Against the Current
Life after Capitalism
Robert Skidelsky
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LONDON – In 1995, I published a book called The World After Communism. Today, I wonder whether there will be a world after capitalism.
That question is not prompted by the worst economic slump since the 1930’s. Capitalism has always had crises, and will go on having them. Rather, it comes from the feeling that Western civilization is increasingly unsatisfying, saddled with a system of incentives that are essential for accumulating wealth, but that undermine our capacity to enjoy it. Capitalism may be close to exhausting its potential to create a better life – at least in the world’s rich countries.
By “better,” I mean better ethically, not materially. Material gains may continue, though evidence shows that they no longer make people happier. My discontent is with the quality of a civilization in which the production and consumption of unnecessary goods has become most people’s main occupation.
This is not to denigrate capitalism. It was, and is, a superb system for overcoming scarcity. By organising production efficiently, and directing it to the pursuit of welfare rather than power, it has lifted a large part of the world out of poverty.
Yet what happens to such a system when scarcity has been turned to plenty? Does it just go on producing more of the same, stimulating jaded appetites with new gadgets, thrills, and excitements? How much longer can this continue? Do we spend the next century wallowing in triviality?
For most of the last century, the alternative to capitalism was socialism. But socialism, in its classical form, failed – as it had to. Public production is inferior to private production for any number of reasons, not least because it destroys choice and variety. And, since the collapse of communism, there has been no coherent alternative to capitalism. Beyond capitalism, it seems, stretches a vista of…capitalism.
There have always been huge moral questions about capitalism, which could be put to one side because capitalism was so successful at generating wealth. Now, when we already have all the wealth we need, we are right to wonder whether the costs of capitalism are worth incurring.
Adam Smith, for example, recognized that the division of labor would make people dumber by robbing them of non-specialized skills. Yet he thought that this was a price – possibly compensated by education – worth paying, since the widening of the market increased the growth of wealth. This made him a fervent free trader.
Today’s apostles of free trade argue the case in much the same way as Adam Smith, ignoring the fact that wealth has expanded enormously since Smith’s day. They typically admit that free trade costs jobs, but claim that re-training programs will fit workers into new, “higher value” jobs. This amounts to saying that even though rich countries (or regions) no longer need the benefits of free trade, they must continue to suffer its costs.
Defenders of the current system reply: we leave such choices to individuals to make for themselves. If people want to step off the conveyor belt, they are free to do so. And increasing numbers do, in fact, “drop out.” Democracy, too, means the freedom to vote capitalism out of office.
This answer is powerful but naïve. People do not form their preferences in isolation. Their choices are framed by their societies’ dominant culture. Is it really supposed that constant pressure to consume has no effect on preferences? We ban pornography and restrict violence on TV, believing that they affect people negatively, yet we should believe that unrestricted advertising of consumer goods affects only the distribution of demand, but not the total?
Capitalism’s defenders sometimes argue that the spirit of acquisitiveness is so deeply ingrained in human nature that nothing can dislodge it. But human nature is a bundle of conflicting passions and possibilities. It has always been the function of culture (including religion) to encourage some and limit the expression of others.
Indeed, the “spirit of capitalism” entered human affairs rather late in history. Before then, markets for buying and selling were hedged with legal and moral restrictions. A person who devoted his life to making money was not regarded as a good role model. Greed, avarice, and envy were among the deadly sins. Usury (making money from money) was an offense against God.
It was only in the eighteenth century that greed became morally respectable. It was now considered healthily Promethean to turn wealth into money and put it to work to make more money, because by doing this one was benefiting humanity.
This inspired the American way of life, where money always talks. The end of capitalism means simply the end of the urge to listen to it. People would start to enjoy what they have, instead of always wanting more. One can imagine a society of private wealth holders, whose main objective is to lead good lives, not to turn their wealth into “capital.”
Financial services would shrink, because the rich would not always want to become richer. As more and more people find themselves with enough, one might expect the spirit of gain to lose its social approbation. Capitalism would have done its work, and the profit motive would resume its place in the rogues’ gallery.
The dishonoring of greed is likely only in those countries whose citizens already have more than they need. And even there, many people still have less than they need. The evidence suggests that economies would be more stable and citizens happier if wealth and income were more evenly distributed. The economic justification for large income inequalities – the need to stimulate people to be more productive – collapses when growth ceases to be so important.
Perhaps socialism was not an alternative to capitalism, but its heir. It will inherit the earth not by dispossessing the rich of their property, but by providing motives and incentives for behavior that are unconnected with the further accumulation of wealth.
