Thursday, December 30, 2010

Capitalism is Dead! Long Live ???

"Were this system improvable, such would already have happened within the last 80 years. Instead we see an insoluble problem in the absurd Capital Market Theory.

Allegedly, all participants in a free market possess the exact same information and future expectations. Were such at all possible in the real world, all participants would value all goods in this market in the same way, that is, assign the same price. But that would mean no transactions whatsoever would take place since no profits would be possible. With identical information and future expectations price and value are judged identically by all market participants. In those conditions no one can make a profit, either through buying or selling. Instead there are only losses due to transaction costs." Franz Hoermann

Unless, perhaps, price/value includes ‘profit.’ But, how could price actually do so in a perfect market? Knowingly paying others profit would be a form of cooperation, antithetical to perfect competition. And even if we did endow homo economicus with sufficient generosity to say, “Sure, I’ll pay X% above your costs,” that X% would be so low as to prohibit accumulation of capital, and hence prevent capitalism from functioning. Hence, capitalism cannot be ‘pure’ in the sense of a perfect market or perfect competition and still be capitalism. It is systemically geared to increase concentrations of capital, otherwise the very leverage required to expand society’s productive and consumptive capacities would be impossible. Capitalism is Wealth-and-Power-Concentration by definition. It is top-down elitism as socioeconomic system. It can therefore be neither free nor democratic in the sense its champions would have us believe. The only freedom capitalism ensures is that afforded by one’s purchasing power. Yes, one can ‘work hard’ and perhaps earn more, but people’s chances of accessing such freedom diminish as power and wealth concentrate and hunker down. Then corruption becomes the norm and decadence sets in.

The question society must ask itself is this: “When the costs of capitalism outweigh its benefits, how do we go about changing course?” After all, one property all systems share is mortality.

The argument that capitalism is Nature mapped to the economic sphere, and therefore not a system as such, and therefore immortal, is mere propaganda. Nature’s composition – as seen by those who assert capitalism’s robust naturalness – looks like this: competition in the true Hobbesian manner of each against all; selfish genes determining behaviour; creative destruction ensuring renewal and change; pitiless, merciless, randomly mutating evolution ensuring survival only of the fittest. But this perception of Nature is an ego-based projection arising from incomplete information garnered over the centuries. The view afforded by the latest science is very different.

Nature is in fact cooperative first, competitive second. Genes are not controllers of behaviour, they react to the environment; environment has primacy, not some unaware double-helix firing off instructions, via proteins, from an imagined control center. Creative destruction is not everywhere evident; there are exceptions, wisdom being one of the most important, institutions the most pernicious. And Lamarckism is making a slow comeback; random mutation as lone engine of evolutionary change is an incomplete idea; there is also intent.

Capitalism does not mirror Nature. Even if it did, it would only do so for a while; Nature is Change, is in fact Everything, and humanity is seamlessly, irrevocably, beautifully embedded in it, changing it as it changes us. Capitalism is indeed a system born of an ideology serving an elite, and can only be so. It has been a lever to linear growth of a certain type, and has successfully harnessed humanity's inventive genius in pursuit of that growth. To paraphrase Eisenstein, it has monetized (made scarce) everything it could, but can take us no further. To the extent it lived, it is now dead. Certainly it was never what it's defenders said it was, and that growing realization is a kind of death.

The alternative is some form of loose egalitarianism motivated by environmental concern, a model based on abundance and cooperation rather than scarcity and competition. (And by the way, neither socialism nor communism are it, for they too are elitist.)

If humanity wants to transition to such a system, in my view it must be one which can benefit sustainably from the fruits of centralization while avoiding its dangers and incorporating decentralization too. This is, in my view, only possible via a radical reorientation of our goals and desires. By demoting money’s socioeconomic role while promoting true wealth as arising from community- and ecosystem-health, open access to a relevant and optional education, etc., the necessary ideas and solutions should arise. What we call this system only history can reveal. Right now, to me, the best name seems to be “Resource-Based Economics.”


Karl said...

While the ideas of a RBE are good, the approach taken by Mr. Fresco and his gang leave much to be desired. They seem to insist that if this approach cannot be done on a global scale, with absolute efficiency, then it may as well not be done. Clearly, 7 billion people are not going to come to any agreement about a planet-wide social restructuring, so any successful approach will be piece-meal. An article [1] linked to from P2P Foundation the other day takes a more realistic approach of decentralized experimentation. The article concludes: "Don’t leave it to someone else; do it yourself, because that’s the only way it’s going to happen."

Stavros Stavrides asks [2] "Do we intend to make a society of sharing by sharing, or do we intend to create this society after a certain period in which we do not share?". The behavior of highly visible members of the Zeitgeist Movement indicate to me that they have no awareness that open, peer-based methodologies are required to develop the commons they seek. During a talk in Slovenia [3] Jacque told his audience to go hat-in-hand to capitalists for the means to build his experimental city. I have never once heard him make reference to any of the existing global commons movements, and Peter Merola only talks about them dismissively.

Communism is fundamentally about commoning in a stateless society, so an RBE is absolutely a form of communism. Adherents of the of Venus Project lose credibility when they insist that communism is about centralized planning or requires the use of money.


Toby said...

