By Roger Baker / The Rag Blog / February 2, 2012

Gar Alperovitz’s book, America Beyond Capitalism, has recently been released in a second edition. The main message of the book is to describe, document and analyze the increasing failure of capitalism to deliver benefits to the general public. In doing so, it compares capitalism to various other types of social institutions that we can see, and which have successfully operated outside the privately run capitalist sector of the U.S. economy.

There is a wealth of documentation in the book regarding different kinds of businesses and institutions that have various degrees of democratic ownership and control, including a rich variety of non-profits, profit-sharing businesses, credit unions, and cooperatives.

As an introduction to many of the same ideas, there is an excellent and informative discussion between Alperovitz and David Schweickart, both post-capitalist social theoreticians who recently spoke at an alternative economics conference, ICAPE. Schweickart’s recent book is “After Capitalism” and his thinking is largely consistent with that of Alperovitz. Both believe that capitalism has developed fatal flaws; that it is failing to deliver and is running into fundamental environmental limits that constrain its further growth. Other lectures and interviews by Alperovitz are available on You Tube such as this one.

The case that U.S. capitalism is in deep trouble was no longer hard to make, even before the major economic crisis of 2008. The internal contradictions of capitalism have now built up to the degree that it has become apparent, even to many ordinary Americans, that our own capitalist system is broken. The polls show wide public agreement that the U.S. government and economy are in serious trouble, although there is wide disagreement about how to deal with the problem. Global finance capital has become like a cancer, so unsustainable and so resistant to internal reform, and in so many ways, that the USA has become an unhappy nation, groping for an alternative to the current system of rule from the top down by a wealthy elite. A recent poll shows this trend quite clearly.

It is not hard to agree with Alperovitz that the current system has gotten past the point that even the wisest and best Keynesian economic techniques cannot keep capitalism expanding. The current situation has become one of searching for ways to postpone a global crisis. When the Euro finally collapses in its buying power, as many think probable, global finance is so interconnected that the crisis is likely to sink the dollar with it.

In the USA, Republicans tend to blame big government while remaining in support of corporate domination and the rule of concentrated wealth at the expense of domestic social spending. Much of the rest of the population supports the expansion of government social safety net programs, which they have looked toward the Democrats to deliver. Given the current partisan gridlock in government, the public has expanded their participation in public protests to express their frustration, as we see with the global growth of the occupy and protest movements over the past year. With the popular support for Occupy Wall Street seen in the polls, we see a nation realizing that business as usual isn’t working.

Wealth and its accompanying political power have now become highly concentrated into the hands of the top 1%, arguably even the top .1%. This power is being increasingly being abused to the detriment of the great majority, and now increasingly without a middle class buffer layer to help maintain social stability. These concepts are certainly not foreign to socialists. Marx anticipated the trend toward concentration of wealth in fewer and fewer hands as the impetus for “class struggle”, and the development of “class consciousness” as a result.

Local democracy

Alperovitz advocates democratic management of various resources and endeavors ranging from agriculture to industry. The force leading us in this direction is the fact that the internal contradictions of top-down control of the US economy by increasingly concentrated wealth are destroying the political and social infrastructure of the USA for selfish short-term gain, creating a social vacuum where there once was a network of local community involvement. As Alperovitz also points out, Robert Putnam’s classic study “Bowling Alone” documents the fact that capitalism is undermining U.S. “social capital”. This is partly the result of the pervasive corporate media programming U.S. citizens to be a nation of compulsive consumers as opposed to politically engaged citizens.

One point that Alperovitz emphasizes is that the whole U.S. economic and political system, both public and private, has now become too top-heavy and removed from popular control to be run democratically from Washington. Chris Hedges describes this weakening of democracy in his book; “The Collapse of the Liberal Class”. A key concept is that the meaningful exercise of democracy to protect the interests of the public on the national level requires the practice of democratic local control at the base. For national democracy to work well, the public needs to be well-informed, involved, and to experience and actually practice democracy at the local level.

