Michael’s criticism of an article by Jason Hickel and Yanis Varoufakis concerning ending the capitalist model
Michael Roberts is an Economist in the City of London and a prolific blogger.
Cross-posted from Michael Roberts’ blog
This file is from the Open Clip Art Library, which released it explicitly into the public domain
Leading left economists Jason Hickel and Yanis Varoufakis jointly wrote an article for the British newspaper, the Guardian this week. It was headlined as “We can move beyond the capitalist model and save the climate – here are the first three steps.” Jason Hickel is professor at the Autonomous University of Barcelona and a visiting senior fellow at LSE. Yanis Varoufakis is the leader of MeRA25, a former finance minister and author of Technofeudalism: What Killed Capitalism.
Hickel and Varoufakis start by making it crystal clear. “Our existing economic system is incapable of addressing the social and ecological crises we face in the 21st century. When we look around we see an extraordinary paradox. On the one hand, we have access to remarkable new technologies and a collective capacity to produce more food, more stuff than we need or that the planet can afford. Yet at the same time, millions of people suffer in conditions of severe deprivation.”
Why is this? Hickel and Varoufakis tells us bluntly that the problem is “capitalism”. A strange answer from Varoufakis who has recently written a book that argues ‘capitalism is dead’ and been replaced by feudalism, or more precisely ‘techno-feudalism’. But then Hickel and Varoufakis’ definition of capitalism is somewhat strangely put. By capitalism, they don’t mean “markets, trade and entrepreneurship, which have been around for thousands of years before the rise of capitalism.” That’s true. But instead, the authors of this piece say that by “capitalism we mean something very odd and very specific: an economic system that boils down to a dictatorship run by the tiny minority who control capital – the big banks, the major corporations and the 1% who own the majority of investible assets.”
I am not sure why this is ‘odd’. After all, the history of human social organisation since primitive times has been one of a division of people into classes, with a ruling class exploiting the rest through different social modes: slavery, feudalism, absolutism and, for the last 250 years or so, capitalist exploitation of human labour power through ownership and control of the means of production. Indeed, as the authors say, under capitalism “the purpose of production is not primarily to meet human needs or to achieve social progress, much less to deliver on any ecological goals. The purpose is to maximise and accumulate profit. That is the overriding objective. This is the capitalist law of value. And to maximise profits, capital requires perpetual growth – ever-increasing aggregate production, regardless of whether it is necessary or harmful.”
Yes, capitalism is a profit-driven system that exploits the mass of working people, but the authors’ emphasis in this piece is less on that aspect of capitalism and more on its ‘irrationality’ ie the “massive production of things such as SUVs, mansions and fast fashion, because these things are highly profitable to capital, but chronic underproduction of obviously necessary things like affordable housing and public transit, because these are much less profitable to capital, or not profitable at all.”
They correctly show that the reason global warming and the reduction of greenhouse gas emissions are not being dealt with under capitalism is that, although renewables are already much cheaper than fossil fuels, fossil fuel production is up to three times as profitable. “Similarly, building and maintaining motorways is many times more lucrative for private contractors, car manufacturers and oil companies than a modern network of superfast, safe public railways. So capitalists continue to push our governments to subsidise fossil fuels and road building, even while the world burns.” As the authors graphically put it: “capitalism cares about our species’ prospects as much as a wolf cares about a lamb’s.”
Capitalism is blocking technologies and investment for the collective good and it is locking “us into never-ending cycles of imperialist violence.” Imperialism is a product of capitalism, where “capital accumulation in advanced economies relies on massive inputs of cheap labour and nature from the global south. To maintain this arrangement, capital uses every tool at its disposal – debt, sanctions, coups and even outright military invasion to keep southern economies subordinate.”
So what is the answer to capitalism and imperialism? The authors are blunt, again. “The solution is staring us in the face. We urgently need to overcome the capitalist law of value.” Yes. But when it comes to a programme to overcome the law of value in capitalism, the alternatives offered by our authors become blunted (in its other meaning). Hickel and Varoufakis offer us three necessary conditions, but not to replace capitalism with socialism, but to replace capitalist “dictatorship” with “a functioning and ecologically sound democratic one”. So not from capitalism to socialism, but from dictatorship to democracy. In this article, the word ‘socialism’ is completely missing.
And why that is becomes clear when the authors spell out their three conditions for change. “The first condition is a new financial architecture that penalises destructive private “investments” and enables public finance for public purposes.” That’s a little vague; what does this mean in practice? “At the heart of this architecture we need a new public investment bank that, in association with the central banks, converts available liquidity into the types of investment consistent with common, sustainable prosperity.” What? So the answer to the domination of finance capital is not to take over the banks, insurance companies, hedge funds, etc and then plan investment. No, it is just to set up a public bank in competition with the existing capitalist finance sector. Given that capitalist investment in modern economies is some five times larger than public investment, how does this proposal reverse that ratio and end the ‘dictatorship’ of capitalism?
The second condition is to have “extensive use of deliberative democracy to decide sectoral, regional and national goals (eg regarding the growth or even winding down of different outputs) towards which the new public finance tools will be aimed.” So our public investment bank is to be run democratically and decisions about investments it makes are to be made democratically. Fine, but what about the investment decisions being made the huge private investment banks in the US, the big five commercial banks in the UK etc? Their decisions are left untouched, it seems.
Ah! No they are not, because the third condition for ending capitalist ‘dictatorship’ , according to the authors, is the formation of companies “run along the lines of one employee, one share, one vote.” Corporations are not to be brought into common ownership. Instead, every worker gets a share and a vote in company decisions. Strange this, because any workers can buy a share in a company right now and vote. What happens to the shares already held by the big corporations, private equity companies and financial institutions? Are they not to be expropriated? If they are, why not say so, instead of just offering us the idea of one worker, one vote?
The authors finish their piece with the claim that there can be a world that avoids ecological collapse and that ends global poverty: “it is a tangible prospect”. The problem is that the three policy prescriptions offered by Hickel and Varoufakis fall well short of achieving that, because they do not lead to the end of what they call capitalist ‘dictatorship’.
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