THE FUTURE OF CAPITALISM:
DOES CAPITALISM REPRESENT THE
BEST HUMANITY CAN EVER HOPE TO ACHIEVE?

by BASIL "BUZZ" HARGROVE

Contents of this article:

A few years ago, someone referred to the period we're living in as "the end of history." What he meant was that there had been fundamental changes in economic and social systems in the past, but this would no longer be the case. The collapse of communism signalled that capitalism would now be here forever - some tinkering here and there of course, but no fundamental change.

At one level, it's hard to see why such a statement should be news. After all, most people in our society had already taken a lot of editorials or TV debates about the possibility of capitalism being changed to another kind of system. The irony is that when this writer announced the end of the debate on capitalism, he actually ended up putting the question of capitalism on the agenda!

It's a question that is, in fact, rarely asked. A question that, given your own ambitions, you may never pursue. Bat a question which, for reasons that will take up most of my talk, won't go away. What I'd like to do, over the next twenty minutes or so, is make some observations relevant to the issue, observations which, I hope, you will continue to think about after you leave the classroom.

Basil "Buzz" Hargrove is the president of the national Automobile, Aerospace, and Agricultural Implement Workers Union of Canada (CAW-Canada). This article is based on a talk given to business administration students.

Let me start with a brief summary of what capitalism is. I don't want to oversimplify, but to highlight two features which distinguish capitalism as a system, and are key to understanding how it functions.

First, some people own the means of production, the factories and offices, the tools and equipment, the financial capital for investment, while others (workers) sell their labour power to these owners. In selling their labour power, working people are really selling their own potential, handing it over to someone else. This is the basis for what is meant when we say that capitalism is inherently structured as a class society: some have power over the use and potential of others.

Second, the owners themselves compete with each other over who gets what share of the overall profits produced. When these owners push for profits, it's not just that they "like" to make more or that they are greedy and materialistic (though many often are!) but that the pressures of competition force them to behave aggressively if they want to remain capitalists. This interaction of class and competitiveness created not just an economic system, but a social system: what happens in this kind of economy tends to dominate every aspect of our lives.

This system has been around for only two centuries of the estimated 3 million years since humans first came on the scene (on the time scale that's comparable to this two-hour class relative to all the classes you will ever attend since kindergarten...).

Although its emergence was incredibly painful in human terms, and although the benefits have been very unevenly spread and new social problems created, the material achievements of this relatively new system were in fact incredibly impressive. No other period of human history can come close to matching its technological progress and its acceleration of the provision of goods and services.

The issue today isn't to deny any of this but to go beyond it: Are there limits to capitalism continuing on as it is? Is this the best humanity can ever achieve? Have the achievements of capitalism themselves laid the groundwork for moving on to a society based neither on class nor the drive to compete?

In addressing these issues, let me turn now to the following half dozen assertions for you to consider:

1) For a good number of people, the system, capitalism, is no longer "delivering the goods."

2) The responses put forth by the economic and political elite of our country will make this worse, not better.

3) The internationalization of competitions is undermining global economic stability and leading to a sustained crisis of jobs and economic waste.

4) The financial system is failing in its role of channelling savings into productive use, undermining needed investments, and aggravating economic instability.

5) An economic system based on valuing only what is profitable cannot deal with the growing environmental crisis.

6) The increasing power of capital over our lives (i.e.,) the lives of those of us those not sharing in that power) means a corresponding growth in the democratic deficit in each country.

Is the System Working?

It's clear that capitalism remains dynamic in terms of its ability to change and restructure the global economy, including our own economy. It's equally clear that there are some who are benefiting from this . But would anyone, and especially young people looking to what they will do in coming years, deny that the system is also failing to address the needs and hopes of a substantial share of its citizens?

Individual companies may be more productive, but the system is wasting more human potential than ever before. The worst unemployment rates of the first thirty years after the war were actually lower than the best unemployment rates in the last decade! Excess overtime for some, no work for others. Pressures to work faster for some, forced part-time work for others.

We have more education than ever before, but less opportunities. More technology and national wealth, but our lives are less secure. We no longer expect, never mind assume, that our kids will have it better than we did.

Single mothers on welfare are threatened with cutbacks, while the financial pages proudly announce a few more millionaires. Inequality is not being reduced but is growing. An environmental crisis is looming but we're too busy with daily survival to worry about the consequences for our health or the survival of the planet. Name any need, any goal, any value, and you'll hear we can't address it because of its impact on competitiveness.

