PostCapitalism: A Guide to Our Future
What started in 2008 as an economic crisis morphed into a social crisis, leading to mass unrest; and now, as revolutions turn into civil wars, creating military tension between nuclear superpowers, it has become a crisis of the global order.
In both scenarios, the serious impacts of climate change, demographic ageing and population growth kick in around the year 2050. If we can’t create a sustainable global order and restore economic dynamism, the decades after 2050 will be chaos.
Neoliberalism is the doctrine of uncontrolled markets : it says that the best route to prosperity is individuals pursuing their own self - interest, and the market is the only way to express that self - interest. It says the state should be small ( except for its riot squad and secret police ); that financial speculation is good; that inequality is good; that the natural state of humankind is to be a bunch of ruthless individuals, competing with each other.
That, in short, is the argument of this book : that capitalism is a complex, adaptive system which has reached the limits of its capacity to adapt.
Postcapitalism is possible because of three impacts of the new technology in the past twenty - five years.
First, information technology has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages.
Second, information goods are corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant. The system’s defence mechanism is to form monopolies on a scale not seen in the past 200 years – yet these cannot last.
Third, we’re seeing the spontaneous rise of collaborative production : goods, services and organizations are appearing that no longer respond to the dictates of the market and the managerial hierarchy.
Today the terrain of capitalism has changed : it is global, fragmentary, geared to small - scale choices, temporary work and multiple skill - sets.
info - capitalism has created a new agent of change in history : the educated and connected human being.
The values, voices and morals of the networked generation were so obvious in these revolts that, from the Spanish indignados to the Arab Spring, the media at first believed they had been caused by Facebook and Twitter.
Most of these revolts petered out.
Without a strong, organized working class to push social issues rapidly to the fore, the revolts often stall. But order is never fully restored.
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.
Everything comes down to the struggle between the network and the hierarchy, between old forms of society moulded around capitalism and new forms of society that prefigure what comes next.
And the central banks, whose operations most people have no clue about, are prepared to sabotage democracy by triggering bank runs where anti - neoliberal movements threaten to win
In a situation like this, knowledge of history is more powerful than you think.
1 Neoliberalism is Broken
The 2008 crash wiped 13 per cent off global production and 20 per cent off global trade. It took global growth negative – on a scale where anything below + 3 per cent is counted as a recession. In the West, it produced a depression phase longer than in 1929 – 33 and even now, amid a pallid recovery, has got mainstream economists terrified about the prospect of long - term stagnation.
Seven years on, the system has been stabilized. By running government debts close to 100 per cent of GDP, and by printing money worth around a sixth of the world’s output, America, Britain, Europe and Japan injected a shot of adrenaline to counteract the seizure. They saved the banks by burying their bad debt; some of it was written off, some assumed as sovereign debt, some buried inside entities made safe simply by central banks staking their credibility on them.
Tidjane Thiam ,
Unions are the ‘ enemy of young people ’, he said, and the minimum wage is ‘ a machine to destroy jobs ’. Workers ’ rights and decent wages stand in the way of capitalism’s revival and, says the millionaire finance guy without embarrassment, must go.
John Maynard Keynes once called money ‘ a link between the present and the future ’.
He meant that what we do with money today is a signal of how we think things are going to change in years to come.
When money expands at this rate, it is a sign that we think the future is going to be spectacularly richer than the present. The crisis was simply a feedback signal from the future : we were wrong.
This, then, has been a depression like no other. We have seen crisis and stagnation combined with the rapid rollout of new technologies in a way that just didn’t happen in the 1930s.
The combined impact of technological progress, policy stimulus and the resilience of the emerging markets has produced a depression much milder in human terms than that of the 1930s. But as a turning point, this is bigger than the 1930s.
bankers were effectively told by politicians that it was their duty to get rich, through speculative finance, so that their wealth could trickle down to the rest of us.
The ‘ bad banking plus imbalanced growth ’ thesis became the explanation for the collapse.
four things that at first allowed neoliberalism to flourish but which have begun to destroy it. They are : ‘ Fiat money ’, which allowed every slowdown to be met with credit loosening, and the whole developed world to live on debt. Financialization, which replaced the stagnant incomes of the developed world workforce with credit. The global imbalances, and the risks remaining in the vast debts and currency reserves of major countries. Information technology, which allowed everything else to happen, but whose future contribution to growth is in doubt.
