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The New Economics - Dusty Old Ideas




It is not at all surprising that when capitalism undergoes one of its periodic slumps and stops “delivering the goods” people, particularly economists, begin searching for better models.  People like Gar Alperovitz, a professor of political economy at the University of Maryland and member of a think-tank the New Economic Institute has made  an impact on left-progressives with his books and articles on  "post-capitalism". He is one amongst many with similar analysis and similar solutions.



When crises arise solutions are sought and alternative economic systems offered. We saw this with Henry George and Land Taxation and with Major Douglas and Social Credit (the “scarcity” of money is the pet obsession of all money cranks. They fix their attention only on the breaking points of the economic conjuncture when capital flees from all other commodities which are falling catastrophically in price, and when the universal cry is for “hard cash” or money, the supplies of which seem to have mysteriously dwindled or even vanished. They ignored altogether other periods, no less characteristic under capitalism, when money supplies appear inexhaustible and funds go begging at low interest rates.)  Populist politicians like Huey Long organised  Share-the-Wealth Clubs. He proposed to reduce the big fortunes by a capital levy tax to a point where no one person may own more than from three to four million dollars and have a yearly income of not more than one million dollars. The surplus  to be distributed so that every family may have at least $5,000. From his calculations  $165,000,000,000 was available to be  distributed with something to spare for a college education for all youth, for old age pensions, for reduction of the hours of labor to do away with unemployment and to guarantee a minimum yearly earning of $5,000 per family.

A lure that will be offered the workers is the struggle to “democratize” capitalism through the old conception of “growing into” socialism, – transforming  capitalism into socialism by placing it in the hands of “the people.”  The concept of “transformation” in practise doesn’t transform capitalism, it transforms the workers  movement into a prop of capitalism.  The worker is not concerned with the forms of administration of capitalism, but in developing its forces for the immediate struggle against and the ultimate overthrow of  capitalism. Socialism is not a struggle for democracy; it is a struggle for class power. Scheme after scheme is being tried by the capitalist class to insure a satisfied and subject class of workers. Profit-sharing, welfare work, and other schemes having proven miserable failures, and now the slogan “industrial democracy” is being used instead.“Industrial democracy” perpetuates the authority of the capitalism over the workers.

In past epochs such reformers opposed the growth of monopolies and trusts in the economic system and defended small business. Today, the giant corporations  are stronger than ever. The “populists" of the past campaigned for people to be more effective in politics and oust the plutocrats from Washington and place the power of deciding national policies in the hands of the people. Today, Wall St still dominate the government completely, ruling through a coalition of the two capitalist parties. The  plutocracy has never lost its grip over the major spheres of our life.  Reforms did not result in any basic changes in daily life or reverse the processes of capitalist centralisation and control. In some cases they even produced consequences contrary to those expected or promised. The laws curbing or breaking up the trusts did not halt but facilitated the growth of the monopolies; the income tax which was to make the rich pay more for the costs of running the government became converted into an engine of extortion from the pay of the workers. The various electoral revisions failed to make the system more responsive to the voters’ will: instead of breaking up the party machines, the primaries gave the bosses an additional instrument for hand-picking their candidates.

Similarly, throughout the current crises, we have witnessed calls not for the abolition of capitalism but its re-shaping. The vision of a new type of society is seen as an unachievable utopia and that instead  bad capitalism can be made into good capitalism. What is up for offer in the more "radical" circles is a more humane capitalism,  re-branded into a new economics. We are counselled by the academics and intellectuals to re-fight all those old fights once more. Their interests, their hopes and their outlooks were bound up with the maintenance of the capitalist system, whose prosperity they want to share in. They show this time and again by dropping the struggle whenever the system is on the up . Just as every economic depression re-animated the “critiques” of capitalism, so every period of capitalist revival lays those critics low once more.

Those individuals and organisations have a certain value in that they compile the damning facts and statistics of capitalism’s failures. However, their own failings is that they if you do not understand the nature of the beast and because of that, they offer flawed and mistaken solutions. They, in their own eyes, very admirably, seek to re-distribute the wealth of capitalism more equitably. However, rather than present any real new ideas, they dig out from the grave and resurrect dead and buried forms of capitalism such as the co-operatives and mutual societies of the 19th century, or the nationalisation and municipalisation of the 20th. These re-born “alternatives” are then re-christened with a new name - “Pluralist Commonwealth” being the one favoured by Alperovitz  while “Workers' Self-Directed Enterprises” is  preferred by a different theorist, Richard D Wolff.

What is proposed is a sort of socialised private property system, rather than the abolition of private property. What is being offered  is “It is the abolition of capital as private property within the framework of capitalist production itself.” as Marx commented on the novel idea at the time - the stock-holding companies.

The New Economics policy would not herald the end of workers’ sacrifices – it would only add further to them. It would not be a recipe for ending the anarchy of capitalist competition, but on the contrary yet another factor that would add to it on a world scale. Lets suppose, for a moment, that these structural changes do lead to a renewed competitive British or American capitalism. Precisely because it would be more competitive it would put renewed pressure on foreign capitalists,  forcing them to cut their own workers living standards, increase unemployment, and so on. The misery of capitalism is simply relocated to another part of the globe.

The state capitalist character of “public enterprise economy” would not be altered even if carried out with “workers control.” To believe otherwise is to completely misunderstand how capitalism works. In volume 1 of Capital, Marx explained  that the role of the capitalist was confined to being the mere “personification of capital” – that is, it is only in so far as he actually follows the needs of capital – by exploiting his workers, accumulating capital etc. – that he is able to go on being a capitalist at all.  It is the laws of capitalism that make the capitalist behave in the way he does, not the other way about. That is why Marx does not change his account when the form of management alone changes, whether it is from the individual capitalist to the joint-stock company or from either to a workers’ co-operative.  So long as competition – which Marx sees as capital’s “inner essence”  – remains, then so too does capitalism. Worker owned or controlled enterprises  would not abolish that “inner essence” but add to it. “Workers control” would therefore not be the basis of a new and socialist form of society, but a new wretched way of incorporating the working class into the  old and familiar form of society – capitalism.

On the face of it “worker- owned and workers-control” sounds very radical but in reality it changes nothing. Ultimately, workers' self-exploitation is supposed to end exploitation. It seems that the 19th century produced utopian schemes to protect the craftsmen from industrialisation, the 21st century are re-producing them to protect the new endangered species the "American middle-class" and their "American Dream". “Radicals" such as Ellen Brown call for banking to be nationalised. While others argue for  the eventual public take-over of the large corporation. The adamantly deny it is  advocating "state-capitalism (or some describe it “state-socialism") because they include such caveats as  decentralisation , democratisation and workers participation  and what-not.

The New Economists demand greater equality, wider opportunities, peace, the extension of democracy, the sharing and spreading of wealth—all within the boundaries of capitalism. They will end up receiving as their fore-fathers did  increasing inequality, growing concentration of wealth and mounting political autocracy because these are the natural bitter fruits of capitalism’s rule and cannot be wished away.  We can affirm as an absolute certainty that with the New Economics the working class will meet with new disillusionments. New Economists yearn for  utopian capitalist society without unemployment and crises and poverty , where the government spends tens of billions of dollars for human betterment, for social security and schools and slum clearance but it can never materialize. The New Economists who advocate it begin from wholly unreal premises. They ignore the nature of  the capitalism.

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