it indeed was. It’s that simple.
And it wasn’t even unexpected — the early Bolsheviks were obsessed with precisely that scenario and how to prevent it. It was the core of one of many disagreements between Trotsky and Stalin — according to Trotsky socialism couldn’t work in a single country because the corrosive influence from the outside would trigger precisely the chain of events that eventually brought down the USSR, i.e. a new bourgeois class would emerge from within the ranks of the party bureaucracy, which would then launch a counter-revolution; he wrote a whole very prophetic book about it once he was in exile. Which is why all resources had to be channeled to launching a worldwide revolution, thus leaving no capitalist remnant to serve as corrosive influence from outsdie the system. Stalin, on the other hand, said “We will solve the problem with repressions and purges” (purges being the way to ensure that such a new bourgeois class did not emerge). And he was correct too — that method worked, as long as it was applied. It is why North Korea has not collapsed to this day. But the war left the USSR utterly exhausted and there was little appetite for further purges and repressions, there was nobody of Stalin’s caliber to even try to return to them anyway, and the rest is history…
“It really comes down to that — the ambition emerged to convert political power into ownership and to pass it on to one’s kids. That wasn’t possible under the existing system, so the system had to be dismantled, and it indeed was. It’s that simple.”
Milanovic explains this impulse (of the politically powerful to attempt to bend the system to their own material benefit and pass those benefits on to their offspring) in more general terms in his Capitalism, Alone: The Future of the System That Rules the World. He claims that this is the biggest challenge facing both liberal democratic capitalism (epitomized by the US) and political capitalism (epitomized by China) — from where I’m sitting the US is already well on its way to losing this battle …
Cheers to GM and NCs commentariat!
Sadly I don’t know any one in real life, being from East Germany and of your inquisitive mind. Which is, what makes it especially painful to watch current events. If any one people in a developed democracy should grasp what it’s like to live resource constraint on a finite planet, it’s those behind the iron curtain with direct kin on the other side and the means to know what happens, comparably, in real time.
And yet here we are with East Germans voting for more of the neoliberal cool aid and trickle down and kicking down.
I often hear these days that “it was the communist elite who hated communism the most”. While there is some truth to that, it is hard to believe that the elites who gained privileges under the communist regime thought they could maintain their positions under the new regime. In fact, didn’t many communist party officials disappear from history after “democratization”?
1) I reject the claim of China being a socialist country.
2) Yes, China is not a socialist country.
[ So a 5,000 year old civilization of 1.4 billion, superbly educated, cannot even be allowed to describe itself. ]
A 5000 year old civilization of 1.6 billion people to the south west of this other civilization describes itself as ‘Mother of Democracy’. Yeah you can describe yourself however you like, it doesn’t mean anything.
Regarding living standards in Eastern-Europe Communism: In contrast to the USSR, Yugoslavia had a self-managed economy with social ownership of firms and thus market-relations with parallel state involvement and planning — Kardelj’s theories, a bit more anarcho-socialist perhaps. The living standards in terms of basic goods (housing, healthcare, food, education,…) were great, however, people complained because they couldn’t get jeans, tropical fruits, and other luxuries — they had to drive to Italy to smuggle them over the border. Oh, and religion was generally frowned upon. Otherwise, it basically meant full employment, no-stress in terms of survival, and similar standards of living, except for the Party elite, of course.
GM:
Thank you very much for your very insightful, brilliant comments! There is a long email exchange between Noam Chomsky and a Polish person touching these very topics (which supports your insights):
https://chomsky.info/19960123/
I have a question: the number of brilliant mathematicians, scientists, that have come out of Russia in the past two centuries is simply stunning. You compare Russia with Brazil, but there is a huge difference in the aspect between the two.
So how come Russia had such a phenomenon of intellectuals, of which I do not know another example in the world (one exception being India, but India was already rich before it was looted by the British)?
There is a cultural aspect here of intellectual idealism and pursuit (witness Perelman’s behavior), embedded over many centuries, that seems independent of whatever political structure was there. But why do you seem to be completely ignoring it in explaining their economic development?
Thanks again.
It wasn’t all the people in official leadership positions that dismantled the system, it was a fraction of them, and then primarily the next level below them and the managerial class.
And yes, indeed, it is true that many of those who were in high ranking positions then ended up with nothing. Those who benefited the most were often seemingly random insignificant individuals, who, however, were in adjacent positions to power and thus had access to key information on which to act on at the critical moments.
One should not be making the mistake of thinking that everything that actually happened was planned down to the last detail, not at all. Once you trigger the collapse, then it is chaos and brutal Darwinian selection after that. There’s no knowing how the chips will fall exactly.
Also, it is doubtful that those who did have power and pushed for a return to capitalism sincerely wished for a return to the 19th century of capitalism, which is what happened in the real timeline (Russia to this day is doing very bad on protection of workers, and has a tax code straight out of the most feverish Western libertarian wet dreams). Or that they seriously considered the geopolitical implications (i.e. that the West will not accept them as equals in the club just because they voluntarily surrendered, and will instead treat them as a defeated enemy). The thinking was probably that we will transition to capitalism, some people (that is, us) will be on top, but overall there won’t be a huge degradation of the power of the country and the living standards of most people.
If you are the shallow materialistic kind of person that is dreaming about limousines, private jets and mansions, then you tend to also not be the kind that thinks deeply about systemic issues.