Our Pikettian Universe

Earlier this month, in announcing plans to replace the David Cameron-created Social Mobility Commission with a new Social Justice Commission, Jeremy Corbyn made a telling, though seemingly unremarkable, observation: “Social mobility has failed, even on its own terms,” he said “… the greater inequality has become, the more entrenched it has become”.

The evidence is all around. According to the aforementioned Social Mobility Commission, social mobility in the UK “has stagnated over the last four years at virtually all life stages”. Last year the OECD reported that, internationally, social mobility was a “reality” for people born before 1975 but has stalled for those reaching adulthood in the 1990s and after. In the UK, according to the OECD, only around a fifth of children of low income families go on to become high earners and only a quarter of children of parents with manual jobs get managerial positions.

These are the results achieved by the unstinting efforts of successive British governments over decades to raise social mobility and achieve a genuine meritocracy. The Conservative-Lib Dem coalition had its ‘social mobility strategy', before then the Blair government vowed to achieve social inclusion, and before then John Major had entered Downing Street promising to create a “classless society”.

Growth and  meritocracy

In Britain, social mobility has all the hallmarks of a secular faith – for people in power at all levels of society a belief in the virtues of social mobility – whatever the evidence – is compulsory, and if it forever seems out of reach, a few policy tweaks, such as adult education or free childcare, will set things on the right course again.

In fact the social mobility faith is remarkably similar to another secular creed – the conviction of the virtues of economic growth. The affinity is most apparent in the fact that belief in them is unshaken by the slight problem that they don’t actually achieve their aims – intergenerational meritocracy in the one case and healthy GDP growth in the other.

LSE anthropologist Jason Hickel, in his book The Divide, correctly observes that “almost the entire economic profession and nearly all politicians” are obsessively focused on raising GDP growth. What he doesn’t go on to note is that this obsession has conspicuously failed to bear fruit. GDP has unquestioningly increased over time, but, as pointed out by the Geopolitical Economy Research Group, the rate of growth, for the world’s industrialised countries, has been trending downwards since at least the mid-1960s.

Since the financial crisis a decade ago, this decline has intensified. For the UK, GDP growth has averaged a mere 1.87% per year since 2010, and for the European Union, the average is even more modest: 1.6%. This is below the 2-3% thought to be essential for profits to be made in the economy and a pale shadow of the 5 or 6% annual growth rates achieved in the 1950s and ‘60s.

Piketty and capitalism

There are several ramifications of low-growth capitalism, one being that debt – corporate, personal and governmental – skyrockets across the board. Another – less noted perhaps – is that low social mobility inevitably follows. In 2014, French economist Thomas Piketty published an almighty tome, Capital in the 21^st Century, to general applause and fanfare. Piketty’s central finding was that when returns to capital are greater than economic growth (when r > g), then inequality is bound to intensify. This is what happened, Piketty asserts, during much of the 19^th century and has occurred over the last 40 years in industrialised countries. It will also be the default state of affairs, he predicts, during the rest of this century.

What are returns to capital? They are income streams that stem from the ownership of assets, such as share dividends, profits, capital gains, rents, royalties and interest. When economic growth is high, Piketty contends, income from labour – which is the only way those without assets can get richer – can outpace these capital returns. When it isn’t, the opposite is the case.

It is fairly apparent, therefore, to see why, in Piketty’s eyes, inequality should increase in an era of low-growth capitalism, such as this one. But it is also the case that returns to capital, should they increase faster than economic growth, also hamstring social mobility. This is because once these assets are amassed, they are almost always passed on to the asset-holder’s children and also because they become concentrated in fewer and fewer hands over time. Essentially they guarantee wealth immobility and ensure that those who are already rich, not only stay rich, but become much richer.

For Piketty, the decades between 1914 and 1973 were unusual because the rate of economic growth was higher than returns to capital.  Coincidentally, this period – certainly the post-WW2 years when economic growth was conspicuously high – was one in which, according to the OECD, social mobility was a ‘reality’.

