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Alternatives to Capitalism

by Conrad Schuler Saturday, Mar. 06, 2010 at 2:02 PM

Neoliberalism, financial market-driven capitalism, intensifies the crises. However the root of evil lies in the developmental laws of capitalism. Neoliberalism is based on double standards and double speak where CEOs are job creators and workers are cost factors.


Lessons from the Past Experiments of Economic Democracy

By Conrad Schuler

[This essay published in: Chapter V of the isw report 79 (January 2010) is translated from the German on the Internet. Conrad Schuler is an economist with the Institute for Social-Ecological Economic Research in Munich.]

In the isw report 79 (January 2010) we analyzed what course capitalism takes and must take on account of its inner law, what alternative exists today, how past attempts to overcome capitalism should be judged and what lessons are suggested by these attempts.

The conclusions are:

1) Neoliberalism, “financial market-driven capitalism,” intensifies the crises. However the root of evil lies in the developmental laws of capitalism. The crises arise out of the general functional logic of capitalism – the crisis of the real economy, the financial sector, social insecurity, poverty, hunger, the environment, democracy, increasing wars and threat of war. To overcome them, a moderating mode of regulation of the capitalist economy is not enough. Intervention in the functioning mechanism of the capitalist economy is necessary. The logic and power of capital must be halted by democratizing decisions in the economy.

2) Capitalism has no strategy for solving its contradictions and cannot have one. The “Public New Deal” and the “Green New Deal” do not change the growth pressure, the pressure of growing exploitation of resources and people. Today capitalism has lost the active approval of large parts of the population. Passive acceptance of its regime is not guaranteed for the growing number of “losers.” The way out that capitalism holds ready is authoritarian inwards and militarily aggressive outwards.

3) On the other hand, the human alternative is: cooperation in society instead of competition, solidarity among the nations instead of murderous “global competition.” Three possible strands of criticism of capitalism and partisanship for a new society can be identified: people driven by capitalism into existential distress both in its interior and its “periphery,” people who for ethical reasons reject a society where success consists in triumphing over others or war against everyone standing in the way of maximum profit and people who affirm or accept capitalism but regard the ruthless exploitation of humans and nature as economically absurd.

4) The theoretical discussions and historical experiences with socialization of the means of production and introduction of elements of economic democracy lead to important discoveries for the further strategy of the struggle for democracy in the economy and society.

4.1) The early “model experiments” of cooperatives of anarchists and utopian communists confirmed the criticism of Marx that “socialism of the petty-bourgeoisie” involved only niche-projects condemned to fail that diverted from what was essential, namely the “negation of capitalism,” overcoming capitalist power relations in the general economy. Cooperatives in competition on the capitalist market are subject to the same laws as their capitalist rivals. The “social standards,” the parameters guiding the aggregate economy, must be changed.

4.2) This struggle, the “negation of capitalism,” must be waged under the condition of the hegemony of capitalism. Drawing an abstract ideal for a model makes no sense. In the words of Marx, “communism for us is not a state that can be produced or an ideal according to which reality has to be directed. Communism is the real movement that abolishes the present state. The conditions result from the presuppositions that now exist.

4.3) How the struggle ends is completely open. The “natural law” of the proletariat abolishing capitalism established by Marx is not in effect. The proletariat or working class is not the only reliable power in the conflict with capitalism. Capitalism can be stopped in its march into catastrophe. Still a key role comes to the working class. The anti-capitalist forces become stronger for “objective” reasons.

4.4) One of the early Marxist ideas was that state authority had to be first conquered and the economy and society democratized with its directives. In his studies on the Paris Commune, Marx relativized this idea. The state itself must be completely changed. The governmental power of command must pass into a solidarity social constitution on all planes and in all sectors. The “real movement that abolishes the present state” consists in advancing democracy on the most different social planes. “Revolution” means the public and social groups taking over decisions in the economy and society.

4.5) As the experiences and problems of the council-republic showed after the First World War in Germany, an economistic narrowing of the factories as the “political nerve center” of society must be democratized and all parts of the population – whether employed in big businesses or not – must cooperate equally.

4.6) As a rule, reforms in capitalism including the increase of democracy in the economy have a double character. On one side, they stabilize the dominance of capital that is given a “rest” with the reform. But secondly and crucially, the position of those emphasizing structural change is strengthened. According to Kautsky’s saying, every reform is right that builds the position of anti-capitalist forces.

4.7) The Scandinavian model offers two lessons. First, it demonstrates that the capitalist accumulation model can actually be joined with a mode of regulation that is far more social than the neoliberal model. In Sweden, social benefits are higher, education is independent of social origin and the capitalist economy develops at least as well as in strict neoliberal countries. Sweden provides the empirical proof that it is not enough to practice “functioning socialism,” the social regulation of damages caused by the capitalist economy. In the last years and above all in the crisis, the protective social fences of the social state were largely dismantled. To prevent this, workers and the society must intervene in the use of the means of production. Thus property must be socialized.

4.8) Concrete socialism did not run aground in the principles of socialization of the means of production and overall social planning but in a crucial deficiency, the lack of democracy. This failure has much to do with a “birth defect,” that the new social order was introduced by avant-garde parties, guerillas or foreign troops, not by democratic mass movements. In additional considerable “endogenous” errors (and crimes) of parties exercising power occurred. As a result, implementing democracy is crucial, not installing elements of the market and competition in socialism. People themselves have to decide what they need and how they will produce and distribute this. There must be social-political guiding principles, not principles of supply and purchasing power demand and profit-planning in the enterprises.

5) The central idea is an ideal to be attained in the economy and society. How we get there must depend on the possibilities in today’s reality for reaching this ideal. If the ideal is composed of the categories “solidarity/cooperation/democracy,” two conclusions are inescapable:

1) All structures that repress the principle of “negation of capitalism” must be combated.

2) All elements and structures pointing in the “ideal” direction should be supported and developed.


VIDEO: Dean Baker's "False Profits" on GritTV:

"The Quiet Coup" by Simon Johnson:

VIDEO: Joseph Stiglitz' "Freefall" on BookTV:

link to

"Ways Out of the Crisis" by Jean-Paul Fitoussi and Joseph Stiglitz:

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