above: 'people power' - time to build a democratic economy
In this new essay Shayn McCallum explores the possibilities for a genuine democratic mixed economy; one profoundly more radical that the social market approach. Debate welcome!
nb: Readers can join our Facebook group too!! at: http://www.facebook.com/groups/152326549326/
Current debates within the European
socialist movement on the way forward for the Centre-Left, often seem to be
centred on the unnecessarily narrow field of “state versus market”. Much of the debate revolves around questions
of the “correct ratio” of state-to-market in the provision of public goods and
services, with scant attention given to the political nature of either. Where an economic vision is articulated we
see labels such as “decent capitalism” or the highly traditional “social-market
economy” employed. Both of these terms
however, borrow heavily from a terminology, and therefore a mind-set, which is
not of the Left and which unnecessarily limits and restricts the thinking of
social-democratic strategists and activists.
The work of George Lakoff and Drew Westen[1]
into the neuro-linguistic dimension of politics reveals a great deal that is
useful in considering the current weakness of the Centre-Left and its apparent
loss of creativity and direction. In
accepting the essence of the liberal world-view and limiting its criticisms of
the liberal project to the details rather than the over-arching vision, social-democrats
have been reduced to becoming the “annoying flea” of politics, creating little
more than an irritation for the continuing (neo-) liberal agenda. It has proven relatively easy for
conservatives and liberals in Europe and elsewhere to dismiss social-democratic complaints about the
ruthlessness of capitalism as mere faint-heartedness or an unrealistic
inability to face up to “what must be done”.
What is worse, the social-democratic discourse reveals that they may
suspect that their neo-liberal opponents might be right after all; thus, the
unsure, excessively tentative, somewhat vacuous nature of much
social-democratic discourse.
By adopting terms such as “good capitalism”
to combat the “bad capitalism” of the neo-liberals, social-democrats are
exposing themselves to the obvious response, common to both far Left and
Centre-Right, that really “there is just capitalism” and adjectives such as
“good” and “bad” are irrelevant or misplaced.
For the hard-core economists of the Right, as much as the more
economistic voices on the hard Left, speaking of “good” and “bad” capitalism
makes as much sense as speaking of “good” or “bad” gravity or “good” or “bad”
oxygen. The term is weak, ineffective
and unambitious and fails to offer more than a limp moral critique of the
system as it is. In fact, the charming
vision of a virtuous, industrious society re-enshrined in the virtuous “real
economy” of manufacturing and productive industry is not only a fantasy, it is,
in many ways, a reactionary one at that.
When ecological collapse is looming right behind the collapse of the
unbalanced and excessive, increasingly-consumption driven, global economic
system, producing yet more “stuff” is probably not the optimum way forward from
where we are now. Short-sighted,
populist attempts to revive the industrial revolution in the wealthy nations
makes as much sense as trying to stop the Titanic from sinking by making the
orchestra play more slowly. The era of
unsustainable industrial growth, at least in the first-wave of industrialised
nations, belongs to the past not to the future and this is, perhaps, one thing
the “neo-social democrats” have got right.
The state we are in demands a much bolder
response than a nostalgic appeal to the good old days of industrial
growth. Terms such as “decent
capitalism” or even the “social-market economy” are flawed, in that they create
a conceptual framework that is inseparable from, and therefore unable to move
beyond the basic framework of the existing system. In contrast, by adopting
terms such as “economic democracy” or even “a democratic mixed economy”
socialists would have the means to open up this currently truncated and
inhibited conceptual framework and, potentially, take back control of the
dominant discourse. Where capitalism,
whether “good” or “bad”, is defined by certain structures and institutions that
cannot, even must not be transcended or interfered with for fear of undermining
the system itself (once the central goal of socialists not so very long ago) terms
such as a “democratic mixed economy” at least open the door to the possibility
of transcending the flawed logic of
capitalism and “the market economy” altogether.