Fiat money, then, contributed to the crisis by creating wave after wave of false signals from the future : the Fed will always save us, shares are not risky and banks can make high profits out of low - risk business.
Nothing demonstrates the continuity between pre - and post - crisis policy better than quantitative easing ( QE ).
It worked, in that it prevented a depression. But it was the disease being used as a cure for the disease : cheap money being used to fix a crisis caused by cheap money.
our lives were financialized.
Economists use the term to describe four specific changes that began in the 1980s :
Companies turned away from banks and went to the open financial markets to fund expansion. Banks turned to consumers as a new source of profit, and to a set of high - risk, complex activities that we call investment banking. Consumers became direct participants in the financial markets : credit cards, overdrafts, mortgages, student loans and motor car loans became part of everyday life. A growing proportion of profit in the economy is now being made not by employing workers, or providing goods and services that they buy with their wages, but by lending to them. All simple forms of finance now generate a market in complex finance higher up the chain : every house buyer or car driver is generating a knowable financial return somewhere in the system. Your mobile phone contract, gym membership, household energy – all your regular payments – are packaged into financial instruments, generating steady interest for an investor, long before you decide to buy them. And then somebody you have never met places a bet on whether you will make the payments.
But financialization created inherent problems; problems that triggered the crisis, but were not resolved by it. While paper money is unlimited, wages are real. You can go on creating money for ever but if a declining share of it flows to workers, and yet a growing part of profits is generated out of their mortgages and credit cards, you are eventually going to hit a wall.
The historian Ferdinand Braudel suggested that the decline of all economic superpowers begins with a spectacular turn to finance. Surveying the fall of the Netherlands as a trading empire in the seventeenth century, he wrote : ‘ Every capitalist development of this order seems, by reaching the stage of financial capitalism, to have in some sense announced its maturity : it [ is ] a sign of autumn. ’
Let’s spell out what this means : the current form of globalization has a design fault. When it produces high growth it can do so only by fuelling unsustainable distortions, which are corrected by financial crisis. To reduce the distortions – the imbalances – you have to suppress the normal form of neoliberal growth.
THE INFO - TECH REVOLUTION
The promise was that new technology would produce an information economy and a knowledge society. These have emerged but not in the form envisaged. In the old dystopias – as with the rogue computer Hal, in 2001 : A Space Odyssey – it is the technology that rebels. In reality, the network has allowed humans to rebel.
2 Long Waves, Short Memories
Kondratieff’s real crime, in the eyes of his persecutors, was to think the unthinkable about capitalism : that instead of collapsing under crisis, capitalism generally adapts and mutates.
Kondratieff was the first person to show the existence of long waves in economic history.
They understood that – if pursued to its conclusion – it would bring Marxism face to face with a dangerous proposition : that there is no ‘ final ’ crisis of capitalism. There can be chaos, panic and revolution but, on the basis of Kondratieff’s evidence, capitalism’s tendency is not to collapse, but rather, to mutate.
If we put that into modern English we get the following. The start of a long cycle sees : the rollout of new technologies the rise of new business models new countries dragged into the global market a rise in the quantity and availability of money.
Schumpeter took Kondratieff’s wave - theory and made it highly attractive to capitalists : in his version the entrepreneur and the innovator drive each new cycle. Conversely, periods of breakdown are the result of innovation becoming exhausted, and capital being hoarded in the finance system. For Schumpeter, crisis is a necessary feature of the capitalist system, in that it promotes the ‘ creative destruction ’ of old and inefficient models.
Industrial capitalism has gone through four long cycles, leading to a fifth whose takeoff has stalled :
1790 – 1848 : The first long cycle is discernible in the English, French and US data.
1848 – mid - 1890s : The second long cycle is tangible across the developed world and, by the end of it, the global economy.
1890s – 1945 : In the third cycle heavy industry, electrical engineering, the telephone, scientific management and mass production are the key technologies.
Late - 1940s – 2008 : In the fourth long cycle transistors, synthetic materials, mass consumer goods, factory automation, nuclear power and automatic calculation create the paradigm – producing the longest economic boom in history.
In the late – 1990s, overlapping with the end of the previous wave, the basic elements of the fifth long cycle appear. It is driven by network technology, mobile communications, a truly global marketplace and information goods. But it has stalled.
