Why the Left Always Gets Capitalism Wrong
Remnant Review
If social change came through combining old shibboleths with the latest fads, there would be a future for the Left. But that is not how social change takes place.
The latest old Leftist to write a book on the end of capitalism is somebody I had never heard of: Paul Mason. His book is titled, Postcapitalism.
To launch it, The Guardian, that aging warhorse of British Leftism, published his article: “The end of capitalism has begun.” This has been announced repeated by The Guardian for 80 years.
[Note: the book I regard as the best autobiography I have ever read, Malcolm Muggridge’s Chronicles of Wasted Time: The Green Stick, provides a series of delightful vignettes on his years as a correspondent in Moscow for The Guardian.]
It never ceases to amaze me how people who cannot think straight can come up with new justifications for whatever worldview they decided at 20 was correct, and which did not pan out. They keep changing the reasons for their grand scenario, but the scenario never changes. It is always this: “Capitalism is just about to die. But this time, we will not have to go to the barricades. It will all be easy-peasy. We don’t have to risk anything. It’s all built into the mode of production.”
This is Marxism without courage. This is Marxism without revolution. The argument from the mode of production is as empty analytically as Marxism was from the beginning, but at least Mason’s screed is written in English, not English as a second language, which Marx wrote in. (If you ever read anything lively or even insightful written by Marx, you can be sure that it was one of Engels’ ghost-written essays.)
Here, I dissect Mr. Mason’s article, not because he is worth refuting for his own sake, but so you can see the pathetic quality of his arguments. Yet he is regarded as hot stuff in the English Left community. The Guardianhas baptized him. He is the latest and the greatest. He is the last man standing. Of course, when his new book sinks without a trace, there will always be another last man standing.
It’s not easy being a Leftist under 80.
THE DEATH OF SOCIALISM
He begins where every Leftist should always begin his analysis: the betrayal of socialism by socialists. This is where Marx usually began, most famously in the Manifesto of the Communist Party (1848). (By the way, this also is where all conservative analysis should begin: the betrayal of conservatism by conservatives.)
The red flags and marching songs of Syriza during the Greek crisis, plus the expectation that the banks would be nationalised, revived briefly a 20th-century dream: the forced destruction of the market from above. For much of the 20th century this was how the left conceived the first stage of an economy beyond capitalism. The force would be applied by the working class, either at the ballot box or on the barricades. The lever would be the state. The opportunity would come through frequent episodes of economic collapse.Instead over the past 25 years it has been the left’s project that has collapsed. The market destroyed the plan; individualism replaced collectivism and solidarity; the hugely expanded workforce of the world looks like a “proletariat”, but no longer thinks or behaves as it once did.
Actually, the proletarians never behaved the way Marx said they would. They were rarely Marxists. The few who were had little influence. The workers went in the direction of trade unionism, which just wanted a larger slice of the pie. That was the position of the revisionist Marxists under Eduard Bernstein in the 1880’s. They dropped the idea of revolution, which was the central idea of Karl Marx. The refusal of the workers to adopt Marxism was why Antonio Gramsci, in the 1930’s, abandoned Marxism in the name Marxism, and instead promoted the view that the revolution would never come until the workers of the West abandoned the morality of Christianity. He scrapped Marx’s idea that the mode of production is fundamental.
Mason refuses to go that far. He still clings to Marx’s mode of production theory of the stages of historical development. He thinks Moore’s law will do the trick.
Mason at least admits that socialism is now a spent force. The capitalist mode of production did not cause a communist revolution, contrary to Marx. Democratic socialism has also failed to displace the capitalist elite. Socialists never did come up with a blueprint for how their system could deal with the problem of scarcity. None of them ever described in detail a socialist incentive system that will rationally allocate wealth, and will also maintain economic incentives for high productivity — incentives that will match, let alone exceed, capitalism’s incentives.
This was openly admitted in 1990 by Robert Heilbroner, the multi-millionaire socialist economics professor, author of the best-selling history of economic thought, The Worldly Philosophers. He wrote an obituary: “After Communism.” It was published in The New Yorker (Sept 10, 1990). In it, he wrote these words: “Mises was right.” Right about what? About the impossibility of rational economic calculation in a world without private property and capital markets. He then called for the next phase of socialism, one which will be based on environmentalism, not economic theory. He said that only by mobilizing the masses behind the idea that the government should intervene in order to save the environment, could socialism once again gain a hearing. Otherwise, the movement was dead.
A little over a year later, the Soviet Union ceased to exist. That was the last hurrah for Marxism, unless we count North Korea.
POST-CAPITALISM
Something is soon going to replace socialism. It is not capitalism.
If you lived through all this, and disliked capitalism, it was traumatic. But in the process technology has created a new route out, which the remnants of the old left — and all other forces influenced by it — have either to embrace or die. Capitalism, it turns out, will not be abolished by forced-march techniques. It will be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which will break through, reshaping the economy around new values and behaviours. I call this postcapitalism.
I see. Post-capitalism. When you’re dealing with Leftist intellectuals, it’s always post-this or post-that. This has to do with book marketing. David Brooks, who is a clever author, once wrote that if you want write a best-selling book for the intelligentsia, it should be titled either The End of . . . or The Death of. . . .
As with the end of feudalism 500 years ago, capitalism’s replacement by postcapitalism will be accelerated by external shocks and shaped by the emergence of a new kind of human being. And it has started.
Ah, yes: the new mankind. The utopian Left always has the new man waiting in the wings, ready to take front and center. The historically inevitable demise of capitalism will bring him to the stage.
What will bring him into the real world, at long last? What change in the mode of production — which has failed to do this so far — will at last evolve?
MOORE’S UNNAMED LAW
Moore’s law will bring the new man. This is technological innovation relating to computer information processing. Mason invokes Moore’s law, but never mentions it by name.