Not only “capitalism”, which, it should be
pointed out, is a term originally coined by critics of the system and which has
only recently been embraced by its aficionados[2],
but also the term “market economy” (whether social or not) is a conceptual
prison. The Delors-era social-democratic
slogan of “we want a market economy, not a market society” is reminiscent of a
caricature of a man being devoured by a tiger and, whilst half-engulfed in the
tiger’s maw, pleads with the creature to eat only his lower half and no
more. A market economy, in the sense
implied by liberal theory, cannot but lead to a market society[3]. A “mixed” economy however, at least
conceptually, has the potential of being a society “with markets” without
necessarily being dominated by them.
Just to frame this concept so it can emerge
from the level of rhetoric to the level of a concrete example, economic history reveals a myriad of examples of economic systems which
employed markets without being dominated by them and without exchange and
commerce occupying the central place in economic life. Indeed, for much of human history, commerce
has existed as one among many forms of economic activity and it is only in the
modern age that it has acquired such a uniquely pervasive influence. Feudal economies, for example, were
essentially war-driven economies based on the control of land and commerce
remained a highly secondary pursuit.
Merchants were tolerated and or encouraged as a means to an end and it
wasn’t until the vast influx of wealth from the new world, from the 1500’s on,
began to undermine the feudal power structure and grant the rising merchant
class a significant degree of political influence that the road to modern
capitalism was opened[4]. Likewise, in the Islamic Middle-East, trade
was an important pursuit and markets held an important place in the life of the
cities yet, even here, the dominant economic engine was the demands of a
militarised state. There was no market
economy to be found in the Middle-East, although very sophisticated markets played
an important role in the urban economic order.
No matter how important markets may have been to pre-modern economies,
these were always merely one part, mostly a subordinate part, of the broader
economic and political context.
As Polanyi points out[5],
economic relations are always embedded in (and have been historically subject
to) broader social and political contexts.
Capitalism therefore, may be perceived as an attempt to dis-embed the
economy and grant it a central, autonomous and superior role in the construction
and maintenance of society. This is,
however (according to Polanyi at least, and history is yet to prove him wrong)
an unworkable fantasy. The idea of the
self-regulating market is just as mythical and untenable as the idea of a
fully-planned, efficient communist paradise.
In reality, all economies embody a variety of co-existing production and
distribution systems and most have varied property forms. Even the most “capitalistic” economies, such
as the U.S.
This definition of capitalism permits the,
otherwise absurd, position of advocating free markets against capitalism. This highly optimistic approach can be found
in the works of David Korten[7]
and the theory of mutualism associated with Pierre-Joseph Proudhon, together
with various theories of “market socialism”.
Indeed, there are a number of political approaches which separate the
market as a mechanism from the rule of capital.
Although this “socialist reading of Adam Smith” is perhaps naïve and
overly rooted in a near extinct class of smallholder artisans, farmers and
entrepreneurs, the idea of a separation of the market from the rule of capital,
although problematic, is not totally unreasonable as the existence of
socially-embedded market mechanisms long precede the emergence of the
capitalist political economy. As has
been mentioned above, the self-regulating market is an ideological fantasy and
does not approach the reality of capitalism which is increasingly exercised
through highly-organised, bureaucratic trans-national corporations that employ
markets as a tool. The problem of
“markets against capitalism” however, is that the competition inherent to a
market system inevitably creates winners and losers and leads to an
evolutionary dynamic that, in a very short period of time, undermines the basis
of the market itself (which is the essence of Polanyi’s critique of free-market
ideology). A market-centred economy,
regardless of its ideological foundations, appears inevitably to tend to
support the emergence of capitalism at some point (a process somewhat
demonstrated by real-world attempts to implement “market socialism”[8]).
Capitalism therefore, defined as the “rule
of capital”, is, in every sense, at odds with popular sovereignty. If social-democrats accept “decent
capitalism” as a goal, they are essentially pleading for capital to be decent
as they are not capable of advancing any meaningful counter-power, such as
powerful, well-organised trade-unions or citizens’ alliances to ensure
this. In fact, the “decent capitalism”
of the post-war Keynesian era, that forms the basis for this vision, was
“decent” precisely because capitalism was compromised and partly balanced by a
rising wave of democratisation. This
democratic revolution was, unfortunately, undermined by circumstances and
partially abandoned in the late 1970’s, at which point the neo-liberal
counter-revolution seized the initiative.