Robert Skidelsky, a member of the British House of Lords, is Professor Emeritus of Political Economy at Warwick University, author of a prize-winning biography of the economist John Maynard Keynes, and a board member of the Moscow School of Political Studies.
Copyright: Project Syndicate, 2011.
www.project-syndicate.org
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niskami 12:31 21 Jan 11
Is it not that in pre-capitalist societies greed was mainly dishonored by the wealthy and powerful? That is, by those who were in the position to influence what is said in the holy scriptures?
mirmos192 01:45 21 Jan 11
OK - so let us accept the broad thrust, here. Not difficult. Some obvious truths. But what implications for policy might follow... What would Professor Lord Skidelsky actually have governments do, then? And what would the effect then be on the poor within the rich countries, and on the poor within the poor countries? And then feed this back into policy recommendations...
genomik 07:58 21 Jan 11
True. Capitalism has been great for the growth phase of humanity, its teen years. Now we are, by some measures, mature. We need to look to another new system. technology is advancing at an exponential pace. It used to be capitalism advanced tech, now tech sort of has its own inertia. We do not need to throw gasoline on the tech fire. Product cycles are so fast its difficult to have lifespans of many products, and that will increasingly be a problem. How many PhDs are on earth now? 100s of millions?
This is why looking at history has its limitations. Capitalism HAS been pretty good. But the *big picture* is changing. As people get richer they get obese, with weight and many other aspects. What do we need more for? The price is increasingly paid by the environment as well, so we have more money, but if the forests and corals are dead, what will we do with it? Buy gold plated toilets?
As a technologist, I think this is why many of us got into tech. We watched Star trek and saw the replicators that made food etc. There was no money in Star Trek, just adventure. The future was post capitalism. We are not far away from nanotech, where we can technologically manufacture gold and diamonds from other elements for example - 20 years? Automation threatens to increase unemployment while simultaneously reducing the need to work! These and many other transformative technologies will invert Capitalism. Ironically, capitalism itself is hastening the coming of the techs that will undermine it!
While I think Socialism is the heir as the writer says, it may be a new form. When I tell most people socialism is the heir they get emotionally invested and see red. Perhaps a new word could meke it more palatable. Technologism? Stabalism? Social Technologism? SoTek?
America has been the flag holder for Capitalism, but now many others are holding the flag too. alternative voices from within the system need to call for re-evaluation, for progress.
TaylorO 06:46 22 Jan 11
Capitalism is moral because it is the only social-political system that protects the rights of individuals to make the choices they need to survive and thrive in this world. The current system in the United States is not capitalism but a bastardized mixed economy of which its failures are directly a result of statist elements.
I highly recommend checking out Ayn Rand's moral defense of Capitalism in Capitalism: The Unknown Ideal and Andrew Bernstein's Book, The Capitalist Manifesto: The Historic, Economic and Philosophic Case of Laissez-Faire. An excellent lecture by Dr. Eric Daniels at Clemson, The Morality of Trade: An Intellectual History, follows the history of the prohibition of usury and why such restrictions are ultimately harmful to human life.
dhlii 03:29 24 Jan 11
Look arround the real world, if the post capitolist era starts when want and need are eliminated we have a long way to go, and no other economic/political system does nearly as well as meeting basic human needs.
Specialization drives us to deep but narrow knowledge not idiocy. As more people become specialists the market for generalists must increase.
Capitolism is not about scarcity - though it is about efficient distribution. It is also about transforming what we can produce into what we want.If it does not result in some arbitrary definition of happines that would be because that is not what we want.
You are free to impose your own values, your own definition of happiness on yourself and anyone who choses to agree with you. But if you compell even one person to live according to your values - even for their own good, your sin is far worse than greed.
ckwrites 08:05 25 Jan 11
Professor Skidelsky has written a poignant piece of article, reflecting his measured perspective of what can go wrong when a superior economic instrument like "capitalism" is abused amid the scarcity of morals. He is not excoriating "capitalism". He is asking the question: having tasted the fruits of capitalism, and witnessing the uncertainty of deriving "happiness" from "having more of everything" {especially in the developed economies}, what really is "capitalism"? The answer lies not in "capitalism", it lies in our authentic, responsible response to the goodness of "capitalism".
llisa2u2 06:03 16 Feb 11
Capitalism can survive, thrive and expand within any war-model social/political system. Responsible, ethical, focused human leadership is the only device that counters increasing risk factors to the stability and peaceful co-existence of all members of the human beings surviving within any war-model social/political system. What is crucial for economic stability from capitalism is individual survival status and the perception of that individual status. If the majority of human beings acknowledge that the basic opportunities to food, shelter, and safe group co-existence is totally at risk, money and all that money, any wealth that money represents is no longer a reasonable goal. Whatever the crisis, the only outcome is destruction. Group destruction by human beings is acknowledged publicly by labels that describe some type of warfare, internal or external. Leadership can focus warfare on certain groups within the society. Certain groups can focus warfare on other groups, including certain leadership. These warfare activities can occur in all social groupings, even without capitalism or war model social infrastructures.