It's not just Canada I'm talking about. Unemployment within the advanced capitalist countries is a staggering 38 million - that's equivalent to a country three times the size of Canada having its entire labour force unemployed. Even those most optimistic about a recovery warn that it might be "fragile" (since who knows how international financiers are going to respond?) and that it's likely to be "jobless" (who defines these kinds of changes as a "recovery"?). And internationally, capitalism's victory over communism was supposed to usher in a new era of global stability and advance. Some stability and advance:

The "new world order" is full of disorder. And worst of all, so many people feel they no longer have any control over their lives, no longer feel like there's a handle on where things are going. Those who reduce all of this to a single focus on "the deficit" are simply telling us how out of touch they are. We are in a social crisis and the real deficit is not so much in budgets but in jobs, equality, justice, democracy, and - especially amongst those who think that things are fine or that the system only needs a tune-up - a revealing lack of vision.

What About the Establishment's Solutions?

In the months before the crash that ushered in the Great Depression, the Financial Post declared that a survey of the leading brokers and investment bankers "failed to reveal any person who is pronouncedly pessimistic as to the future." When the crash came, the quite universal advice from the business community was to slash budgets and cut wages - policies that guaranteed that the Depression would grow worse. While business likes to dress itself in the garb of the future as it puts forth the "only" solutions and direction possible, it sounds very much like it did back in the 1930s - or even earlier.

But even laying that aside, there is a more direct way to evaluate the answers coming from the business community. After all, the corporations have pretty much had their way - whoever was in government - for some time now. How does their record measure up? Remember the promise that the U.S. Canada Free Trade Agreement of 1992 would raise our living standards, strengthen our social programs, leave us more secure? Has this come to pass? Did deregulation of airlines and trucking leave us better off?

What about wrestling inflation to the ground - remember when that was the key to getting everything on track? Did increasing the inequality of the tax system create jobs? Will making parents poorer reduce child poverty? Business constantly points to the United States, months watering at the "more favourable environment" in the home of free enterprise. Fine for them. For us, the question is a little different: is U.S. society a model for the kind of society we aspire to?

They ask us to be "realistic." Well, the reality is that we have lived through a period in which the elite has had the increasing power to enforce their agenda and they have failed miserably. Like all elites, they present their self-interest as the national interest. What the record shows - exposes is more apt -- is that their agenda is more about reinforcing their wealth and power than solving our problems. As time goes on, the declining credibility of their answers will, as it eventually did in the 1930s, raise questions about the credibility formerly unquestioned, of their power over our lives.

The Race Downward: Who Will Buy the Goods?

In the face of increased global competition, companies and all levels of government have faced increased pressures to reduce those costs that don't support competitiveness. This has meant restraint or cutbacks in the wages and social programs of Canadians. But this means a lowering of purchasing power. Who will buy the goods and services we're increasingly able to provide?

The glib answer is "Don't worry. Canadians may not buy the goods but there's a whole world out there. We'll export and the exports will provide jobs and everything will be wonderful." Nice answer. But what if every country is facing the same pressures and reacting the same way?

We're back to "who will buy the goods" and the answer starts getting a little murky. Recessions sink deeper and last longer; expected upturns seem less certain and sustainable. Individual companies and even particular countries may end up much more productive that ever before, but not so the overall efficiency of the global economic system, saddled as it is with the waste of factories and machines sitting idle, tens of millions in the developed world denied a chance to use and develop their skills, and - amidst the growing potential for abundance around us - a Third World suffering the worst kind of poverty and lost potential.

For a time, the United States had the unilateral power to allow it to play the role of an "international government," creating a measure of global stability. But that era (never ideal anyway) is gone. And with it the assumption, held by many in the 1950s and 1960s, that the waste of capitalist cycles and unemployment was behind us, that technical adjustments to the system would smooth things out. Does anyone still really believe that the system is capable of self-regulation, self-regulation that doesn't exact an enormous price?

The Financial Community: Who Serves and Who Rules?

The point of money and finance in a capitalist system is to grease the wheels, to facilitate the movement of savings and credit so that the world of production and services can do its thing. Again, does anyone consider this an accurate description of the role of finance today? Isn't it closer to the truth to point out that its finance has been deregulated, but rather than making the system work better, this has exposed its irrationality?