3 Was Marx Right ?
Marx spent his life trying to rectify flaws in the labour - theory, in order to explain the crises and breakdowns early capitalism had been plagued with. According to Marx, a fully fledged market economy creates inherent instability. For the first time in history, there is the possibility of crisis amid abundance. Things are made that cannot be bought or used – a situation that would have seemed crazy under feudalism or in the ancient world.
He also realized that the ultimate source of profit is work; specifically, the extra value coerced out of employees by the unequal power relationships in the workplace.
Since labour is the ultimate source of profit this will tend, as mechanization spreads across the whole economy, to erode the rate of profit. In a company, sector or whole economy where increasing proportions of capital are invested in machinery, raw materials and other non - labour inputs, you are reducing the scope for labour to generate profit. Marx called this ‘ the most fundamental law of capitalism ’.
In summary, Marx argued that crisis is the pressure valve for the system as a whole. It is a normal feature of capitalism and a product of its technological dynamism.
Across the three volumes of Capital, Marx describes several forms of crisis.
The first is an overproduction crisis ,
inefficient flow of capital between sectors :
crisis triggered by the failure of the counteracting tendencies listed above, leading to a tangible collapse in the profit rate, an investment freeze, layoffs and falling GDP.
Finally, in volume III of Capital, Marx describes how financial crisis happens : credit becomes massively overextended, and then speculation and crime drive it to unsustainable limits where the bust inevitably overcorrects the boom – pushing the economy into a multi - year depression. In one evocative sentence Marx anticipated the world of Enron, Bernie Madoff and the wealthy 1 per cent.
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 ’.
CAPITALISM SUPPRESSES THE MARKET
supply and demand did not set prices : millionaires did.
In 1906 Hilferding
‘ Through this relationship … capital assumes the form of finance capital, its supreme and most abstract expression. ’
Luxemburg’s 1913 book, The Accumulation of Capital ,
is forever beset by the problem of too little spending power among the workers. So it is forced to open up colonies, not just as sources of raw material but as markets. The military costs incurred while conquering and defending colonies have the added benefit of soaking up excess capital. It is, said Luxemburg, akin to waste or luxury consumption : it drains off excess capital.
But Luxemburg was wrong to limit this to the possession of colonies. New markets can also be created at home, not just by boosting the workers ’ spending power, but by transforming non - market activities into market ones.
During the war, both Lenin and the Bolshevik theorist Nikolai Bukharin had produced works inspired by Hilferding, each drawing the conclusion that finance - dominated capitalism was proof of the system’s imminent doom. Lenin called this new, declining model ‘ imperialism ’, and defined it as ‘ capitalism in transition ’.
What follows is my ‘ normative ’ restatement of long - cycle theory, merged with what is rational about the Marxist understanding of crisis :
The start of a wave is usually preceded by the build - up of capital in the finance system, which stimulates the search for new markets and triggers the rollout of clusters of new technologies.
Once the new technologies, business models and market structures begin to work in synergy – and the new ‘ technological paradigm ’ is obvious
Throughout the whole cycle, the tendency to replace labour with machines operates. But in the upswing, any fall in the profit rate is counterbalanced by the expanded scale of production, so overall profits rise.
When the golden age stalls, it is often because euphoria has produced sectoral over - investment, or inflation, or a hubristic war led by the dominant powers.
Now the first adaptation begins : there is an attack on wages and an attempt to de - skill the workforce.
If the initial attempt to adapt fails ( as it did in the 1830s, 1870s and 1920s ), capital retreats from the productive sector and into the finance system, so that crises assume a more overtly financial form. Prices fall. Panic is followed by depression.
4 The Long, Disrupted Wave
In 1948 the Marshall Plan kicked in, the Cold War began and Bell Laboratories invented the transistor.
The Marshall Plan, combined with domestic rebuilding efforts, allowed most European economies to grow at well above 10 per cent per year until they reached their pre - war highpoint, which for most was achieved by 1951.2
All currencies would be pegged against the dollar, and the USA would peg the dollar to gold at $ 35 an ounce.
But this was a system also stacked against high finance. Strict limits on bank leverage were imposed by law and ‘ moral suasion ’ – quiet pressure from central banks on banks that lent too much.
