‘Is there an al­ter­na­tive to cap­i­tal­ism?

Financial Mirror (Cyprus) - - FRONT PAGE - By Sam Ben-Meir

It never ceases to sur­prise me how merely the sug­ges­tion that our cur­rent global cap­i­tal­is­tic sys­tem is not the best hu­man­ity can do for it­self, is so of­ten met with vir­u­lent hos­til­ity. One would think that when we are still re­cov­er­ing from the eco­nomic cri­sis of 2007-2008 (and many econ­o­mists see an even worse cri­sis on the hori­zon), when in­equal­ity has been steadily ris­ing since the ne­olib­eral turn of the early 1980s, when real wages have re­mained vir­tu­ally stag­nant, and the list goes on – one would think that per­haps we would keep an open mind re­gard­ing al­ter­na­tives; in­stead of buy­ing the tired old ar­gu­ment that any­thing else must ei­ther lead to to­tal­i­tar­i­an­ism, or be in­cur­ably utopian.

Cap­i­tal­ism has al­ways been about move­ment, and our era of dereg­u­lated glob­al­i­sa­tion has only fur­ther aug­mented the hy­per-mo­bil­ity of cap­i­tal. As a con­se­quence, this has pro­duced a vir­tu­ally end­less sup­ply of cheap labour – trade lib­er­al­i­sa­tion has seen jobs flee the coun­try and com­pelled de­vel­op­ing coun­tries to dereg­u­late and turn a blind eye to labour stan­dards so as to main­tain a com­pet­i­tive ad­van­tage. Trump’s prom­ises to keep jobs at home have been mostly empty rhetoric.

The grow­ing concentration of wealth among a tiny few has been helped along by a tax code that has shifted the bur­den off the very rich and onto the mid­dle class. And now the Repub­li­cans want to cut taxes on the rich yet fur­ther: the wealthy will pay only 35% on their in­come taxes – down from 39.5%. In ad­di­tion, Trump’s pro­posal gives the rich a sub­stan­tial tax break by elim­i­nat­ing the es­tate tax, which will only fur­ther ex­ac­er­bate eco­nomic in­equal­ity.

How is this de­fen­si­ble? The main ar­gu­ment one hears is that fal­lacy that Repub­li­can lead­ers have con­tin­ued to foist upon the Amer­i­can pub­lic since Pres­i­dent Rea­gan: that high taxes on the top in­come bracket is bad for growth; that slash­ing taxes will spur the econ­omy.

This is not his­tor­i­cally ac­cu­rate – in fact, it is a bald-faced lie.

The pe­riod in which Amer­ica en­joyed un­prece­dented growth, dur­ing the fifties and six­ties and un­til the late sev­en­ties, the tax rate never fell be­low 70%. Amer­ica’s growth dur­ing that time was 4-5%. Then in 1981, Rea­gan’s Eco­nomic Re­cov­ery Tax Act (ERTA) cut the mar­ginal tax rate 25% across­the-board, with the top mar­ginal tax rate fall­ing from 70 to 50%. In 1987, Rea­gan low­ered the top tax rate from 50 to 38.5%, where it has hov­ered since. The av­er­age rate of growth since the 1970s has been 2%. In­deed, there is no in­di­ca­tion that Trump’s “trickle-down” tax plan will en­gen­der any sig­nif­i­cant growth.

What we have seen is that un­der ne­olib­er­al­ism there has been a re­dis­tri­bu­tion and concentration of wealth in the hands of the very rich few. Real wages have re­mained stag­nant while eco­nomic dis­par­ity has in­creased since the mid- to late-1970s when “the up­per­most tier’s in­come share be­gan ris­ing dra­mat­i­cally.”

A 2015 re­port by the Eco­nomic Pol­icy Institute states that be­tween 1979 and 2013, “the hourly wages of mid­dle-wage work­ers … were stag­nant… The wages of low wage work­ers fared even worse, fall­ing 5% from 1979 to 2013.”

As War­ren Buf­fet ac­knowl­edged, “There’s class war­fare, all right, but it’s my class, the rich class, win­ning.”

