‘Cure for capitalism’

Published August 12, 2013
Some look for social movements as ‘Occupy Wall Street’ to gain momentum if things are to be put right. They recognise the need for some social force to persuade the elite to alter course. - File Photo
Some look for social movements as ‘Occupy Wall Street’ to gain momentum if things are to be put right. They recognise the need for some social force to persuade the elite to alter course. - File Photo

With the unending international financial crisis, many eminent economists and social scientists have been offering ‘prescriptions’ for what may be generally termed as a ‘cure for capitalism’.

And with ever widening urge for social transformation, as demonstrated by the great debate worldwide, liberal and left-leaning thinkers have focused on the need for a paradigm shift in political and economic policies, that would bring about the ‘needed’ evolutionary changes in the status quo.

Most of them recall how regulations have helped prevent cyclic/systemic crises in the past and advocate reforming ‘the market that lacks voluntary discipline, while at the same time conceding that the ‘revolving doors’ connecting the state and the market have made both economics and politics dysfunctional.

Some look for social movements as ‘Occupy Wall Street’ to gain momentum if things are to be put right. They recognise the need for some social force to persuade the elite to alter course.

They are critical of what they call ‘savage’ austerity, and want fiscal stimulus for economic recovery, not the type that the US Fed is doing for the benefit of the capital market, but one that would revive all round economic activity, and that produces jobs. In all these suggestions and proposals, there is an underlying belief that the role of the state can be enlarged to tackle the unending crises.

In an era when the states have been dwarfed by giant multinationals and national champions, when the size and the incomes of many companies are larger than those of smaller states, it would be next to impossible to empower the state without a social force (spontaneous movements would not do) that is not visible anywhere. Given the time span of the recent crises, it would appear that revolutions, that bring about social transformation, have ceased to happen, although culture change that precedes them is sweeping across the globe. It is the markets that call and will continue to call the shots at least in the foreseeable future.

But Richard D. Wolff, Professor of Economic Emeritus, University of Massachusetts has a different view. He does not look to the state to deliver though he would like governments to help strengthen democracy at workplace.

In his book ‘Democracy at Work---A cure for Capitalism’ the author states forcefully ‘ Just as these conditions force millions to need and want more from the local, state and federal governments, officials continue to announce ever more cutbacks in public services.’

First, he looks at the fundamental issue facing developed world ‘Cascading economic problems and crises, coupled with dysfunctional political responses, have plunged modern societies into deepening turmoil. Wages and workers benefits are trending downward, while profits are simultaneously increasing.’

The author offers an altogether different, radical solution, for replacing the current organizational mode of production inside offices, factories, stores and other workplaces.

Instead of a small board of directors selected by a tiny number of major shareholders, he suggests that the ‘surplus-producing’ workers should themselves be allowed to make the basic decisions about production of goods and services and distribution of surpluses produced by them. They would thus become, collectively and democratically, their own board of directors.

But the new mode of organisation would not necessarily involve any particular type of ownership — it could be a state, private and workers owned enterprise — that could co-exist with the workers self-directed enterprises (WSDEs). Similar ideas of worker ownership and management earlier were thrown up by British philosopher Betrend Russell. While Marxists strived in the Soviet Union and the Peoples Republic of China without success to eliminate ‘ profits’ which they termed as uncompensated surplus produced by workers, Wolfe wants workers in self-directed enterprises to produce surpluses to service a wide range of listed obligations. He thinks ‘ socialism’ in the Soviet Union and China was in fact was ‘state-capitalism.’

In complex, complicated and fast changing socio-economic conditions, there is a major shift worldwide from owner-run enterprises to professional management, particularly in global enterprises. In case of banks and financial institutions, sharing holding has been widely dispersed, but professional management has been responsible for the current global financial crisis. Random efforts to transfer share-holding and management to workers has not worked.

Worldwide, particularly big companies and banks have been pursuing a flexible labour policy, to become thin, lean and agile, replacing unskilled and low skilled workers with highly skilled personnel. The wage-labour system is being replaced by contract labour or outsourcing. More and more firms are hiring talents for piece jobs rather than offering full time employment. Professionals are trying to build their life –time careers through different jobs. It is not clear whether workers self-directed enterprises would work in a fast changing environment.

However the author is right that there is a need for direct democracy at the workplace but not by making every worker a member of company ‘board of directors’. Perhaps, employees could be empowered to get their collective decisions carried out by their ‘representatives’ on the boards for raising output and sales, revenues, building cash reserves for new investment and distribution of income. However, it seems unlikely that workers self-directed enterprises can be organised in the current situation when IT technology and global competition is unsettling the corporate world.

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