It is also true that – contra Piketty – in the last decade income from labour in the UK has risen even more slowly than economic growth, reversing the historical norm. In fact wage levels have, in real terms, contracted, while the economy as whole has grown, albeit weakly. Moreover, overall wage levels hide enormous inequality in remuneration. Corporate chief executives have seen vast increases, while earning levels in the lowest income groups have barely moved at all since the 1990s.

But that does not detract from the fact that income from capital has outpaced economic growth, with all the consequences that that entails.

No more Thatcherism

This ‘Pikettian’ problem explains much about the current travails of the Conservative party. The Conservatives simply cannot bring themselves to accept that Thatcherism doesn’t work anymore. The promise of Thatcherism was that assets – such as shares and council houses – would be distributed throughout society, leading to a genuinely popular capitalism. Privatisation, said Thatcher, represented “the greatest shift of ownership and power away from the state to individuals and their families in any country outside the former communist bloc”. The creation of a ‘share-owning democracy’ was the clarion call of the age.

Unfortunately for the Conservatives, the shift was transitory if it occurred at all. Before Thatcher entered Number 10, individuals owned almost 40% of the shares in British companies. When she died in 2013, that figure had shrunk to under 12%. In reality, large companies are now owned by other large companies – frequently banks – in an interlocking system which the small shareholder has no influence over.

Council houses were swiftly transferred from the people who had bought them under the ‘Right to Buy’ scheme to a small coterie of private landlords. Home ownership in general has been in decline since 2003 accompanied by soaring rates of private renting. Governments of all stripes have since the 1980s tried to stoke a perpetual property price boom, mainly by restricting supply and not allowing council or social housing to be built. In these conditions of low-growth capitalism, the main hope of becoming wealthier lay not in a lifetime’s labour but in realising the capital gains (one of Piketty’s returns to capital) from selling your property, possibly numerous times. A route millions took.

The dilemma for the Conservatives (and Blairites) is that high property prices prevent young people from buying homes in the first place, thus ensuring that home ownership becomes more concentrated over time. And because their original promises have proven so hollow, the Conservatives – to save their electoral skin – have resorted to the zero sum game of fuelling a ‘culture war’ and overseeing a no deal Brexit, even at the cost of completely alienating the sector of society – big business – whose interests they exist to protect. ‘Fuck business’ was a retort that came out of Boris Johnson’s mouth, not Jeremy Corbyn’s.

21^st century wage slavery

What our Pikettian universe means is that for many millions of people employment is not – as it was for many decades after the Second World War, even up to the 1990s – an escalator out of their current economic situation and into a better one. As the figures on in-work poverty show, it is merely a means of week to week survival and sometimes, given the fact that many people who show up a food banks also have jobs, not even that.

Naturally, it can be pointed out that most people don’t live in poverty and most people have mortgages rather renting their homes from landlords (and given the fact that interest rates are so low have benefitted from the last decade or so). However, even ignoring the fact that more precarious forms of work are mushrooming, the trend is not in favour of those who clearly gain materially from capitalism. Piketty’s prediction of a low growth future seems quite solid, and in those circumstances, the asset poor will slowly but surely close the gap on the asset rich.

This has ramifications for how work is perceived, although ones that Piketty, who dismisses ‘the lazy rhetoric of anti-capitalism’, does not make. If work no longer comes attached with an ulterior motive – that it represents a way to personally progress – then it will increasingly be seen in terms of its bare essentials: that is, the granting of wages in exchange for obedience. In the 19^th century (the original epoch, Piketty contends, when returns to capital exceeded economic growth and wages were flat), the concept of wage slavery – the idea that the employee is forced by the pressure of need to rent themselves out to employers and endures, in effect, a form of slavery during their time at work – was common on the Left, even the non-socialist Left (see Henry George). If the 21^st century replicates the economic conditions of the 19^th (not literally, mass outbreaks of cholera are unlikely), then the idea of wage slavery will grow in popularity because it will reflect most people’s experience.

