This is an old revision of the document!
Marxism is both a theory of history and a theory of crisis. As a theory of history it is superb: armed with an understanding of class, power and technology, we can predict the actions of powerful men before they know what they're going to do themselves. But as a theory of crisis, Marxism is flawed… we need to understand his limitations – and the theoretical mess his followers got into as they tried to overcome those limitations.17)
Much of the chapter is devoted to charting the strains of thought that flowed from Marx into the Twentieth Century, most of which took Marx's thought further from the truth because of the political or optimistic necessity of casting capitalism as imminently vulnerable to its one final catastrophe, blinding the left to the complex reality of the system's ability to mutate and adapt. Later, as large national corporations became an obvious stepping-stone to socialism, it was necessary for socialists to ignore the possibility or evidence that capitalism could further mutate into something different. The main analysts who continued in the Marxist tradition failed. Hilferding concluded that
the cyclical crisis was over, Luxemburg [moved] crisis theory to the terrain of collapse, Lenin [assumed] the irreversibility of economic decline. With Varga, we move from rationality to dogma: the least sophisticated of all the crisis theories becomes the unchallengeable doctrine of a merciless state, every communist party in the world becomes its emissary, and every left-wind intellectual for a generation gets taught utter rubbish.18)
Marxist analysis of crises fails in three important ways:
For example, the behaviour of an ant colony might be a product of the ant's genetic code, but it has to be studied as behaviour, not genetics.19)
Marx recognised that capitalism has self-destructive tendencies, which operate constantly. Profit is ultimately extracted from labour, by paying labour less than the contribution it makes to the value of the product it produces. But over time, the profit that can be extracted invariably falls. Every established sector or market will experience this decline in returns to capital. This is Marx's “most fundamental law of capitalism”.((p52))
However, the system also works constantly to counteract this tendency. New markets are created with higher profits, to which investors move their money. Falls in the cost of living (food and consumer goods) can push down the real cost of wages. Cheaper labour can be found abroad, machinery can be made at lower cost, or managers can increase their market share to compensate for lower profit per unit.
On a higher level and over a longer time period, investors can switch from productive investment in order to earn a return on their capital. Under certain conditions the majority of investors may choose to switch to this sort of low-risk, low-return investment, rather than entrepreneurial opportunities.
For Marx, a crisis happens when these counteracting tendencies fail.
That is, when you run out of cheap labour, or new markets fail to appear, on the finance system can no longer safely hold all the capital that risk-averse investors are trying to store there.20)
Marx describes various different kinds of crisis:
The main function of credit, he wrote, is to develop exploitation 'to the purest and most colossal form of gambling and swindling, and to reduce more and more the number of the few who exploit the social wealth'.21)
There is enough good analysis in Kondratieff and Marx's original work combined to construct a good theory of crisis, and to apply it to the last thirty years. Kondratieff's explanation that there was a need to renew large-scale infrastructure every fifty years was too simplistic. Instead, each wave generates a new set of solutions to the falling rate of profit: a set of business practices, skills and technologies, and the upswing lasts until these become overwhelmed by the tendency of profit to fall as they mature. After the peak, the nature of the decline depends on how successfully countervailing forces can offset falling profits.
Put simply: fifty-year cycles are the long-term rhythm of the profit system.22)
Of particular importance is the role of organised labour during the decline. In each of the first three waves (1830s, 1880s and 90s, 1920s), downward pressure on wages was fiercely resisted, which hastened the onset of the crisis and forced investors to turn to new technologies rather than eke out their existing business models at the expense of their workforce.
The outcome [of class warfare in the downturn] is critical: if the working class resists the attack, the system is forced into a more fundamental mutation, allowing a new paradigm to emerge. But in the fourth wave we found out what happens if the workers do not successfully resist.23)
During the fourth (post-war) wave, a substantial part of the world (the Soviet bloc) is closed off: a fifth of global GDP is outside the capitalist system. After 1989 the availability of these resources and markets, and other countries previously under Soviet influence, prolong the wave.
After 1989 [capitalism] experienced a sugar rush: labour, markets, entrepreneurial freedom and new economies of scale.24)
But other factors played into the distortion of the fourth wave, particularly the failure of organised labour, the rise of technology with fundamentally new characteristics, and the “discovery that once an unchallenged superpower exists, it can create money out of nothing for a long time.”25)
The upswing of the fourth wave was unprecedentedly successful. Between 1948 and 1973, Western Europe grew by an average of 4.6 per cent, almost double the rate of the third wave's upswing in 1900-1913. Although many of the sources of this success were common to previous waves, in various ways they were intensified in the fourth:
Considering the inadequacy of the explanations for the dramatic changes in the 1970s, the end of the upturn can best be understood as “a classic phase change on the Kondratieff pattern”, as usual a quarter century into the cycle. The mechanisms are also clear, as we can see many of the drivers of the upswing are exhausted.
