An Introduction to Political Economy

December 28, 2017

Last month, when I looked across the vast gray wasteland of the calendar page ahead and noted that there were five Wednesdays in November, I asked readers—in keeping with a newly minted but entertaining tradition here on Ecosophia—to suggest a theme for the fifth Wednesday post. This blog being the eccentric phenomenon that it is, it probably shouldn’t have surprised me that the result was a neck-and-neck contest between a post on nature spirits and a post on alternatives to capitalism and socialism, with a focus on democratic syndicalism. Nature spirits won by a nose, but there was enough interest in the other option that I decided to go ahead and write a post on that as well.

Nature spirits and democratic syndicalism may not seem to have much in common, but I’ve discovered one unexpected similarity: it’s very difficult to discuss either one in a single post. To make any kind of sense out of the ancient belief that the forces of nature are best understood and most truly experienced as persons rather than things, it turned out to be necessary to delve into the entire tangled mess our culture has made about the concept of personhood, and what does and doesn’t count as a person. Only when that was cleared away could we go on and talk about what it means to experience nature as composed of persons rather than things.

In the same way, if we’re going to make any kind of sense of the alternatives to capitalism and socialism, it’s going to be necessary to talk for a while about capitalism, socialism, and the third and usually unmentionable system of modern industrial economics—yes, that would be fascism. In the process, we need to pay attention to the thing that conventional economics systematically ignores—the mutual entanglement of political power and economic wealth—and that requires us to revive a science that has been dead and buried for well over a century now.

If you take an introductory course on economics, you can pretty much count on being told that the modern science of economics was launched by Adam Smith. Like so much conventional wisdom about history these days, this is false, and it’s false for at least two different reasons.

First of all, economics isn’t a science. What sets apart a science from other kinds of human knowledge is that the assertions of a science are tested against what actually happens. When a scientist makes a claim, at least in theory, other scientists run the same experiment or observe the same phenomenon and see if they get the same results. If they don’t, the claim made by the first scientist—again, at least in theory—goes into the wastebasket alongside such discarded notions as phlogiston and the luminiferous ether. Nowadays, this doesn’t always happen, and that’s one of the core reasons that the sciences these days are facing a catastrophic crisis of legitimacy, but that’s an issue for another post; when a science does what it’s supposed to do, every claim is tested to see if it can be replicated. That’s what makes it a science.

Economists don’t do this. They don’t even pretend to do it.  Mainstream economists like to make claims about what will happen when their preferred policies are put into place, mind you, but the mere fact that those claims simply aren’t true never gets considered when repeating them. Consider the way neoliberal economists to this day rehash David Ricardo’s claim that free trade will make poor countries rich. They’re wrong; history shows that when poor nations embrace free trade, they become even poorer, while poor nations that reject free trade schemes generally prosper. Yet the total disconfirmation of free trade theory in practice has yet to register on the economic mainstream.  As far as economists are concerned, Ricardo said it, they believe it, and that settles it.

So economics isn’t a science. It also wasn’t founded by Adam Smith. What Adam Smith founded, rather, was political economy. You won’t hear much about that field of study these days, and that’s not an accident. Political economy, as the name indicates, explores the relations between wealth and power in a society.  For reasons that I suspect my readers will have no trouble understanding, this is something that a great many wealthy and powerful people in today’s industrial nations don’t want to discuss—and that, my children, is why we don’t have courses on political economy in universities today. We have courses on political science, which claim to study power without taking wealth into account, and courses on economics, which claim to study wealth without taking power into account, and both of these highly praised, well-funded fields of study by and large duly churn out vast amounts of poppycock instead of offering useful insights into the societies in which we live.

We’re going to talk about political economy in this week’s post. We’re going to do that because it’s not really possible to understand why the world’s industrial nations are running themselves into the ground without understanding the self-destruct button hardwired into capitalism, and it’s impossible to understand that latter bug—or is it a feature?—without talking about the ways that wealth and power form feedback loops in an industrial society.