This situation also means the traditional ameliorative solution of the social democratic Left – redistribution of income through taxation – will no longer have the effect it once did. If income is primarily secured by the ownership of assets, then redistribution has to focus on ownership. This is why the UK Labour party moves in favour of ‘alternative models of ownership’ – such as cooperatives, municipal ownership and democratic forms of national ownership – are significant. These may be too limited  and too slow  – John McDonnell’s ‘inclusive ownership fund’ would see companies transferring shares to their workforce every year but it would take 50 years for these to constitute a majority – and in essence a policy fix for a systemic problem. But at least they presage a necessary change of thinking.

However, there is a larger problem. Piketty’s central assertion is that low growth capitalism will inevitably lead to inequality intensifying over time. But low growth capitalism is the condition we are told is essential if climate change is to be seriously mitigated. The question is therefore: does averting ecological catastrophe mean entrenching the power of an oligarchy?  I will attempt to provide an answer in a future post.

We are not the 99%

‘We are the 99%”, the Occupy movement famously proclaimed. Society is now run for the benefit of the top 1%, Occupy said. The rest of us, the 99%, are frozen out, paying for the mistakes of a small elite, in whose clutches wealth was obscenely concentrated.

I’ve written before about how, paradoxically, this depiction of society is both an underestimate (the ones really making out like bandits are the 0.1%), but also brushes over fundamentally conservative impulses among a large segment of the 99%.

But in light of the Conservative party’s victory in the UK general election, I think the second part of that argument needs firming up. We are witnessing, it seems, not just a coincidence of interest between the 1% and, roughly, the top half of society. But an active alliance to the exclusion and detriment of the rest of society. “We” are definitely not the 99%. Some animals are more equal than others.

This is not just based on a common or garden assumption that the fortunes of the rest of us depend on the 1% or 0.1% prospering. That argument is always there.  Just last week, we learnt that in 2011 nearly a fifth of UK pension fund money was “intricately linked” to the profits of BP and Shell.

No, what I’m talking about is a division between asset rich and asset poor. And a de facto alliance between the finance industry and around half of society in the UK. One based around near zero interest rates.

Despite the assumption that this is the new normal, interest rates, the level of interest charged by government central banks to commercial banks, are astoundingly low. They have been stuck at 0.5% in the UK since 2009. By way of comparison, the Bank of England base rate (interest rate) was 5.75% in July 2007, 6% in January 1999, 7% in August 1997, nearly 14% at the end of 1990, 12% in 1986 and 11.25% at the start of 1975.

And the official interest rate has profound impact on the wider economy, since the interest charged by commercial banks will reflect the so-called ‘base rate’. Back in 2007, the now deceased former Bank of England governor, Eddie George confessed to a Parliamentary committee that he had paved the way for the financial crisis, by slashing interest rates from 6% in 2001 to 3.5% two years later. This had the effect, he said, of pushing house price inflation above 25% and stimulating consumer spending in a way not seen since the late ‘80s boom. Note, that when the late ‘80s boom turned into recession, the response was to raise interest rates mercilessly. Now, post-crash, they been cut even further. Is that not a prima facie example of a reckless economic strategy?

What are the effects of ultra-low interest rates? One is to make is much easier for banks and the government to handle their huge debts. With the base rate so low, bank debts, 210% of UK GDP in 2011, are much lower than they otherwise would be. So, taken together with Quantitative Easing, government intervention which reduces the effective interest rate, insolvent financial institutions are made solvent. So the banks, especially overleveraged ones, love low interest rates.