The post-war arrangements had effectively locked away instability into two zones of control: relations between currencies and relationships between classes.27)
Both of these broke down in the late 1960s and early 1970s. Firstly, under the Bretton Woods system, the US backed the dollar with gold at a constant price of $35 per ounce. Then, all other countries backed their own currencies with a fixed value in dollars. The problem was that it was possible for countries other than the US to devalue their currencies (more or less unilaterally), thereby giving themselves a competitive advantage against everyone else (and this was a politically benign safety valve where other alternatives were unpalatable). There had been 400 devaluations by 1973. But this option wasn't open to the US, and as other countries caught up with its productivity edge this became a problem. America attempted to use domestic inflation to fight back leading to the inflation crises of the late 1960s. Then the unexpected and extreme failure in Vietnam forced the US to go further, and unilaterally suspend the dollar's peg to gold in 1971.
The relationship between classes was dominated by wages and productivity. During the upswing, rapid productivity increases made high wage increases feasible (and, through consumption, these enabled continued growth). At the same time, full employment ensured that organised labour was steadily gaining power. As in other waves, those productivity increases were not sustained indefinitely. Productivity fell, unions maintained their wage demands, and profits fell by a third by 1973 compared to the wave's peak. Governments responded by pushing up inflation to reduce real wages and by subsidising wages through benefit payments, which grew rapidly, especially in Europe. When Nixon abandoned fixed exchange rates, governments were suddenly able to lower interest rates and increase state spending without limit.
The inevitable stock market crash hit Wall Street and London in January 1973, triggering the collapse of several investment banks. The oil shock of October 1973 was the final straw.28)
The original concept on which neoliberalism is based is the destruction of working class organisation. In response to the relative power of organised labour in the early phases of the fourth wave, its architects (Pinochet, Thatcher and the “Cold Warriors” who brought Reagan to power) “resolved to smash labour's collective bargaining power, traditions and social cohesion completely.”
Labour had come under attack before – but always from paternalist politicians who had proffered the lesser of two evils: in place of militancy, they'd encouraged a 'good' workforce, defined by moderate socialism, unions run by agents of the state. And they helped build stable, socially conservative communities that could be the breeding ground for ground for soldiers and servants. The general programme of conservatism, and even fascism, had been to promote a different kind of solidarity that served to reinforce the interests of capital. But it was still solidarity.
The neoliberals sought something different: atomization. Because today's generation sees only the outcome of neoliberalism, it is easy to miss the fact that this goal – the destruction of labour's bargaining power – was the essence of the entire project: it was a means to all the other ends. Neoliberalism's guiding principle is not free markets, nor fiscal discipline, nor sound money, nor privatisation and offshoring – not even globalisation. All these things were byproducts or weapons of its main endeavour: to remove organised labour from the equation.29)
During the 1980s, many countries adopted deliberately self-destructive policies in order to deepen the recession, in order to further undermine the working class. High interest rates destroyed many of the large industrial companies in which unions were strongest. In Japan unions were broken by “taking out the ringleaders and beating them physically every day until resistance stopped.”30)
Much of the remainder of the chapter goes through a series of graphical illustrations of the fourth wave. One in particular is important to resolve the common misconception that it is in a ruling class's interests to maintain healthy growth in an economy. This figure illustrates that during the upswing, 99 per cent of society enjoy steady gains in their income, but the top 1 per cent benefited little. During the downswing, this relationship is reversed: 99 per cent of society see their income flatline, but after the assault on organised labour in the early-to-mid 1980s, the income of the highest 1 per cent of earners rockets.
Neoliberalism succeeded in destroying working-class organisation in way that has never happened before, and in the process rebalanced the entire global economy in favour of capital. Kondratieff's theory predicted that we would see downturn and depression, but by breaking labour, neoliberalism managed to convert this into
two exhilarating decades in which an upswing in profits coexisted with social breakdown, military conflict, the return of abject poverty and criminality to communities in the West – and spectacular riches for the 1 per cent.31)
This chapter outlines a list of contributions from authors that have played with “postcapitalist ideas”, which have been variously labelled “the knowledge economy”, “the information society”, “info-capitalism” and “cognitive capitalism”.
