To discover what comes next, says Geoff Mulgan in this month’s cover story, “After Capitalism”, maybe we should look upwards? Mulgan explains how skylines have long provided a simple test of what a society values: “a few centuries ago the greatest buildings in the world’s cities were forts, churches and temples; then for a time they became palaces. Briefly in the 19th century civic buildings, railway stations and museums overshadowed them. And then in the late 20th century everywhere they were banks.”
In what is one of the most fascinating big picture commentaries on the current crisis published in the UK, Mulgan then goes through the causes of the current moment. More importantly, he shows how the seemingly permanent edificie of contemporary market capitalism in its longer context, and asks what might come beyond it. Only a few decades ago this quesion, he points out, was common—with everything from managerialism and communism both mooted as realistic successors. Now we’ve got out of the habit of predicting such big changes; something Mulgan wants us to re-learn. And in an eclectic range of indicators—from worker cooperatives to urban greening projects—he thinks some of that future, in which markets will be tamed. might already be with us. And looking up to the skyline? As Mulgan concludes: it might be “great leisure palaces and sports stadiums; universities and art galleries; water towers and hanging gardens; or perhaps biotech empires?” As ever, let us know your own opinions below.
Share
Comments
Print
Add Comment
Thanks for an interesting article. Economics is in need of imagination.
It is reassuring to think about the economy as cyclical. And with the money, reassurance is half the battle. But you know how it is. Sometimes we are just unable to be concious of real change. There is too much fear for us to contain.
If we are able at some future point both collectively and individually to recognise a transformation in our relationship with, and understanding of, money then the path to a new future will open. Until then, it’ll be more of the same albeit, perhaps, with sports stadiums and leisure palaces replacing banks and corporate hqs as the most powerful architectural manifestation of capitalism’s continued dominance.
Predicating after capitalism is very difficult,is to venture into the business of crystal gazing. I think now we could not turn to past for solution, past is dead,we could not abolish our techonological progress. Man is by nature irrational,we could not control this irrationality of mankind.Globalation is part and parcel of our life. War or invention of new technology may change world economy but is it possible?If establish world government body who control the economy is it possible? Iam doubtful for that.Economy expert come together and suggest thousand of alternative before the world let than select one which is useful.
Businesses evolve. New products and services replace old ones. E-mail replaced the fax which replaced the telex which replaced the telegraph which replaced the Pony Express. Companies are born, they live and while they do hopefully they make an impact and then die. A lot of good comes out of every bubble. Yes the dot.com bubble was full of companies with no assets, revenue or customers, but it also resulted in a lot of investment that makes today’s wireless connected world possible. Just like the real estate bubble drew a lot of investment is reviving old run-down communities. When the bubble bursts there will be some casualties. When new innovations and technologies render older ideas and products obsolete we have to let go.
Keeping GM and failed banks in business is not good. It results in a misallocation of resources. It keeps capital, resources and people in unwanted industries and keeps those resources from being employed in new and better areas. Rewarding incompetence and keeping new businesses from starting.
The economies of the world are going tobe cyclical. There are so many factors that unbalance them. From high debt, wealth redistribution,and technology. Yet there are four things that are truly destoying our way of life. Greed, lack of concern for our environment, racism and a very week education system world wide. Collectively these parts create a deceased moral body. The strength and disipline that is required for mankind to prosper, has been undermined by our moral backsliding. All brought on by corporations forcing/selling consumerism for their immediate profit(quarterly profit)at the expense of the next generation’s future thinkers,inventors, inovators and explorers.
Perhaps it is time for us to feel some economic pain so that we can reconsider the path we are on, to be more aware of our actions and to make difficult moral changes we need to make. Since when have corporations and Wall St. become our elected leaders? We decide who will lead us, so lets encourage them and support their appropriate decisions and finally, be good to one another.
It is hard to take this too seriously when the author misses the boat with regard to US savings rates.
He should note that even now, after drops in both stock and real estate prices, US household NET worth is on the order of $58 trillion.
US savings rate figures are also very deceptive — they do not include 401K contributions, which stand at 8% of before tax income.
Also, he points to aging demographics without considering that, by definition, must decrease the savings rate.
We are through the looking glass here, folks. Even the Tories now concede that the free market ideal occasionally pays little heed to sustainability.