The other main effect is to make it much cheaper to hold or take out a mortgage. Mortgages either track the base rate or follow it closely. The number of people with a mortgage, compared to renting, has certainly dropped, to around 65% of the adult population in the UK, but it is still a clear majority. Government subsidies in the ‘market’ through the £80bn Funding for Lending scheme and Help to Buy, has also had the effect of reducing the cost of mortgages.  The result for many people has been a massive compensation for the fact that wages have endured their greatest contraction since the 19^th century. “Many landlords who bought property before the financial crisis are on interest rates tracking the Bank of England base rate and have seen their costs plummet since it dropped to 0.5%,” observed an article on how Buy to Let landlords have earned 1,400% returns since the mid-90s. “They are coining it in – they’ve benefited from unprecedented property price rises and their rates are rock bottom,” said one mortgage broker. So mortgage-holders love low interest rates, too.

But others, those without assets, are definitely not coining it in. Private renters have endured rent rises of, on average, 15% since 2010, and they are accelerating. Evictions stand at a six year high. Benefit claimants, invariably without assets, have endured a torrent of hostility ranging from sanctions, the denial of help to sick and disabled people, the Bedroom Tax, and the benefit cap. There are roughly 1,000 food banks in Britain now, and just one provider, the Trussell Trust, distributed enough food last year to feed 1.1 million people. These people are paying for the sins of others.

Ultra-low interest rates, together with the deliberate restriction of the supply of newly built houses, also work to bolster perpetually rising house prices. This is clearly an advantage if you already have a mortgage or own a house outright. But not if you don’t. It’s no accident that support for the Conservatives in the recent election increased with age. In the way the British economy has been skewed in the last few decades, older and middle aged people, by and large, have housing assets. Younger people don’t.

But what is most interesting is that, to many economists, ultra-low interest rates, or to give its technical name, financial repression, means economic stagnation. This is because it discourages new investment. Investment largely takes place through borrowing and investors know, in the context of near zero interest rates, they won’t get much of a return (if interest rates are below inflation, a negative return), so they don’t bother. The game isn’t worth the candle. The dominant, supply-side philosophy, which says that if you reduce taxes on business, investment will increase simply doesn’t work. Still, a rise in government interest rates, though perennially predicted as being just around the corner, never actually happens.

All this chimes remarkably with Thomas Piketty’s assertion that, in an era of low growth, returns from capital (income from the ownership of assets, such as houses) will outpace returns from labour (income from work). It’s also why, I would suggest, society is so culturally conservative in comparison to the 1960s or ‘70s, but that’s a matter for another article.

The question is, can this alliance around low interest rates, last? Japan, the country of two ‘lost decades’, has kept interest rates below 1% since the mid-nineties (sometimes they have even been negative) and resorted to recurrent bouts of quantitative easing. The wealth and home owners have benefitted, savers and wage earners haven’t. But Japanese politics has remained staunchly conservative, with the only departure being that so-called ‘Abenomics’ isn’t implementing austerity.  

What would explode this compact between finance and a significant segment of the UK population? Undoubtedly, a large and unintended rise in interest rates. Default or write down of debt in the Eurozone may provide the spark, with debt being sold, the value going down and interest rates rises the inevitable result. The financial crisis, part two, in other words. But in its absence, the mantra, ‘we are the 99%’ simply doesn’t get to the heart of the matter.

The return of capitalism's contradictions

A version of this essay was presented at the Ecological Challenges conference in Oslo in September 2014. It has now been published as a chapter in the compendium Social Ecology and Social Change, just released by New Compass Press.

One of the animating beliefs of twentieth century social ecology was that capitalism had tamed its dangerous contradictions. “The unprecedented fact remains that capitalism has been free of a ‘chronic’ crisis for a half century,” wrote Murray Bookchin in his 1989 essay, Radical Politics in an Era of Advanced Capitalism “Nor are there signs that we are faced in the foreseeable future with a crisis comparable to that of the Great Depression,” he went on. “Far from having an internal source of long-term economic breakdown that will presumably create a general interest for a new society, capitalism has been more successful in crisis management in the last fifty years than it was in the previous century and a half.”

Indeed, a robust, incessantly growing capitalism, shorn of past weaknesses and instabilities, was precisely the nub of the problem. With the help of the state and Keynesian economic innovations, capitalism had subdued its internal contradictions. But this success left in place a “new, perhaps paramount” external contradiction. The “clash”, as Bookchin put it, “between an economy based on unending growth and the desiccation of the natural environment.”

