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# PostCapitalism-_Paul-Mason_-_z-library.sk_-1lib.sk_-z-lib.sk_

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Part III

An all-round increase in wealth threatened the destruction – indeed in some sense was the destruction – of a hierarchical society.

Emmanuel Goldstein, in George Orwell, Nineteen Eighty-Four<sup>1</sup>

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On Transitions

It can be a shock to find out capitalism has not always existed. Economists present ‘the market’ as the natural state of humanity. TV documentaries recreate in fantastic detail the Egyptian pyramids or Beijing under the emperors, but gloss over the totally different economic systems that built them. ‘They were just like us,’ dads confidently tell their kids as they wander around the Herculaneum exhibition in the British Museum – until confronted by the statue of Pan raping a goat, or the wall painting of a couple having a threesome with their slave.

When you realize that capitalism, once, did not exist – either as an economy or a value system – a more shocking thought arises: it might not last for ever. If so, we have to get our heads around the concept of transitions, asking: what constitutes an economic system and how does one give way to another?

In the preceding chapters I’ve shown how the rise of information technology disrupted the basic institutions of capitalism: price, ownership and wages. I’ve argued that neoliberalism was a false dawn; that the post-2008 crisis is the product of flaws within the economic model which prevent the exploitation of new technologies, and the takeoff of a fifth long wave.

All this makes postcapitalism possible, but we have no model for the transition. Stalinism left us with a blueprint for disaster; the Occupy movement came up with some piecemeal good ideas; the so-called P2P (peer-to-peer) movement has evolved collaborative models on a small scale; while environmentalists have developed pathways for the transition to a

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zero-carbon economy, but tend to see these as separate from the survival of capitalism.

So when it comes to planning the transition from one kind of economy to another, all we have is the experience of two very different events: the rise of capitalism and the collapse of the Soviet Union. In this chapter I will focus on what we can learn from them, and in the final part of the book I will try to apply these lessons to the design of a ‘project plan’ for moving the economy beyond capitalism.

Twenty-five years of neoliberalism have forced our thinking about change to become small. But if we are bold enough to imagine we can rescue the planet, we should also imagine rescuing ourselves from an economic system that doesn’t work. In fact, the imagination stage is critical.

A BOLSHEVIK ON MARS

In Alexander Bogdanov’s vintage sci-fi novel, Red Star (1909), the hero – an organizer in the Russian Bolshevik party – gets taken to Mars on a spaceship. He finds the Martian factories modern and impressive but the most stunning thing is what he sees in the control room: a realtime display provides an hourly snapshot of labour shortages in every factory on the planet, together with a summary of sectors where there is a labour surplus. The aim is for workers to move voluntarily to where they are needed. Since there is no shortage of goods, demand is not measured. There is no money either: ‘Everyone takes whatever he needs, in whatever quantities he wants,’ explains the Martian guide. The workers, controlling but never touching giant pieces of machinery, also fascinate our earthling: ‘They seem to be inquisitive, learned observers who had no real part in what was going on around them … To an outsider the threads connecting the delicate brains of the men with the indestructible organs of the machines were subtle and invisible.’<sup>1</sup>

In Red Star, Bogdanov not only imagined how a postcapitalist economy could work, he imagined what kind of person would be needed to make it possible – information workers, their brains connected by something ‘subtle and invisible’. But by portraying the communist future, he was defying the conventions of his time: all wings of socialism were opposed to discussing castles in the air. But this was no mere whimsy.

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Bogdanov, a medical doctor, was one of the twenty-two founder members of Bolshevism. He had been imprisoned, exiled, led the party in the Petrograd soviet, edited its newspaper, managed its funds and organized the raising of them – through bank robberies. It is Bogdanov we see playing chess with Lenin in the famous photograph at the party’s training school on Capri in 1908.<sup>2</sup> But within a year of that photo, Bogdanov would be expelled from Lenin’s party. He had formed an opposition to Lenin, based on disagreements that prefigured the tragedy that was about to unfold.

The 1905 revolution, said Bogdanov, showed that workers were not ready to run society. Because he thought postcapitalist society would have to be a knowledge society, any attempt to create it through blind revolutionary action could only bring to power a technocratic elite, he warned. To prevent this, Bogdanov said, ‘a new proletarian culture must be disseminated among the masses, a proletarian science developed, a proletarian philosophy worked out’.<sup>3</sup>

All this was anathema to Lenin. Marxism had become a doctrine of imminent breakdown and revolution, where the workers would make the revolution happen despite the ideas and prejudices in their heads. Bogdanov also had the temerity to suggest that Marxism should adapt to new ways of thinking in science. He predicted that mental labour would replace manual labour; that all labour would become technological. Once this happened, our understanding of the world would have to go beyond the dialectial methods of thinking Marx had inherited from philosophy. Science would replace philosophy, Bogdanov predicted; and we would come to see reality as connected ‘networks of experience’. Separate sciences would become part of a ‘universal organisational science’ – the study of systems.