Will things change? Doubt it. Why should they, when public money has been made so readily available to cover the bankers’ arses?
Another silly bit of flatulence blaming capitalism for our current late stage disaster statism.
Our economic problems today are caused by the inflationist policies of the centrally planned, state monopoly fiat currency systems. Trillions of dollars of fiat currency injected into the economy under Bush and Odumba (Tweedledum and Tweedledee) to cause booms, misallocations and misinvestments, and busts.
Any author who writes about the economy without ANY cognizance whatsoever of the tremendous growth in the money supply is immediately exposed as a completely illiterate moron, which you are.
Such a reliance on sneering and name-calling is another indication of a source not to be trusted easily. A point well argued does not require any of that extreme behaviour.
As for the story itself, the vagueness is inherent to the subject matter, but some things needed to be nailed down firmly. I am not convinced I understand why capitalism is to become the servant of other goals, for example. I am fairly sure I get it, but the story needed to spell that out clearer.
I trust that capitalism will always thrive even with the manipulation and regulations of the politician’s and the pinhead “intellectuals” in ivy league colleges. We have never had laissez-faire capitalism in its true form, even in the l9th century. If we ever mature enough to realize that the economy should be completely severed from the state (just as church and state), we would witness such an explosion of productivity that would totally embarrass academia from their failed predictions of capitalism’s demise. So-called business cycles, the most volatile ones, have always been caused by some form of government meddling. These bailouts are just such an example. Instead of allowing these companies to close shop and/or file bankruptcy, the childish rush to print money, create credit thru the Fed or underwrite loans is actually just a raw grab for power.
Government over-regulation caused this house of cards to fall to begin with by encouraging lenders to make sub-prime loans to begin with and that was to primarily garner votes at election time.
What’s after capitalism? I fear that more fascism is on the horizon (i.e. regulation without nationalization) and in some cases out-and-out socialism with more government ownership of parts of the edifice itself.
To say that capitalism is master is misdirection. People own the wealth and they call the shots out of the bottom of their tiny black hearts. Also, to pick another problem with your piece, the kind of work available is not in proportion to the work skills out there and that’s more critical than whether there’s variety or not. There should be a good deal more manual labor used, efficient or not. Otherwise the profit garnered by those throwing the laborers out of work has to be shared with them. The economy DOES have to be made servant to the people.
Speaking of which, I certainly hope you’re right about the possibility of a more collective response to the healthcare problems and those left with little support, and I applaud your recognizing that.
But the idea that the financial sector might come up with innovative instruments to help the average Joe is pure fantasy — the whole industry is basically a parasite on the real economy. In the US, with the congress we have, where the minority can easily stymie any progress and the rich are allowed to buy off our politicians, it’s hardly surprising our government doesn’t move more quickly to help. I don’t think this group of mercenaries is capable of it free from obligations or not. Similarly, I think your musing that anything can happen given our fiscal situation is laughable. Very view things are likely to happen with the overclass we have in both the UK and the US. You call it an affinity with the power structure, but in fact these people have to be forced into a more equitable system.
Good luck trying to pull that off with your streets peppered with CCTVs!
It would have helped if the writer actually knew what capitalism is. There was no mention of profit or of surplus value, to say nothing of exploitation. If one does not understanding that the purpose of capitalism is to confiscate the surplus production of workers after the break-even point, without paying them or giving them or the public a decisive say in how the surplus is used, one can’t began to understand how the world around them is working as we speak.
But there are already strong movements to restrain the excesses of mass consumerism: slow food, the voluntary simplicity movement and the many measures to arrest rising obesity.
