Interview with Greek newspaper Eleftherotypia
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Published on February 23, 2013
It’s been five years since the global financial crisis of 2007-08, yet most advanced capitalist economies are either experiencing weak growth or are in recession. And then, of course, there are the peripheral nations in the euro zone which are in a deep depression. Are you surprised by the severity of the global crisis of 2007-08?
No. Decades-long developments in global capitalism prepared the conditions for a long and deep crisis. These include deepening inequalities of wealth and income in Europe and North America, rising consumer debt to mask that inequality and postpone its negative effects, rising dangerous speculation by profit-rich banks, corporations, and the rich, relocation of capitalist enterprises to Asia, Latin America, and beyond, and hegemonic spread of neoliberal ideology to mask all of these dangerous changes. Such conditions turned one of capitalism’s recurring cycles into the worst downturn since the 1930s.
Are there any unique characteristics in the current capitalist crisis?
Yes, the roles of debt (and especially accumulated and excessively risky consumer debt), globalized speculation in financial derivatives based on that debt, and long-term stagnation of real wages prior to the crisis were unique in their extent if not in their existence per se.
What’s your own explanation for the specially bad performance of the European economy?
First, the collapse of much of the labor movement and socialist parties into weak criticism of neoliberalism or, worse still, embrace of neoliberalism prevented the kind of mass working class demands for social supports during the downturn that could have saved Europe from its “specially bad performance” (as, for example, the militance of the CIO and labor unions, socialists, and communists did for the US in the 1930s). Second and consequentially, the acceptance of more or less austerity as a necessary policy response. Third, the delusion in 2008 and 2009 that the crisis would remain a serious problem primarily for the US rather than being conveyed via commodity and credit markets to Europe and the world. Fourth, permitting differential wage and price controls in different countries that could and did work to worsen economic inequalities among European economies and thereby lessen the chances for an effective crisis response that would have served all of Europe.
The call for a new global financial architecture has met fierce opposition by the hedge fund managers and the banking community in general. Is finance-dominated capitalism different today than it was in previous eras? Moreover, is the call for a new global financial architecture a cause to be embraced by progressives?
The issue is not whether or not to have a global financial architecture; its development is already well underway. The issue is what kind of architecture favoring what interests. This simply replicates the question of a European union. That too is underway, but the key issue is whose interests will be served by what paerticular mechanisms, rules, and institutions of the union. So soon as hedge funds and banks can agree on a plan for an architecture that advances their particular interests, they will heavily promote it in the usual way, namely as if it were (a) the only reasonable way and (b) in the best interests of everyone.
You have argued in your latest book that democracy is the cure for capitalism. What kind of democracy do you advocate?
Democracy at the base of society and economy, namely inside each enterprise. Classic socialism and communism focused excessively on society’s macro-level. They stressed changing property ownership (from private to national) and changing distribution systems (from markets to central planning). That left largely unchanged the internal structure of enterprises in which masses of workers produced surpluses for small numbers of other people (state officials rather than boards of directors elected by major shareholders). Democracy inside enterprises means that the workers become their own collective board of directors; the surpluses or profits generated in each enterprise are received and distributed by the workers. Worker-directors replace capitalists. Worker-directors will not distribute surpluses in absurdly high incomes for a few top executives and share-holders while everyone else has difficulty making a simple living. Worker-directors will not use toxic technologies endangering their children to enhance their enterprise’s bottom line. Because worker directors will pay all taxes – partly as individual income earners and partly as enterprise directors – the state and its policies will finally become genuinely dependent upon and accountable to the mass of people. The merely formal democracy of capitalism will be replaced by a real democracy located both inside enterprises and in residential communities.
The western left has placed its hopes on the collapse or overthrow of capitalism at least since the end of the second world war. Yet, in spite of all its problems and the damage it causes, capitalism is still around and it’s hard to see a real challenge to it coming from anywhere. The battle, in fact, seems today to be over contesting types of capitalism, e.g., neoliberalism vs. Keynesian intervention. How do you respond to this dilemma?
Permit me to challenge your last question. The western left mostly abandoned its commitment to overthrow capitalism and became instead critics of some kinds of capitalism and advocates of other kinds as if surpassing capitalism was no longer feasible or only a distant utopian dream. Thus socialism became Keynesian economics, welfare state social spending, peaceful foreign policies, anti-racism, pro-immigration, gender equality, and environmental sensitivity: it precisely left out economic system change beyond capitalism. Capitalism’s supporters, especially triumphant after the collapse of “actually existing socialism” in the USSR and eastern Europe, persuaded most socialists to exclude transition from capitalism to a radically different economic system as no longer “practical” or “realistic”.
Ironically, today’s deep and lasting crisis exposes anew capitalism’s flaws and weaknesses and its dominance of politics to keep governments’ crisis-responses favoring capitalists. The crisis leads growing numbers of people to recognize the need for basic system change as the only serious solution. In the US, for example, mass criticism of capitalism per se and mass interest in considering alternative economic systems is far greater than at any time since the end of World War 2.
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