Posts Tagged ‘noncapitalism’

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Marxist economists have spent a lot of time in recent years deconstructing capitalism, showing that there are lots of spaces within modern economies in which capitalism does not prevail. The idea behind “iceberg economics” is that lots of alternatives to capitalism already exist (barter, self-help, producer cooperatives, and the like) and, once recognized, they can be fostered and further developed.

By the same token, it’s also important to focus on instances where capitalism does exist, even when—as in the case of the so-called sharing economy—it might appear that the typical relations of capitalism don’t apply.

Uber, the ride-sourcing service, is a case in point. The owners of Uber maintain their drivers are independent contractors, and all they’re doing is providing “a technology platform that helps willing drivers connect with passengers willing to pay for a ride.” Drivers, in turn, benefit “because they have complete flexibility and control.”

But the California Labor Commission has now ruled that Uber has an employer-employee relationship with its drivers. As Katy Steinmetz explains,

The growing independent-contractor workforce is a key reason that companies like Instacart and Uber have been able to grow so quickly, because the cost of organizing independent contractors is much less than hiring employees. There’s no requirement to pay unemployment tax or ensure that workers are making at least minimum wage. In many cases, the companies don’t have to pay for the smartphones or data plans workers use on the job. They don’t have to deal with the costly spools of red tape that come with federal and state withholdings and healthcare and anti-discrimination laws.

Uber’s relationship with its drivers is an essentially capitalist one, in the sense that it hires the drivers and extracts a surplus from them—without many of the rules and regulations that pertain to other capitalist employers.

Recognizing the capitalist dimension of that relationship is important, at one level, because it pushes back against the ability of Uber and other companies in the so-called sharing economy to shift many of the expenses of running a business onto their employees. Drivers and other workers will certainly benefit as a result.

But only partly. They’ll still be employees of billion-dollar companies. Recognizing the capitalist nature of much of the on-demand economy is even more important, on another level, because it means we can finally go beyond the false image of flexible and in-control independent contractors and put on the agenda the abolition of the wages-system itself.

Then we’d have the chance to build a real sharing economy.

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Last week, in my discussion with Chris Dillow on the differences between mainstream and heterodox economics, I cited the example of one Charles Calomiris, a professor of financial institutions at Columbia University and a research associate of the National Bureau of Economic Research, as an example of the kinds of policies mainstream economists would like to see imposed in Greece.

Richard Wolff [ht: hr], a heterodox economist, offers a very different analysis of the situation in Greece, along with an alternative set of policies. Wolff makes a number of key points—about how Greece got into this mess (as a result of a number of conditions that came together and then blew up during the global economic collapse of 2008), the mistakes some Greeks made (believing they could become more competitive, based on lower wages, within the euro zone), what austerity has meant in Greece (shifting “the burden of the crisis. . .on to the masses of people, while telling a story which you hope that the media and the professors of economics will take seriously, that this is not only the best way to solve the problem, but the only way”), the fact that the United States has it own Greece (in devastated major cities, like Detroit), and finally an alternative set of policies (less about the relationship to the rest of the world and more about the organization of the economy inside the country).

The whole interview is worth a read. What it does is illustrate my original point that “heterodox economists see that another economics—another economic theory as well as another economic system—is both necessary and possible. Mainstream economists, for their part, don’t.”

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Most mainstream economists are not on the Left. Most wouldn’t know heterodox economics if it bit them on the proverbial nose. And most heterodox economists do identify with some kind of left-wing politics.

Yet, Chris Dillow (with whom I have found myself in agreement on many occasions) just can’t seem to disentangle the relationship among mainstream economics, heterodox economics, and the Left.

Let’s see if I can’t offer a bit of assistance. First, most mainstream economists with whom I’m familiar (at least the sort one finds in the U.S. academy) tend to locate themselves somewhere in the center of the political spectrum—some more to the liberal side (like Arrow, Solow, Tobin, and Samuelson, the economists named by Dillow), others to the more conservative side (like Mankiw, Cochrane, Taylor, and so on). But they’re certainly not on the Left, if by that we mean critical of the capitalist system and supportive of one or another kind of socialism (a pretty traditional definition of the Left for much of the past century, it seems to me).

Mainstream economists also don’t know much, if anything, about heterodox economics. Perhaps a previous generation did (if only for having studied the history of economic thought) but not the current generation. A friend of mine reported the following story from the most recent meetings of the American Economic Association/Allied Social Science Association meetings:

On Monday morning I was hanging out in the exhibition hall at ASSA, at a table shared by Dollars and Sense and the Heterodox Economics Network. About once an hour, some professional economist looked perplexedly at the banner saying “Heterodox Economics” and asked what that meant. They genuinely, honestly did not know.

The current generation of mainstream economists don’t know because they weren’t exposed to heterodox economics as undergraduate or graduate students, it doesn’t appear in the journals they read, and they simply aren’t forced to learn about it. Ever.

Heterodox economists are in a very different situation. They may reject mainstream economics but, as I’ve written before, they have to know it—and know it even better than mainstream economists themselves. Why? Because they have to teach it (often alongside their own, quite different approaches) and they have to engage it in public debate (precisely because mainstream economics dominates the debate within the academy, the media and policymaking circles).

Finally, most heterodox economists do, in my experience, identify with some kind of left-wing politics. Not the Austrians, of course—although it’s not clear they’re not part of mainstream economics these days. But all the other heterodox economists—of the sort one will find on the Heterodox Economics Directory—are located somewhere on the Left (in the way I define it above). The names may have changed over time—when I was young, we were called “radicals,” now it seems “heterodox” is the more accepted term—but the support for left-wing politics doesn’t seem to have changed.