Neoliberalism was designed and implemented by visionary politicians : Pinochet in Chile; Thatcher and her ultra - conservative circle in Britain; Reagan and the Cold Warriors who brought him to power. They’d faced massive resistance from organized labour and they’d had enough. In response, these pioneers of neoliberalism drew a conclusion that has shaped our age : that a modern economy cannot coexist with an organized working class. Consequently, they resolved to smash labour’s collective bargaining power, traditions and social cohesion completely.
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 privatization and offshoring – not even globalization. All these things were byproducts or weapons of its main endeavour : to remove organized labour from the equation.
5 The Prophets of Postcapitalism
In 1993, the management guru Peter Drucker wrote : ‘ That knowledge has become the resource, rather than a resource, is what makes our society “ post - capitalist ”.
In his book Post - Capitalist Society, Drucker argued that certain norms essential to capitalism were being replaced.
And that’s what visionaries are for. While many around him saw ‘ info - tech plus neoliberalism ’ as capitalism perfected, Drucker allowed himself to imagine info - capitalism as a transition to something else.
Drucker guessed that the solution must be to connect, creatively, the different knowledge disciplines : ‘ The capacity to connect may be inborn and part of that mystery we call genius. But to a large extent to connect and thus raise the yield of existing knowledge, whether for an individual, for a team or for an entire organisation, is learnable. ’ 8
who is the social archetype of postcapitalism ?
It would be, Drucker proposed, ‘ the universal educated person ’.
combining the manager’s ability to apply knowledge with the intellectual’s ability to deal with pure concepts. Such an individual would be the opposite of the polymath – those rare people who are simultaneously expert in Mandarin Chinese and nuclear physics.
This new type of person would, on the contrary, be someone able to pick up and run with the products of expert research in narrow fields and apply them generally : applying chaos theory to economics, genetics to archaeology, or data - mining to social history.
Drucker divides the history of industrial capitalism into four phases : a mechanical revolution lasting most of the nineteenth century; a productivity revolution with the advent of scientific management in the 1890s; a management revolution after 1945, driven by the application of knowledge to business processes; and finally an information revolution, based on ‘ the application of knowledge to knowledge ’.
Romer spelled out why : ‘ Once the cost of creating a new set of instructions has been incurred, the instructions can be used over and over again at no additional cost. Developing new and better instructions is equivalent to incurring a fixed cost. ’ 13
Once you can copy and paste something, it can be reproduced for free. It has, in economics - speak, a ‘ zero marginal cost ’. Info - capitalists have a solution to this : make it legally impossible to copy certain kinds of information.
In 2006 Yochai Benkler, then a law professor at Yale, concluded that the network economy
was ‘ a new mode of production emerging in the middle of the most advanced economies in the world ’.
Wikipedia is the best example.
THE ECONOMICS OF FREE STUFF
In the late nineteenth century economists began to notice that not all the effects of capitalism could be understood through the act of buying and selling. Given most factories were by then surrounded by slag heaps, slums and stinking rivers, it was hard not to notice that capitalism has effects external to what is done in the marketplace. They called these ‘ externalities ’, and a debate began over how to account for them.
if somebody did anticipate the information - driven fall of capitalism ? What if someone had clearly predicted that the ability to create prices would dissolve if information became collectively distributed and embodied in machines ? We would probably be hailing that person’s work as visionary. Actually there is such a person. His name is Karl Marx.
Marx had imagined an economy in which the main role of machines was to produce, and the main role of people was to supervise them. He was clear that in such an economy the
main productive force would be information.
Given what Marxism was to become – a theory of exploitation based on the theft of labour time – this is a revolutionary statement. It suggests that – once knowledge becomes a productive force in its own right, vastly outweighing the actual labour spent creating a machine – the big question becomes not wages versus profits but who controls the ‘ power of knowledge ’.
the nature of the knowledge locked inside the machines must, he writes, be ‘ social ’.
but the code will still contain thousands of bits of previous code written by other people that cannot be patented.
In the Fragment on Machines, these two ideas – that the driving force of production is knowledge, and that knowledge stored in machines is social – led Marx to the following conclusions.
First, in a heavily mechanized capitalism, boosting productivity through better knowledge is a much more attractive source of profit than extending the working day, or speeding up labour :
Second, Marx argued, knowledge - driven capitalism cannot support a price mechanism whereby the value of something is dictated by the value of the inputs needed to produce it. It is impossible to properly value inputs when they come in the form of social knowledge.