In general these authors offer isolated insights. A common weakness is to lazily declare that a new mode of production has arrived, and the world economy has already transitioned to it. Perhaps only a British journalist could write that
This is a technique common in European speculative thought: to invent a category and apply it to everything, thus reclassifying existing things as sub-categories of your new idea. It saves you the trouble of analysing complex and contradictory realities.32)
They come from a variety of disciplines: law, economics, technology and history, at minimum, and a true understanding of how society is changing and could change further needs to recognise how these trends fit together, and importantly the synergies and tensions between nascent developments and existing neoliberal production. Some come from very mainstream neoliberal thinkers (who tend to see this development as a benign triumph of neoliberalism), others from the left. In their more exalted moments, they see this new form of info-capitalism as capitalism's “third phase”, after mercantilist capitalism and industrial capitalism.
We will try to keep an account of these origins to a minimum, because the important content here is how they are synthesised by Mason into a comprehensive theory.
Peter Drucker was a management guru who wrote The Post-Capitalist Society in 1993. He posed two main questions, the first being, “How do we improve the productivity of knowledge?”33). Connecting knowledge from different spheres to an unprecedented degree through networks vastly increases the potential for knowledge production. Secondly, he asked “Who is the social archetype of postcapitalism?”34) His answer is “the universal educated person”: somebody with a basic general education who can take advantage of easily accessible knowledge by applying it.
Paul Romer is a mainstream American macro-economist who published the paper Endogenous Technological Change in 1990. This was a dry academic attempt to place innovation into the economic theory of growth, assuming that technological change was a driver of economic growth and therefore looking at how an economy can drive faster technological change. He discovered that “instructions for working with raw materials are inherently different from other economic goods”, so that an economy based on information products will be entirely different from one based on physical goods.
Most importantly, information goods make perfect competition impossible. They push industries towards imperfect competition. In order to run a large business based on information goods, it is necessary to establish an elaborate monopoly. For Apple to sell music, in requires the aggressive use of copyright law, but also an expensive physical network of technologies: “the Mac, iTunes, the iPod, the iCloud, the iPhone and the iPad – to make it easier for us to obey the law than break it.” This is because the traditional market mechanism of supply and demand is irrelevant when supply is effectively infinite at zero marginal cost. Although Romer is a respected and successful professor, the economics profession greeted this paper with “hostility and indifference”.35)
The Free Software Foundation and its founder Richard Stallman have created a community based on voluntary contribution of work in a non-hierarchical network that generates products that are freely distributed. It began with the GNU project to replicate the UNIX operating system with a free alternative. This project incorporated Linux, and intellectually spawned allied projects such as Wikipedia and Firefox. The two “most important document[s] in the history of digital economics”36) were, secondly, an open letter by Bill Gates to communities of computer enthusiasts that copied software illegally:
Most of you steal your software. [You believe] hardware must be paid for but software is something to share. Who cares if the people who worked on it get paid.37)
and, firstly, Stallman's GNU Manifesto:
If anything deserves a reward, it is social contribution. Creativity can be a social contribution, but only in so far as society is free to use the results. Extracting money from users of a program by restricting their use of it is destructive because the restrictions reduce the amount and the ways that the program can be used. This reduces the amount of wealth that humanity derives from the program.38)
Next, US journalist Kevin Kelly wrote for Wired and a book New Rules for the New Economy in the late 1990s. His insight was that the revolution of cheap computation was already over. The changes it had made to society were already apparent. The much bigger revolution to come was based on the interconnection of computers, the “Internet of Things” as it has come to be known.
I prefer the term network economy, because information isn't enough to explain the discontinuities we see. We have been awash in a steadily increasing tide of information for the past century… but only recently has a total reconfiguration of information itself shifted the whole economy.39)
He accepted the implication of Romer's work, that information technology would endlessly make products cheaper as the marginal cost of production approached zero. But he believed that this would be counterbalanced by inexhaustible supply, as “human imagination” endlessly invented new products and combinations of products for which the cost of production was still (temporarily) finite. Neoliberalism would survive, and those that understood the new technology would flourish. Then came the dotcom crash.
Yochai Benkler, one of the architects of Creative Commons licences (a legal framework which protects sharing various kinds of content) wrote The Wealth of Networks in 2006. Cheap computing power plus networks enable people to produce valuable products through non-commercial processes of interaction: “as human beings and as social beings, rather than as market actors through the price system.” Wikipedia is the most successful archetype, and has both out-competed its capitalist competition, and made the idea of a new encyclopaedia created through capitalist production processes unthinkable.