After WWII, capitalism was forced into an open-ended compromise with
democracy, from the 1980’s onwards it has been busy undoing the bonds imposed
by that era.
Just as it is impossible to serve two
masters, it is also impossible to simultaneously uphold the power of capital
and the sovereignty of the people. The
unsatisfactory compromise offered by liberalism is to separate the political
from the economic, leaving the economy to the abstraction known as the market
(in truth, organised corporate interests) whilst parliaments elected by the
people handle what remains of the political.
In short, according to the theory, the “market” will see to employment,
prices, wages and the distribution of essential and non-essential goods and
services, whilst “democracy” need content itself with rulings on issues such as
the permissibility of gay marriage, the criminalisation of flag-burning, gun
ownership, abortion or other details of the social, cultural and political
milieu. In such an environment, politics
becomes a matter of flavour and preference with cultural issues substituting
for questions of class power, redistribution or the provision of social goods
and services[9]. That social-democrats have allowed themselves
to be led down this path is a sad indictment of the robustness of socialist
thought and strategy in the current era.
As Thomas Meyer points out[10],
economic issues, issues of public welfare and economic justice give democracy
its substance. If the liberal
celebration of “negative freedom” (i.e. “freedom from” as opposed to “positive
freedom” being the “freedom to” act or access something[11])
leads to little more than the “freedom” to be unemployed, homeless, ignorant or
uninsured, there is good reason for adopting a more balanced and sober
attitude. There is no point speaking of
“freedom” unless people have the basis on which to enjoy that freedom and this
can only be assured politically, by means of an active, participatory democracy
that embraces all areas of public life.
Thomas Meyer roots his approach to
social-democracy in the U.N. Universal Declaration of Human Rights and there is
some merit in referring to this document.
The Declaration attempts not to align itself overtly with any particular
political or economic theory or ideology although it is quite explicit in its
advocacy of a political and social democracy entailing a raft of full social
and political rights. Indeed, the
resulting document proves, in its fundamentals, incompatible with either
capitalism or communism (as practised in the Soviet Bloc or China
It is worthwhile remembering that liberals such as Keynes, although by no means socialists, were also very much disenchanted with capitalism, although they grudgingly tolerated its continuation as the least-bad of the available alternatives. The aim of Keynesian demand-management was the general welfare and it saw capitalism as a tool, a means rather than an end. Keynes’ economics were, therefore open-ended and evolutionary and, arguably, contained the seeds equally of what could become either a democratic socialist or a social-liberal approach.
Although the benign capitalism of the
“social market economy” may have resembled, in practice, the social-democratic
ideal of a “democratic mixed economy” in truth the intentions were, and are,
different. The social market may be
“social” but the market is the indispensable, central mechanism of the economy,
albeit modified where necessary by the need for a degree of social justice
(again, to the degree that it does not “distort” the market mechanism). The “democratic mixed economy” however is an
open-ended evolutionary project which stresses democracy as its primary
feature. Its goal is not mere benevolent
capitalism but a terrain on which new, emancipatory forms of property and
production are able to evolve and emerge.
It does not seek to overthrow capitalism in a frontal assault, nor
necessarily to entirely eliminate market mechanisms from the economy, but
rather to tame them, then subordinate them to the general good where
possible. The difference, in brief, is
that the “social market” is conceptually rooted in the market and therefore
limited by the demands of the market whereas a “democratic mixed economy” is
conceptually rooted in, and limited by, the demands of democracy and social
justice. In the former, the limits of
the social are determined by the market whereas, in the latter, the limits of
the market are determined by the social.