The most important thing to understand, if you’re trying to make sense of political economy, is who owns the means of production. Means of production? That’s a convenient bit of shorthand. Every human society produces goods and services; the means of production are the sum total of the arrangements made to do this necessary task. Now of course a category this diverse is going to include things owned by an equally dizzying array of people, but in most societies, ownership of the most important means of production tends to follow specific patterns.

Examples? Consider a feudal society—early medieval England, let’s say. It’s an agrarian society in which most people are employed in farming, and the means of production that matter most can be summed up in one word: land. Who owns the land? That’s a simple matter. The king owns all the land; he grants the right to use it to his immediate vassals, the great dukes and earls of the kingdom, in exchange for their loyalty and obedience; they pass on the same right to barons, the lesser fish of the feudal system, on the same terms; the barons then do exactly the same thing, and we proceed straight down the feudal pyramid to Higg son of Snell in his peasant hovel. Higg has his hovel and the farmland that goes with it because he’s a vassal of Sir Hubert de Ware, who is a vassal of Baron Fulk of Lewes, who is a vassal of Duke Geoffrey of Sussex, who is a vassal of the king. Understand that pattern of ownership of the means of production—that pattern of political economy—and you understand early medieval English society.

Okay, let’s consider another example: early twentieth-century America. It’s an industrial society. and factories and offices are the means of production that matter most. Who owns the factories and the offices? That’s also a simple matter. The factories and offices are owned by corporations. Who owns the corporations?  Their investors. How do you get to be an investor? By having enough capital to purchase stocks and other investment vehicles. How do the investors exercise their ownership? By electing boards of directors in elections in which each share of stock has one vote; the boards of directors then hire and fire the people who run the factories and offices. (Remember, this is early twentieth-century capitalism; things are different now.) Understand that pattern of political economy, and you understand early twentieth-century America.

Notice, before we go on, that there are two crucial differences between the political economies of feudal England and industrial America. The first has to do with the relationship between power and wealth. In feudal England, that’s totally explicit: the king is the head of state and also the landowner of last resort; the dukes and barons are political officer as well as economic magnates. In industrial America, it’s not explicit: in theory—mind you, only in theory—the government is entirely separate from the economic sphere. In practice the wealthy buy and sell political offices and voting blocs the way they buy stocks and bonds, and since there’s no explicit relationship between power and wealth, there’s nothing to keep them from doing whatever they want.

The second difference has to do with the distribution of wealth. In both societies, wealth is very unfairly distributed—the rich are very rich and the poor are very poor—but the feudal system has a counterbalance to the tendency of wealth to flow uphill. If you, dear reader, were a duke or a duchess in early medieval England, and you had the brains the gods gave geese, you would know that your influence, your security, and your survival depended on having plenty of vassals who would come running with drawn swords any time you needed them. How do you get vassals? By granting them landholdings—that is, transferring wealth down the ladder.

But your vassals are in the same situation you are.  They need vassals of their own, and their vassals need vassals, all the way down to Higg son of Snell, who will not only come running with a billhook in his hands when Sir Hubert needs him in battle, but puts in the daily labor that puts bread on everyone’s tables. Thus feudal societies constantly move wealth down the pyramid. As a direct result, they tend to be extremely stable—so much so that when complex  societies collapse, a feudal system is almost inevitably what takes shape amid the ruins.

Capitalist societies don’t do this. Quite the contrary, in a capitalist society like early twentieth century America, all the incentives keep wealth flowing up the social ladder, and nothing brings it back down. The investors who own stock in corporations have an understandable interest in maximizing the return on their investment, so they reliably vote in boards of directors who will hire management who will force down wages as far as possible.  The investors who own stock in corporations also have an understandable interest in keeping as much of their wealth as possible out of the clutches of the tax man, so they reliably pressure and bribe government to spend as little as possible for the benefit of anybody outside the investor class.

As a result, capitalist societies are anything but stable; they suffer from savage cycles of boom and bust. The process at work here is quite easy to understand, and in fact it was very widely understood three quarters of a century ago; regaining that understanding is a crucial step toward making sense of the mess we’re in today.