Last year, I used the Oc­to­ber 13 birth­day of Great Bri­tain’s late Prime Min­is­ter Mar­garet Thatcher as an oc­ca­sion to ob­serve how her vi­sion of lais­sez-faire cap­i­tal­ism still holds ide­o­log­i­cal sway in our glob­alised land­scape. Her fa­mous claim that ‘There is no al­ter­na­tive’ to cap­i­tal­ism needs to be aban­doned once and for all. At the very least, we need to be­gin to con­sider al­ter­na­tives to the kind of cap­i­tal­ism we have.

A good place to start is with ex­tend­ing demo­cratic prac­tices to new so­cial spa­ces cur­rently oc­cu­pied by hi­er­ar­chi­cal and bu­reau­cratic or­gan­i­sa­tions, in­clud­ing the ur­ban set­ting as well as the work­place. The fact is that there is an al­ter­na­tive to the way firms are run on the cap­i­tal­ist model. That al­ter­na­tive is worker self-man­age­ment and it has seen re­mark­able suc­cess.

Look, for ex­am­ple, at the Mon­dragon Cor­po­ra­tion cen­tred in the Basque re­gion of Spain. Mon­dragon has a thor­oughly demo­cratic struc­ture of gov­er­nance with a General As­sem­bly that meets an­nu­ally, as well as a su­per­vi­sory coun­cil that ap­points man­age­ment, a so­cial coun­cil with ju­ris­dic­tion con­cern­ing mat­ters to do with work­ers’ well-be­ing, and a watch­dog coun­cil that mon­i­tors and gath­ers in­for­ma­tion for the general as­sem­bly. A fed­er­a­tion of sup­port­ive co­op­er­a­tive firms, Mon­dragon has now over a dozen ed­u­ca­tion cen­tres in­clud­ing a poly­tech­ni­cal univer­sity. In 2015, Mon­dragon gen­er­ated rev­enues in ex­cess of 12 bln euros, and em­ployed over 74,000 peo­ple.

To claim that we have no choice but to ac­cept the global cap­i­tal­ist sta­tus quo is sim­ply no longer plau­si­ble. This is not to say that worker self-di­rected firms will be idyl­lic,





we’re that they will all suc­ceed, or that they will not face a myr­iad of un­fore­seen chal­lenges. How­ever, they have shown them­selves to be suc­cess­ful, even while op­er­at­ing in highly com­pet­i­tive en­vi­ron­ments. If com­pa­nies are self-di­rected and work­ers them­selves par­tic­i­pate in the de­ci­sion mak­ing process re­gard­ing, for ex­am­ple, the lo­ca­tion of pro­duc­tion, it be­comes far more un­likely that we will see plant clo­sures, out­sourc­ing, job ex­ports, and so on.

Such firms will em­brace demo­cratic pro­cesses in which goals can be in­ter­nally de­fined: where there is equal­ity of vot­ing power, and work­ers them­selves make de­ci­sions about pro­duc­tion and dis­tri­bu­tion. Fur­ther­more, in the process of nur­tur­ing par­tic­i­pa­tory at­ti­tudes, we not only fa­cil­i­tate and re­in­force self-man­age­ment within the firm (or neigh­bour­hood, school, etc.): we are also ed­u­cat­ing and em­pow­er­ing in­di­vid­u­als to seek self-de­ter­mi­na­tion and demo­cratic par­tic­i­pa­tion in the po­lit­i­cal arena.

The same fun­da­men­tal com­mit­ments that urge us to pro­mote po­lit­i­cal democ­racy should com­pel us to pro­mote eco­nomic democ­racy as well, a so­ci­ety in which en­ter­prises are col­lec­tively gov­erned by all those ac­tively con­tribut­ing to the process of pro­duc­tion.

In­deed, eco­nomic democ­racy is es­sen­tial to the le­git­i­macy of a fully demo­cratic so­ci­ety – which is to say that demo­cratic le­git­i­macy must be grounded in the so­cial realm, as much as the po­lit­i­cal.

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