Economists like to demonstrate the archaic nature of command planning with mind-games like 'imagine the Soviet Union tried to create Starbucks'. Now, here's a more intriguing game: imagine if Amazon, Toyota or Boeing tried to create Wikipedia.40)
At the end of the Nineteenth Century, economists developed their understanding of “externalities”: beneficial or detrimental side-effects of market transactions. The information economy drastically escalated their importance, suddenly externalities could dominate the market transaction entirely. Society's first response to this was to create “public goods” like science: society pays for the production of science for the good of everyone, because the amount of benefit that can be captured by privately commissioning science is a tiny fraction of its value if it is released for the benefit of everyone. But Kenneth Arrow, a mainstream economist in 1962 argued that under capitalism, the purpose of creating information is (or should be) to capture private benefits by enforcing intellectual property rights.
Precisely to the extent that it is successful there is an under-utilisation of information.41)
In other words, the success of your exploitation of your intellectual property rights can be measured by all the things you manage to prevent society from doing with the information you created.
If we restate Arrow's observation in a different way, its revolutionary implications are obvious: if a free-market economy with intellectual property leads to the underutilisation of information, then an economy based on the full utilisation of information cannot have a free market or absolute intellectual property rights.42)
Although closely associated with a radically different type of transition from capitalism, Karl Marx provided some of the greatest insights into postcapitalism in a notebook that remained unpublished until the late 1960s and was only translated into English in 1973. In the Fragment on Machines Marx explores the idea of machines becoming so sophisticated that labour ceases to be a significant part of the production process, but rather the role of labour is to design, repair and oversee mechanical production. Here, he concludes, the most important factor of production becomes the “general intellect” – the shared body of knowledge from which the design of the machines is derived. And capitalism is forced to develop the intellect of the worker and will tend to reduce working hours.
It is impossible to properly value inputs when they come in the form of social knowledge. Knowledge-driven production tends towards the unlimited creation of wealth, independent of the labour expended…
[K]knowledge-based capitalism creates a contradiction… [creating] 'the material conditions to blow [capitalism's] foundation sky-high.'43)
Since the 1990s, information technology has undermined capitalist property relations thus:
As information constantly corrodes value, firms have three possible responses:
However, parallel to firms' response, people are now producing value through peer-production with zero or negligible “market” component. In some areas this is wildly successful and destroys all capitalist competition within a decade.
In response, capitalism is beginning to reshape itself as a defence mechanism against peer-production, through info-monopolies, through allowing the wage relationship to weaken and through the irrational pursuit of high-carbon business models.44)
There is a fundamental contradiction between the “social” and “technological” dimensions if this change.
Technologically, we are headed for zero-price goods, unmeasurable work, an exponential takeoff in productivity and the extensive automation of physical processes. Socially, we are trapped in a world of monopolies, inefficiency, the ruins of a finance-dominated free market and a proliferation of 'bullshit jobs'.
Today, the main contradiction in modern capitalism is between the possibility of free, abundant socially produced goods, and a system of monopolies, banks and governments struggling to maintain control over power and information. That is, everything is pervaded by a fight between network and hierarchy.45)
It is uncertain how this will play out. Capitalism may maintain control and absorb these new technologies into familiar hierarchical power structures, and either capture or neutralise the potential of networks. Or the network undermines both the functioning and the credibility of markets and there is a significant shift in societal power and the dominant mode of production. Given the amount of power stacked behind existing hierarchies, if the transition to postcapitalism happens then it will be the result of an intense fight with those who are pushing for change.
We'll know it's happened if a large number of goods become cheap or free, but people go on producing them irrespective of market forces. We'll know it's underway once the blurred relationship between work and leisure, between hours and wages, becomes institutionalised.46)
This chapter outlines two competing theories of how the price of goods come to be set. Mainstream economics' understanding is based on marginal utility, which is able to make accurate predictions about the movement of prices in established markets. However, it is a static theory: it does not encompass crises, and is unable to explain historical changes.
The labour theory of value is perhaps a “higher level” theory, that predicts historical dynamics and explains why capitalism tends towards crisis. It is less easy to use to make quantitative predictions about individual markets, but the main reasons that it fell out of favour in the nineteenth century were political. It suggests that all value is created by workers, and the implications of that for the fair distribution of wealth were uncomfortable for elites, as much in the nineteenth century as today. As a result, although there are many distinguished scholars who believe the labour theory of value and teach it as fact, there are very few that are permitted to teach in economics departments.47)
The basic idea that the ultimate source of value is labour is as old as economic analysis. It was first proposed by Adam Smith and taken up by David Ricardo, but its most complete form is in the work of Karl Marx.