Here’s how it works. Since working class wages get driven down, and government expenditures aren’t allowed to rise to take up the slack, people in the working classes can’t afford to consume the value of the goods and services they produce. Sales accordingly falter, and so do profits in productive industries. Since the investor class is interested solely in maximizing the return on its investment, in turn, investment money flows out of productive industries and into financial instruments of various kinds, where it drives speculative bubbles. As the bubbles inflate, they suck even more money out of the productive side of the economy. When the bubbles pop, in turn, so does the economy, and down we go into a depression.

That’s what happened all across the industrial world in the nineteenth and early twentieth centuries, over and over again, until the Great Depression hit and the investor class realized that something had to give. What convinced them of that? The rise to power of two rival economic systems that rejected the basic presuppositions of capitalism, and—ahem—worked.

The first of these systems was socialism. Let’s stop right here for a moment and explain the meaning of the word, shall we? Plenty of people, especially but not only in the United States, have been using that moniker “socialism” to mean any number of randomly chosen things, but the word does actually mean something specific.  Socialism is the system of political economy in which the means of production are owned by the national government. That’s what it is, and that’s all it is. (Most of the things that currently get labeled “socialist” in the English-speaking world are actually social democracy, which is an entirely different system that we’ll discuss in a moment.) If it doesn’t have to do with government ownership of the means of production, it’s not socialism, full stop, end of sentence.

Socialism has its problems. In its most popular form, the version that more or less follows the recipe laid down by Karl Marx, it so consistently produces bloodthirsty dictatorships that a good case can be made for chucking it into the rubbish heap of failed ideologies. The fact remains that as an economic system, it works about as well as capitalism—that is to say, not well, but well enough to stay in power—and it does a much better job of distributing wealth to the working classes than capitalism does, which is why capitalists hate it so much. On the other hand, given a choice, the working classes favor it, for the same reasons capitalists hate it: if you’ve got a choice between two dysfunctional systems, why not choose the one that benefits you most?

Then there was the other rival system, which has been so obscured by shrill rhetoric over the last three quarters of a century or so that we’re going to have to approach it by a roundabout route. Suppose, then, that some charismatic figure in today’s American scene—somebody toward the center of our overheated political spectrum—were to propose a new system of political economy to replace the mess we’ve got now. We’re going to keep capitalism, she says, but it’s going to have its excesses curbed and its abuses prevented, not by the government, but by an organized movement of citizens under my leadership. Each year we’re going to sit management and labor down at the bargaining table, everybody in a given industry all at once, and make them bargain in good faith, with the citizen movement watching both sides to make sure a fair settlement is reached; there will be no more strikes, no more lockouts, no more labor troubles, just a new contract every year, and the citizen movement will enforce that by whatever means happen to be necessary. What’s more, she tells adoring crowds, the citizen movement will take on the same role in the political sphere, and be ready to yank the chains of officials when they get out of line. Of course the citizen movement will have to have special powers to do this, she says, and here’s the enabling act to give it those powers, just as soon as I become Chancellor…

That is to say, we’re talking about fascist economics. Yes, I’m aware that this isn’t the sort of thing that comes to most Americans’ minds when you mention the word “fascism,” but that just shows how thoroughly ignorant most Americans are about history. Fascism was never about the unrestricted rule of the capitalist investment class—that’s a falsehood originally manufactured by Stalin’s flacks back in the days of the Third International, and repeated by the misinformed ever since. Fascism attracted the masses in the 1920s and 1930s because it offered an alternative to unrestrained capitalism with its lethal boom-and-bust cycles. Did it work? Not very well, but then neither did unrestrained capitalism, and here again most people forced to choose between dysfunctional systems will choose the one that benefits them personally.

It was in response to the popularity of the socialist and fascist systems that social democracy came into being. (This, remember, is the thing that Republicans these days call “socialism.”) Social democracy was an attempt to take the best parts of fascist economics and combine them with constitutional government and the rule of law. In place of the “citizen movement” of my sketch above—that’s spelled “The Party” in its historical examples—social democracy puts the elected government of a constitutional representative democracy. In a social democracy, capitalism still exists, but at least in theory, it has to put up with legal checks that keep it from running too far off the rails: laws against monopolies, laws against insider trading, laws forcing banks to have deposit insurance, and so on.