Thanks for the comment Karl. Sorry that I just today noticed that it got spammed by Blogger. I have no idea why Blogger saw your post as spam -- I've not done anything to the spam filter so it's still on its default settings.

I agree with all your points except for the last one about communism. There are indeed many similarities along the lines of sharing and the commons, but Marx and his followers tended to make an idol of labour, and here a RBE is of course quite different.

As to the hopeless position of The Venus Project, yes, they are trying to squeeze an enormous camel through the eye of a tiny needle, while ignoring more open alternatives. This point, that openness is key, I make as often as I can while trying not to bore people with it. Why I still closely follow what Peter Merola and Jacque Fresco do and say, is because their arguments are generally sound (not always, I disagree with plenty), as well as stimulating, and they argue in a cohesive manner which I find nowhere else. They still have plenty to offer. We just don't have to obey them.

I don't believe it is helpful to say the future will be X, and that we must ruthlessly adhere to that vision. The Venus Project/TZM say this too, as in "the means are the ends" yet they don't live it. This disappoints me. What is true though is that they cannot control what happens globally. The ideas they present are bigger than the people presenting them, are 'out of the bag,' and will influence events in unforeseeable and uncontrollable ways.

Toby said...

Great links Karl, especially to the article on the commons. I urge everyone to read it. Here are my initial reactions, with quotes:

Massimo De Angelis: "Today, most of what is produced in the common—whether in a distorted capitalist commons or alternative commons—has to be turned into money so that commoners can access other resources. This implies that commons can be pitted against one another in processes of market competition. Thus we might state as a guiding principle that whatever is produced in the common must stay in the common in order to expand, empower, and sustain the commons independently from capitalist circuits."

Me: This is why Fresco and Merola urge global acceptance. The favoured quote is: "Patchwork won’t work." But, we cannot expect global acceptance by any other means than understanding, experimentation, and desire for the new way. This is the inescapable Catch 22.

Stavros Stavrides: "I am thus very suspicious or reserved about the idea that we can build our own small enclaves of otherness, our small liberated strongholds that could protect us from the power of the state. I don’t mean that it is not important to build communities of resistance, but rather than framing them as isolated enclaves, we should attempt to see them as a potential network of resistance, collectively representing only a part of the struggle. If you tend to believe that a single community with its commons and its enclosed parameter could be a stronghold of liberated otherness, then you are bound to be defeated. You cannot avoid the destruction that comes from the power of the state and its mechanisms. Therefore, we need to produce collaborations between different communities as well as understand ourselves as belonging to not just one of these communities. We should rather understand ourselves as members of different communities in the process of emerging. [My emphasis.] […snip…] But, for sure, the state will be there until something—not simply a collection of struggles, but something of a qualitatively different form—happens that produces a new social situation. Until then we cannot ignore the existence of the state because it is always forming its reactions in terms of what we choose to do. [snip]

I think it is not a question of a model. We cannot say that some kind of model exists, nor should we strive for it."

Me: The means are the ends, in other words. What should remain important is something simple and broad which allows reasonable, humane and environmentally supporting priorities to emerge. For me the expression "demote money, promote wealth" does this, but I welcome other suggestions. Indeed, I long for them.

Toby said...


Massimo De Angelis: "I dare to say that "if we are left alone" we may end up doing pretty much the same things as we are now: keep the race going until we re-program ourselves to sustain different types of relations. In other words, you can assume that “we are left alone” and still work in auto-pilot because nobody knows what else to do. There is a lot of learning that needs to be done. There are a lot of prejudices we have built by becoming—at least to a large extent—homo economicus, with our cost-benefit calculus in terms of money. There is a lot of junk that needs to be shed, other things that need to be valorized, and others still that we need to just realize. […snip…] Concerning the other part of your question, yes, we could envisage a "state," but not necessarily in the tragic forms we have known. The rational kernel of "the state" is the realm of context—the setting for the daily operations of commoners. From the perspective of nested systems of commons at larger and larger scales, the state can be conceptualized as the bottom-up means through which the commoners establish, monitor, and enforce their basic collective and inter-commons rules. But of course the meaning of establishing, monitoring, and—especially—enforcing may well be different from what is meant today by it."

Stavros Stavrides: "So, coming back to your question, when we are left alone we have to deal with the fact that we are not equal in every aspect. In order to establish this equality, we have to make gestures—not only rules—but gestures which are not based on a zero-sum calculus. Sometimes somebody must offer more, not because anyone obliges him or her but because he or she chooses to do so. For example, I respect that you cannot speak like me, therefore I step back and I ask you to speak in this big assembly. I do this knowing that I possess this kind of privileged ability to talk because of my training or talents. This is not exactly a common, this is where the common ends and the gift begins—to share you have to be able to give gifts. To develop a society of equality does not mean leveling but sustaining the ability of everybody to participate in a community, and that is not something that happens without effort. Equality is a process not a state. Some may have to "yield" in order to allow others—those more severely underprivileged—to be able to express their own needs and dreams."

Me: These guys are articulating the process I think of a resource-based economics. It is not a system we strive towards, it is a new set of priorities we agree to adopt because we want to, right across the planet. The process necessarily starts off small, but must be adopted everywhere if it is to work as a new global system.

Thank you Karl for linking me to these guys. I feel like I've bumped into two soul mates in one day. Wonderful stuff!