Under this theory, the entire value of products can be traced back to the hours of labour that went into their creation. Although the price paid for a good in any given transaction can be influenced by many other things (which Smith lumped together as “haggling”), in the long term the price must settle to the sum total of all socially necessary work required to create it. However, this labour value can be divided into two:
Three further questions establish the framework:48)
At the dawn of capitalism, average working days of fourteen hours or more were imposed – not just on adults but on children as young as eight. A rigid system of timekeeping was implemented: rationed toilet time, fines for lateness, product defects or talking, enforced start times; and immovable deadlines. Wherever we see the factory system created afresh – whether in Lancashire in the 1790s or Bangladesh in the last twenty years – we see these rules enforced.
Even in advanced countries the labour market is built overtly on coercion. Just listen to any politician make a speech about welfare: cutting unemployment and disability benefits is designed to force people to take jobs at wages they can't live on. In no other aspect of the market does the government coerce us to take part; nobody says 'You must go ice skating or society will collapse.'50)
The theory used by mainstream economics focuses not on the workplace but on the market. It is based on the idea that a consumer will pay a price equal to the last unit of a good that they are willing to buy. If I can buy a chocolate bar for $1, I will keep buying chocolate bars until the last chocolate bar is less use to me than the dollar I would have to pay for it. This insight enables analysis of markets for scarce goods that leads to useful predictions about how they will behave. But it predicts stability: markets tend towards equilibrium. This is an accurate prediction of observed fact the vast majority of the time (and its predictions can be precise). But it cannot explain how crises originate, so mainstream economics can only conclude that it comes from “somewhere else”: something outside their model.
The labour theory of value predicts historical dynamics. Firms seek profits, and one way to earn profits is to improve productivity. That means reducing the amount of labour required to make your product. Then you can capture the difference between the price you are still charging and the reduced amount that you are paying to your workers, until other companies have copied you and the market price of your product has fallen.
The problem is that this improvement in productivity has reduced the amount of labour embodied by your product. Now a higher proportion of the cost of production comes from “finished labour” (machinery, energy, raw materials) and a smaller proportion from labour. But labour is your only source of profit: so in the long-term stable state, profit for everyone in the industry has declined. And this will keep happening.
To counteract this, you will need to find new products or markets where the labour content of production is higher, so that you have more to exploit. This could mean new physical markets (oversees) or the commercialisation of previously non-market areas of life (like the advent of paid entertainment such as the cinema for the working class in the early twentieth century). If these new sources of revitalised profit do not materialise, then capitalism is heading for a crisis.
Under the labour theory of value, machinery erodes, and it is the value of that erosion that makes up the “finished labour” component of a product's value. Because of this conception of the cost of capital, a machine that does not erode – that never needs to be replaced – is effectively free. 51) As all products progressively incorporate information as a larger share of their value, we will see much more of our capital approach this ideal.
An analysis of what happens when capital is free reveals that it reduces the value (and price) of labour. Recall that the value of labour is determined by the cost of all the labour that is required to sustain labour. Many of these things are capital costs (such as housing). Effectively free capital means that workers need to spend less to live, and iteratively reduces the labour value of labour. Over time, energy and raw materials increasingly tend to dominate the cost of all goods.
To survive and mutate into info-capitalism, our economy needs to use the standard countermeasures to address falling profits in the face of free information and free machinery: new markets or new consumer needs. It would have to:
The elements of this are already in place:
Apple is the classic price monopolist, Amazon's business model the classic strategy for capturing externalities; commodity speculation the classic driver of energy and raw material costs above their value; while the rise of personal micro-services – dog minding, nail salons, personal concierges and the like – show capitalism commercialising activities we used to provide through friendship or informality.52)
However, there are problems:
You could pay wages for housework, turn all sexual relationships into paid work, mums with their toddlers in the park could charge each other a penny each time they took turns to push the swings. But it would be an economy in revolt against technological progress.
Early capitalism, when it forced people into factories, had to turn large parts of the non-market lifestyle into a serious crime: if you lost your job you were arrested as a vagrant; if you poached game, as your ancestors had always done, it became a hanging offence. The equivalent today would be not just to push commercialism into the deep pores of everyday life, but to make resisting it a crime. You would have to treat people kissing each other for free the way they treated poachers in the nineteenth century.55)
An economy based on information, with its tendency to zero-cost products and weak property rights, cannot be a capitalist economy.
The usefulness of the labour-theory is that it accounts for this: it allows us to use the same metric for market and non-market production in a way that the OECD's economists could not.56)
This chapter is a history of the proletariat since the early days of capitalism. It charts the evolution of
Another feature of the earlier phases is to point out mistakes in the writing of Marx, Engels and Lenin. In particular, in contrast to Marx's powerful analysis of capitalism, his understanding of the working class was weak and full of errors.