Here’s one I bet you haven’t heard about: http://facingzionwards.blogspot.com/
Here is an article (”After capitalism”, by Geoff Mulgan, Prospect, no. 157, April 2009) inviting a response from all of us, armchair economical thinkers. I know diddly about economics but, having lived first half of my life in (European) socialism and the current half in (US) capitalism, and having had to fight for existence, almost on a daily basis (three jobs in socialism and 14, so far, in capitalism) I did on occasion shed a thought or two about the world I live in, raise my family and try to make a career. Allow me to share one thought. If capitalism is described as an interplay of production agents (factories, farms,…) and financial agents (banks, hedge funds, …) then a lot of cycling through the boom and bust (and those in between) phases can be explained by rigging these two parameters. Imperfect as it is, the model is an improvement over the majority of one-dimensional models used to explain pretty much everything else (by the way, socialism can be described fairly well with the same two parameters). One of the components feeding both agents – production & finances – is the technological innovation and this is where I see a problem. Economists are using the word in the sense that there is a nearly infinite sea of inventions that are only awaiting a technological innovation and infusion of financial capital. Well — there isn’t. Hundred and fifty years after Her Nikolaus Otto we are still running on the same 4-stroke internal combustion engine and two hundred years after Ben Franklin we still don’t know how to store electricity an any efficient way, not even to produce it in a decent way. Sure, there are personal microcomputers and the Internet (and vaccination, and antibiotics, …,and the list, thank God, goes on) but there has not been much progress on a lot of essential fronts. The difference is, apparently too subtle for most economists, the one between an invention and a technological progress. So when JFK pounded on the table saying that we would put a man on the Moon we have done it; this was pure technology. But when Dick Nixon pounded on the (same) table promising that we would defeat cancer in 20 years nothing much has happened; forty years later people are dying left and right of all kinds of cancers. No capitalism or socialism or something third will bring about true progress and advancement, for it takes a good mind, unburdened by either worker’s party proclamations or financial world’s agendas and deadlines, to find a solution. And the financial branch of capitalism cannot care less for investing monies in such a long and uncertain adventure. What, exactly, are we going to reach for in that bag of inventions that will help us in our next technological – economical burst? Solar cells? They have been around for 50 + years, with all of their 8 % efficiency.
Then it was hierarchy which was natural; today it is individual acquisitiveness.
But natural acquisitiveness has appeared in every single non-nomadic culture in the world. In Communist countries the upper levels of the Communist Party mostly lived in luxury and accumulated comforts and beautiful artwork. In monarchies, the king and nobles lived in luxury and accumulated beautiful artwork. In pre-European NZ the rich and powerful amongst the Maori acquired beautiful feather coats and greenstone meres. The form of consumption can vary, from fabulous pyramids, to collecting Old Masterpieces, to throwing lavish parties where you show off the amount of wealth you can throw away (as per Roman Emperors with the gladiator games or the potlatch tradition amongst indigenous groups in Pacific Northwest Coast).
And even in nomadic cultures people accumulate personal items that are beautiful and rare.
If something keeps occurring in culture after culture across the globe, I’d say it’s natural to human beings.
We are only a few generations from societies where the military stood at the apex of status and respect.
Which cultures were those? In traditional European cultures there was an uncomfortable battle between the church and the military powers (as represented by the kingdoms).
Capitalism became an “ism” when the vigorous banking and trade of Genoa and Venice, London and Bruges, combined with inventive manufacturing to create a world where the holders of abstracted capital became dominant, displacing the many other contenders for pole position, from warriors and scholars to bureaucrats and makers of things.
Under this definition we have never had capitalism. The military has always been dominant – see what Napolean or Hitler did to Europe, imagine what a nuclear bomb could do today. Or the power conveyed by oil wealth.
But as Karl Marx predicted, capitalism is expansive: 19th-century capitalists bought politicians, art collections, landscapes and universities with equal relish.
Nothing special about capitalism either. Dictatorships controlled politicans, art collections, landscapes and universities, monarchies brought politicians (all those titles of nobility), art collections (see Queen Elizabeth II’s collection sometime), landscapes (see Versaillies) and universities with equal relish. The Catholic Church happily meddled in politics. Roman Emperors were grand on politicians, art collections, landscapes and universities.
Anything can be turned into a commodity to be bought and sold—from sex to art and religion—and capitalism has been nothing if not inventive.
What’s inventive about selling sex, art or religion? People have been selling those for all of recorded human history and in all socities around the world, capitalist, communist, and hunter-gatherer. If selling sex, art and religion is inventive, what on earth could possibly be classified as non-inventive?
Even climate change has turned into a potential boom for capitalism, with taxpayers subsidising new waves of R&D, and governments persuaded to sponsor carbon markets which give traders, brokers and investors yet another way to grow rich.
Now Geoff commits the broken window fallacy. Taxpayers subsidies’ may make the people who get them rich, but the people who pay the taxes are poorer, by at least the amount of money that went into the tax. Plus the dead-weight losses as well. The only way that tax-payers subsidises for R&D is good for capitalism as a whole is if they result in some brillant innovation that improves all our living standards.