It is true that social ecology did not exclude the possibility that capitalism could relapse into a chronic stagnation nor believe that the system’s contradictions had somehow vanished. Bookchin regarded capitalism as “one of the most unstable economies in history” and inherently unpredictable. But the “traditional radical notion” that periodic or chronic crises would unfailingly occur was “uncertain”, he averred, and the prospect of capitalism sinking into a “major chronic crisis” remained unexpected.

I think we need to face the fact that the unexpected has happened, and both capitalism’s internal and external contradictions have come to the fore. I believe the economic events of the last few years have demonstrated that, in the advanced capitalist countries, rumours of the death of capitalism’s contradictions have been greatly exaggerated. The crisis that has emerged is unmistakably chronic in character and cannot be mistaken for a periodic downturn. This has important implications for how a post-capitalist, ecological movement relates to masses of people whose material underpinnings are declining and unstable.

But it is equally important to recognise that, contrary to the hopes of leftists in previous eras, crisis and stagnation does not mean that capitalism is about to self-destruct. Nor are there legions of class-conscious proletarians ready to, in Marx’s famous words, “expropriate the expropriators”. What makes this crisis unique is that it has emerged after capitalism has vanquished all meaningful opposition, borrowed deeply into society, and expanded across the globe.

I would like to proceed from an agreement as to what capitalism is. In line with social ecology, I’d argue that capitalism is primarily a system in which money is invested to make more money, and so on ad infinitum. This creates an insatiable necessity for growth. Zero-growth capitalism is a contradiction in terms. “To keep to a satisfactory growth rate right now would mean finding profitable opportunities for an extra $2 trillion compared to the ‘mere’ $6 billion that was needed in 1970,” says Marxian geographer David Harvey. “By the time 2030 rolls around, when estimates suggest the global economy should be worth more than $96 trillion, profitable investment opportunities of close to $3 trillion will be needed.”

But in the core, advanced capitalist countries – the US, Western Europe and Japan – the growth rate, though still positive, has not been satisfactory for some time. Between 2001 and 2011, the rate of economic growth in the US was 63% below that of the 1960s. In Japan, growth between 1973 and 2008 was just one quarter of the level it reached between 1950 and 1973. In Western Europe, it has contracted by more than half. In the UK, the rate of GDP growth was 2.7% in the 1980s, 2.2% in the 1990s, 1.8% between 2000 and 2010 and 1.3% between 2010 and 2014. In the core countries, decline is in evidence virtually everywhere.

There are differing theories as to what lies at the root of this stagnating growth. One culprit that looms large in many explanations is a drop in the purchasing power of the mass of people. A 2011 report from the UK Resolution Foundation, Painful Separation, describes an extreme “decoupling” of average incomes from the rate of economic growth. Since the 1970s, the report says, median pay has grown at less than half the rate of economic output in the US, Canada and Australia. In Britain, France and Germany, median pay tracked economic growth for a long period, but, in the past decade, has increased by less than half the growth rate. Only in Scandinavia and Japan has the divergence between economic growth and average pay been “mild”, the report concludes. In recent years, this contraction of wealth has been intensified. According to the US Russell Sage Foundation, the net wealth of the typical American household declined by a staggering 36% between 2003 and 2013. In the UK, real wages, the value of wages when you factor in the effect of inflation, have dropped by 8.5% since 2009, the largest fall since the 19^th century. Four out of ten of the new jobs ‘created’ in Britain since 2010 are self-employed and well-paid managerial posts are being replaced by more ‘elementary’ jobs such as cleaning.