During the first phase, workplaces tended to centre around skilled, adult male guilds, with women and children providing unskilled labour. Marx characterised them as alienated by their lack of “craft, skill, religion and family life”57) and thereby apt to agitate for aims that were then popular in the German middle-class: socialist revolution and the abolition of private property. But instead they overcame the alienation shock of migration to factory work by constructing a culture of “learning, humanity and self-help”, and fought capital for more modest objectives, above all control of their work.
Capital responded by targeting the most skilled workers and trying to use automation to break their power. This was another source of Marx's confusion. He saw this process of automation as inevitably leading to further alienation and lowering wages, but generally speaking it failed. Automation came, but while it reduced the labour content of production, it rarely reduced the need to employ highly skilled workers who retained the ability to down tools.
Engels' anthropology of the English working class in 1842 is detailed, complex and specific. The Marxist theory of the proletariat is not: it reduces an entire class to a philosophical category.58)
After mid-century instability, the upswing of the second wave brought strong economic growth. This period was characterised by strong trade unions of skilled workers across the West, albeit in larger workplaces with less guild insularity than before. Employers found it easier to give in to their demands than to resist. Even after the peak, the unions retained their strength and were largely able to resist attacks on their wages and workplace autonomy, although their aims and demands did not extend beyond these basic objectives. Marx saw the situation in England as an anomaly that was only possible due to colonial exploitation abroad, and refused to see that the pattern was in fact similar in other countries.
It was a near-total misreading of the situation. Skill, passivity and political moderation were pervasive all across the workforce of the developed world during the second half of the nineteenth century.59)
In the third wave, a generation of entrepreneurs including Frederick Winslow Taylor and Henry Ford believed that the way to break the power of the skilled unions was not so much automation as to break each skilled task down into simple units that could be taught quickly and easily. The resulting work was much more dull and repetitive than before, and
Taylor wrote that the type of man suited to such work was 'so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox than any other type'.60)
In the process, there was a great upskilling of a large number of workers from unskilled to semi-skilled. Over time these semi-skilled workers became “educated, radicalised and political”61) and union membership exploded.
Alongside this, Vladimir Lenin was deciding that working people were not capable of fulfilling the destiny that Marx had assigned to them, and would need to be led by an intellectual vanguard. He also had to deal with the unfortunate surge in patriotism across the developed world that came along with the war. He blamed the 'labour aristocracy' – the skilled workers who were the “source of patriotism and moderation polluting the labour movement”.62) Lenin doesn't discuss the origins of skilled labour's privileges, it is almost as if he assumes that capitalists granted those privileges rather than doing everything they could to destroy skilled labour.
By now, Lenin was a long way from both Marx and Engels. For Marx, the working class is capable of becoming communist spontaneously; for Lenin it is not. For Marx, skill is destined to disappear through automation; for Lenin, skilled privilege at home is the permanent result of colonialism abroad.63)
Unions were important in disrupting and ending the First World War. This began with strikes in Berlin, Glasgow and Petrograd in 1916 and '17, and a widespread mutiny in the French army in 1917. Workplace control had been established by factory committees in Russia that later had to be dismantled in order for Lenin to consolidate power. Then the opposition of German unions to the war ultimately led to its end, with revolution narrowly avoided after a mainstream socialist party joined and co-opted the rebellion.
Within forty-eight hours of the mutiny [of German naval workers], they had forced an armistice, the abdication of the Kaiser and the inauguration of a republic.64)
The interwar period saw unions take a more radical position, vacillating between revolution and reform. Communism may not have been their instinctive goal, as Lenin had said, but their ambitions certainly extended beyond pure trade-unionism.
Their spontaneous ideology was about control, social solidarity, self-education and the creation of a parallel world.65)
However, the Wall Street crash marked the peak of the third wave, and the conflict between labour and capital rapidly intensified.
The stage was set for the decisive event of the 200-year history of organised labour: the destruction of the German workers' movement by fascism. Nazism was German capitalism's final solution to the power of organised labour.66)
As the 1930s wore on, the conflict turned violent across Europe: in a civil war in Austria in 1934, in Spain from 1936, and in Greece under the Mataxis dictatorship – and the unions lost.
The workers who fought fascism were the most class-conscious, self-sacrificing and highly educated generation in the entire 200-year history of the proletariat.67)
As well as the physical destruction of workers, whether in concentration camps or on the battlefield, the extreme left failed to understand what was happening. Trotsky maintained the traditional line of refusing to participate in wars between imperialist powers, utterly failing to understand that “by May 1940 the war was a bigger fact than class struggle”.68) What followed was an uneasy alliance between organised labour – cognisant that their survival required the physical destruction of fascism – and the Allied powers, who were more than happy to halt their advance to allow the Wehrmacht to deal with any potentially troublingly militant working class rebellion.