The distribution and acknowledgement of wealth, "what wealth is" , "what wealth" represents for the world human society, individual nations, individual communities, and any one "common" individual is the "extreme" risk factor that reasonable world leaders need to publicize. If the risk factor for any one individual is so extreme that no safety exists for any individual, regardless of money, to survive with food and debt-free shelter, then only destruction, in one form or another, in one place or another, continues to escalate.
Human beings, with focused thoughts and focused energies to accomplish reasonable group goals balance any negative outcomes from capitalism. These efforts must reach beyond short-cycle political and personal power goals for capitalism to produce positive outcomes.
McMike 08:51 16 Feb 11
I disagree with your assertion that communism = socialism. In addition, the idea that the Soviet and Chinese totalitarian regimes resembled communism is equally silly. While we are the topic; I disagree that what we have here in the USA bears any resemblance to free market capitalism.
If you wish to argue that attempts at communism inevitably devolve into statist totalitarianism, then you must also consider whether capitalism does not invariably devolve into cronyism, fascism, and anti-democratic kleptocracies and oligarchies. Both seem proven true by experience.
Luckily, socialism is not the same thing as communism.
I further disagree that capitalism solves scarcity. There is a solid argument to be made that capitalism in fact creates scarcity.
It's weird though, I disagree with all that but still generally agree with your post.
Mountern 03:54 18 Feb 11
The Paradox of Capitalism
Capitalism and Communism aspire to economic efficiency and optimality. Capitalism eschews central planning and Communism eschews market competition.
Capitalism encourages market competition in a world of market anarchy and will end up with a centrally planned economy. Communism frowns upon market competition and will end up with market anarchy.
In one the central planner is chosen by market forces after much due diligence and time. In the other central planner is self appointed with immediate effect.
What the capitalist hated most he ended up as it. Equally, what the communist feared most he also ended up as it. Somewhere along the road where both of them meet you can’t tell one from the other. China and Singapore is a case in point. China is looking more and more capitalistic by the day whereas Singapore’s economy is to a large extent strictly controlled and planned by the government. We can think Ikea, Walmart, Google, Microsoft, Apple and all the large corporations in the world. The more monopolistic power they have the more they resemble a central planning economy.
The strange thing is both sides are arguing the same thing: supply and demand don’t match. Marx claimed there is an internal contradiction between social nature of modern production and private nature of ownership of capitalists’ resources in capitalism. He argued that price changes ensure some ex post coordination of firm decisions but its extent is limited and the imbalance between supply and demand, created by such ‘coordination failures’ accumulates into periodic economic crises.
The many crises in capitalistic society have proven him right to a large extent. However, his solution of central planning doesn’t work because of complexity. Complexity has many unintended consequences and it is also almost impossible to solve in many situation. However, its consequences can be mitigated or avoided when there is transparency. Transparency is really what the world needs.
look4sola 10:40 23 Feb 11
“HEIR” TO SOCIALISM AS A RESPITE TO THE “AFTER-LIFE” OF CAPITALISM
“Perhaps socialism was not an alternative to capitalism, but its ‘heir’; it will inherit the earth not by dispossessing the rich of their property, but by providing motives and incentives for behaviour that are unconnected with the further accumulation of wealth”
A deep thought into the last paragraph of the published article, titled “Life after capitalism”, gives a clear leeway out of the prevalent discordant economic waves, through out the world. Despite these hassles, many intellectual have theoretical explanations for how we got here, but the unfortunate side of the story, is that there is no creative theoretical answer, that is different from those prescribed by especially European theoretical philosophers of the eighteenth century. All the theoretical solutions are better presented as rhetoric’s to get awards but sure doomed to fail as soon as it is tried on the field (I mean as national policies) the core difference between the demographic and climatic factors of todays’ world and that which existed in the eighteenth century is what has neither been properly studied or deliberately jettisoned, If at all it is been studied. (The dead can not rule the living absolutely, without confusion).