For becoming, effectively, the first systems theorist, and for his prescient warning about what might happen in Russia, Bogdanov was expelled – at a fractious meeting in Lenin’s Paris apartment in 1909. Within months, his novel Red Star was published, and widely circulated among Russian

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workers. In the light of what actually happened under Stalinism, its treatment of the postcapitalist economy is far-sighted.

In the novel, Martian communism is based on abundance: there is more than enough of everything. Production takes place on the basis of realtime and transparent computation of demand. Consumption is free. It works because there is a mass psychology of cooperation among workers, based on their high education and the fact that their work is primarily mental. They shape-shift between male and female genders, remain calm and selfless in the face of stress and danger, and live an enriched emotional and cultural life.

Bogdanov’s outline of the back-story is also provocative: Mars was industrialized under capitalism; a struggle for control of industry began, followed by a revolution – largely peaceful because it was conducted by workers rather than peasants. There had then been a 100-year-long transition period during which the need for work was progressively eroded, by shortening the compulsory working day from six hours to zero.

To anybody with a knowledge of orthodox Marxism, it is easy to read between the lines of Red Star. Bogdanov was using the novel to outline a complete alternative to the ideas that would dominate the far left in the twentieth century. He advocates technological maturity as the precondition for revolution, the peaceful overthrow of the capitalists by means of compromise and compensation, a focus on technology as a means to reduce labour to a minimum and a relentless insistence that it is humanity itself that has to be transformed, not just the economy. Furthermore, a major theme of Red Star is that postcapitalist society has to be sustainable for the planet. The Martians voluntarily commit suicide if they perceive there are too many of them for their planet to support. And as their natural resources fail, they begin an agonized debate about whether to colonize Earth.

If you are thinking: ‘What might Russia have become if Lenin had fallen under a tram on his way to the meeting where they expelled Bogdanov?’, you are not the first to do so. There is a whole literature of ‘what if?’ focused on Bogdanov – and rightly so. Though he could not imagine a

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computer, he had imagined the kind of communism that society based on mental labour, sustainability and networked thought might produce.

After 1909, Bogdanov retired from activism and spent ten years writing a pioneering book on systems theory. In the early years of the Soviet Union he formed a mass workers’ cultural organization – the Proletkult – which was shut down after it became allied with an opposition group advocating workers’ control.<sup>4</sup> He returned to medicine and died in 1928 after subjecting himself to an experimental blood transfusion. 5

When they began to construct socialism by diktat in the 1930s, Soviet planners were fond of citing Red Star as their inspiration.<sup>6</sup> But by then the facts and the utopia had diverged.

THE RUSSIAN NIGHTMARE

The Russian Revolution went wrong in stages. Under conditions of civil war, from 1918 to 1921, banks and major industries were nationalized, production was directed by commissars (with trade unions subject to military discipline), factory committees were banned and crops simply requisitioned from the peasants. As a result, output declined to 20 per cent of its pre-war level, famine spread through the countryside and the rouble collapsed; some companies resorted to barter and wages had to be paid in kind.

In March 1921, the USSR was forced to switch to a form of market socialism known as the ‘New Economic Policy’. Letting the peasants keep and sell their crops revived the economy, but created two dangers that the beleaguered revolutionaries in Russia had trouble understanding. First, it channelled money towards the better-off peasants, known in slang as ‘kulaks’, and gave the agricultural sector a de facto economic veto over the speed of industrial development – summarized in the slogan ‘Socialism at a snail’s pace’. Second, it solidified a privileged bureaucracy running factories, distribution organizations, the army, the secret police and government offices.

Against the rich peasants and the bureaucrats, the Russian working class pressed for more democracy, for rapid industrialization through central

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planning and for a crackdown on speculators. Soon this three-way struggle in society was reflected within the Communist Party itself.

A factional dispute broke out, between a left opposition led by Trotsky, arguing for more democracy and more planning; a pro-market wing led by Bukharin, who wanted to delay industrialization, telling the peasants ‘enrich yourselves’; and in the centre Stalin himself, defending the interests of the bureaucracy.

In November 1927, at a parade celebrating the anniversary of the revolution, around 20,000 supporters of the left-wing faction carried banners calling for the party to suppress the kulaks, speculators and bureaucrats. When several Moscow factories marched out to join them, the police attacked and street fighting followed.

