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

The most challenging arena for action is the state; we need to think positively about its role in the transition to postcapitalism.

The starting point is: states are enormous economic entities. They employ about half a billion people globally, and on one measure make up an average 45 per cent of economic activity across all countries’ GDP (from 60 per cent in Denmark to 25 per cent in Mexico). Plus, through what they choose to procure, and by signalling their future behaviour, they can have a decisive influence on markets.

In the socialist project, the state saw itself as the new economic form. In postcapitalism, the state has to act more like the staff of Wikipedia: to nurture the new economic forms to the point where they take off and operate organically. As in the old vision of communism, the state has to ‘wither away’ – but here the economic withering has to be front and centre, not just the functions of law enforcement and defence.

There’s one change which anybody in charge of a state could implement immediately, and for free: switch off the neoliberal privatization machine. It’s a myth that the state is passive in neoliberalism; in reality the neoliberal system cannot exist without constant, active intervention by the state to promote marketization, privatization and the interests of finance. It typically deregulates finance, forces government to outsource services and allows public healthcare, education and transport to become shoddy, driving people to private services. A government that was serious about postcapitalism would give a clear signal: there will be no proactive extension of market forces. Simply for attempting this, the relatively conventional leftists of Syriza in Greece were overtly sabotaged. The ECB staged a run on the Greek banks and, as the price for stopping it, demanded more privatization, more outsourcing, more degradation of public services.

The next action the state could undertake is to reshape markets to favour sustainable, collaborative and socially just outcomes. If you set the feed-in tariff on solar panels high, people will install them on their roofs. But if you don’t specify they have to come from a factory with high social standards, the panels will get made in China, generating fewer wider social benefits beyond the energy switch. If you incentivize the creation of local energy

systems, so that excess power generated can be sold to nearby businesses, you create further positive externalities.

We need a new understanding of the state’s role in an economy that includes capitalist and postcapitalist structures. It should act as an enabler of new technologies and business models, but always with an eye on how they fit with the strategic aims and principles outlined earlier.

Peer-to-peer projects, collaborative business models and non-profit activities are typically small scale and fragile. A whole community of economists and activists has grown up around them, but the actual raw material is so meagre, compared to the market sector, that one of the first things you have to do is clear a space in the capitalist jungle for these new plants to grow.

In the postcapitalist project, the state must also coordinate and plan infrastructure: today this is done haphazardly and under heavy political pressure from the carbon lobby. In future, it could be done democratically and with radically different outcomes. From social housing in cities blighted by speculative development to cycle lanes or healthcare provision, even the most progressive infrastructure designs are moulded around the interests of the rich – and assume the market will last for ever. As a result, infrastructure planning remains one of the disciplines least transformed by networked thinking. This needs to change.

In addition, because of the global nature of the problems we face, the state has to ‘own’ the agenda for responses to the challenges of climate change, demographic ageing, energy security and migration. That is to say, whatever micro-level actions we take to alleviate these risks, only national governments and multilateral agreements can actually solve them.

The most pressing issue, if states are to help drive the transition to a new economic system, is debt. In today’s world, developed countries are paralysed by the size of their debts. These are, as we saw in chapter 9, projected to become stratospheric as a result of ageing populations. Over time, there is a danger that austerity plus stagnation will shrink the size of the economies from which the debts have to be repaid.

Therefore governments have to do something clear and progressive about debts. They could be written off unilaterally – and in countries like Greece, where they are unpayable, that might be required. But the outcome would be de-globalization, as countries and investors holding the worthless debt retaliated, cutting off market access or kicking the defaulting countries out of various currency and trading zones.

Some of the quantitative easing money could be used to buy and bury the debts – but even this so-called ‘monetization’ of debt, using the \$12 trillion created so far, would not reduce global sovereign debts enough compared to GDP as these stand at \$54 trillion and rising, and the global stock of all debts is approaching \$300 trillion.

It would be more sensible to combine controlled debt write-offs with a ten- to fifteen-year global policy of ‘financial repression’: that is, to stimulate inflation, hold interest rates lower than the inflation rate, remove people’s ability to move money into non-financial investments or offshore, and thus inflate away the debts, writing off the part that remained.