Of course, in the real world, assuming the basis for a new compromise could be created, there would be a competition in politics between the visions of the “democratic economy” and the “social-market” which was, indeed, the ideological cleavage separating the Centre-Right and Centre-Left in the post-war Western European political economy. The democratic Left begins from the assumption that its own vision must be fought for amidst a plurality of competing visions and approaches. Any democratic political project must be open-ended and subject to both advances and reversals. It is a pity that the large sections of the Centre-Left abandoned its own vision before it had even achieved the bulk of its goals, although there is still a chance it will find its way back home.
At this point, it is perhaps appropriate to
remember the approach of Eduard Bernstein for whom the “movement (was)
everything, the end nothing”. The end,
for modern socialists, is perhaps not “nothing”, in that it helps to have a
landmark in the distance by which we can measure our progress, although, the
nature of social-evolution is such that there usually is no identifiable end
that can be discerned as one victory endlessly opens the path to new
struggles. The goal of the Centre-Left
therefore ought to be to ensure that the direction of evolution be towards
greater freedom, equality and solidarity.
Getting trapped in the historical cul-de-sacs of specific systems or
institutional frameworks, whether it be “state-socialism” or “decent
capitalism”, is the passport to extinction.
Socialists need to imitate life itself and embrace constant evolution,
but they must never forget the direction they wish to evolve in if they are to
avoid the fate of the dinosaurs and dodos of the past. In time, terms such as “democratic mixed
economy” are bound to pass their use-by date and develop into hidebound clichés
as reality continues to extend its limits and social-democrats, if they are
even continuing to call themselves by that name by then, will once again need
to adapt or die, but always, hopefully, on the path to ever more democracy,
ever more equality, liberty and fraternity.
[1] Lakoff and Westen’s work strongly parallel and even largely
duplicate each other. The most
comprehensive exposition of their approach can be found in:
Lakoff, George (2008): The
Political Mind: why you can’t understand 21st-century politics with
an 18th-century brain, Penguin, NY
Westen, Drew (2007): The Political
Brain: the role of emotion in understanding the fate of the nation Public
Affairs, NY
[2] Professor Fred Block points this out frequently in his work on
capitalism and social-democracy and particularly compellingly in a Miwon
lecture he delivered to Kyung-Hee University, Korea on September 26 2011,
entitled; The Origins of the Current
Crisis of Global Modernity
[3] Articulated most clearly by Karl Polanyi, especially in his magnum
opus The Great Transformation. See
Polanyi Karl (2001 (1944) The
Great Transformation, The Political and Economic Origins of Our Time, Boston
Beacon Press
[4] These ideas are explored widely in Polanyi’s writings on economic
history and can also be found in Eric Hobsbawm’s writing on the era as well as
in a number of other sources. There is a
wide range of literature dealing with the Islamic Middle-East however, among
the best is probably the 3-volume investigation on the political-economy of the
Ottoman Empire by Halil İnalcık and Donald Quataert., see
İnalcık H & Quataert D (1994) An
Economic and Social History of the Ottoman
Empire , CUP, Cambridge
[5] Polanyi Karl (1944) op.cit.
[6] This is also mentioned by Polanyi but also widely commented on by a
very wide range of other sources positioned on all points of the political
spectrum. It was even acknowledged by
former U.S.
[7] David Korten is a leading proponent of a non-capitalist market
economy. Most of his work embraces the
central contention that capitalism is actually not a market system and that a
“true” market economy is the solution.
In many respects, his work is reminiscent of classical Proudhonian mutualism.
[8] Examples of this may be cited as the collapse of Yugoslav market
socialism as well as the rather makeshift “goulash socialism” of communist Hungary China Vietnam Cuba
[9] For an enthusiastic embrace of this process, see Thomas Friedman’s The World is Flat
Friedman Thomas (2005) The World
Is Flat: a brief history of the twenty-first century FSG NY
[10] Meyer, Thomas
& Hinchman, Lewis (2005 (2007) The Theory Of Social Democracy
Cambridge, Polity Press
[11] The distinction between “positive” and “negative” freedoms here are
based on the categories introduced by Sir Isaiah Berlin
