Postcapitalism

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Paul Mason. Postcapitalism: A Guide to Our Future. New York: Farrar, Straus and Giroux, 2016.

Paul Mason is a British freelance journalist and economics writer. He is a bold, creative thinker who challenges a lot of mainstream economic thinking. Here he has written an especially insightful and thought-provoking book, one that deserves serious attention and debate.

Mason’s title may make his book sound like a speculative, utopian work, but the future he envisions doesn’t drop out of the sky. It emerges naturally from his understanding of both the recent and earlier history of capitalism. For those who think that something as pervasive and entrenched as capitalism cannot possibly wind down, he offers this observation: “It is absurd that we are capable of witnessing a 40,000-year-old system of gender oppression begin to dissolve before our eyes, and yet still seeing the abolition of a 200-year-old economic system as an unrealistic utopia.”

Another stumbling block for readers may be Mason’s frankly Marxian perspective, although his is a revised version with no “dictatorship of the proletariat.” (Today he sees the educated and networked individual as the key agent of change.) I have some reservations about a few of his arguments, especially concerning the labor theory of value, but that hasn’t stopped me from agreeing with many of his conclusions about the future.

Capitalism’s bleak prospects

Mason begins his book by saying that “the long-term prospects for capitalism are bleak. According to the OECD, growth in the developed world will be ‘weak’ for the next fifty years. Inequality will rise by 40 per cent.”

If we keep going as we have been, we face two alternative futures, neither very pleasant:

  1. Economic globalization continues, but only the wealthy in the developed countries get much benefit from it; or
  2. Popular opposition to globalization grows, global cooperation breaks down, and more nationalist and authoritarian governments emerge, as in the 1930s. Each country tries to save itself at the expense of others, such as by putting up trade barriers to other country’s manufactured goods [See Trump, Donald].

And either way, things get worse in mid-century when the full effects of climate change and demographic change (the challenge of supporting larger and older populations) are felt.

New technologies yes, capitalism maybe not

Mason believes that a better alternative is to take advantage of the potential for new technologies to end capitalism as we know it. Economic problems such as over-reliance on fossil fuels and stagnating wages result from trying to perpetuate a system that no longer works very well. “Capitalism is a complex, adaptive system which has reached the limits of its capacity to adapt.” Although capitalism has a long history of generating technological change, it can no longer adapt to such change because it is now creating technologies that are ultimately incompatible with capitalism itself.

“Information is different from every previous technology,” Mason declares. “Its spontaneous tendency is to dissolve markets, destroy ownership and break down the relationship between work and wages.” Information is different because, unlike other means of production, it can be reproduced at near-zero cost. If I were to give you my car I would lose a car, but what have I lost if I give you an idea? It costs me nearly nothing to share these thoughts with you, so why should I expect you to pay for them? Why would people buy an encyclopedia when Wikipedia is free, or buy a newspaper when so much news is available online?

In addition to widely disseminating “information goods,” the information revolution also “adds a high information content to physical goods, sucking them into the same zero-price vortex….” In a fully automated production system, the key resource is the set of instructions for turning raw materials into finished products. “The knowledge content of products is becoming more valuable than the physical elements used to produce them.” Once the knowledge exists, many users can apply it with little additional cost.

A world of abundant information should also be a world of abundant things produced by automated, information-driven processes. That undermines capitalist markets, since “markets are based on scarcity while information is abundant.” As industrial robots proliferate, the need for paid human labor should diminish. Earlier technological innovations like the assembly line already shortened the work week while simultaneously raising living standards for workers. The more radical change Mason envisions now will free vast amounts of labor from paid employment. Much of that labor can go into voluntary but socially useful activity, whether it is caring for a loved one or making music. Consumers too should experience some liberation from capitalist markets, as more goods and services become available at little or no cost. “We are seeing the rise of non-market production: horizontally distributed peer-production networks that are not centrally managed, producing goods that are either completely free, or which…have very limited commercial value.”

Capitalists can impede this transition, but only by monopolizing information in order to restrict its free flow and maintain its artificial scarcity. Intellectual property rights will be a key issue. Society will have to balance the need to grant such rights in order to reward the producers of new knowledge, against the need to limit such rights in order to facilitate the free spread of information. In the end, Mason doesn’t think that capitalists will be able to own or control the intellectual means of production the way they have owned and controlled other means of production. “The main contradiction today is between the possibility of free, abundant goods and information and a system of monopolies, banks and governments trying to keep things private, scarce and commercial.”