To be brutally clear, this would reduce the value of assets in pension funds, and thus the material wealth of the middle classes and the old; and by imposing capital controls you would be partially deglobalizing finance. But this is only a controlled way of doing what the market will do via chaos if, as S&P predicts, 60 per cent of all countries see their debt reduced to junk by 2050. In conditions of near-stagnation and long-term zero interest rates, the income generated by pension fund investments is in any case already minimal.

But the state is not even half of the story.

EXPAND COLLABORATIVE WORK

To promote the transition, we need a decisive turn to collaborative business models. To achieve this requires the removal of the uneven powerrelationships that have sabotaged them in the past.

The classic workers’ co-ops always failed because they had no access to capital and when crisis hit they couldn’t persuade their members to take lower wages or work fewer hours. Successful modern co-ops, such as

Mondragon in Spain, work because they have the support of local savings banks and because they’re complex structures – able to redeploy workers from one sector to another, or soften short-term underemployment through non-market perks for those laid off. Mondragon is no postcapitalist paradise, but it is the exception that illustrates the rule: if you look at a list of the top 300 co-ops in the world, many of them are simply mutual banks that resisted corporate ownership. In most respects, they play the game of financial exploitation – though with a social conscience.

In a network-based transition, collaborative business models are the most important thing we can foster. They, too, have to evolve, however. It is not enough for them to be just non-profit businesses; the postcapitalist form of the co-op would try to expand non-market, non-managed, non-money-based activity against the baseline of market activity it starts from. What we need are co-ops where the legal form is backed up by a real, collaborative form of production or consumption, with clear social outcomes.

Likewise we should not fetishize the non-profit aspect of things. There can be profitable peer-to-peer lenders, cab companies and holiday rental firms, for example, but they would have to operate under regulations that limited their ability to contribute to social injustice.

At the government level, there could be an Office of the Non-Market Economy, tasked to nurture all businesses where free stuff is produced, or where sharing and collaboration are essential, and maximizing the amount of economic activity that takes place beyond the price system. With relatively small incentives, this could create big synergies and restructure the economy.

For example, lots of people form startup businesses – of which about one in three fails – because the tax system incentivizes startups. Often, they create cheap-labour businesses – such as fast-food outlets, building contractors and franchise shops – because, again, the system is stacked in favour of a cheap-labour economy. If we reshape the tax system to reward the creation of non-profits and collaborative production, and reshape company regulations to make it hard to form low-wage businesses but very easy to form living-wage ones, we could achieve a big change for little outlay.

Large corporations could also be very useful for driving change, as much as anything else because of their sheer scale: McDonald’s, for example, is the thirty-eighth biggest economy in the world – bigger than that of Ecuador – and is also the biggest toy distributor in America. In addition, one in eight people in the USA has worked for McDonald’s. Imagine if, on induction day for new employees, McDonald’s had to give you a one-hour course in trade unionism. Imagine if Walmart, instead of advising people to claim in-work benefits to reduce the wage bill, advised them on how to increase their wages. Or imagine simply if McDonald’s stopped dispensing plastic toys.

What could induce corporations to do any of this? Answer: law and regulation. If we legally empowered the workforces of global corporations with strong employment rights, their owners would be forced to promote high-wage, high-growth, high-technology economic models, instead of the opposite. The low-wage, low-skill and low-quality corporations that have flourished since the 1990s exist only because the space for them was ruthlessly carved out by the state. All we need to do is throw that process into reverse gear.

It may sound radical to outlaw certain business models, but that’s what happened with slavery and with child labour. These restrictions, in the teeth of protest from the factory bosses and plantation owners, actually regularized capitalism and forced it to take off.

Our aim would be to regularize postcapitalism: to privilege the free wifi network in the mountain village over the rights of the telecoms monopoly. Out of such tiny changes, new systems can grow.

SUPPRESS OR SOCIALIZE MONOPOLIES

The creation of monopolies to resist prices falling towards zero is capitalism’s most important defence reflex against postcapitalism.

To promote the transition, this defence mechanism has to be suppressed. Where possible, monopolies would be outlawed and rules against price

fixing strictly enforced. For twenty-five years, the public sector has been forced to outsource and break itself into pieces; now would come the turn of monopolies such as Apple and Google. Where it’s dysfunctional to break up a monopoly – as for example with an aircraft manufacturer or a water company – the solution advocated by Rudolf Hilferding 100 years ago would suffice: public ownership.