Carbon markets may make some traders, brokers, investors rich, but where does that money come from? From other traders, investors or power producers.
From an economic perspective, this passage is just ignorant. Geoff can’t distinguish between a transfer of money and actually making a whole society rich. Carbon markets or publicly-subsised R&D can only be good for capitalism overall if they produce some new technical breakthrough. They may also protect us from all being made *worse* off from global warming, and I certainly hope so, but it’s stupid to call them a boom for capitalism overall.
But their weakness and the weakness of much contemporary anti-capitalist literature (from David Korten, Wendell Berry, Alain Lipietz or Michael Albert) is that they offer little account of how their visions might be realised and how powerfully entrenched interests would be overcome.
In other words, they are entirely impractical. These ideas are like the people who keep proposing perpetual motion machines but with no idea of how to overcome the laws of thermodynamics. They’re not going to revolutionise engineering and the utopians are not going to revolutionise the world economy if they don’t understand that the desire for individual acquisitiveness is deep within the human breast, appearing in every culture where goods can be accumulated.
But restless capitalism has continued to give grounds for believing that it might destroy itself.
I don’t think that these grounds are unique to capitalism. Fear sells, and authors have always been able to gain a reputation for themselves by selling fear. Even if the author isn’t motivated by money, fame can be a motivator.
The collapse of the savings rate—to around zero by 2007 in the US when it needs to be closer to 30 per cent to cope with ageing, is a stark symptom of a capitalism that has lost the ability to protect its own future.
The savings rate argument is irrelevant. Our living standards in 2050 will depend mostly on our ability to produce in 2050 (and a bit on what we have produced pre 2050).
Other critiques have emphasised capitalism’s vulnerability to success. Extraordinary productivity gains in manufacturing reduce its share of GDP, leaving economies more dependent on services which are inherently harder to grow.
But growth in service productivity over the last few centuries has been incredible. For an example take music. 200 years ago if you wanted to listen to music you needed a live performer. Nowadays you can download music from a vast range of performers in a vast range of traditions on to your cellphone and carry it around with you. And the range of live performances has increased vastly – jazz, gospel, rock & roll, hip-hop. Plus the range of live performances has drastically increased with the development of electronic amplification.
Productivity in medicine has increased out of all sight – take the invention of antibiotics.
The idea that services are inherently harder to grow is just wrong.
Having successfully met people’s material needs, capitalism is threatened if they then lose interest in working hard and making money, turning instead to new age counselling, mid-life gap years and three-day weekends.
Yeah, because no capitalist has ever figured out how to sell new age counselling, golf courses, backpacks for the mid-life gap year, etc.
Capitalism’s only response is to invest ever more in creating new needs fuelled by anxiety about status, or beauty and body mass, a perverse result that may make developed capitalist societies more psychologically troubled than their poorer counterparts.
This is flat out wrong. Across the world happiness goes up with income. Look at this map of the world: http://www.world-notes.com/2008/06/happiness-world-map/
What’s going on here? Is Geoff Mulgan trying to maximise the number of things he can get wrong per paragraph? Is this an early April Fool’s joke?
. They had both practical justifications (market risk is amplified the more degrees of separation there are between prices of financial assets and underlying value), and moral ones (the more degrees of separation there are, the less possible it is for markets to act with moral responsibility).
How is market risk amplified the more degrees of separation there are between prices of financial assets and underlying value? Is not the risk from an earthquake for insurers directly determined by the fact that houses that are destroyed suddenly become worthless financially?
And surely the more degrees of separation there are, the easier it is for people to act with moral responsibility? One of the remarkable things about world history is that most atrocities are done by people close to the people they are killing. The Isrealis and the Palestinians are not joining up together to kill Tongans, as would be implied by the degrees of separatoin. We easily deplore slavery, we who have never dirtied our hands with it, but for centuries slaves were widely held and the vast majority of soceity was entirely comfortable with it. The abolitionist movement started in Britain where for various legal reasons slavery was basically outlawed on British soil, and thus remote from ordinary people, not amongst the slavetakers who captured slaves with their own hands. When we are benefiting from something directly ourselves it is far harder to take the moral high ground than if it is distant.