In the eighteenth century, Classical Socialism was an alternative to Classical Capitalism, and it could afford to be so, because in all the economies that really determined the ‘World Socio-Political Climate’, Social Training and Academics did not vary too wide amongst all classes, as we have in the poorest nations of the world today.
Literacy and educability was readily available in Germany, England and other advanced capitalist nations, hence it would have been possible for the literate and easily educable “working class” to effectively take control and manage the economy, If for instance, the anticipated revolution of 1918 in Germany was successful. (the context of Literate and Educable as used in this article refers to a class of citizen who can be trained to understand the workings of political economy, without having to go through formal academic Institutions. i.e Universities and Colleges, but rather could learn how their daily activities, viz-a-viz sports, corporate responsibilities, trading, taxes, schooling etc, even local purchases, all inter-connect in a number of ways to create an economy, and there impact on their local legal tenders (money’s). But in the absence of this class properly nurtured, the core economy of the society is seen by the widest majority of the citizen of the local environment as a divine occurrence or in better alternative, an exclusive reserve of the best elites, who already represent the interest of the existing socio-economic order “CAPITALISM”.
So, if German economy could have been exclusive (I.e. stand alone) for instance, then socialism would have been an alternative, and the citizens would have understood and appreciated the transition. But the revolutions in Russia, where there was even no CAPITALISM, then the socialism of LENIN was an alternative to what?, Feudalism? The length of time required to train the citizens to average educability is what also required for the citizen to forget where they are coming from (pre-1917) so the practical social-theories remained a debate among the Russian social elites who decided inevitably to “kill themselves” and pruned down the number of available intelligentsia’s who carry the history and revolutionary perspectives. So, if Russia “reversed ” to capitalism, it was the same “private ownership” classical capitalism that Russia never witnessed in its own history, that it went back to experience. And the experience, whichever way it is viewed, is another social advancement. (absolving ourselves from all forms of stereo-typed theoretical social progressions).
The basic question to ask today is; Is what we practice world wide now CAPITALISM? Especially after all the bail-out for supposed private companies?. Looking at the theoretical values of private funds and private investment, what we have now can no longer be called capitalism. But the “Old Capitalist” are still the ones in charge of the ship everywhere. Daily confused, but there is no practical alternative views in the same world societies that is posing a clear and understandable way out and at the same time having its own army who will redirect the economies, if per-adventure it takes over. So the situation is far worse than a stalemate.
This situation, is what may be leading us to looking for, NOT SOCIALISTS, but a “HEIR” from its midst who understands socialism (The management of public resources in the general interest of the public) but is not prepared to disposes the existing capitalist of their possession (As it is far from practicability, not only because it is impractical, it is economically unnecessary and Mis-directive. Even the time and attention spent on the undue venture, with possible resistance, will create a fatal loss). This “Heir” is what would be required first to be a tool in the hands at the existing capitalist to take on an enormous task of helping to raise a new generation of citizens who would be economically useful, employable, creative and manageable, especially in the poorest nations. These will assist to revive the dwindling wealth at the already wealthy. It is their experience in doing this, that can create the path for them to see the creation of another economically viable world and its various national economic inter-relations.
So in my conclusions; socialism was more likely an alternative to capitalism, but now; its “heir” is more likely the answer to the “off-shoot crisis” of the “after world” of capitalism.
AKINBINU OLUSOLA M
A MASTERS OF BUSINESS ADMINISTRATION STUDENT.
OBAFEMI AWOLOWO UNIVERSITY, ILE-IFE
NIGERIA
08082998382
Gulmar 10:09 11 Mar 11
Gulmar
I think that capitalism survive Third Depression. Superiority of capitalism is from this, that could be reformed - could overcoming its frailties and limitations. Ability to reform of capitalism is determined by three factors:
2.1. the right of both the market economy and capitalist democracy, freedom of activity and economic and political rivalry. This is conducive to winning the competition by better products and producers and better programs and more efficient political teams. Better - it does not mean perfect, because capitalism - as all human things - is flawed in many ways. But, in contrast to other formations, particularly socialism - until recently his main rival - the freedom of speech allows to define disability, and democratic-market rules conducive to overcoming them.
2.2. ability to broaden the social base of the pro-capitalist by absorbing the core of anti-capitalist ideas and movements - both socialist and anticolonialist. This allowed to overcome the two most threatening limitations of capitalist formation in the past - that this was a system efficient [1] not for entire nations, and [2] not for all nations. This allowed to overcome the main threat - an attempt to create socialism as an alternative to capitalism, and the spread of market economies throughout the globe.