Global capitalism has deep structural problems

Given its very nature, capitalism must grow to survive. It depends on perpetual growth to pay off the interest on its loans. However, the reality is that more and more global finance capital looks like a global finance bubble or Ponzi investment scheme. It is beginning to occur to many sober economists that the aggregate debt of unregulated bank loans and bond debt booked on the global accounting ledgers can never be paid back in terms of its previously assumed buying power. The global economic system must somehow be keep expanding by the continuing expansion of easy credit for the system not to deflate and collapse at some point. Alas, the capacity for infinite expansion process seems to be nearing an end. Alperovitz approvingly quotes Kenneth Bolding; “Anyone who thinks that exponential growth can go on forever is either a madman or an economist”.

When a growth-addictive system like global finance capital can no longer expand, whether due to unsustainable environmental trends and internal contradictions, global finance is in trouble. It has to be replaced by some other type of system that does not depend on growth. Alperovitz devotes himself at length to trying to describing what that something else must look like and what rules it needs to follow to work, based on a lot of his own past governmental and community organizing experience.

One is tempted to think that Alperowitz might discuss socialism a lot, but in fact his book barely mentions the “S” word. What Alperovitz advocates may resemble socialism, but of a type that preserves the market and is minimally antagonistic to local democratic control of capital and local initiatives. He cultivates a vision of evolutionary democratic progress distinctly at odds with the classic Marxist image of workers massing in the streets behind barricades to take state power. Instead, Alperovitz writes about local democratic control and what he terms “evolutionary reconstruction”, with capital to be tamed and managed as a public resource.

Alperovitz’s vision is one of radical decentralization, plus a widespread popular culture shift toward the strong local exercise of democracy. It requires a radical extension of the forms of local management that we can already see happeninng now. Where we see local democracy strengthening community control, we see something beneficial that can grow over time, and by example inspire alternatives with the attractive qualities needed to displace our existing but failing institutions.

He terms his concept the “Pluralist Commonwealth” model. It includes examples like coops, publicly owned banks, credit unions, and various local public ownership and nonprofit entities. To this list, we might also add the “transition communities” that foresee local grassroots reorganization to deal with hard times. Alperovitz describes a growing “new economy” movement

Any intelligent humanist certinly wants things to go in the direction that Alperovitz suggests. We desperately need a peaceful transition to a post-capitalist society withh a sustainable economy. Because if we don’t get there somehow soon, mother nature will take charge and make us do things the hard and unforgiving way. The limits of nature are getting hard to deny, with the best climate scientists warning us that we must take immediate action to prevent a future disaster.

The breakdown of control from above

One of Alperovitz’s insights that I found particularly interesting in his panel discussion with Schweickart, is that local community organizations are spontaneously arising to solve social problems that the current political system is unable or unwilling to address. Alperovitz notes that this spontaneous grassroots self-organization trend from below seems to be happening even faster than more traditional cooperative worker ownership and control of business enterprises that he advocates. Why would this trend be happening now?

My own interpretation is that a lack of control from above gives rise to citizen action below. William Robinson postulates that the global control of finance capital is weakening, and that movements like Occupy Wall Street are emerging globally to fill the political vacuum. The global ruling elite are losing their grip and don’t know quite what to do. Geopolitical scholar Immanuel Wallerstein tends to agree

Robinson describes the breakdown of top-down control by traditional capital-based authority. When the grip of a top-down social control system breaks down, partly due to the fact that that they are no longer delivering many benefits such as jobs or food, people tend to try to take matters into their own hands. Freed of effective top down control, people tend to reorganize new grassroots identities and create their own organizations to meet to their most pressing needs. This same outlook is closely akin to the central thesis of Loretta Napoleoni’s book “Rogue Economics”. Napoleoni believes that unregulated, rapacious finance capital is globally undermining our existing social institutions based on national laws and culture and generating an outlaw rebellion below.

“…violence war and fear plague the globalized world, and at times like these human ideals vanish while the values of closed societies remain…Equally globalization not only fails to bring about peace and stability to a planet in deep political turmoil, it unwittingly fosters modern tribalism” (Rogue Economics, p 233).

Since humans are tribal by nature, when their governments and traditional institutions and sources of authority and social influence lose their grip, people tend get together and to spontaneously invent their own supportive networks and social capital. New but closed social institutions like churches, gangs, or clubs arise; mutual support networks tend to replace the old open society sources of government and law enforcement from above. Youth gangs and the global growth of criminal enterprise are unfortunate examples of the weakening of traditional governmental authority from the top down. Where there are large numbers of incarcerated youth, combined with few employment opportunities, the rise of prison inmate gangs who deal drugs is one predictable result.

