“Our choice comes down to this,” George Monbiot concluded
in the Guardian newspaper last month. “Do we stop life to allow capitalism to
continue, or stop capitalism to allow life to continue?” Notwithstanding the
strong suspicion that if a politician arose promising to stop capitalism he or
she would be instantly denounced by the same newspaper as a far left
anti-Semitic, misogynist demagogue, it’s an urgent question.
However, despite its urgency, I would suggest no
satisfactory answer will be found until two further questions are also
addressed. Firstly, what exactly is capitalism? Secondly, what role does
capitalism – through its inevitable companion economic growth – play in
material progress and poverty reduction?
Capital-ism involves the advancing of money to make more
money, the generation (hopefully from the point of view of the capitalist) of a
financial return that is invested again, barring some deductions for luxury
consumption. That’s the semantic difference between capital and mere money. Thus,
the system is inherently expansionary. This accumulation – capital advanced to
make more money which is then invested again and so on ad infinitum – drives
the process and is the beating heart of the capitalist system. John Maynard
Keynes in his now famous 1930 essay The Economic Possibilities for our
Grandchildren explained the
transformations in the “standard of life” since the 16th century as
the result of a joint process – technological improvements allied to the accumulation of capital.
The accumulation of capital occurs in spite of other
strongly held desires that contradict its purposes – it has an imperative and
logic of its own, to which other social needs, such as the preservation of a
liveable climate or the wish to pursue, in Keynes’ phrase, life’s “non-economic
purposes”, are sacrificed. This is not to suggest that many activities related
to this accumulative process simply occur without anyone wanting them – the
slave trade and slavery, colonialism, the seizure of common lands from the
European peasantry will were all consciously willed and carried out. Nor does
it mean that everyone benefits from capitalist accumulation or such benefits
are evenly spread, geographically or socially. But imperialism, subjection,
slavery and exploitation have existed throughout history and the last 400 years
have been qualitatively unique in terms of the development of technology and
the exploitation of material resources. The reason, I would suggest, is not
just due to the thirst for profit but the pressure of accumulated funds.
What this constant build-up of capital does – one
contemporary economist has described it as a ‘wall
of money’ – is to create an incessant pressure for new outlets for
investment. Such outlets might take the form of the extraction of raw
materials, privatisation or debt-fuelled financial instruments. It is the hope
of enlightened defenders of the system that this glut of capital can be
directed towards socially , beneficial, low carbon forms, such as renewable
energy or retrofitting the economy. But, as Monbiot notes, this seems a
forlorn hope.
It is true that in recent decades investment has
increasingly taken ‘fictional’, non-physical forms – financial instruments or
property speculation – but, besides the fact that this leaves the system
increasing crisis-prone, capital cannot migrate entirely to making money from
rents, interests and royalties. It cannot become completely immaterial.
Keynes – erroneously – believed that this accumulative
process could, in essence, be called to a halt once it had achieved its social
purposes – once the technological developments it spurred had enabled a
comfortable life for everyone and we were free to “value ends over means”. He
imagined that by 2030 everyone would be working 3 hour days and 15 hour weeks.
Monbiot appears to slip into the same delusion. “Like coal,” he writes, “capitalism has brought many benefits. But, like coal, it now causes more
harm than good. Just as we have found means of generating useful energy that
are better and less damaging than coal, so we need to find means of generating
human wellbeing that are better and less damaging than capitalism.”
However, no such voluntary euthanasia on the part of the
capitalist system is going to happen. Accumulation and expansion will go on
inexorably and will increase hugely in scope thanks to the growth in funds
requiring investment which themselves will generate profit demanding a
financial return.
Thus if we are serious about finding a “means
of generating human wellbeing that are better and less damaging than capitalism”,
this accumulative process must be consciously snuffed out. And to do so
requires confronting the immensely wealthy and powerful interests that have
developed around this accumulative process and wish, whatever else they wish,
that it continues and they remain wealthy and powerful. Moreover, we can’t
comfort ourselves with the notion that it is just the 0.1% versus the rest of
us. Hundreds of millions of people who aren’t fabulously wealthy also have a
stake in the system’s perpetuation through stock market invested pensions
funds. The capitalist system, we can
be certain, will not go quietly into the night. It won’t depart with its hands
aloft because our most sensitive minds have thought of something better.