It’s not a bad system, all things considered—which is to say it’s dysfunctional, but slightly less so than any of the three other alternatives we’ve discussed. Its great weakness was that it came into being because the investor class realized that they would end up dangling from lampposts if they tried to keep unrestrained capitalism going much longer, and it could only survive so long as the investor class stayed scared. Once the Great Depression and the age of rising fascist states faded out of historical memory, though, a new generation of capitalists convinced themselves that all this social-democracy stuff was a useless hindrance to their God-given right to engage in a kleptomaniacal orgy of profiteering at public expense.

That was when the Republican Party in the US, the Conservative Party in Britain, and their equivalents elsewhere embraced the view that the sole business of government was to make rich people richer while kicking the poor in the face, and when the Democratic Party in the US, New Labor in Britain, and their equivalents elsewhere embraced the supposedly opposite view that the sole business of government was to make rich people richer while mouthing vacuous feel-good verbiage at those of the poor who were sufficiently politically organized to be annoying. The results are predictable: in Britain, a resurgence of old-fashioned socialism under the leadership of Jeremy Corbyn, who will probably become Britain’s next prime minister if the clown car that passes for a Conservative government keeps bungling things as badly as they’ve done so far; in America, a crisis of legitimacy that’s already catapulted a populist demagogue into the White House and may well replace him with something much worse in the years ahead.

There are alternatives. Next week, in place of the usual ask-me-anything open post, we’ll talk about some of them. The following week? 2018 will have arrived, and it’ll be time for the annual round of predictions about what the new year will hold. Stay tuned!

Ed. note: Because of the continuity of the two posts (and because I can!) I have combined John’s two original posts into one.

Systems that Suck Less

Last week’s post on political economy attracted plenty of disagreement. Now of course this came as no surprise, and it was also not exactly surprising that most of the disagreement took the shape of strident claims that I’d used the wrong definition of socialism. That’s actually worth addressing here, because it will help clear the ground for this week’s discussion.

The definition I used, for those who weren’t here last week, is that socialism is the system of political economy in which the means of production are owned by the national government. Is that the only possible definition of socialism, or the only definition that’s ever been used? Of course not. The meanings of words are not handed down from on high by God or somebody; the meanings of words are always contested among competing points of view, and when a word has become as loaded with raw emotions as the word “socialism” has, you can bet that every one of the definitions you’ll be offered is slanted in one direction or another.

That’s just as true of the definition I’ve offered, of course, as it is of any other. I want to talk about who owns the means of production in society, since this is arguably the most important issue in political economy, and it so happens that socialism, capitalism, and many other systems can be defined quite neatly in this way. A century ago, when it was still acceptable to talk about systems of political economy other than capitalism and socialism, the definition I’ve proposed was one of the most common. You don’t hear it very often now, and there’s a reason for that.

Since 1945 the conventional wisdom across most of the world has insisted that there are two and only two possible systems of political economy: socialism on the one hand, capitalism on the other. That’s very convenient for socialists and capitalists, since it allows both sides to contrast an idealized and highly sentimental picture of the system they favor with the real and disastrous failings of the one they don’t, and insist that since the two systems are the only available options, you’d better choose theirs. This allows both sides to ignore the fact that the system they prefer is just as bad as the one they hate.

Let us please be real. In theory, socialism is a wonderful system in which the workers own the means of production, and people contribute what they can and receive what they need. In practice, as seen in actual socialist societies? It sucks. Get past the rhetoric, and what happens is that the workers’ ownership of the means of production becomes a convenient fiction; an inner circle of politicians controls the means of production, and uses it to advance its own interests rather than that of the workers. Centralized bureaucracy becomes the order of the day, fossilization follows, and you end up with the familiar sclerosis of the mature socialist economy, guided by hopelessly inefficient policies mandated by clueless central planners, and carried out grudgingly by workers who know that they have nothing to gain by doing more than the minimum. Eventually this leads to the collapse of the system and its replacement by some other system of political economy.