The many moves in this direction include the still tentative attempts to make pension fund investments more accountable for their social and environmental effects
But this would make pension fund investments less transparent – social and environmental effects are harder to measure than financial ones. Furthermore, if your pension fund produces bad returns, how do you know whether this was because of incompetence or becuase they were pursuing social or environmental effects. And how do we agree on what soical effects are? A committed Catholic is going to have a very different view about the social desirablility of contraception.
We are also again hearing arguments for publicly owned banks to finance housing, infrastructure or innovation, for Tobin taxes and higher capital gains tax for short-term investments.
And are these arguments any good?
Even money itself may be rethought. The privileges that accompany the ability to create money will come in future with more responsibilities, but we may also see more enthusiasm for alternative currencies that are more embedded, like the local currencies in Germany or timebanks.
Why? We already have the movement towards independent central banks – I thought the placing of limits on the ability to create money was more of a response to the growing inflation problem of the 60s and 70s.
But there are already strong movements to restrain the excesses of mass consumerism: slow food, the voluntary simplicity movement and the many measures to arrest rising obesity, are all symptoms of a swing towards seeing consumerism less as a harmless boon and more as a villain.
Nothing new about that. People have been saying too much consumption is bad back to the Ancient Greeks. But people keep consuming.
Reinforcing these trends are shifts in the balance of the economy away from products and services, towards a “support economy” based on relationships and care (from nurseries and therapy to weekly organic food deliveries).
What’s not a service about nurseries and therapies, or weekly organic food deliveries?
Volumes of evidence now confirm the vital role that families play in nurturing the skills and attitudes of future citizens
Have you read The Nurture Assumption? It argues that families aren’t actually all that vital in nurturing the attitudes of future citizens, instead children are affected by the culture that they grow up in. Trivially, but obviously, children acquire the accent of their peers not of their parents if the two sets are different. More fascinating is the identical twins studies – identical twins separated at birth are about as much like each other as identical twins brought up together. Adopted children are no more like their genetically-unrelated siblings than children brought up in different houses in the same culture. Given that Geoff Mulgan didn’t bother checking his assertion about mental health, I suspect that he didn’t bother checking if there was any evidence to back up his statement above.
Within a generation we may be on the threshold of a major expansion of collective provision, born of our shared vulnerability to disability, dementia and being left without children or spouses to look after us. That provision will be shaped by access to far more accurate information about individual dispositions, or the effectiveness of treatments, and it will undoubtedly make use of business capabilities. But it is highly unlikely to be capitalistic.
Why not? Capitalism is the most productive economic system the world has ever produced. Seems rather brave to ignore all that history and assert that a new system will be introduced. What non-capitalist system can solve the knowledge problem?
it’s not hard to imagine some offering services where people can borrow money for a period of retraining, parental leave or unemployment, and then repay through the tax system over 20 or 30 years, or through a charge on homes, with much lower transaction costs than the banks.
It’s also not hard to imagine some governments offering services at much higher transaction costs than banks.
Plus transaction costs are not the only important costs. When NZ introduced its ACC scheme, which paid compensation for all forms of accidents, it boasted about its very low overhead costs compared to private schemes. However at least part of the reason for those low overhead costs were that no checking was done to see if any fraudulent claims were made. ACC overall costs (overhead plus payouts) spiralled upwards until the government introduced such checks against frauds. It’s quite easy to imagine that if the government doesn’t worry about credit worthiness or debt collection it will have lower transaction costs than the banks in lending money, but overall taxpayers would be worse off as people just borrowed money and never repaid it.
societies that invest large proportions of their surpluses on advertising to persuade people that individual consumption is the best route to happiness end up paying a high price.
Again, see the happiness map. They may pay a high price, but it’s a lower price than those in non-capitalist countries, which is what I thought would have been the relevant criteria.
President Sarkozy has announced his eagerness to adopt some of their ideas and Obama will want measures of success that take account of health improvements, greener cities and better education rather than just measuring how much people have spent.
Someone should tell Obama that governments have been collecting data on things like infant mortality and education levels far longer than they have been collecting data on GDP. Incidentally, GDP is measured two ways – neither of which is how much people have spent, one is the income measure – how much people have earned (out of which they might save) and the other is the production measure – how much people have produced.