So, what distinguishes liberal mainstream economists from left-wing heterodox economists? To my mind, it comes down to focusing on market imperfections (which can, at least in principle, be fixed within capitalism) versus focusing on the problems with capitalism as a system (which require, for a solution, the creation of noncapitalist practices and institutions).

Here’s the definition of heterodox economics I gave back in 2010:

Heterodox economics comprises all those theories that academic economists and others use to criticize and develop alternatives to mainstream (neoclassical and Keynesian) approaches. Heterodox and mainstream theories differ in terms of their starting points, methodologies, and conclusions. Thus, for example, Marxian economists start with class and use Marxian value theory to criticize capitalism, whereas neoclassical economists start with a set of given preferences, technology, and resource endowments and use a framework of supply and demand to celebrate capitalism. The problems of capitalism and mainstream economic theories, now as throughout their history, create the space for and interest in heterodox approaches.

To practice that kind of left-wing heterodox economics means one does have to know something about Marx, Kalecki, Sraffa, and Minsky—because their work (and that of many others) constitutes the foundations (or at least some of the foundations) of nonmainstream, heterodox analysis.

Heterodox economists reject economic orthodoxy not, as Dillow believes, because they’re ignorant of what the orthodoxy is or because of some kind of halo effect, but because, when they look at the world through the lens of Marx, Kalecki, Sraffa, and Minsky, they see an economic and social system that continues to discipline and punish the vast majority of people in order to benefit a tiny minority at the top. They see, in other words, an economy that is inherently unstable, fundamentally unequal, and profoundly unjust.

Hence, heterodox economists see that another economics—another economic theory as well as another economic system—is both necessary and possible. Mainstream economists, for their part, don’t.

 

Here is my friend and former fellow graduate student Antonio Callari in an interview on Marxism he did for a group that produces educational videos directed at students and teachers. He starts with Marx’s biography, discusses changes in Marx’s thought and politics during the nineteenth century, and concludes with a discussion of the ways Marxism has (and has not) worked over the course of the past century.

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Clearly, U.S. capitalism continues to face a serious legitimation crisis.

According to new Pew survey [ht: db], 62 percent of Americans now think the existing economic system unfairly favors the powerful, and 78 percent think too much power is concentrated in the hands of a few large companies. The only group that thinks otherwise—on the Right or the Left—are “business conservatives.”

Here’s the breakdown according to the political categories devised by Pew:

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Most Americans, then, believe current economic arrangements are unfair.

That should invite a robust discussion—in the academy, in the public sphere—of alternative ways of organizing the economy. We can and should be debating how to create more economic fairness and how to change the way corporations are organized so that, instead of wielding excessive power over the rest of the economy, their power might be democratically exercised by their employees and the communities in which they operate.

But we’re not there yet. Capitalism’s legitimacy continues to be called into question but alternatives to capitalism are still, for many people, hard to imagine. As Antonio Gramsci wrote during the last Great Depression, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

 

What’s the difference between Massey Energy’s Upper Big Branch mine in Montcoal, West Virginia and Ohio Cooperative Solar in Cleveland? The mine, in which 29 workers were killed in 2010, created wealth for CEO Don Blankenship and Massey’s shareholders and “illth”—poisoned streams, toxic air, and deliberate inattention to safety in and around the mine—for everyone else. Ohio Cooperative Solar, in contrast, is a worker-owned enterprise that operates on a one-worker/one-vote model and, as part of the Evergreen Cooperatives, seeks to improve conditions for its workers and the surrounding communities.

As Erik Reece [ht: db] explains in a remarkable recent essay, “The End of Illth,”

As CEO of Massey, Don Blankenship hadn’t dug up an ounce of coal, but in his last year at the company he walked away with $17.8 million and a deferred compensation package valued at $27.2 million. [Former CEO Steve] Kiel told me that under the formula OCS had developed, profit-shares were determined one third by a worker’s wages, one third by the hours he or she had worked that year, and one third by his or her overall tenure with the company. The model sought to reward commitment to the co-op and to the community.

“The deal we make with employees is that this is not an overnight ATM machine,” Kiel said. “You’re going to have to work here eight to ten years before you see the benefits of ownership. . . . What we get in return as a community is people living in these neighborhoods for long periods of time with long-term job security, and that leads to the entire community stabilization we’re looking for.” What’s more, when the workers are the stakeholders, long-term thinking about what’s best for the company replaces the short-term, profit-driven motives of today’s average shareholder. “Most capitalists have a return-on-investment threshold,” Kiel said. “Typically venture capital is going to put up a million dollars up front and will look to get a [huge] annual return. We don’t have that capitalist on board, so we have a different measure, which is how many people can we hire.”

The worker-owned model advocated by Reece represents a new answer to the question “which side are you on?” not only for the traditional coal-mining areas in Appalachia but for the rest of the country.

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Critics of capitalism and capitalist alienation (such as Chris Dillow) may have given up on the possibility of noncapitalist planning too quickly.

Part of the problem is, planning has become identified with the grandiose 5-year plans and top-down decisionmaking associated with the state capitalism of the Soviet Union. However, what if there are other models of planning?

One such example is Cybersyn [ht: tm], the cybernetic planning system that was conceived in Salvador Allende’s Chile (but never completed before his violent overthrow) to cope with the “messy jumble of factories, mines and other workplaces that had long been state-run, others that were freshly nationalised, some under worker occupation and others still under the control of their managers or owners.”

Clearly, as Greg Borenstein and Jem Axelrod explain, the Chilean experiment, as designed by British cybernetics-management consultant Stafford Beer, was a model of ultramodernist omniscience and ominpotence. I wonder what a postmodernist model of planning for a noncapitalist economy would look like today.