In theory, equally, capitalism is a wonderful system in which anyone willing to work hard can get ahead, and the invisible hand of the market inevitably generates the best possible state of affairs for everyone. In practice, as seen in actual capitalist societies? It sucks. Get past the rhetoric, and what happens is that social mobility becomes a convenient fiction; an inner circle of plutocrats controls the means of production, and uses economic power backed by political corruption to choke the free market and stomp potential competitors. Monopoly and oligopoly become the order of the day, wealth concentrates at the top of the pyramid, and you end up with the familiar sclerosis of the mature capitalist society, in which the workers who actually make the goods and provide the services can’t afford to buy them, resulting in catastrophic booms and busts, soaring unemployment, and the rise of a violent and impoverished underclass. Eventually this leads to the collapse of the system and its replacement by some other system of political economy.

Yes, this is as true of capitalism as it is of socialism. Unrestricted capitalism has already collapsed once—the aftermath of the Great Depression saw it replaced by social democracy, socialism, or fascism over all of the industrial world—and we didn’t begin to return to it again until the Reagan-Thatcher counterrevolution of the 1980s. Now that we’ve gotten back to something fairly close to unrestricted capitalism, we’ve got all the same spiraling dysfunctions that brought things crashing down in the 1930s. The possibility that it could end the same way, with a similar quota of armbands and jackboots, is rather hard to dismiss out of hand just at the moment.

At the same time, the notion that we can fix the current mess by exchanging capitalism for socialism doesn’t bear close examination. We know how socialism works out, just as we know how capitalism works out. As previously noted, both of them suck. The obvious solution—unthinkable these days, oh, granted, but obvious—is to look for other options.

The best way to do this, it seems to me, is to pay attention to the core similarity between capitalism and socialism. Both systems reliably end up dominated by massive bureaucracies—corporate bureaucracies in the former case, government bureaucracies in the latter—and the bureaucracies do so stunningly bad a job of getting people the goods and services they need that it becomes necessary to paper over the gaps with propaganda and police violence. There’s a reason for the similarity, and it’s one that people who studied political economy a century and more ago had no trouble at all recognizing: in capitalism and socialism alike, control of the means of production is concentrated in too few hands.

Promoters of socialist systems like to pretend that if the means of production are owned by the government, they’re really owned by the workers, but I trust none of my readers are simple-minded enough to fall for that bait-and-switch tactic. In the same way, promoters of capitalist systems like to pretend that if the means of production are owned by stockholders, a little old lady who has five shares of Microsoft has just as much effective ownership as Bill Gates; here again, the old bait-and-switch tactic gets a hefty workout. In socialist systems, control of the means of production is kept within a small circle of upper-level bureaucrats; in capitalist systems, control of the means of production is kept within a small circle of upper-level plutocrats.

That’s not something either socialists or capitalists like to talk about, in turn, because once you start looking at who owns the means of production, it really doesn’t make sense to insist that the only choice your society has is either to hand them over to a small coterie of bureaucrats, or to hand them over to an equally small coterie of plutocrats. Most people, considering that choice, will quite sensibly ask why some other arrangement is out of the question—and that is not a question either socialists or capitalists want to answer, or even to hear.

Here again, there’s good reason for that. In a modern industrial society, after all, the people who control most of the wealth are also the people who exercise disproportionate influence over the political system. The choice between capitalism and socialism thus amounts to asking whether you want the means of production in the hands of corporate bureaucracies owned by the elite class, or political bureaucracies controlled by the elite class. “Meet the new boss,” sang the Who, “same as the old boss.” There are other options, and they begin with getting the means of production into many more hands.

What happens if we ask ourselves how control over the means of production can be spread more widely? Why, then we would end up revisiting the lively world of alternative systems of political economy that existed before 1945, when the US and the Soviet Union between them squeezed out every alternative to social democracy on the one hand and socialism on the other, and kept on squeezing. We would find that the question of the ownership and control of the means of production was the focus of vigorous and thoughtful discussion from the second half of the nineteenth century straight through the first half of the twentieth. There were quite a few systems proposed during that time, but those that didn’t gravitate either toward capitalism or toward socialism generally embraced one form or another of syndicalism.

Syndicalism? That’s the form of political economy in which each business enterprise is owned and run by its own employees.