So you are left with a stand-off between two intractable features of the economy. On the one side, a ‘wall of money’ (as one English economist, Harry Shutt, puts it), demanding more and more profit-generating opportunities and, on the other, the declining purchasing power of the majority of people. This is not a recipe for economic health. The unavoidable consequences are, in the absence of productive investment for which demand is lacking, an increase in speculation (the buying of assets, currency futures or collaterized debt obligations for example, in the hope their value will rise), and spiralling household debt. These are both prime underlying causes of the 2007-9 economic crisis, and revealingly, nothing that has happened subsequently has done anything to ameliorate them. It can be argued that privatisation, which began in the 1980s, was another way to utilise all this ‘surplus capital’. But state-owned services and assets are obviously a finite resource. And despite the best efforts of governments like that of the UK, the gravy train cannot go on forever.

It is very hard to escape from this situation. To do so would require reversing the war on organised labour that has occurred since the 1970s, and I can sense no appetite among employers to do this, or placing restrictions on credit and raising interest rates, which though they may reduce household debt, would have the unfortunate side effect of sinking the economy.

Given this, the official government reaction has been to put the economy on life support through the printing of enormous sums of money (officially known as Quantitative Easing), pioneered by Japan and now part of the economic toolkit of the US, UK and most recently, the European Central Bank. This is done in conjunction with near zero interest rates, which makes the borrowing of money incredibly cheap. Meanwhile, the political and economic authorities feel they have no option but to reboot and reinstall the casino economy.

But if nothing is done to change the underlying conditions which brought forth economic crisis, merely a smoothing over of the cracks, then the extreme likelihood is that further crises will erupt in the near future. In fact, the current crisis has yet to play itself out fully, as the economic torpor in the Eurozone aptly demonstrates. Not for nothing is this called ‘the Great Recession’. The economic engine of capitalism is clearly sputtering, despite huge government action and financial rescues. The successful “crisis management” that, at the end of the 1980s Bookchin credited capitalism with, has been transformed into a series of desperate measures. Capitalism’s contradictions, thought to have been banished to the history books, have emerged resurgent.

However, there are important caveats to be made before we become engrossed in making comparisons with the last great crisis of capitalism, the Great Depression of the 1930s. The first concerns poverty. The inhabitants of the wealthy core capitalist countries are clearly getting poorer but, in the main, they cannot be classed as poor. Contrary to the predictions of Marxism, the working class in these countries enjoyed burgeoning wealth throughout most of the twentieth century, particularly in the decades after the Second World War. According to the economist Thomas Piketty, whose book Capital in the 21^st Century predicts growing inequality in the coming decades, the emergence of what he terms a “patrimonial middle class” in the 20^th century should not be underestimated. Tens of millions of individuals in Europe or 40% of the population, says Piketty, “individually own property worth hundreds of thousands of euros and collectively lay claim to one-quarter to one-third of national wealth: this is a change of some moment.” These people are not destitute and “do not like to be treated as poor”, Piketty asserts. Despite the fact that the 1%, and especially the 0.1%, seem to inhabit a different universe, both materially and spiritually, to the rest of us, we haven’t suddenly jumped in a time machine and travelled back a hundred years to an era when the top 10% owned virtually everything and the bottom 90% nothing. So Bookchin was not being blinkered when he noted in the 2002 essay The Communalist Project that “almost 50% of American households own stocks and bonds, while a huge number are proprietors of one kind or another, possessing their own homes, gardens and rural summer retreats.” It is just that, many millions of people in the wealthy countries are now going, in the words of one recent book, “down the up escalator”.

The second qualification is that low growth and recurrent economic crises are malaises that seem peculiar to the wealthy capitalist countries. Yes, China was affected by the global financial crisis and economic growth slowed there, but it still reached over 7% in 2012. China, with its chronic air pollution reducing life expectancy, is contending with problems generated by a vigorous capitalism, not a faltering one. Likewise, the Turkish economy expanded by 8.5% in 2011. So called ‘emerging markets’ have the advantage of increasing populations and a rising middle class. Economically speaking, they are more sustainable.