There is plenty of money around, but instead of being channelled to useful needs, it's going into mergers, speculation, private fortunes, or leaving the country to do who knows what with our savings and the tax breaks we've conceded.

Seven of every eight dollars that crosses international borders is now linked to speculation rather than facilitating economic activity. Since the mid-1970s, real interest rates, what we allegedly pay financiers for taking "risks," have steadily increased but net investment, what they contribute to the economy, has steadily fallen. Interesting isn't it: when workers face a high risk of unemployment the policy prescription is, as we see today, to cut unemployment insurance and welfare payments; but when investors face a real (or imagined?) risk, we increase their welfare...Surely this speaks to something terribly amiss about how we carry out our affairs.

Nothing infuriates me more than to hear obscenely overpaid bankers lecture working people about the need to work harder, be more productive, make more concessions so they, the financiers, cannot only continue to enjoy their privileges but, through their actions, actually sabotage, rather than support, our ability to carry on and improve our lives. The financial elite are not serving Canada's needs (I include here the needs of important sections of business itself). And it's threatening to get worse. How much longer will we accept this? When will the issue be placed front and centre on the national agenda?

Maximizing Profits, Devaluing the Environment

I must say that, although I care about the environment and treasure Canada's physical beauty, like many others I have not yet fully accepted the importance of the environment as a priority in my daily life. What keeps drawing it to my attention is partly the stubborn determination of young people in our society to make it an issue, partly a growing activism within my own union by a similarly stubborn and committed group of local activists, and partly the growing evidence from even establishment scientists and researchers that our air, our lakes, and our health are greatly at risk. Someone, a Mexican writer, said "capitalism knows the price of everything but the value of nothing."

I think we have to ask ourselves a fundamental question about the environment (which, in fact, is hardly limited to the environment): Can a system whose very being is to maximize profit and which, in its single-minded devotion to this objective pushes everything else aside or demands that it conform with this single goal, can such a system leave room for the king of sensitivity to the environment which is necessary to defend public health and ultimately maintain the survival of the planet?

Some will argue that it's not just business that stands in the way, that workers and unions have not always been consistent defenders of the environment. Some of such criticism is valid, and some is not. I'd be very happy to compare the position of labour and business on environmental issues in the workplace and in society.

But this misses the point that capitalism, as a system, undermines concern for the environment. It's not just the rush for profits by particular individuals and corporations, but the creation of a set of values that stress "more" at the expense of better and fairer, that undermine the value of collective goods and needs like the environment, and that maintain the kind of insecurity that leaves some people so desperate for jobs - any jobs - that environmental concerns become an "unaffordable luxury." If capitalism undermines the future of our environment, something we cannot do without, then what does that imply about the future of capitalism?

Capitalism and Democracy: A Growing Contradiction?

The greatest deficit in our country, the one growing the fastest, the one that will cost future generations the most, the one undermining the confidence not of financiers but of ordinary people, is the deficit in democracy, the deficit in our collective ability to shape our society and its vision so that it can truly address our needs.

How come, if we can produce so much more than ever before, we don't generally feel more liberated from material needs? Why are so many of us feeling less in control than ever before in all dimensions of our lives? Why should we accept the "new reality" that elections are meaningless because governments should or must follow the logic of the market? What king of democracy tells us there is no alternative but to structure our lives and our society around the fear of losing our competitiveness"?

Capitalism defines freedom in terms of market freedoms, freedoms based on the power that capitalists have in the marketplace. But those "freedoms" increasingly stand in the way of a different kind of freedom, a freedom based on the ability of everybody to develop their potential and all dimensions of their lives. When the two clash, we have to make a choice.

Look around you. Do you see a healthy society? Do you see a society that supports bringing out the best in people, all people not just the few? Do you believe that more of the same will do anything but reinforce the rat race and meanness so increasingly prevalent in our society? Does this kind of society strike you as the ultimate in human possibilities?

I happen to believe that something else, something better, is possible. I can't offer anyone any blueprints or guarantees, but when I hear "there's no alternative," I can only think of this as "no alternative but to search for that something better." And, unless young people pick up this challenge - and that's what real democracy and real change is, a challenge - nothing will in fact be possible.

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