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Capitalism and Post-Capitalism CERIUM, July 3, 2010. Pierre Beaudet. What we will discuss today. Capitalism, an historical construct Again on the Contemporary Crisis Life after capitalism?. Capitalism, historical construct. The first 1000 years.
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Capitalism and Post-CapitalismCERIUM, July 3, 2010 Pierre Beaudet
What we will discuss today • Capitalism, an historical construct • Again on the Contemporary Crisis • Life after capitalism?
The first 1000 years • Early ‘civilizations’ were based on agriculture and small military/religious elites capturing the visible ‘surplus’ through slavery and serfdom. • By the turn of the millennium, that surplus became bigger particularly in China and India, and later in Mediterranean cities.
The Asian Surge • Markets became bigger and autonomous. Products became merchandises. In China however, markets remained under the control of rural gentries and a strong state with a ‘modern’ bureaucratic infrastructure. Until the 1800s, the Chinese economy was more advanced and the society more stable than in Europe.
Predatory Europe • In the Mediterranean cities, the process was more painful. The ancient (Roman) State was destroyed and Europe became dislocated into a myriad of competing City-States. These cities were to become later expansionist and ‘predatory’ against the rural surroundings on the one hand, against other city-states and foreign territories.
The new bourgeois • Under ‘modern’ European-style capitalism, the new ‘bourgeois’ became rich through the colonial plunder and forced changes on ancient regimes. The old ‘putting-out’ system of contracting rurals was slowly replaced by ‘manufactures’. Peasants were expropriated by millions. Great wars plagued Europe for centuries.
New state • Imperialism was reinvented and central in the European ascent. In Europe, primitive accumulation continued its course through expropriation of peasants and ‘proletarization’. Manufactures became ‘industries’. After many political convulsions (French revolution of 1789), the modern state was born.
Modern capitalism is revolutionnary (Karl Marx) The bourgeoisie cannot exist without revolutionizing the instruments of production. Constant revolutionizing of production, uninterrupted disturbance of all social conditions everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real condition of life and his relations with his kind
Changes from the top • Capitalism has revolution in its ‘genetic’ code. Accumulate by transforming goods, services, people, into merchandises. • Moving from use to exchange value. • Appropriating labor power (through expropriation) • Possessive individualism and reification of the material. • Everyone becomes against everyone, and against all non-human forms of life.
State, Empire, War • Capitalism expanded world-wide, forcing modern states towards confrontations. • The world was divided into ‘spheres of influences’ and colonies (Berlin conference) • Imperialism led to the First World War (1914). It was the greatest massacre of all times. But then the system cracked.
Resistance • But capitalism and imperialism were challenged by proletarians in the factories and shantytowns of Europe and. It was fought by colonized peoples during the imperialist drive. • What’s the image on the right?
Marx in Detroit • Capitalism was also fought by ‘modern’ mass workers of the 20th century. • What is the photo on the left?
The Keynesian ‘revolution’ • In the 1920s and 1930s, modern capitalism was on the brink. The 1929 crash was the trigger and the symptom. Revolution was in the air (Soviet Union). • John Maynard Keynes saw that to survive, the ‘invisible hand’ of the market had to be regulated by a strong state redistributing the assets so as to integrate a larger part of the popular and the middle classes in ‘benefiting’ from capitalism.
War (again) • The USA took the lead in the Keynesian ‘revolution’ with the ‘New Deal’. But then it had to confront the rise of an alternative capitalist ‘revolution’ from fascism and German imperialism. There was then an extraordinary alliance between Keynesian ‘revolutionaries’ and socialists (USA + USSR).
The new phase • After 1945, US-led modern capitalism was the lead, although the ‘Soviet bloc’ was also powerful. Then emerged a new actor, the ‘third world’. For a while, the balance of forces was ambiguous. • The US reshaped the world by integrating the Americas, Western Europe and Japan into the ‘western world’. It became ‘globalized’ through the American ‘way of life’.
Coca-Cola-ization, Disney-ilazation, MacDonald-ization, WalMart-ization, etc.
But it was not so stable after all. • Western/US capitalism was squeezed by the irruption of the third world in the 1960s and by rebellious students and workers in the world revolution of 1968.
As history moves … • But Capitalism changes and adapts all the time. • Since the 1980s, it transformed itself through neoliberalism: weakening popular classes through new policies of deregulation, privatization, outsourcing, relocalization. • Again it triggered lots of resistance.
What about now? • The elites are trying to save capitalism by transferring the ‘bill’ to middle and popular classes, perhaps adding a touch of ‘green’. • The discontents are include reactionary elements who oppose capitalism on the basis of backward rightist projects using the language of identity and religion. • The ‘lead’ country, the USA, acts like a wounded tiger, in decline but fighting hard, not only people, but emerging competitors.