Why oh why did Prospect hire someone as massively ignorant as Geoff Mulgan to write this article?
The result is that a large political space is opening up. In the short run it is being filled with anger, fear and confusion. In the longer run it may be filled with a new vision of capitalism, and its relationship to both society and ecology, a vision that will be clearer about what we want to grow and what we don’t.
Or again we may not.
People in a free society have never agreed about what we want to grow and what we don’t, I don’t see any reason to believe that that will suddenly change.
They have prevented the sale of people, of votes, public offices, children’s labour and body organs
You do realise that prohibiting the sale of body organs has led to unnecessary deaths as the result of a shortage of organ doning? That banning child labour in Third World countries has led children to work as prostitutes as they still need to eat?
Democracies are far better than the alternatives, but they are far from fail-safe.
We need to rekindle our capacity to imagine, and to see through the still-gathering storm to what lies beyond.
Geoff, I suggest you start off with trying to see what is actually in the world around you, and what’s been happening in the past. You’re really really good at the imagination, no problems there, what you have problems with is reality.
Andrea Ricco’s comment is to the point: “Keeping GM and failed banks in business is not good.”
US motorists as customers in the marketplace are telling GM what they think of its product. US motorists as taxpayers are telling it the opposite; or rather, the government is doing it for them, though neither at their request or with their approval.
Mulgan has written an excellent essay. Capitalism is not the final stage of social evolution, though its best features must be retained. Traditional hierarchical Leninist-Stalinist socialism is not a way forward either, and was actually late feudalism rebranded.
Financial crises if they are not to become endemic, must provoke a mass rethink on the nature and role of money in global society.
Financial crises if they are not to become endemic, must provoke a mass rethink on the nature and role of money in global society.
There is no guarantee that a mass rethink on the nature and role of money in global society will prevent endemic financial crises. The trouble with a global society is that we can’t do controlled experiments in the lab. This is not a promising situation for successful redesigns.
Furthermore, the fact that someone as massively ignorant about the world today and history as Geoff Mulgan is could get an article published in Prospect magazine makes me very gloomy about the prospect for any mass rethink.
I am not convinced that any mucking about with markets by the government or other institutions has ever achieved anything of value. I therefore do not expect the government to bail out my business because I am responsible for its success or failure. I measure the value my business delivers both by the revenue it generates and by my personal satisfaction at delivering excellent service. My goal is to promote prosperity for everyone involved in a transaction.
My beliefs about capitalism are simple and based in experience. I am a participant in the system and not an economist.
Human relationships are exchanges of value and values. Such exchanges have shifted, morphed, and evolved based on context, creativity, education, access to information, and the tendency for humans to be attracted to bright, shiny things for the sheer delight of it.
Free market capitalism is self-policing. I believe that when people conduct business from an ethical perspective, the results promote the greatest good for the greatest number of people. The Madoffs and Lays of the world are brought to justice most of the time.
That people with no moral compass can steal, hoodwink, con, and otherwise cajole money from the hands of many is a reflection of personal ignorance. Being “taken” hurts. You can fool some of the people some of the time.
Financial crises will therefore be with us always. Should there be safety nets? Perhaps. It’s difficult for me to say, as I am the only safety net I have.
Ignorance is its own reward.
The author mentions the work of Fernand Braudel.
May I recommend two 4 books to readers of this essay??
1/Fernand Braudel’s Civilization and Capitalism (3 vols.)
But more importantly in my view, is the monumental man who runs the Fernand Braudel Center at Binghamton University:
Immanuel Wallerstein.
2/Immanuel Wallerstein: “Utopistics: Historical Choices for the 21st Century.
and
3/”The Decline of American Power” (esp. the last couple of chapters which deal with precisely that question of “what after Capitalism?”)
4/Classic (but also dated) book on this problematic is:
Alec Nove “The Economics of Feasible Socialism”
It is the best article that I have read from Prospect since last year.
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Sarah
http://www.clpostingguide.info
Tracy W.
Tracy W.
I would like to reply to one of your points.
You say that acquisitiveness is natural. Fine, but what in God’s great name does that have to do with Capitalism (a completely human invention and artifice if ever there was one)??