Before we go on, I’d like to encourage my readers to stop, reread that definition, and remember that we’re talking about the ownership and control of the means of production. It’s possible to approach political economy from other directions, sure, and there’s a point to those discussions as well, but—ahem—not when those discussions are used to try to stonewall discussion of who gets to own and run the means of production. We can talk about those other things later.

Okay, with that settled, let’s talk about the most important feature of syndicalism: it’s already been tried, and it works. Right now there’s a very large number of employee-owned enterprises in the United States, and an even larger number elsewhere in the industrial world. They are by and large just as successful as companies owned by stockholders who aren’t employees. There are several different ways to set up a worker-owned enterprise—the two most common are the worker-owned cooperative, on the one hand, and the closely held corporation whose stock can only be owned by employees, on the other—and they’ve been around long enough to have had the bugs worked out. Thus we’re not talking about a pie-in-the-sky system, we’re talking about something with a long and relatively successful track record. You’ve probably shopped at worker-owned enterprises, dear reader; I certainly have.

In a very real sense, syndicalism is what happens when you take the basic unit of a market economy—the individual sole proprietor with no employees, who sells the product of his or her labor directly to customers—and maintain the same relationship with the means of production at a larger scale. In a capitalist society, only the owners of capital own the means of production: the mass of the population, not being rich enough to be able to invest in ownership of the means of production, are excluded from any economic activity other than selling their labor at whatever wages employers want to pay, and buying products at whatever price companies want to charge. In a socialist economy, no individual owns the means of production: everyone is an employee of the state, and the bureaucrats who draft the latest Five-Year Plan in blissful ignorance of shop-floor realities have no more of a personal stake in how things turn out than the working stiffs on the shop floor who have to carry out the dictates of the plan despite its obvious cluelessness.

In a syndicalist society, by contrast, every employee is an owner. Every employee benefits when the business prospers and suffers when the business takes a loss. Every employee has some influence over the management of the business—the usual approach is to have employees elect a board of directors, which then hires and fires the management personnel. Every employee thus has a personal stake in the business—and every business is owned and run by people who have a personal stake in its success. That’s one of the reasons syndicalism works well.

Let’s deal with some of the usual questions at this point. Do sole proprietorships exist in a syndicalist system? Of course. An individual who goes into business for himself or herself is the simplest form of syndicalist economic organization:  a business wholly owned and operated by its one employee. A family business—the sort of thing where Mom and Dad own the business and their kids work there—is also a syndicalist business in miniature. It’s when things get larger than that, and there are employees other than the individual proprietor or the members of a family, that the classic forms of syndicalist ownership come into play.

Wouldn’t syndicalism mean that new employees coming in could simply take over the business and throw the founder out on his or her ear? Not at all, because the way you organize a business in a syndicalist society prevents that. Let’s say you’ve founded a blivet-making business, just you and your blivet press, and you do well enough that you need a second employee. You hire someone, and part of the terms of hire are that she gets a share in the business for each year of employment. The business is worth thirty thousand dollars at the time of hire, we’ll say, so she gets, as part of her compensation package, one share with a five hundred dollar face value each year. This cannot be sold or transferred; it remains with her only as long as she remains an employee of the company; but it gives her voting rights in the shareholders meeting and a cut of the annual dividend. A year after she’s hired, she has one vote in the shareholder’s meeting and you’ve got fifty-nine, so she’s not going to be throwing you out any time soon.

By the time she’s put in thirty years, she owns half the original value of the company, but of course by then you’ve retired, and your shares are the basis of your pension. (Your shares revert to the company when you retire, remember—they can only be owned by employees—but your pension makes up for the income.) In the meantime, as the business grows and you bring in more employees, they also start earning shares on the same basis. A hundred years down the road the business you founded is a thriving blivet firm with three hundred fifty employees, all of whom are part owners, and each new employee starts out in the same place as your first hire, working for a year and getting that first share. Again, this was all worked out a long time ago.

