End of capitalism?
22
COVID-19 has brought mighty capitalism to its knees in a David and Goliath way that its Stalinist and Islamist foes never even dreamt about. But worry not, the beast is still sturdy and will be back bellowing on its feet soon. Yet multiple threats have hit it hard since the 1990s after it proudly felled communism. Each has stemmed from its many serious flaws and hurt its long-term prospects.
Also read: How destructive have coronavirus and oil price war been for the world economy?
Post-9/11 terrorism emerged as a gross response to the spiritual void in capitalism and US hegemony. It caused a massive death toll but also imposed debt on the US as it led to trillions of dollars being diverted from productive areas to fight it. Terrorism has subsided but not the ire against the US, which may mutate into new terrorist forms. The 2008 recession came from capitalism’s move from its social democratic form to an uglier neoliberalism as communism receded. As states cut regulation, it ventured into riskier areas and crashed in 2008. But few reforms took place later and capitalism remains reckless.
In the quest for cheap labour, neoliberalism poured trillions into China. It also created a strong ideological rival to the US and an economically conjoined twin which it can only hurt by hurting itself. Neoliberalism spawned huge inequality which has hurt the US middle class and created billionaires whose wealth dwarfs that of billions of people. Capitalism-fuelled climate change is making large areas unlivable.
But even neoliberalism can’t satisfy elite greed now as it still follows rules, albeit ones that favour Western states and whites. However, large states like China and India and non-whites in the West can now compete under these rules. This has ignited bigoted populism. Neoliberalism exploits all workers and consumers in markets blind to their backgrounds. Bigoted populism undermines non-whites only via biases in markets and political and social spheres. At the other end, it upends neoliberalism often, as with Trump’s tariffs against China, creating conflicts across two right-wing tools. Both have also made global institutions irrelevant. Adding to these threats, Covid-19 is now taunting world powers about how susceptible they still are to natural risks despite huge scientific progress.
One sees a path to capitalism’s possible end decades later.
Put together these threats and one sees a path to capitalism’s possible end decades later. Recessions, political gridlock and inability to tax the rich in the US increase public debt and undermine infrastructure. They alienate middle classes from capitalism due to high inequality and the spiritual void. But China thrives geo-economically. During a recession, Trump orders huge tariffs and blocks Chinese money in the US, upending the global economy. China’s Xi sends warships towards Taiwan. Climate change gives a new deadly virus that paralyses the world. Terrorists use it to bio-attack India or Israel. Global institutions fail and tensions cause a nuclear war in the Middle East, South Asia and/or East Asia. What happens next can be seen in The Day After or Planet of the Apes on Netflix.
This view seemed impossible three months ago. Covid-19 has pushed its risk to levels where states usually take mitigation steps. But the steps needed now may shake the edifice of a civilisation built around capitalism. Populism and neoliberalism must go. Even social capitalism may only delay trouble. To its left then lies Bernie Sanders’ menu which some say goes beyond capitalism. But focused on national policies, it won’t be enough.
What then, if not capitalism? The gut response is communism. But that is dead though not all of Marxism. To start sketching non-communist options, one must unpack capitalism. The other Karl, sociologist Polanyi, taught us that capitalism is not defined by markets, which existed even before it. Capitalism is the state-contrived high domination after the 1800s of markets over other institutions. It is their intrusion in all spheres to force us to satisfy more of our needs via markets rather than other institutions to increase capitalist profits. What must end is not market but its high domination.
But markets will dominate society until greed dominates other motivations in humans. The base of any ideology is its values from which emerge specific institutions and policies. The core value for both communism and capitalism is materialism. Upon it, communism built the institutional edifice of state monopoly and capitalism that of market near-monopoly. Once materialism is nixed as the main aim, a democratic society built on a mix of equal market, state, non-profit, employee-owned and community institutions can emerge. Ideas which even progressives like Sanders still avoid, eg, steady-state economics and this writer’s wisdom economy, may be debated. Humans can do so gradually before Armageddon or precipitously The Day After.
The writer is a Fellow with UC Berkeley and heads INSPIRING Pakistan, a progressive policy unit.
Published in Dawn, May 5th, 2020