At the end of the war, elites genuinely feared revolution in a wide range of countries, and profound accommodations were made to labour in the form of welfare states and legal protection of union activity. Welfare states were even “imposed” on defeated enemies “as a punishment for their elites and as an obstacle to their re-emergence as fascist powers.”69) The global economy took off and output and wages rose rapidly. The success of Keynesian demand management created a new consensus in which government was expected to guarantee full employment.
When the peak of the wave came, the Keynesian consensus broke down rapidly but not in a single event. By 1971 the upswing was over, but counterintuitively the breakdown of fixed exchange rates gave governments a brief breathing space and the power to make everything worse by hiking “the social wage”70) to 13.5 per cent of GDP across the OECD. The economy would inevitably turn a corner into the decline of the wave, but workers held too much power to accept the consequences.
The standardised production process of the post-war era… ended up creating a workforce it could not control. The mere fact that the work-to-rule actions became the most effective form of sabotage tells the real story. It was the workers who really ran the production process. Any proposal to solve macro-economic problems without their consent was pointless.71)
The elite response was a group of politicians who were prepared to destroy the economy in order to break union power, and the second oil shock in 1979 offered them the opportunity to launch their project. Labour's greatest analytical mistake was failing to foresee the
part of the workforce [that was] prepared to side with conservative politicians… many skilled British workers, tired of the chaos, swung to the Conservatives in 1979 to give Thatcher ten years in office. Outright working-class conservatism had never gone away: what it always wants is order and prosperity, and by 1979 it could no longer see these things being delivered by the Keynesian model.72)
This chapter looks at two historical transitions between economic models in order to draw out lessons for the forthcoming transition to postcapitalism. However, it is concluded that there is much more to learn from the second (feudalism to capitalism) than from the first (the Russian system of quasi-feudalism and early capitalism to Soviet state planning).
The transition to Soviet planning went wrong in phases:
This was resolved by Stalin expelled rivals and then adopted parts Trotsky's proposal in an extreme and violent form, destroying the wealthier peasantry through enforced collectivisation, killing 8 million people in 3 years in order to kickstart industrial development which aimed to catch up with the West in 10 years.
The USSR did not catch up with the West in ten years. But by 1977 its GDP per head was 57 per cent of the USA's – which put it on a par with Italy. From 1928 until the early 1980s, the average growth in the USSR, according to a CIA-commissioned survey, was 4.2 per cent. 'This clearly qualified as a sustained growth record,' concluded analysts at the RAND corporation.73)
However, this study74) concluded that only a quarter of this growth had come from productivity increases, the rest coming from increased inputs. For this reason, this growth was not sustainable – exponential growth is not typically considered possible simply by amassing ever greater quantities of capital in this way (according to mainstream economic theory).
At this point the book contains an incongruous attack on state planning, which is odd for two reasons. First, it seems unlikely that many readers need convincing that in 2015 a new system of state planning will rescue the global economy. Second, the entire thing is a straw man, attacking laughably weak examples of state planning (namely pre-war Soviet attempts and an academic political science project run by a couple of guys in Europe), pretending that a single failed example proves all attempts impossible and studiously avoiding credible alternatives.75)
Mason concludes that the main lesson to learn from the Soviet transition is that “a transition phase generates its own dynamics; it is never just the fading of one system and the rise of another.”76)
The transition from feudalism to capitalism was, of course, extremely slow. But the most important observation is that this wasn't merely a transition from one sort of economy to another – that is a modern perspective that is natural only to us because our current society is dominated by market economics. The transition was really about the market becoming important, or even the market coming to exist for the first time.
Feudalism was a system based on obligation: peasants were obliged to hand part of their produce to the landowner and do military service for him; he in turn was obliged to provide the king with taxes, and supply an army on demand.77)
And here's where the mode of production concept gets challenging: the changes are so huge that we are never comparing like with like. So when it comes to the economic system that replaces capitalism, we should not expect it to be based on something as purely economic as the market, nor on something as clearly coercive as feudal power.78)
Feudalism ended for four reasons:
If the medieval cathedral was full of meaning – an encyclopaedia in stone – printing destroyed the need for it. Printing transformed the way human beings think…
If we accept the four-factor account given above, the dissolution of feudalism is nor primarily a technology story. It is a complex interplay between failing economics and outside shocks. These new technologies would have been useless without a new way of thinking and the external disruptions that allowed new behaviours to flourish.80)
Many of the external shocks that will shape the transition from capitalism are already well known: “energy depletion, climate change, ageing populations and migration”.81) Whereas twentieth century leftists have tended to believe that a gradual transition beyond capitalism was not possible whilst the alternative was central planning, this has turned out not to be true. Once dreams of success began to fade, the left focused simply on clinging to privileges previously won, such as free healthcare and union rights.