Let’s quickly define Capitalism as: a system which valorizes and hyper-activates the endless and infinite accumulation of capital. And let’s note very quickly that “capital” is an entirely different thing to “money” or indeed material objects. Instead, capital is a “promissory note” – think for example of US treasury bonds with which the Americans have been using to pay the Chinese for their export consumer items, and which the Chinese are increasingly heartily sick of receiving as payment as there are just pieces of paper – which is an “investment” as well as assumption of future earnings.
That is to say, the “profit motive” rests on the assumption of ever-higher returns. I would assert that this is quite simply physically impossible, and that we are at that point in history where this is becoming ever more readily apparent.
It is impossible both in terms of:
1/Natural ecology, which we are hearing a lot about right now (think “peak oil”) natural resources which it is actually in the capitalists’ interest to NOT replace, as it cuts into the margin of profit; dumping and disposal of waste products, again something which the capitalist far is completely unconcerned to bother with. This amount to saying that for the capitalist to make these profits, everybody else (usually the state) has to pick up the bill for these depleting and dumping activities.
2/Human ecology. This is the whole raft of “moral” arguments concerning exploitation of human labor which is severely underpaid compared with the profit which the capitalist makes off these human beings, concentration of political, social as well as overwhelming economic power. The end result is a whole scale social, political and economic alienation which results from a materially hierarchical, exploitative and polarized world-system and economy.
I will end by saying to everyone else. Check out the mouthful of goddamned attitude that Tracy W fills her post with. Geoff Mulgan is accused of ignorance, fantasy etc etc.
This is precisely the arrogant, mule-headed easy assumption of oligarchic elitist superiority which is precisely the cancerous dismissal of democracy that marks to the core the capitalist “bastard” “mind”-set.
I say most of you are full of hot air…. The problem with Captialism failing is do to two very big giants along with a number of human issues….
1. Government has over taxed the populace and manufacturing to the point where it takes two adults to make enough income to raise a family of two..SO you do not work for your family, you work for the Governement!
It also forces the parents to send their children to school earlier to become more or less “Children of the State” and they in turn have no real bond with their children as does the children with them… Therefore the Children act out and the idot teachers want to drug them into submission.
Governments interferance into every aspect of life has done nothing but create problems and heavy tax burdens and has made millions miserable to say the least…Manufactureres just pass their tax burden on to the taxpayers via higher costs for goods and food, meanwhile the idiots in Washington brag how they are taxing business, the idiots are just taking more money out of the slaves or taxpayers…The Governement Lies…..
Unions, are the next biggest cause of the failure of Captilism… Unions are anti-american, they are socilist or communist in creation and stature… The have broken the back of the Manufacturers who left the country in droves as soon as they were able to via the increase in modernazition of the third world…. Unions today really serve no purpose since Government Rules and Regulations have straightened out the majority of problems in the work place… Unions have trained their members to think they are better than any one else and “Deserve” more money for actually doing less work and producing less…
Next do we then do we need to delve into the Unions buying of Polticians to the detrement of the hard working taxpayer??? Unions are a scrouge on this earth and should be eliminated.
So between the Unions and the Government, the Country was doomed….
I don’t care what you Economics people with Noble Prizes say,,, I say your full of hot air, the problem is the Governments of the world and their greed for money via taxes and the greed of Polticians and Unions…. As an example, right now, this very minute, the Governor of NY is having to battle with the Unions of NY…over pay cuts… The Unions just believe that the State should raise taxes to pay for them for just showing up to work since the State does not produce anything of value…. The Government of NY has made every Poltician from every City a BEGGAR as it sucks in tremendenous amounts of tax money to be split up by 3 Assholes in a back room….. That is what is wrong with this Country people… Politicians and Unions and the sooner they are placed in check the sooner the Country will recover,,, plain and simple…. So write on with all your BS and try to convince each other with it…. As with Unions, Economists need to be eliminated as well… They are also a scourge on this Country and work hand in hand with Politicians to create lies for the working person…as are Pollsters… The sooner the better…..And even the creaters of the Declaration of Independence and the Bill of Rights warned future generations about Bankers…
Eddie S – The frantic desperation of capitalists to blame another capitalist crisis on governments (and unions!!), is no doubt to be admired for its energy and inventiveness, but not followed for its (in)coherence.