For Marx, knowledge - based capitalism creates a contradiction – between the ‘ forces of production ’ and the ‘ social relations ’. These form ‘ the material conditions to blow [ capitalism’s ] foundation sky - high ’. Furthermore, capitalism of this type is forced to develop the intellectual power of the worker. It will tend to reduce working hours ( or halt their extension ), leaving time for workers to develop artistic and scientific talents outside work, which become essential to the economic model itself.
Finally Marx throws in a new concept, which appears nowhere else – before or after – in his entire writings : ‘ the general intellect ’.
He imagined socially produced information becoming embodied in machines. He imagined this producing a new dynamic, which destroys the old mechanisms for creating prices and profits. He imagined capitalism being forced to develop the intellectual capacities of the worker. And he imagined information coming to be stored and shared in something called a ‘ general intellect ’ – which was the mind of everybody on earth connected by social knowledge, in which every upgrade benefits everybody. In short, he had imagined something close to the info - capitalism in which we live.
Furthermore, he had imagined what the main objective of the working class would be if this world ever existed : freedom from work.
This is possibly the most revolutionary idea Marx ever had : that the reduction of labour to a minimum could produce a kind of human being able to deploy the entire, accumulated knowledge of society; a person transformed by vast quantities of socially produced knowledge and for the first time in history more free time than work time. It’s not so far from the worker imagined in the Fragment to the ‘ universal educated person ’ predicted by Peter Drucker.
Antonio Negri, to make the first attempt at a theory of info - capitalism, which they dubbed ‘ cognitive capitalism ’.
Yann Moulier - Boutang, a French economist, believes that the key for cognitive capitalism is the capture of the externalities. As people use digital devices, they become ‘ co - producers ’ with the companies they are dealing with :
the ‘ factory ’ in cognitive capitalism is the whole of society.
This is what the cognitive capital theorists mean by the ‘ socialized factory ’. We are no longer in a world of clearly delineated production and consumption, but one in which ideas, behaviours and customer interactions with the brand are critical to generating profit; production and consumption are blurred.
6 Towards the Free Machine
‘ It was not by gold or by silver but by labour that all the wealth of the world was originally purchased, ’ Smith wrote ;
This is the classic labour theory of value : it says the work needed to make something determines how much it’s worth.
Marxist phrase ‘ tendency of the profit rate to fall ’, it is no real catastrophe for capitalism.
in the classic model of capitalism outlined by Marx, the pursuit of productivity drives material wealth higher but causes repeated short - term crises and then forces big mutations, whereby the system has to voluntarily raise the cost of labour.
And that was how all crises looked in the era of scarcity : mass unemployment and idle plant caused by a collapse in profitability, and all explicable using the labour theory of value.
THE AVOIDANCE OF ‘ FUTURE THINGS ’
Léon Walras, one of the founders of marginalism, insisted : ‘ The selling prices of products are determined in the market … by reason of their utility and their quantity. There are no other conditions to consider for these are the necessary and sufficient conditions. ’
‘ Do I need to buy this next thing – glass of beer, cigarette, condom, lipstick, minicab ride – more than I need to keep this last € 10 note in my pocket ? ’
the marginalists were trying to free economics from philosophy.
Like Marx, Walras was working at a high level of abstraction.
In its purest form, marginalism denied not only the possibility of exploitation, but of profit as a specific phenomenon. Profit was just the reward for the utility of something the capitalist was selling :
The rise of information goods challenges marginalism at its very foundations because its basic assumption was scarcity, and information is abundant. Walras, for example, was categoric : ‘ There are no products that can be multiplied without limit.
Let’s restate what Marx called the ‘ law of value ’. The price of everything in the economy reflects the total amount of labour used to make it. Productivity gains derive from new processes, machines, reorganizations – and each of these comes at a cost, in terms of the amount of labour it took to create it. In practice, capitalism escapes the tendency of innovation to shrink the labour content of the economy, and thus shrink the ultimate source of profit, because it creates new needs, new markets and new industries where labour costs are high, so there are more wages to drive consumption.
In the Grundrisse, Marx says : if a machine costs 100 days ’ worth of labour power to make, and wears out in 100 days, it’s not improving productivity. Much better to have a machine that costs 100 days but wears out over 1,000. The more durable the machine, the smaller the amount of its value chipped off into each product.
Marx is not here speaking about the immaterial but of non - transitory material : that is, something that does not degrade.
