Schweickart Forward to the Slovak Edition of After Capitalism

Forward to the Slovak Edition of After Capitalism (2010) This book was not written with Slovakia in mind. It was written in response to the unexpectedly large protests against neoliberal globalization that came to public attention in November, 1999, when demonstrators from all over the world, representing a wide variety of political, economic and ethical concerns, brought to a halt the Seattle meetings of the World Trade Organization. The critique of neoliberalism driving this activist upsurge seemed to me to be both important and accurate--but also incomplete. For it had not gone deeply enough. It had focused on the immorality and irrationality of a certain form of capitalism, the form identified with the "Washington Consensus," but not on capitalism itself. Nor had it addressed in any systematic fashion the question of alternatives. Since this question has long been at the center of my own research, I felt obliged to offer a contribution to what I call in this book, "the counterproject," the global movement, as yet far from unified, to create a world that is qualitatively freer, happier, and more just than the world we inhabit today. At the heart of this book is an economic model, a model for an economically viable, ethically desirable form of socialism. The model elaborated here is result of more than three decades of research, research motivated by three fundamental facts: First of all, the fact that Marx, while providing us (humanity) with a powerful and compelling critique of capitalism, did not provide us with an explicit model for a viable alternative to capitalism. He offered no "recipes for cookshops of the future"--to cite his disdainful phrase. 1 Secondly, the fact that the Soviet model of central planning, which was identified in the twentieth century as the paradigm of Marxian socialism, is fundamentally flawed as an economic 2 model. It cannot be salvaged simply by "democratizing" it, as many Western leftists once believed (and a few still do). This was clear to me, even thirty years ago. Thirdly, the fact that the strongest rebuttal to the Marxist critique of capitalism is the question, "What is your alternative?" To a generation of Western activists coming to political consciousness in the 1960s, the Marxian critique was compelling. But what if it were true that there is no better alternative? How does one respond to the claim that there isn't any, that any attempt to go beyond capitalism will only lead to something worse? Given these facts, it seemed imperative to develop a fairly concrete model of a socialist alternative to capitalism that could be shown to be at least as efficient as capitalism, less prone to capitalism's irrationalities, and vastly preferable on normative grounds. The county in mind, as I developed various iterations of what I have come to call "Economic Democracy," has been my own country, the United States--although the model was always meant to have more general applicability. This book will detail some of major problems of contemporary capitalism: savage inequality, degrading unemployment, increasing insecurity, poverty in the midst of plenty, the hollowing out of democracy, and ecological devastation. One problem, however, is barely touched upon: the instability of capitalism. Other problems are examined in detail, but not deep irrationality manifested in the crisis that hit the global economy in 2008--the sharp contraction in economies everywhere that had nothing whatsoever to do with material causes—floods, drought, warfare, etc., due instead (somehow) to those mysterious “financial markets.” Instability didn’t seem to be a pressing issue a decade ago. To be sure, there had been a meltdown of sorts in East Asia (and Russia) in the late 1990s, and the U.S. stock markets had 3 plunged when the dot.com bubble burst, but the real economy (in the United States) hadn’t been much affected by any of that. Prominent economists agreed. In 2003 Robert Lucas, professor at the University of Chicago and winner of the 1995 Nobel Memorial Prize in Economics, gave the presidential address at the annual meeting of the American Economics Association. After explaining that macroeconomics began as an intellectual response to the Great Depression, he declared that it was time for the field to move on: "the central problem of depression prevention," he declared, "has, for all practical purposes, been solved, and has, in fact, been solved for many decades." 2 (A notable exception was Paul Krugman--who himself later received a Nobel Prize— entitled his 1999 book, The Return of Depression Economics .3) Since the now-pressing issue of capitalist economic crises is not dealt with in the main body of this book, let me offer some thoughts on the crisis here. I will focus on the current economic crisis as it developed in the United States. Since it was the U.S. crisis that triggered the global crisis, it is important to understand the proximate and, more importantly, the deep causes of that crisis. Comparable analyses of the various crises engulfing European countries today would differ as to details, but all would involve, in varying degrees, the contradictions within capitalism that brought the U. S. economy to a point unthinkable a decade ago. I. The Deep Irrationality of Global Capitalism Let me start with a story a Chicago story, a story based in the city where I live. Last spring (2010) it was announced that the Chicago Public School System, which services some 435,000 students, will have its budget cut next year by $600 million. This will require, among 4 other things, increasing class sizes in the elementary schools to thirty five, and making major cuts in non-varsity sports, kindergartens, after-school programs, summer programs, library services, etc. Several weeks before this announcement, Alpha Magazine published its “Rich List,” the incomes of the top hedge fund managers for 2009. The top twenty-five averaged $1 billion each, the top earnings going to David Tepper of the Appaloosa Fund, who made a record $4 billion. On the list was Ken Griffin, the 42-year-old manager of Citadel, Chicago’s largest hedge fund. He made $900 million.4 It occurred to me that if Mr. Griffin’s income were taxed at 66 2/3% (significantly less than the post-war top-bracket rate of 90%), those revenues would cover the entire CPS budget shortfall. 435,000 young people (many of them from very poor households) would benefit, and he’d still have $300m left with which to play! I then asked myself: what would it take to bring Mr. Griffin’s income down to the salary of the highest paid government official in the United States, i.e. the president? That salary, what the citizens of the United States deem their most important elected official merits, is $400,000. Below is a reproduction of my back-of-the-envelope calculation: Ken Griffin’s Possible Tax Travails Income Tax Rate After Taxes $900m 90% $90m 99% $9m 5 99.9% $900,000 99.95% $450,000 That is to say, if the Internal Revenue Service were to take 99.95% of Mr. Griffin’s income, leaving him with only one-twentieth of one percent of his income , he would still have more left over than Barack Obama earns for his services as president—considerably more, in fact, since his $450.000 is after taxes, whereas the President would have to give back a 30% or so of this salary to the government. (Note: we would have to tax Mr. Tepper at 99.99%, leaving him with one one-hundredth of one percent of his income last year, to bring his after tax income down to Mr. Obama’s pre-tax salary.) Of course the staggering wealth of the few juxtaposed against the soul-destroying poverty of so many—globally, but also within rich countries—is but one of the deep irrationalities of the current order. Among the others: • We have more control over nature than ever in the history of our species, yet more ecological devastation. • Technology that could give everyone more leisure throws millions out of work and makes hundreds of millions insecure and overworked. • Vast numbers of people, billions, suffer the effects of economic crises that are purely structural, in no way related to such scarcity-creating material factors. Can any rational being who thinks about such things doubt that there is something deeply 6 wrong with our current economic arrangements? II. What is to be done? We need a new economic system. In this book I will propose an alternative to the current capitalist system that would be as efficient as capitalism but not suffer its deep irrationalities. We will call it Economic Democracy. This “new economic system” will be a form of socialism. But is it credible to speak of socialism today? Consider the words of Paul Krugman, in a book published last year: Who now can use the words of socialism with a straight face? As a member of the baby boomer generation, I can remember when the idea of revolution, of brave men pushing history forward, had a certain glamour. Now it is a sick joke. The truth is that the heart has gone out of the opposition to capitalism.5 Yet the iconoclastic Krugman strikes a different note, just a paragraph later: Capitalism is secure, not only because of its successes--which have been very real--but because no one has a plausible alternative. This situation will not last forever. Surely there will be other ideologies, other dreams, and they will emerge sooner rather than later if the current economic crisis persists and deepens.

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