2.3. ability to move the pattern-creating center of capitalism in ever new regions of the world. Originally the center was located in the cities of northern Italy, France and the Netherlands, producing by manufacure luxury items for the "leisured class." Then center had moved to England - thanks of production widely available textile. Next the center became USA - offering pattern of conveyer-belt system mass-production automobile, jeans, Coca Cola, westerns and others democratic patterns of "american way of life". This substantiates the presumption that center of global capitalism will move to another country or region . It's more visible in degenerating "american way of life" - substitution commonly available democratic model "welfare society", by stimulating adhesion and borrowing "society of abundance." Less - for now - in creating a more rational patterns of production and consumption patterns. There is no such ideas and theories - they are concrete manifestations of changes, promising to create a model of progress of capitalistic system [I wrote down them from the real patterns in Knol published on the Internet "Premisses a civilization of rational sufficiency" and “Are now chance for improvement of capitalism?”]
llisa2u2 07:34 11 Mar 11
Hello Gulmar:
You have presented some interesting remarks even with the “English” version, word, and phrasing errors.
2.3 includes some very intriguing and critical comments, especially your comment about capitalism: “ability to move the pattern-creating center of capitalism in ever new regions of the world.”
Here’s my comments in response to 2.3:
Presently, especially in the US, the trend from capitalism is morphing into a form of predatory expansion by elite commercial groups that grow by exploitation of targeted micro-marketing economies. Only the large corporations, or those with access to specific elite funding, and information are expanding in a variety of ways to control and consume whatever marketing, and operating options are available internationally.
An example in the US is the fact that as Wal-Mart is losing sales at big box stores, now Wal-Mart will buy, build and distribute branded products in “SMALL” local stores. The individual entrepreneur is being eaten alive because of inability to compete by not only the “Distribution Monopoly” by Wal-Mart, but also increasingly in any aspect of business activity. Can any individual, common man-on-the street initiate a start-up to compete? In other countries, where the individual citizen is severely disenfranchised from any realizable opportunity for personal profit, growth, success, development, health/wealth (ad infinitum) only the “elite groups”, political or commercial, profit by exploiting the increasingly “needy” and increasingly exploitable many within specific targeted micro-markets. This trend is no longer the concept of capitalism of the “old school” theorists and thinkers. I suggest that we, internationally, are dealing with a merging of non-ethical artificial organizations functioning outside of physical national and international boundaries and historically ethical human thoughts and principles.
Not only is/has the pattern-creating center of capitalism changed, the pattern that is being created is no longer capitalism that can be discussed as capitalism, as theorized by theorists of the industrial/manufacturing age.
In a way, I am suggesting that as human beings, we are caught in the dilemma of understanding, observing and explaining an artificial warfare of artificial organizations/corporations effectively attacking the smaller and larger, but real/individual/human capitalistic (old school theories) enterprise-in-action. This warfare was not necessarily planned, or expected. It is happening now. The collateral damage is easily observable daily and internationally. This is a negative effect of the electronic/instant/communication technological development. So, in other words, I am saying that there are a lot of bad results for the very people who enjoy using and contribute to the profit of certain business organizations such as Facebook. Fun and games is not always fun and games
Individual citizens, regardless of present residency in any nation, can no longer pursue individual and group ideas to group and organize into effective small business organizations for profit. The individual entrepreneurial opportunity for any citizen in any micro-economy is becoming more limited in focus to only day-to-day survival operating activity of primarily food establishments and the myriad of food production/consequence activities. Who are the consumers? How many are left to consume? Who can consume what?
Of course, effective voluntary or forced boycott efforts can intersect and perhaps cause certain changes to certain trends. However, boycotting implies other political effects, trends and results, again, ad infinitum.
hoplite 03:39 25 Mar 11
The premise you missed:
Human happiness comes from aproaching the intended state of man. (which leads to)
The intended state of man is freedom.
Individual freedom is impossible without private property.
Capitalism gives more people private property than any other system.
Why do you want to change?
FFTMMFA 07:49 20 Jan 11
Hasn't this already happened in some wealthy countries, such as Scandinavia and Switzerland? But there it has come about not post capitlism but was instead fused with it at its early nexus, making the social values an abutment to capitlism at its base and in its construction. Is it thus tenable that societies without similar traditions will be able to pass beyond capitalism, or improve it in a meaningful way. In the United States it seems that those who would most benefit from such changes are most against it, or at least they think they are, anyway.