But Marx thought that if they existed in large numbers they would explode the system based on labour values – ‘ blow it sky high ’, as he says in the Fragment on Machines.
In 2013, a study by the Oxford Martin School suggested 47 per cent of all jobs in the US were susceptible to automation. Of these, it was admin and sales that stood the highest risk.
‘ In the first wave, we find that most workers in transportation and logistics occupations ,
In the second wave, it is everything relying on finger dexterity, observation, feedback, or working in a cramped space that gets robotized. They concluded the jobs safest from automation were service jobs where a high understanding of human interaction was needed – for example, nursing – and jobs requiring creativity.
Therefore the real danger inherent in robotization is something bigger than mass unemployment, it is the exhaustion of capitalism’s 250 - year - old tendency to create new markets where old ones are worn out.
An economy based on information, with its tendency to zero - cost products and weak property rights, cannot be a capitalist economy.
7 Beautiful Troublemakers
André Gorz, who was wrong on many things, was right about the reason why. Work – the defining activity of capitalism – is losing its centrality both to exploitation and resistance.
As we have seen, information technology expels labour from production, destroys pricing mechanisms and promotes non - market forms of exchange. Ultimately, it will erode the link between labour and value altogether.
DIGITAL REBELS, ANALOGUE SLAVES
seven years into the post - 2008 crisis, a permanent contract on a decent wage is an unattainable privilege for many people. Being part of the ‘ precariat ’ is all too real for up to a quarter of the population. For both groups flexibility has become the key attribute. Among skilled workers, much value is placed on the ability to reinvent yourself, to align yourself with short - term corporate objectives, to be good at forgetting old skills and learning new ones, to be a networker and above all to live the dream of the firm you work for.
For the peripheral workforce, flexibility relies first on the general and abstract character of your work.
Sennett and Wellman both noticed the tendency of people adapted to this networked lifestyle to adopt multiple personalities, both in reality and online. Sennett writes : ‘ The conditions of time in the new capitalism have created a conflict between character and experience, the experience of disjointed time threatening the ability of people to form their characters into sustained narratives. ’
The networked individual creates a more complex reality : s / he lives parallel lives at work, in numerous fragmentary subcultures and online.
Michael Hardt and Antonio Negri summed it up well in their 2012 book Declaration : The center of gravity of capitalist production no longer resides in the factory but has drifted outside its walls. Society has become a factory
8 On Transitions
After 1970, there was no growth at all in productivity : if you needed double the number of nails produced, you built a new nail factory alongside the old one – productivity was off the agenda.
Economists call this ‘ extensive growth ’ – as opposed to the intensive growth that raises real wealth. In the medium term, a system based on extensive growth cannot survive.
What caused feudalism to collapse and capitalism to rise ?
we can list four probable causes for the end of feudalism.
Up to about 1300, feudal agriculture had been dynamic ,
In 1347 the Yersinia pestis bacillus hit Europe. By 1353, the Black Death had killed at least a quarter of Europe’s population. 30 For those who lived through it, the experience was spiritually transformative – like witnessing the end of the world. Its economic impact was stark : the supply of labour collapsed. Suddenly farm workers, who had been the lowest of the low, could command higher wages.
Basically, the rat that brought the Black Death into Cadiz in 1347 triggered an external shock that helped to collapse an internally weakened system.
The second driver of change was the growth of banking.
The third big driver of capitalism’s takeoff was the conquest and pillage of the Americas, beginning in 1503.
Finally, there was the printing press. Gutenberg put the first one to use in 1450. In the following fifty years 8 million books were printed – more than all the scribes of Christendom had managed to produce since Roman times.
The modern equivalent of the long stagnation of late feudalism is the stalled fifth Kondratieff cycle, where instead of rapidly automating work out of existence, we are reduced to creating bullshit jobs on low pay, and many economies are stagnating. The equivalent of the new source of free wealth ? It’s not exactly wealth : it’s the externalities – the free stuff and wellbeing generated by networked interaction. It is the rise of non - market production, of un - ownable information, of peer networks and unmanaged enterprises. The internet, says French economist Yann Moulier - Boutang, is ‘ both the ship and the ocean ’ for the modern - day conquest of a new world. In fact, it is the ship, the compass, the ocean and the gold.