When pursued in its original form – i.e. the public non-profit corporation – public ownership delivered a huge social benefit to capital by cheapening the input costs of labour. In the postcapitalist economy it would deliver this and more. The strategic aim – shining in big letters from a PowerPoint projector in every public sector boardroom – would be to cheapen the cost of basic necessities, so that the total socially necessary labour time can fall and more stuff gets produced for free.

If true public provision of water, energy, housing, transport, healthcare, telecoms infrastructure and education was introduced into a neoliberal economy, it would feel like a revolution. Privatizing these sectors over the past thirty years was the means by which the neoliberals pumped profitability back into the private sector: in countries stripped of productive industries, such service monopolies constitute the core of the private sector and, with the banks, the backbone of the stock market.

And providing these services at cost price, socially, would be a strategic act of redistribution, vastly more effective than raising real wages.

In summary: under a government that embraced postcapitalism, the state, the corporate sector and public corporations could be made to pursue radically different ends with relatively low-cost changes to regulation, underpinned by a radical programme to shrink debt.

It is not in this area, though, that true postcapitalist economic forms emerge. Just as the British state fostered the growth of industrial capitalism in the early nineteenth century by setting new rules, today a mixture of government and highly regulated corporations would create only the framework of the next economic system, not its substance.

LET MARKET FORCES DISAPPEAR

In a highly networked, consumer-oriented society, where people have an individual-centred model of economic need, markets are not the enemy. This is the major difference between a postcapitalism based on info-tech and one based on command planning. There is no reason to abolish markets by diktat, as long as you abolish the basic power imbalances that the term ‘free market’ disguises.

Once firms are forbidden to set monopoly prices, and a universal basic income is available (see below), the market is actually the transmitter of the ‘zero marginal cost’ effect, which manifests as falling labour time across society.

But in order to control the transition, we would need to send clear signals to the private sector, one of the most important of which is this: profit derives from entrepreneurship, not rent.

The act of innovating and creating – whether it be a new kind of jet engine or a hit dance music track – is rewarded, as now, by the firm’s ability to reap short-term gains, either from higher sales or lower costs. But patents and intellectual property would be designed to taper away quickly. This principle is already recognized in practice, despite the protestations of Hollywood lawyers and pharmaceutical giants. Drug patents expire after twenty years, often becoming undermined before then because of production in countries where the patent is not recognized, or because – as in the case of HIV – the patent holders agree to allow generic drug use in the face of pressing human need.

Simultaneously, the increased use of Creative Commons licences – where inventors and creators voluntarily waive some rights in advance – would be promoted. If, as suggested above, governments insisted that the results of state-funded research should be essentially free at the point of use – moving everything produced with public funding into the public sphere – the balance of intellectual property in the world would quickly tilt from private to common use. People who are driven only by material reward would go on creating and innovating – because the market would still reward entrepreneurship and genius. But, as befits a society where the rate of

innovation is becoming exponential, the reward period is going to be shorter.

The only sector where it is imperative to suppress market forces completely is wholesale energy. To meet climate change with urgent action, the state should take ownership and control of the energy distribution grid, plus all big carbon-based suppliers of energy. These corporations are already toast, as the majority of their reserves cannot be burned without destroying the planet. To incentivize capital investment in renewables, this technology would be subsidized and the companies providing it remain outside state ownership where possible.

This could be done while keeping the overall energy price to consumers high – in order to suppress demand and force them to change behaviour. But it’s equally important to reshape the way households consume energy. The aim would be to decentralize the consumer side of the energy market, so that technologies such as combined heat and power and local generation grids could take off.

At every stage, energy efficiency would be rewarded and inefficiency punished – from building design, insulation and heating to transportation networks. There is a wide range of proven techniques to choose from, but by decentralizing and allowing local communities to keep the efficiency gains they make, market forces in the retail energy market could be used to achieve a defined and measurable goal.

But beyond energy and the strategic public services, it is important that a large space be left for what Keynes called the ‘animal spirits’ of the innovator. Once information technology pervades the physical world, every innovation brings us closer to the world of zero necessary work.