Thinking the unthinkable • What is now in front of us? The unthinkable becomes thinkable like the catastrophic chains of events from environmental crashes to collapse of economic systems. Who will feed the people? Listen to Vandana Shiva. • The unthinkable also includes more war. On the other side, there is a return to social-democracy and Keynesianism. Finally there is also a discussion about ‘socialism of the 21th century’.
Since the late 1980s and until the summer of 2008, policies associated with capitalist globalization were usually presented as a «global» success. • There were problems admitted Wall Street, Bush & Harper, and the World Bank, but more or less everything was «on track». • Since the crisis erupted, the dominant discourse has been, «The system is fine, let’s fix it». • Obama
Financial meltdown • Over $16 trillion in total market capitalization has been wiped out since 2008. • You have been discussing this over the last days …
Why? • Bad banking practices? • Bad apples in a still good basket? • Too many crooks? • Or trying to bypass structural dimensions of the crisis?
Robert Brenner • The rate of profit is down because of overcapacity in global manufacturing industries, related to increased competition (China, Japan, Germany). • Profits are squeezed, forcing down profits and wages. Capitalists invest more to meet the challenge, thus reinforcing the race.
The irresistible decline • Manufacturing jobs migrating to the south. 3m jobs from the USA (average $16 an hour) moved to China ($0,61) between 2001-04. • Relocating and outsourcing is profitable. Employers diminished job security, work rules, pensions. Labour is «feminized». • GM is involved with Daewoo, Shanghai Motors, Fiat, Fuji, Saab. Decentralization of production, concentration of economic power. • Over 43 million Americans will use food stamps by the year 2011.
Rich getting richer and poor getting poorer (USA)14% more millionnaires in 2009
CEOs' pay in the USA as a multiple of the average worker's pay, 1960-2005
‘Financiarization’ The financial sector has thus turned on itself. • The result is an increased bifurcation between a hyperactive financial economy and a stagnant real economy. In 2006, the average daily turnover in global currency markets was $1,5 trillion. • Between 1995 and 2005, the five biggest Canadian banks avoided paying $16 billions in taxes.
The Canadian angle • The Canadian deficit in trade (2009) was $4.3 billion ($62 billion surplus in 2005). 80 % of Canada’s total exports are going to the US. • In January 2009, the federal government introduced a $40 billion dollar stimulus package including investments in infrastructure and tax reliefs.
The good news? • Contrary to the US, the banking sector in Canada was less fragilized. Canadians banks are not as fragmented as they are in the US (the six largest Canadian banks hold more than 90 percent of assets), more regulated and less inclined to risky financial operations. Billions of dollars were nevertheless lost by Canadian banks ‘contaminated’ by ‘toxic’ funds (sub-prime loans and other speculative investments).
The rich are doing fine • The richest 20 % of Canadians enjoyed median earnings increases of 16,4 % but the poorest 20 % had a 20,6 % drop in earnings since 1980. The total average compensation for Canada’s highest paid 100 CE0s was $7,3 million in 2008 compared with an average $42,300 for all Canadians. Since 1995, tax revenue in Canada has dropped from 36 % of GDP to 33 % of GDP (loss of nearly $50 billion a year in public revenue).
The bad news • In the first year of the crisis, 600 000 jobs were slashed in Canada (50 % not recuperated in 2010). The number of unemployed (over 1,5 million people) in the spring of 2010 was 31 % higher than it was before the crash in 2008. More than 43% of the unemployed do not receive UI, • According to latest Statscan, three million Canadians are under the poverty line.
At the world level unemployment up by 239 million in 2009. The number of working poor living on less than a dollar a day could rise by some 40 million — and those at 2 dollars a day by more than 100 million.
Food crisis • In 2005-08, food prices have risen by 75%. In the first months, prices are higher than they have been in decades. Rice, bread and tortillas are the staple food for this half of the world’s population. In 2007, the price of grain rose by 42 %, and dairy products by 80 %, according to UN figures. • Why?
Fix it! But how? • More control (regulation) over financial institutions. • Investing into the rehabilitation of infrastructures. • Invest into education and retraining of workforce. • Employers are asking trade unions to accept cut-backs in order to maintain jobs. • Bill Gates on saving capitalism.
Is it the end of capitalism?Not so simple … • Hear I. Wallerstein … Perhaps • http://www.youtube.com/watch?v=nLvszWBf6BQ&feature=related
Life after capitalism? • There is a terrible lesson in history … Indeed the last two «global crisis» (1872 and 1929) led to two world wars. • Today the epicentre of the conflict is in the Middle East with abundant oil resources. • Is it possible that these conflicts will turn into full confrontations?