But the most important caveat to understand is that a dysfunctional capitalism displaying contradictions that are harder and harder to hide, is not simply going to disappear. Bookchin’s departure from the Marxist orthodoxy of the early twentieth century stemmed from an exasperation with the idea that, because of its internal development, capitalism would inevitably collapse and give way to socialism. This old leftist conviction was entwined with a resolute faith that a class conscious working class would be ready and willing to take over when capitalism faltered, and guide society to a communist future. “For generations,” Bookchin wrote in his 1989 book, Remaking Society, “radical theorists opined about the ‘inner limits’ of the capitalist system, the ‘internal’ mechanisms within its operations as an economy that would yield its self-destruction. Marx gained the plaudits of endless writers for advancing the possibility that capitalism would be destroyed and replaced by socialism because it would enter a chronic crisis of diminishing profits, economic stagnation and class war with an ever-impoverished proletariat.”

What makes the current period of economic stagnation and chronic capitalist crisis unique in historical terms is that, in the palpable absence of a revolutionary alternative, capitalism shows no signs of self-destructing or meekly conceding to “socialism”. It was, ironically, Lenin who remarked that there were no “absolutely hopeless situations” for capitalism. And the present situation is far from hopeless. Capitalism will, despite its attendant shocks and contradictions, and despite growing evidence in its heartlands of stagnation and decline, inexorably go on. There is no such thing as a “last stage” of capitalism while capitalism still exists. The last stage can only be identified retrospectively when, and if, it is replaced by another economic system. The system will not jump, it has to be pushed. And no-one is pushing.

The fact is that the overwhelming majority of people, even in the wealthy countries, are wage and capital dependent. They need jobs and money and a functional economy. This means that they have a clear interest in re-installing the economic system whenever it breaks down. “So long as the basic institutions of capitalism remain in place, it is in rational self-interest of almost everyone to keep the capitalists happy,” wrote American mathematician David Schweickart in his 2002 book, After Capitalism. “Economic growth is in the immediate interest of virtually every sector of society – growth in the straight-forwards sense as measured by GDP”.

This truth holds in spite of low growth and recurrent recessions or crises. Consider the clamour to do ‘whatever it takes’ to restore business as usual after the 2008 crash when the system really did threaten to break down and there was the immediate danger of ATM machines not dispensing cash and companies not being able to pay their workforce. With no alternative on the horizon, political elites were always going to intervene with trillions of dollars of taxpayers’ money. That is why it’s presumptuous to describe any of capitalism’s increasingly visible contradictions as fatal. The aforementioned David Harvey, lists 17 contradictions of capital in his latest book, but maintains only one of them is “potentially fatal”. “But it will turn out so,” he elaborates, “only if a revolutionary movement arises to change the evolutionary path that the endless accumulation of capital dictates. Whether or not a revolutionary spirit crystallises out to force radical changes in the way in which we live is not given in the stars. It depends entirely on human volition.”

So is there any value in being aware of capitalism’s resurgent contradictions if they are probably not fatal and even if they result in economic breakdown, simply produce a clamour on the part of the public as well as elites to restore the system to, if not health, at least basic functionality? The point, I would suggest, is that there is a crying need for a post-capitalist, ecological movement to articulate an alternative to a capitalism that is seriously not delivering for millions of people, and not delivering in a way that hasn’t been true since before the Second World War. I was brought up with the idea that, although capitalism may have terrible side effects, it delivered the goods in terms of rising wealth and consumerist distractions. That, from where I’m sitting, is simply not the case anymore. Whereas, not so long ago, politicians promised a better future, however much those promises were empty PR flannel, now their message is conspicuously negative. Politics has become nasty and vicious (and in its treatment of the unemployed and the disabled verging on the sadistic) and all about adapting to the demands of a creaking economy. Forget the sunlit uplands, the future comprises differing gradations of pain.