A key point in Mulgan’s very interesting article is where he talks about ‘the socialisation of risk’. Here indeed is the very Achilles Heel of capitalism as a system. As Marx pointed out better than anyone before or since, capitalism is indeed an extraordinary creative and productive economic system. The problem is that, in essential tendem with this, it is also an immensely disruptive, unpredictable and destructive system. It inevitably involves visiting risks on individuals and society on a grand and insupportable scale.
How has capitalism – despite Marx’s essentially accurate analysis – survived this essentially manically risk nature? The answer is simple: it has offloaded and socialised the risks onto Government. Since the start of the twentieth century at least, Governments have repeatedly rescued capitalism. Left to its own devices, capitalism will create socially explosive inequalities (hence the need for welfare systems and redistributive taxation), an uneducated workforce (hence the need for state education), technological stasis (hence the predominance of the state in funding long-term technologies), and financial destruction (hence… well, we are in the process of finding out).
Capitalism without an enabling and rescuing state would have failed a century ago, just as Marx predicted.
One consequence of this crisis which you have evidently not grasped is that it will massively reduce the moral and cultural influence of the USA in the world. The failure is a quintessentially American failure of extreme capitalist excess, hyper rationalism, and foolish individualism (more fool those countries such as the UK who enthusiastically followed). This will never be forgotten. The new models Mulgan rightly sees emerging will come from somewhere. But assuredly not from the USA.
Tracy W – you make some good points against Mulgan, but your central claim about capitalism and happiness (on any sophisticated definition of well-being) is just plain wrong. Above a certain subsistence level, what drives well-being is social equality not capitalist inequality. All the data are in the recent ‘The Spirit Level: Why More Equal Societies Almost Always Do Better’ by Nottingham University medical epidemiologist Richard Wilkinson. (Your much cited (by you) ‘happiness map’ is a triviality in comparison.)
You have more than a little rethinking to do!
Mulgan helps promulgate the myth of the financial crisis as unforseen. The political and media elites had their heads in the sand, but there was no shortage whatsoever of those warning that both government debt and personal debt were far beyond sustainable levels. There were also those who warned that we were keeping inflation low, and consumption high, insignificant part through relocating production to low costs developing economies, but that this was a finite process that would stop driving GDP growth once relocation reached its limit and the labour forces in those countries demanded more rights and better wages.
It is incredible too how Mulgan makes such a complex meal of grasping his way towards already well understood points in real world economics. Take his section about needing to move away from GDP as our core measure of progress, in which he makes it sound like proposing such a change is a radical new concept. Now look at this speech about exactly the same thing by Robert Kennedy in 1968:
http://www.ecopolis.org/bob-kennedy-on-gdp/
He talks of “capitalism more clearly as servant than master”, but then in analysing the “great accommodation” that may be on its way he suggests: “Capital itself is a good place to start”.
Mulgan and many of the posters here would do well to realise that capitalism and socialism are nothing more than completing versions of consumerism. It is consumerism that is the problem – unless you’ve discovered some new laws of nature. All these leftrightist arguments are a dead end. Leftrightism is a redundant problematic.
It is not a matter of which way the pendulum swings now and how far. This pendulum, the left wing, the right wing, capitalism and socialism are not of the least bit of interest to us.
If you cannot appreciate this, try Vaclav Havel’s famous essays as an easter bloc dissident in the 70s and 80s.
“[T]here are already strong movements to restrain the excesses of mass consumerism…”
This is one of the statements that in my view are tantamount to the admission that various things other than capitalism are at fault, among them fiscal privilege for corporations and the legality of ubiquitous, 24-hour audiovisual advertising. The fact that the economy we know is very largely based on the creation of artificial demand is madness of the highest order, but such madness is not something intrinsic to capitalism per se.
Capitalism is not a system but rather is a feature common to various systems, none of which would work without a legal and fiscal framework. In my view it is regrettable that writers do not more commonly acknowledge this fact at the outset.
My response to Mulgan’s piece:
http://www.criticalglobalisation.com/blogs/nathancoombs_capitalism_keynes_socialism.html
“Soviet communism accepted its own demise; Western capitalism has not accepted it yet”.
(Stafford Beer- “World in Torment”)
See also -> “The VSM as the foundation for social systems” Presentation –
http://www.ototsky.mgn.ru/it/presentations/paradiso2009m.htm
—
A real way to use the VSM globally !