Dramatic changes, conflicts and crises have been common in the history of capitalism. As profit-making opportunities have declined in old industries, capital has repeatedly sought out new markets and new technologies. Always, however, the assumption of industrial capitalism was that people would depend on the owners of centralized means of production for both employment and products. What makes the current crisis different is that knowledge is so easily decentralized, and networked individuals can create so much of value on their own. Global corporations continue to make their profits for now, but they do so increasingly by squeezing the workers and damaging the environment. New technologies that could produce more freedom and abundance for all while better protecting the planet are not yet allowed to do so.

Mason’s argument that abundance will reduce market activity and expand non-market activity makes a lot of sense to me, but I’m not sure how far to take it. The most obvious example is the displacement of human labor from manufacturing production as automation takes control. Many low-skill service jobs could also be automated, although the availability of cheap labor reduces the incentive to make the transition. But I would expect there to be a continuing market for skilled services because not everyone will be willing or able to provide them. A lot of free legal information is available online, but that doesn’t mean that everyone is comfortable being their own lawyer. And although an abundance of goods and services may make them cheaper, only if they become entirely free will the need for money and marketplace exchanges disappear entirely. While some people, especially the more educated, may experience a reduction in paid work hours as a blessing, others may experience it as the curse of unemployment or poverty. Mason’s postcapitalist world will require massive investments in human capital and a stronger safety net for the economically displaced.

The limits of neoliberalism

Standing against Mason’s vision of the future is the set of ideas and policies known as neoliberalism. That is the most recent incarnation of the free-market economics that was considered liberal in the eighteenth and nineteenth centuries, but is associated with conservatism today. Mason defines it as a commitment to uncontrolled markets, the pursuit of self-interest through the market, the small state, and a high tolerance for financial speculation and inequality. On the one hand, he credits neoliberalism for unleashing the information revolution and promoting economic development, especially in poorer countries. On the other hand, he blames the uncontrolled pursuit of profit for aggravating economic inequality and endangering the global environment.

Although neoliberal policies have brought capitalism to a crisis point, neoliberal theory is poorly equipped to understand crisis or radical transformation. Neoliberals believe that markets are essentially rational and self-correcting. If left to their own devices, they tend toward equilibrium, not crisis. For neoliberals, capitalism is just the normal state of affairs, a “continuous present.” Writing with more than a little sarcasm, Mason says that neoliberal economics has a “brilliant model for understanding forms of capitalism that do not change, mutate or die. Unfortunately these do not exist.”

Neoliberal policy and practice has kept capitalism as we know it limping along by relying on loose monetary policy, dramatic growth of the financial sector, and global imbalances between creditor and debtor nations. Specifically:

  1. “Fiat money,” which is money that a state can create freely as long as people have confidence in it, has allowed central banks to counteract stock market drops by pumping cheap money into the economy. When this money inflates the prices of stocks and other assets beyond realistic earnings prospects, boom becomes bust.
  2. As real wages have stagnated, consumer spending has been sustained more by credit and borrowing. By the time of the 2008 financial crisis, 40 percent of corporate profits were coming from the financial sector. Profits must eventually fall if they depend too much on the accumulation of debt.
  3. Neoliberal policies have created debtor countries as well as indebted consumers. “For countries that smashed organized labor, offshored large parts of their productive industries and fueled consumption with rising credit, the outcome was always going to be trade deficits, high government debts and instability in the financial sector.” Debtor nations like the United States require other countries, such as China, Germany and Japan, to be creditor countries. When the burden of debt becomes too great to sustain, countries resist and the system breaks down.

Since the recent financial crisis, neoliberal policy has turned toward imposing austerity on the debtors, while not addressing the reasons for the expansion of debt in the first place. Mason regards the economic recovery as only a temporary fix, since the underlying weaknesses have not been corrected. The real existential crisis of capitalism itself is only beginning.

The most important limit on the neoliberal system is information technology, which is put to the service of the existing capitalist system in the short run, but undermines it in the long run.

And that’s just the introduction and Chapter 1! My next post will look at the historical part of Mason’s argument, his interpretation of the “long cycles” in capitalist history.

Continued

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