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Reimagining Capitalism: An End to Mythologies

John Peeler: The economy, like the polity, ought to be democratically controlled. Democracy should operate at the level of the firm as well as the community: employees should be owners.

The American right wing operates on the basis of pernicious myths about the market and capitalism: that a free market solves all problems better than government, that our present economic system exemplifies the best of free enterprise, and that capitalism is synonymous with democracy. Yet we know that unregulated markets lead inexorably to monopoly, and cannot provide such goods as health care and education equitably to all. We know that our present economic system provides subsidies and safety nets for large corporations while consigning small business to the hazards of free enterprise. We know that while democracy presupposes the equality of all citizens, capitalism inherently promotes inequality.

capitalism reimagined

On this basis it seems reasonable that we should keep on trying to abolish capitalism, rather than “reimagining” it. But we ought to bear in mind that while we have centuries of experience with the real world of capitalism, we have much less real world experience with socialism, and a good deal of that experience has been bad. We have many interesting small-scale socialist experiments that at best can provide a humane existence for their members (e.g., the Mondragón cooperatives in Spain). We have the fairly successful (but stressed) social-democratic regimes in Scandinavia, which have provided high living standards, relative economic equality, and exemplary social services. But those countries remain capitalist: they have reimagined capitalism. Then we have the Leninist regimes that we don’t much like to talk about. Their founding myth was that socialist central planning and control would solve all problems better than capitalism. We know how that turned out.

Before we get into abolishing capitalism, we socialists need to do some “reimagining socialism.”

A reimagined socialism will probably turn out not unlike reimagining capitalism. To the extent that we get rid of capitalism’s vices, we open the way for capitalism to be turned to democratic and socialist purposes. The economy, like the polity, ought to be democratically controlled. Democracy should operate at the level of the firm as well as the community: employees should be owners. The task of deepening our democracy at both national and local levels is inevitably also the task of democratizing our economy. As we empower citizens by subjecting capitalism to democratic control at all levels, we will have created twenty-first century socialism.

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The difficulty with democratizing capitalism is that by its very nature it produces inequality, while democracy is premised on equality. So the task is to harness the enormous energy of capitalism by requiring it to serve the whole society rather than merely the interests of stockholders or managers. In imposing this obligation on capitalism, we will in fact protect it from its own fatal tendency to concentrate ever more resources in ever fewer hands, until the structure falls of its own weight (as has happened repeatedly, most recently in 2008-9).

The very ideas of the private firm and the corporation need to be reimagined. Capitalism gives capital exclusive control of the firm or corporation, while treating the workers who produce the value that the firm markets have no right of control. This means that management can close a plant at will, without any consultation with its workers. The law needs to be changed to require firms and corporations to give workers meaningful control over management. The contribution of labor must be recognized as the equivalent of capital, carrying with it the right to share in managing the company and in reaping the profits thereof.

At the level of the national economy, democratically elected officials (executive and legislative) should have the recognized right to regulate and guide corporations to assure that they serve the public interest. And the convention that corporations have all the rights of individual citizens, as codified by Supreme Court decisions all the way back to the post-Civil War period, must be changed. The issuance of a charter to a corporation should entail the obligation to serve the public good.

john peeler

In an increasingly open, globalized world economy, states must first of all become more democratic internally in the ways described above. Then they must work together to regulate the global economy, making sure that it serves the interests of humanity as a whole, and of the larger ecology of our world. Unregulated, free-trade capitalism will destroy us, because under such a system it is nobody’s responsibility to consider anything beyond what is profitable in the short term.

John Peeler