Postcapitalism is possible because of three major changes information technology has brought about in the past 25 years. First, it has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages. The coming wave of automation, currently stalled because our social infrastructure cannot bear the consequences, will hugely diminish the amount of work needed — not just to subsist but to provide a decent life for all.
He says that capitalism is reducing the need for work. This is nonsense. Unemployment in the United States is as low as it has been for decades. People have jobs. All over the world, people are looking for jobs, and they are getting jobs wherever trade unions are not keeping them out of the job market, as they do in Greece and Spain.
There surely will be recessions. Central banking guarantees this: the boom-bust cycle. But this has nothing to do with technological innovation, robotics, or Moore’s law.
As long as there is scarcity, there is a need for work. As long as we cannot get everything we want at zero price, we are going to have to work to get whatever it is we want. The idea that the socialist nirvana is going to come in on the back of Moore’s law is simply one more example of the same old socialist story, namely, that industrial capitalism will lead to mass unemployment. It was not true 200 years ago, and it is not true today. We see nothing like what he is described. Yet he says it is right in front of us. He says it is even behind us. Well, it isn’t.
INFORMATION COSTS AND THE FREE MARKET
He continues.
Second, information is corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant. The system’s defence mechanism is to form monopolies — the giant tech companies — on a scale not seen in the past 200 years, yet they cannot last. By building business models and share valuations based on the capture and privatisation of all socially produced information, such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.
Then he says that cheaper information is corroding the market’s ability to price things. This may be the dumbest statement by any socialist I have ever read. The whole point of Hayek’s famous article in 1945, “The Use of Knowledge in Society,” and also the whole point of Mises’s revolutionary article in 1920, “Economic Calculation in the Socialist Commonwealth,” was this: the price system is the most important source of accurate information about the economy in the history of man. The essence of decentralized information is this: the free market’s system of incentives persuades people who possess accurate information to share with others, usually by selling it to the highest bidder, and then implement this information in order to make a profit.
Raymond Kurzweil is right: the decline in the cost of information has been gigantic ever since the census of 1890, and it is accelerating. Yet this era was a period of extraordinary economic growth, and a period in which capitalism became dominant throughout the world. The essence of the free market is this: there is a constant reduction in the cost of everything through increased productivity, but above all, there is a reduction in the cost of accurate information.
So, Mason has things exactly backwards.
THE STRUCTURE OF CAPITALISM
His third erroneous conclusion has to do with the structure of capitalism. He thinks we are headed for decentralization. So do I. He thinks this is anti-capitalist. I do not. On the contrary, it is the essence of advanced capitalism.
Third, we’re seeing the spontaneous rise of collaborative production: goods, services and organisations are appearing that no longer respond to the dictates of the market and the managerial hierarchy. The biggest information product in the world — Wikipedia — is made by volunteers for free, abolishing the encyclopedia business and depriving the advertising industry of an estimated $3bn a year in revenue.
In the initial stages of capitalism, there is centralization of production. Why? To take advantage of the economies of scale. But this process ends rapidly. The capitalist system provides a growing number of alternatives in order to sell goods and services to people with all kinds of tastes. I wrote about this in 1974. It was not a new idea then.
Almost unnoticed, in the niches and hollows of the market system, whole swaths of economic life are beginning to move to a different rhythm. Parallel currencies, time banks, cooperatives and self-managed spaces have proliferated, barely noticed by the economics profession, and often as a direct result of the shattering of the old structures in the post-2008 crisis.
This is “commune babble.” Marx always thought that communal socialists were utopian airheads, and this is one of those few areas in which I have always agreed with Marx.
BACK TO THE COMMUNAL FARM
Then he writes: “You only find this new economy if you look hard for it.” This means that it doesn’t exist as a significant market factor.
In Greece, when a grassroots NGO mapped the country’s food co-ops, alternative producers, parallel currencies and local exchange systems they found more than 70 substantive projects and hundreds of smaller initiatives ranging from squats to carpools to free kindergartens. To mainstream economics such things seem barely to qualify as economic activity — but that’s the point. They exist because they trade, however haltingly and inefficiently, in the currency of postcapitalism: free time, networked activity and free stuff. It seems a meagre and unofficial and even dangerous thing from which to craft an entire alternative to a global system, but so did money and credit in the age of Edward III.
These Greeks have been wiped out economically by the socilist policies of the state. They participate on the fringes of the money economy. They are working in a low division of labor sector. In short, they are basically living in the manorial world before capitalism. Yet this Leftist thinks communal living is the wave of the future.
Leftists are convinced that we are about to have a world of free goods. This has been the whole push of socialism from day one. So, there is no curse on the earth. There really isn’t any scarcity. It is only because of evil institutions, which were created by capitalism, that mankind is kept from the nearly unlimited productivity of nature. Private property is keeping nature from overwhelming us in the bountiful cornucopia of free stuff.
They never learn. They never figure out that nature is niggardly. They never figure out that there is scarcity, and that only through capital formation can this scarcity be overcome. Only through the extension of the division of labor through capital formation and greater specialization can we overcome the limits of scarcity. This was Adam Smith’s position in chapter 1 of The Wealth of Nations (1776), but socialists refuse to respond to it.
New forms of ownership, new forms of lending, new legal contracts: a whole business subculture has emerged over the past 10 years, which the media has dubbed the “sharing economy”. Buzzwords such as the “commons” and “peer-production” are thrown around, but few have bothered to ask what this development means for capitalism itself.
So, what else is new? What is capitalist society, if not experiments in new forms of ownership, meaning ownership outside of the state’s control, new forms of lending, and new contracts? Experimentation in these things has gone on in the West since at least 1300.
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