Can you fire someone in a syndicalist company? Of course, if they’re not doing their job, or do something that deserves termination. That’s why the employees elect a board of directors, and the board hires management: so there’s somebody who’s not on the shop floor who can take responsibility for hiring and firing, and the other tasks management has to do. A management team that tries to offshore jobs to Third World sweatshops is going to be out on its ear in a hurry, of course, because the board of directors has to worry about being thrown out by vote of the employees; in the same way, any board of directors that tried to pay a management team the kind of absurdly kleptocratic salary packages that management thinks it deserves in today’s America had better empty its desk and pack its bags in advance. When every employee has a personal stake in the success of the enterprise, though, firing somebody who’s not pulling their weight, or is a problem in some other way, is rarely a controversial issue.

Now, the big one: could such a thing actually happen? Of course it could, for the same reason that unrestricted capitalism gave way to social democracy, socialism, and fascism across the industrial world in the 1930s. Capitalism, as we discussed last week, has a self-destruct button wired into it:  as the distribution of wealth becomes more and more imbalanced, the production of goods and services stops being profitable, speculative booms and busts replace investment in productive activity, and sooner or later the economy hits a crash devastating enough that the voters turn to somebody who promises to replace unrestricted capitalism with something else. We’re arguably not that many crises away from such a moment here in America right now.

That’s why it’s time to start talking again about the alternatives to capitalism and socialism. Since, as already noted, both of them suck, and the third alternative most often tried back in the 1930s—fascism—sucks even more, other options are worth considering.

It’s worth noting that classic social democracy is also an option. That’s the system we had in the United States from 1932 to 1980—a period, please note, when this country achieved the highest standard of living and the widest distribution of wealth and income in its history. As mentioned in last week’s post, social democracy balances the power of government against the power of the corporations. It’s an unsteady balance, and eventually breaks down when the wealthy forget that limiting the excesses of the capitalist system is the one thing that keeps them from being strung up from lampposts, but during the time that it works, it sucks less than either of the two alternatives that get all the air time these days.

It’s also worth noting that syndicalism comes in many flavors. Those of my readers who happen to be Roman Catholics will want to check out distributism, the specifically Catholic version of syndicalism, which draws its basic principles from encyclicals issued by Leo XIII and Pius IX in the nineteenth century, and was worked out in some detail by G.K. Chesterton in the early twentieth. Those who aren’t Roman Catholics, or sympathetic to Catholic moral doctrines, will probably not find it to their tastes, because it incorporates quite a bit of conservative Catholic morality; I mention it here partly because I have quite a few readers who are either Catholic or comfortable with Catholic moral thought, and partly as a reminder that syndicalism isn’t necessarily associated with the political left—you’d have a hard time convincing anyone who knows the first thing about Pius IX or G.K. Chesterton that either man was a leftist.

There are other versions, ranging from anarchosyndicalism on the extreme left to national syndicalism on the extreme right. The version I tend to favor, as previously noted, is democratic syndicalism: the system of political economy that combines a syndicalist economy with a politics based on constitutional representative democracy. I also favor a firm distinction between public utilities, which are best owned and operated by local governments, and private businesses, which are best owned and operated by the people who work for them; readers of my book Retrotopia already know that I consider banking to be a public utility rather than a private business, but that’s a matter for another post.

Is what I’ve just very roughly sketched out a perfect system? Of course not. In the real world, there are no perfect systems.  Every possible system of political economy will inevitably turn out to have glaring flaws, for the simple reason that human beings have glaring flaws. The best we can hope to achieve is a system that sucks less than the ones that have been tried so far.

I think that’s potentially within reach, even given the many other pressures on the United States and industrial society in general as we lurch through the opening phases of the Long Descent. If such a thing is going to be possible, though, the first step is to break out of the mental rut that insists that the only choice we’ve got is between capitalism and socialism, two systems that both unquestionably suck. Attention to the ownership of the means of production is one tolerably effective way to leave that rut and start exploring the vast and interesting spaces outside it.

John Michael Greer

John Michael Greer is a widely read author and blogger whose work focuses on the overlaps between ecology, spirituality, and the future of industrial society. He served twelve years as Grand Archdruid of the Ancient Order of Druids in America, and currently heads the Druidical Order of the Golden Dawn.

Tags: economics, political economy