The paradox of
economic growth
The second problem we face relates to the fact that attempts
to challenge capitalism often seem to make it stronger. This hinges on the role
of economic growth. “Capitalism collapses without growth” says Monbiot, “yet perpetual growth
on a finite planet leads inexorably to environmental calamity.” This is inescapable
but at the same time partial. Economic growth, through being transmuted into
social spending, money transfers and public provision, has resulted in huge
reductions in poverty since the middle of the 20th century. This is
not to defend capitalism itself as some miraculous engine of prosperity. It has
dispossessed as many people as it lifted out of poverty. But given strong
social movements and/or sympathetic governments economic growth can, through
taxation, be directed towards socially beneficial ends. The most glaring
example is China. The Chinese economy has quadrupled in size since 1978 and per capita income
grew fivefold between 1990 and 2010. Coincidentally, poverty has been slashed and the
country is thought to be responsible for more than three
quarters of world poverty reduction. This has all happened in the context of chronic and lethal
air pollution and a major contribution towards global warming.
You might regard China as, until recently, peculiarly
benighted as regards the environmental catastrophe we are heading towards. But
a similar dilemma afflicts far more enlightened countries. In 2009 Bolivian
president Evo Morales said climate change was driven by a western, capitalist
“culture of death”. His government contrasted ‘living well’ (vivir bien) with a
capitalist insistence on ‘living better’ (vivir mejor) and, in 2012 through the
‘Law of Mother Earth’, became the first state in history to grant rights to
nature.
But at the same time, Bolivia’s great strides in poverty
reduction – the country is the poorest in South America – have been achieved
through redistributing the proceeds from, primarily, gas and oil extraction. Morales
nationalised the hyrdocarbons firm YPFB, hiking royalties and taxes and
increasing revenues from gas to over $2 billion from a mere $332 million. Over
the past 13 years the Bolivian economy has tripled in size and now boasts the
highest growth rate in the region – 4.7 per cent.
This is the background to a tripling of the minimum wage,
conditional cash transfers to poor families and the creation of a free health
service aiming to bring coverage to the 70% of the population who don’t have
any. Poverty
has been cut in half and the middle class has grown by a million people.
This is far from a painless process, however. As one one sympathetic
assessment of the Morales years concludes:
The result is that Bolivia, with
the world’s seventh largest tropical forests, now suffers the highest rate of
deforestation in South America. In 2015,
the MAS government promulgated a law permitting hydrocarbons and mining
companies to explore up to 20 million hectares, much of it in protected areas.
Large-scale hydro-electric projects, now in the planning stages, would further
the goal of turning Bolivia into a regional energy hub. Soy production has
roughly doubled since Morales took office ten years ago.
However, it would be the height of arrogance to, from a safe
distance, condemn the Morales government for making the wrong choices and
maximising the proceeds from economic growth, given its constricted options.
Not least because it bears an uncanny resemblance to the way European countries
attacked poverty and transformed the life chances of millions of their citizens
in the decades after the Second World War.
And that is the nub of the problem. There will, in all
likelihood, be many more Chinas and Bolivias in the coming years. Unless zero
or minimal economic growth can deliver the same poverty-reducing benefits as
taxing high economic growth, the temptation will always be to go for the
latter, despite the fatal consequences.
The only way this can happen, I would surmise, is by
systematically reducing the cost of basic goods and services – such as housing
– to something approaching zero, so that poverty is abolished from the opposite
direction so to speak. The pressing need of the vast majority of people to earn
a livelihood from selling the labour – the foundation of economic growth – can
be ameliorated through a generous basic income which would sever the link
between work and existence. However, that basic income would still need funded
somehow.
There is not an ‘off the shelf’ answer to this question. But
we can’t pretend that it doesn’t exist. Though nothing is painless, if we are
to ‘stop capitalism to allow life to exist’ indulging it to cream off the
proceeds for the benefit of the poor must cease to be the only practical
option.