SOCIALIZE THE FINANCE SYSTEM

The next big piece of social technology would be focused on the finance system. Financial complexity stands at the heart of modern economic life. This includes financial instruments like futures and options, and highly liquid twenty-four-hour global markets. It also includes the new relationship that we, as workers and consumers, have to financial capital. It is for this

reason that states are forced with each financial crisis to ratchet up the implicit bailout guarantee that stands behind banks, pension funds and insurers.

Morally, if the risks are socialized, then the rewards should be socialized too. But there is no need to abolish all financial complexity. Where complex financial markets lead to speculation and make the velocity of money needlessly high, they can be tamed. The following measures would be more effective if undertaken globally, but it’s more likely, given the scenario spelled out in chapter 1, that individual states will have to implement them, and with some urgency. They are:

1. Nationalize the central bank, setting it an explicit target for sustainable growth and an inflation target on the high side of the recent average. This would provide the tools to stimulate a socially just form of financial repression, aimed at a controlled write-down of the massive debt overhang. In a global economy made up of states, or currency blocs, this is going to cause antagonism but ultimately, as under Bretton Woods, if a systemic economy did it, other countries would have to follow suit.

In addition to its classic functions – monetary policy and financial stability – a central bank should have a sustainability target: all decisions would be modelled against their climatic, demographic and social impacts. Its bosses would, of course, have to be democratically elected and scrutinized.

The monetary policy of central banks – probably the most powerful policy tool in modern capitalism – would become overt, transparent and politically controlled. In the late stages of the transition the central bank and money would have a different role, which I will return to.

1. Restructure the banking system into a mixture of utilities earning capped profit rates; non-profit local and regional banks; credit unions and peer-to-peer lenders; and a comprehensive state-owned provider of financial services. The state would stand explicitly as lender of last resort to these banks.

1. Leave a well-regulated space for complex financial activities. The aim would be to ensure the global finance system could, in the short to medium term, return to its historic role: efficiently allocating capital between firms, sectors, savers and lenders, etc. The regulations could be a lot simpler than the Basel III Treaty, because they would be backed up by strict criminal enforcement and professional codes in banking, accountancy and law. The guiding principles would be to reward innovation and to penalize and discourage rent-seeking behaviour. For example, it would become a breach of professional ethics for a chartered accountant or qualified lawyer to propose a tax avoidance scheme, or for a hedge fund to store uranium in a warehouse to drive its spot price higher.

In countries such as the UK, Singapore, Switzerland and the USA with globally oriented finance sectors, governments could offer a deal whereby, in return for coming clearly and transparently onshore, some limited lender of last resort facilities were made available to the remaining high-risk, profit-oriented finance firms. Those which did not come onshore and become transparent would be treated as the financial equivalent of Al-Qaeda. After a suitable amnesty offer, they would be tracked down and suppressed.

These short-term, strategic measures could dismantle the ticking timebomb of global finance, but they do not yet constitute a design for a true postcapitalist finance system.

A postcapitalist project would not seek – as the money fundamentalists do – the end to fractional reserve banking. In the first place, if it was attempted as a short-term remedy to financialization, it would cause demand to slump. Also, we need credit creation and an expanded money supply to wear down the debt pile that is strangling growth.

The most immediate objective is to save globalization by killing neoliberalism. A socialized banking system and a central bank attuned to sustainability could do this using fiat money – which, as we discussed in chapter 1, works as long as people believe in the credibility of the state.

However, over the long transition to postcapitalism, an elaborate finance system is going to run into a brick wall. Credit creation works only if it makes the market sector grow – so the borrower can repay the loan with interest. If the non-market sector begins to grow faster than the market sector, the inner logic of banking would break down. At this point, if we want to maintain a complex economy, where the finance system acts as a realtime clearing house for a multitude of needs, then the state (via the central bank) would have to take on the task of creating money and providing credit, as advocated by supporters of so-called ‘positive money’.⁸

But the aim here is not to achieve some kind of mythical, steady state capitalism. The aim is to promote the transition to an economy where many things are free, and where returns on investment come in a mixture of money and non-monetary forms.

By the end of the process, decades in the future, money and credit would have a much smaller role in the economy, but the accounting, clearing and resource mobilization functions currently provided by banks and financial markets would have to exist in a different institutional form. This is one of the biggest challenges for postcapitalism.