Along with the global proliferation of crime that Napolioni describes, and in parallel with these, there are many commendable and beneficial groupings emerging from below in response to increasing popular desire. Churches and volunteer organizations tend to emerge as communal support networks of last resort. Even the homeless may be seen to self-organize themselves in commendable ways that offer mutual support. In fact, the Occupy Wall Street movement in New York organized brave and compassionate grassroots support networks in Zuccotti Park, which were ultimately repressed by the NY police authorities.

Alperovitz concludes “America Beyond Capitalism” with guarded optimism that it is possible to make the leap to a new potential material abundance that the age of technical progress and information technology have made possible. The allure of this promise, seen in contrast with the economic reality, could help stimulate the sort of cultural shift that Alperovitz foresees as a source of motivation for the transition to evolutionary reconstruction.

Timing is important

We can see the wealth of evidence provided by Alperovitz and more and more other sources that our current institutions are breaking down, due to their growing internal and external unsustainability. That the system as a whole is failing should be pretty clear to the observant by now. However, predicting where things will go from here, the timing is much less certain, because the big picture is so globally interactive, political, and complex. We are now probably facing a world depression, but with less prospect of eventual recovery than in the 1930s.

Trying to predict the timing and course of the breakdown of social control from above is important. Global finance capital seems to be losing its grip faster than the new economy movement or the Pluralistic Commonwealth is gaining ground. A decline in capitalism might lead to filling the power vacuum through replacement by local democratic control, or it might empower the the sort of rogue criminal elements that we see operating in Mexico. The governmental response from above to a growing crisis is not likely to be very carefully weighed. Bureaucracies are not good at handling unfamiliar situations, and an atmosphere of crisis is not conducive to sober reflection on the best long range alternatives.

The crisis of capitalism is likely to see a more abrupt decline when things are headed down, in contrast to the long ascent of capitalism with its associated world population over the last 250 years. This long ascent was during a period when the world still had cheap energy and abundant mineral and natural resources to be matched by improvements in technology. This period of ascent and decline are likely to be asymmetric, with a long rise and a faster decline due to basic resource limits. This pattern has been seen throughout history and has been termed “the Seneca Effect”

Oil has now emerged as a primary factor limiting growth

Understanding the key role of oil in the global economy requires that we understand that the role of cheap oil that now powers almost all the movement of real goods in the global economy. The price of oil has risen five-fold from about $20 to $100 in only about a decade. This means that many of the investments that underlie global finance capital have become totally unprofitable. In the face of this new reality, a new and greener type of global infrastructure is urgently needed.

Because of the end of cheap oil, it is likely capitalism is sinking into crisis even faster than Alperovitz anticipates. The world now faces the end of growth, with peaking global oil production being a primary limiting factor.

We are likely already caught up in a state of global environmental resource overshoot and economic crisis. Talented resource economists such as Chris Skrebowski have recently suggested that we have a maximum of only a few years before we see the end of growth in the more developed countries, with lower labor cost countries picking up the slack.

“The current failure of most western economies to achieve anything
more than minimal growth this year (2011) is most likely because oil
prices are already at levels that severely inhibit growth. Indeed,
research by energy consultants Douglas-Westwood concludes that oil
price spikes of the magnitude seen this year correlate one-for-one
with recessions”

Given an inability to grow because of rising energy costs, global finance capital is now in a crisis so severe and difficult to resolve that Nature, one of the world’s top scientific journals, recently outlined the problem in some detail. Whereas climate change is slow, the economic impact of the end of cheap oil is now hitting the global economy hard and fast.

“The approaches needed for tackling the economic impacts of resource scarcity and climate change are the same: moving away from a dependence on fossil-fuel energy sources. Whereas the implications of climate change have driven only slow policy responses, economic consequences tend to drive shorter-term action.”

— James Murray and David King

If the scientists are right, and they make a strong case, we will know within the next few years. Let us study the current situation and try to assist a soft landing as global finance capital continues to weaken and decline. Let us try to work together to see that kinder, more local, and more democratic alternatives, developed along the lines that Alperovtiz proposes, are able to replace it.

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