In the cooperatives, the credit unions, the peer - networks, the unmanaged enterprises and the parallel, subcultural economies, those elements already exist. We have to stop seeing them as quaint experiments; we have to promote them with regulation just as vigorous as that which capitalism used to drive the peasants off the land or destroy handicraft work in the eighteenth century.
9 The Rational Case for Panic
Wherever I go, I ask questions about economics – and get answers about climate.
There’s a pointless argument between economists and ecologists over which crisis is more important – the ecosphere or the economy ? The materialist answer is that their fates are interlinked. We know the natural world only by interacting with it and transforming it : nature produced us that way.
But in the edge - places of the world the catastrophe is happening already. If we listened to those whose lives are being destroyed by floods, deforestation and encroaching deserts, we would better understand what is coming : the total disruption of the world.
But industrial capitalism has, in the space of 200 years, made the climate 0.8 degrees Celsius hotter, and is certain to push it two degrees higher than the pre - industrial average by 2050.
climate - change deniers ,
have grasped that if climate change is real, capitalism is finished.
The lesson is : a market - led strategy on climate change is utopian thinking.
Saving the planet, then, is technologically feasible and economically rational, even when measured in cash terms. What stands in the way is the market.
The problem is, first, that the market - led transition is too slow and too vulnerable to pressure from consumers ( who naturally want cheap energy ) and from fossil - fuel producers.
Now though, we have a new problem : demographic ageing.
Yet it is potentially as big an external shock as climate change – and its impact will be much more immediately economic.
Europe and Japan, there are currently three workers for every one retired person. By 2050 the ratio will be one - for - one.
The problem is that an ageing population means a smaller potential workforce, lower growth and lower output per head.
government debt. An ageing population boosts demand for spending on health, public pensions and long - term care. In 2010, Standard & Poor’s calculated that unless governments across the world reined in public pension provision, their debts, by 2050, would sink the world.
10 Project Zero
a new route beyond capitalism has opened up, based on promoting and nurturing non - market production and exchange, and driven by information technology.
In this chapter I will try to spell out what a large - scale postcapitalist project might involve. I call it Project Zero – because its aims are a zero - carbon energy system; the production of machines, products and services with zero marginal costs; and the reduction of necessary labour time as close as possible to zero. Before we start we should outline some principles based on the knowledge gleaned from past failure.
The first principle is to understand the limitations of human willpower in the face of a complex and fragile system.
The second principle for designing the transition is ecological sustainability.
The third principle I want to insist on is : the transition is not just about economics. It will have to be a human transition.
A fourth principle should be : attack the problem from all angles. With the rise of networks, the capacity for meaningful action is no longer confined to states, corporations and political parties; individuals and temporary swarms of individuals can be just as powerful agents of change.
The fifth principle for a successful transition is that we should maximize the power of information.
The aggregated data of our lives – which will soon include our driving speed, our weekly diet, our body mass and heart rate – could be a hugely powerful ‘ social technology ’ in itself.
Once the Internet of Things is rolled out, we are at the real takeoff point of the information economy. From then on, the key principle is to create democratic social control over aggregated information, and to prevent its monopolization or misuse by states and corporations.
The top level aims of a postcapitalist project should be to :
Rapidly reduce carbon emissions
Stabilize the finance system between now and 2050 by socializing it ,
Deliver high levels of material prosperity and wellbeing to the majority of people, primarily by prioritizing information - rich technologies
Gear technology towards the reduction of necessary work to promote the rapid transition towards an automated economy.
In the socialist project, the state saw itself as the new economic form. In postcapitalism, the state has to act more like the staff of Wikipedia : to nurture the new economic forms to the point where they take off and operate organically.
switch off the neoliberal privatization machine.
The next action the state could undertake is to reshape markets to favour sustainable, collaborative and socially just outcomes.
In the postcapitalist project, the state must also coordinate and plan infrastructure :
the state has to ‘ own ’ the agenda for responses to the challenges of climate change, demographic ageing, energy security and migration.
only national governments and multilateral agreements can actually solve them.
It would be more sensible to combine controlled debt write - offs with a ten - to fifteen - year global policy of ‘ financial repression ’ : that is, to stimulate inflation, hold interest rates lower than the inflation rate, remove people’s ability to move money into non - financial investments or offshore, and thus inflate away the debts, writing off the part that remained.