Stalin expelled Trotsky and the leaders of the left and sent them into forced exile. Then, in one of those U-turns that Orwell would later parody in Nineteen Eighty-Four, Stalin implemented the left’s programme – but in a much more extreme form, with maximum violence and brutality. In 1928 it was Bukharin’s turn to be purged, together with the market-oriented right of the party. The kulaks, were ‘liquidated’ in a programme of forced collectivization of their farms. Estimates vary, but a combination of famine and mass shootings in the countryside killed about 8 million people over three years.<sup>7</sup>

The scale of Stalin’s ambition in the first Five Year Plan (1928–32) was captured in his statement: ‘We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they crush us.’<sup>8</sup>

The official figures show a massive growth in output during the first Five Year Plan: the doubling of coal, steel and oil production; colossal infrastructure projects completed ahead of time. But, unlike in the sci-fi world of Red Star, planners faced two absolute impediments. The economy was still dominated by agriculture, and the technical base of the industrial sector was weak and had been undermined by ten years of chaos. Far from planning in a situation of abundance, Stalin imposed planning on a society with high levels of scarcity and a semi-feudal farming system. To make any kind of progress, he needed a brutal process of reallocation: from the countryside to industry, and from consumption to the sectors producing heavy machinery. The industrial targets were met, but at the cost of mass starvation, mass executions, slave labour conditions in many workplaces and, in the end, a further economic crisis.<sup>9</sup>

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The USSR did not catch up with the West in ten years. But by 1977 its GDP per head was 57 per cent of the USA’s – which put it on a par with Italy. From 1928 until the early 1980s, the average growth in the USSR, according to a CIA-commissioned survey, was 4.2 per cent. ‘This clearly qualifies as a sustained growth record,’ concluded analysts at the RAND Corporation.<sup>10</sup>

But Soviet growth was never driven by productivity. The RAND study found only a quarter of the USSR’s growth was driven by better technology, with the rest by rising inputs – of machinery, raw materials and energy. After 1970, there was no growth at all in productivity: if you needed double the number of nails produced, you built a new nail factory alongside the old one – productivity was off the agenda.

Economists call this ‘extensive growth’ – as opposed to the intensive growth that raises real wealth. In the medium term, a system based on extensive growth cannot survive. It is likely that, with flatlining productivity, the Soviet system would have collapsed at some point from its internal problems, even if it had not been confronted with pressure from the West in the 1980s.

One lesson – spelled out in advance by anarchists, agrarian socialists such as Kondratieff and dissident Marxists like Bogdanov – was: ‘do not take power in a backward country’. A second lesson is: understand that planning is guesswork. As the economist Holland Hunter showed by datamining the Soviet numbers, the targets of the first Five Year Plan were never achievable without a 24 per cent slump in consumption.<sup>11</sup> Soviet planners were flying blind: guessing at a target, erring on the upside to maintain pressure on their subordinates to deliver, and – when they failed – wasting huge amounts of effort trying to remedy the situation or cover it up. They refused to recognize that even transitional economies have objective laws: dynamics that work behind the backs of the economic players and confound their willpower. ‘It is impossible to study the Soviet economy taking causality as one’s axis,’ announced the party’s economics textbook in the mid-1920s.<sup>12</sup> In the fantasy world of Stalinism, even cause and effect were irrelevant.

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Because Soviet growth outstripped that of the West for a time, Keynesian economics remained in awe of the planned economy. It was the prophets of neoliberalism – Mises and Hayek – who had from the very beginning predicted its chaotic demise. If we want to design a project of transition towards postcapitalism today, we have to take the criticisms of Hayek and Mises seriously. They were, at their sharpest, not just critics of Soviet reality; they insisted that – even in a developed country – all forms of planning must fail.

THE CALCULATION DEBATE

It’s strange but true: the possibility of socialism was once a central tenet of mainstream economics. Because the marginalists thought the market was the perfect expression of human rationality, they had no problem – as long as it was only a thought experiment – with the idea that an all-knowing state could achieve the same results as a perfect market. ‘Both systems are not different in form and they lead to the same point,’ wrote the Italian economist Vilfredo Pareto in a celebrated textbook, ‘the result is extremely remarkable.’<sup>13</sup>

In 1908, his colleague Enrico Barone wrote a detailed account of how a socialist state could calculate the exact same outcomes that the market achieves blindly. Barone showed how it would be possible to discover, using linear equations, the most efficient forms of production, consumption and exchange. ‘It would be a tremendous – a gigantic – work … but it is not an impossibility,’ he wrote.<sup>14</sup>

This was an article of faith for marginalists: in theory, a perfect plan – made by a state with perfect knowledge and the ability to calculate in realtime – was as good as a perfect market.

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