I believe a social ecology and assembly democracy movement that wishes to thrive and become a genuine rival to capitalism has to respond to this new situation and mood. If I were to crudely summarise the message of social ecology up to this point, it is along the lines of capitalism incessantly grows, creating soulless and energy draining urbanisation and megacities. And at the same time as it destroys the natural environment and pollutes, the market economy steadily remakes society in its own image, commodifying more and more aspects of life and imposing a buyer-seller relationship. But explicit within the concept of ‘post-scarcity’ was the assumption that the material foundations of people in wealthy capitalist countries were assured.  The post Second World War era, Bookchin wrote, was infused with “a buoyant sense of promise” and this feeling of optimism was “clearly materialistic. A radical ethic developed, he asserted in Remaking Society, possessed of “the reasonable certainty that the abolition of oppression in any form – of the senses as well as of the body and mind – could be achieved even on the bourgeois grounds of economic instrumentalism.” The trouble with the capitalist machine, as well as its potential, was not its internal contradictions, but that it had become remarkably stable and successful. I am not arguing that capitalist growth is no longer a problem. Even during the ‘crisis years’ of 2008 to 2012, the advanced capitalist countries grew by around 1% a year, which is high by long-term historical standards. Economic stagnation in Japan has been accompanied by a rise, not a fall, in carbon emissions. And commodification has, if anything, intensified post-crash as the rich countries try to resuscitate growth. However, what cannot be ignored is that capitalism is no longer the prosperity machine of old for millions of people in the rich countries. A growth in absolute poverty, mass unemployment, under-employment, low-paying self-employment, declining incomes, housing precarity and evictions, and a disavowal of responsibility to vulnerable people dependent on vanishing state welfare benefits, are all features of this new landscape. The buoyant sense of promise Bookchin discerned in the spirit of the 1960s has been transformed into virtually its polar opposite – an atmosphere of dread and fatalism.

What this signifies is that if social ecology wishes to really make headway as a movement for ecological transformation, it needs to invigorate its social dimension. It is revealing that, Kurdistan aside, the outbreaks of assembly democracy that have occurred in recent years have all taken place in countries suffering from economic breakdown and trauma – namely Argentina, Greece and Spain.  In addition to assemblies of indignatos, co-operative economic alternatives, in energy, food and housing, for example, have flourished in Spain post-crash, partly for the prosaic reason that the dominant capitalist economy has simply ceased to be a reliable presence in people’s lives. If capitalism fails, alternatives will happen, that is an absolute guarantee. The question that remains is what will be the relationship of the economic alternatives to the popular assemblies that also spring up. As a theory, libertarian municipalism, the political dimension of social ecology, is strong on how political power can be reclaimed from the state, but less so about how it can be wrested from capital. There is little doubt that representative democracy has failed. It has exposed itself as simply a component in the economic and political oligarchy that rules Western societies. But to take on that oligarchy requires an assembly democracy to, for example, provide public oversight of and control over a new public system of credit and banking. And even if it is agreed that that state is the crux of the oligarchy, the issue remains that millions of people are dependent on state public services and benefits. To merely leave them to the wolves in an existential rejection of the state and all its works, is not an option. A post-capitalist movement must be defensive as well as creative.

Despite the proliferation of sages, no-one really knows what will happen to capitalism in the wealthy countries in the coming decades. The only certainty is that we are in a period of uncertainty. “The validity of a theory and a movement will depend profoundly on how clearly it can see what lies just ahead,” Bookchin said in 2002.  Yet what lies just ahead is far from clear. It is quite possible that a new and overwhelming financial crisis will occur, leaving the state unable to bail out financial institutions and other corporations and thus precipitating a wave of bankruptcies and a destruction of capital value comparable to the Great Depression of the 1930s. This will leave some form of state capitalism as the only possible option and create millions more ‘superfluous’ people – superfluous in capitalist terms. Capitalism is no longer capable of playing the role assigned to it by social ecology in the past: that of well-tuned, efficient machine that spews out endless change in all directions, from compound growth to urbanisation, from work to climate change, from ethics to popular culture, while itself remaining free of volatility and disequilibrium. The machine itself is now malfunctioning. This changes everything.