EXPAND COLLABORATIVE WORK
In a network - based transition, collaborative business models are the most important thing we can foster. They, too, have to evolve, however. It is not enough for them to be just non - profit businesses; the postcapitalist form of the co - op would try to expand non - market, non - managed, non - money - based activity against the baseline of market activity it starts from. What we need are co - ops where the legal form is backed up by a real, collaborative form of production or consumption, with clear social outcomes.
Large corporations could also be very useful for driving change, as much as anything else because of their sheer scale : McDonald’s, for example, is the thirty - eighth biggest economy in the world – bigger than that of Ecuador – and is also the biggest toy distributor in America.
Or imagine simply if McDonald’s stopped dispensing plastic toys.
It may sound radical to outlaw certain business models, but that’s what happened with slavery and with child labour.
SUPPRESS OR SOCIALIZE MONOPOLIES
For twenty - five years, the public sector has been forced to outsource and break itself into pieces; now would come the turn of monopolies such as Apple and Google.
In summary : under a government that embraced postcapitalism, the state, the corporate sector and public corporations could be made to pursue radically different ends with relatively low - cost changes to regulation, underpinned by a radical programme to shrink debt.
LET MARKET FORCES DISAPPEAR
Once firms are forbidden to set monopoly prices, and a universal basic income is available ( see below ), the market is actually the transmitter of the ‘ zero marginal cost ’ effect, which manifests as falling labour time across society.
profit derives from entrepreneurship, not rent.
The act of innovating and creating – whether it be a new kind of jet engine or a hit dance music track – is rewarded, as now, by the firm’s ability to reap short - term gains, either from higher sales or lower costs.
The only sector where it is imperative to suppress market forces completely is wholesale energy. To meet climate change with urgent action, the state should take ownership and control of the energy distribution grid, plus all big carbon - based suppliers of energy.
But beyond energy and the strategic public services, it is important that a large space be left for what Keynes called the ‘ animal spirits ’ of the innovator.
every innovation brings us closer to the world of zero necessary work.
SOCIALIZE THE FINANCE SYSTEM
The next big piece of social technology would be focused on the finance system.
Morally, if the risks are socialized, then the rewards should be socialized too.
The following measures
that individual states will have to implement them, and with some urgency. They are :
Nationalize the central bank, setting it an explicit target for sustainable growth and an inflation target on the high side of the recent average.
local and regional banks; credit unions and peer - to - peer lenders; and a comprehensive state - owned provider of financial services.
Leave a well - regulated space for complex financial activities. The aim would be to ensure the global finance system could, in the short to medium term, return to its historic role : efficiently allocating capital between firms, sectors, savers and lenders, etc.
The most immediate objective is to save globalization by killing neoliberalism. A socialized banking system and a central bank attuned to sustainability could do this using fiat money – which, as we discussed in chapter 1, works as long as people believe in the credibility of the state.
PAY EVERYONE A BASIC INCOME
But in the postcapitalist project, the purpose of the basic income is radical : it is ( a ) to formalize the separation of work and wages and ( b ) to subsidize the transition to a shorter working week, or day, or life. The effect would be to socialize the costs of automation.
Because we need to radically accelerate technological progress.
It allows them to volunteer, set up co - ops, edit Wikipedia, learn how to use 3D design software, or just exist.
THE NETWORK UNLEASHED
Info - capitalism is based on asymmetry : the global corporations get their market power from knowing more – more than their customers, suppliers and small competitors. The simple principle behind postcapitalism should be that the pursuit of information asymmetry is wrong – except when it comes to privacy, anonymity and security issues.
In the end, all we’re trying to do is move as much of human activity as possible into a phase where the labour that’s necessary to support very rich and complex human life on the planet falls, and the amount of free time grows. And in the process, the division between the two gets even more blurred.
IS THIS FOR REAL ?
We lie at a moment of possibility : of a controlled transition beyond the free market, beyond carbon, beyond compulsory work.
LIBERATE THE 1 PER CENT
What happens to the 1 per cent ? They become poorer and therefore happier. Because it’s tough being rich.
Just 8 per cent of American CEOs have a real Twitter account.
Convinced that only the smart succeed, they send their kids to expensive private schools to hone their individuality. But they come out the same : little versions of Milton Friedman and Christine Lagarde.
To live in a world so separate, dominated by the myth of uniqueness but in reality so uniform, constantly worried you’re going to lose it all, is – I am not kidding – tough.