Today we have the relearn to do positive things: to build alternatives within the system; to use governmental power in a radical and disruptive way; and to focus all our actions towards the transition path – not the piecemeal defence of random elements of the old system.82)
This chapter describes two imminent shocks to the global economy that will determine the context in which neoliberalism will end. Each will make the transition more difficult and prone to social and economic breakdown. An attempt to transition to a postcapitalist economy will have to address both seriously, which in turn will determine which strategies are feasible.
I've avoided 'building in' the climate crisis until now. I wanted to show how the clash between info-tech and market structures is, on its own, driving us towards an important turning point. Even if the ecosphere was in a steady state, our technology would still be pushing us beyond capitalism.83)
The effects of climate change are already seriously disrupting livelihoods in a large number of areas of the world. In order to contain the crisis, a target of limiting the rise in global temperature to 2 degrees above the pre-industrial level has been set. This in turn would require global emissions to peak by 2020 and fall by half by 2050. Taking all current and planned action into account, global temperature is projected to rise by approximately 3.6 degrees. This is consistent with “severe, pervasive and irreversible impacts for people and ecosystems” according to the IPCC's 2014 report.84) This is a scientific report; these words are not used in order to shock or persuade – they are the authors' sober and honest expectations of the consequences of our current course of action.
Market responses: subsidies, carbon rationing, ??, have made limited headway, but they are not proportionate to the scale of the problem, and more radical results are not possible through these mechanisms.
It has become common to laugh at the absurdities of the climate-change deniers, but there is a rationality to their response. They know that climate science destroys their authority, their power and their economic world. In a way, they have grasped that if climate change is real, capitalism is finished.
The real absurdists are not the climate-change deniers, but the politicians and economists who believe that the existing market mechanisms can stop climate change[.]85)
The current market valuation of large energy companies demonstrates that markets expect that they will extract the full 2.8 trillion tones of their known carbon reserves – while knowing that it would be environmentally catastrophic for more than 20-40 per cent to be burnt. In this way, the market is telling us that it is confident that our efforts to address climate change will fail. One of the most damning recent events was Saudi Arabia's efforts to halve the global oil price in order to head off America's move towards energy self-sufficiency through fracking. This move has created terrible market signals for all actors across the global economy. “Clearly, somewhere, the market as a signalling mechanism has gone wrong.”86)
Seen against the rising geopolitical tensions, the prospects for a deal… in Paris, in December 2015, do not look positive. More and more, the climate talks conducted in these conferences come to resemble the peace treaties that paved the way to the Second World War.87)
Whether we like it or not, only vastly greater state involvement in energy production and distribution – replacing the market – is able to achieve the step change required to meet our existing targets.
There are two linked demographic trends that will become very important during the twenty-first century:
Aging in the West will lead to:
Continued population growth in countries least able to provide decent livelihoods for their populations (e.g. by 2050, Niger's population will have grown from 18 to 69 million, Chad's from 11 to 33 million, Afghanistan from 30 to 56 million) will lead many more to make the rational choice to migrate illegally to the West, even if that strategy becomes significantly more difficult and dangerous even than it is today.
This chapter contains a varied list of prescriptions for individual projects that can mutually reinforce a shift towards a postcapitalist economy. The name “zero” is chosen to denote “a zero-carbon energy system; the production of machines, products and services with zero marginal costs; and the reduction of the necessary labour time as close as possible to zero.”89) These projects collectively aim towards five principles of transition:
Based on these principles, Mason proposes four top-level goals:
The remainder of the chapter is broken down into a wide array of things that could be done in different fields in order to pursue these goals, and an explanation of how each will contribute to the overarching programme.
The low-wage, low-skill and low-quality corporations that have flourished since the 1990s exist only because the space for them was ruthlessly carved out by the state. All we need to do is throw that process into reverse gear.95)
[C]ooperative, self-managed, non-hierarchical teams are the most technologically advanced form of work. Yet large parts of the workforce are trapped in a world of fines, discipline, violence and power hierarchies – simply because the existence of a cheap labour culture allows it to survive.
A crucial goal for the transition process would be to trigger a third managerial revolution: to enthuse managers, trade unions and industrial system designers about the possibilities inherent in a move to networked, modular, non-linear team work.99)