Financialisation is a problem for capitalism. Is socialism the solution? (Part 2)

In this recent post I outlined some of the ideas in Grace Blakeley’s new book Stolen – How to Save the World from Financialisation. Her answer to the apparent political, social and economic problems with financialisation under capitalism is a transformation towards democratic socialism, starting in the UK and spreading across the world.

In the book she describes a range of policies that would, she hopes, encourage such a trend: a Public Investment Bank; a People’s Asset Manager to encourage the spread of public ownership; an ambitious Green New Deal; changes to corporate governance so that a much wider range of stakeholders are more closely involved in decision-making, not only in non-financial corporations, but also in banks and including the Bank of England. She also argues for the restoration of trade union power and influence, the refinancing of private debt and much tougher regulation of private banking, to encourage definancialisation domestically and ultimately globally.

Some of this is certainly radical. For Blakeley, the general aim of such a path is to shift the balance of power in the economy and society away from capital and towards labour, away from private ownership and towards collective ownership. Society should then prioritise the collective and the public over the individual and the private, and cooperation rather than competition. Marxists such as SOAS’ Costas Lapavitsas in his Profiting without Producing, and Michael Roberts, who blogs here, are two vocal proponents of a socialist society that they argue would not only be more efficient than capitalism, but also more just and more democratic.

I have to admit, to a degree I find the analysis of a number of Marxist political economists very interesting and in many ways richer than much mainstream thinking in their evaluation of the flaws of capitalism, as well as its strengths, both of which are in the spirit of Marx himself. But when it comes to how to respond to these flaws, I find the arguments for socialism to be a little thin and unconvincing. I don’t think that society can be fully and rationally planned, however knowledgeable and intelligent those in charge might be. Clearly, while there is much planning under capitalism, in corporations or government for example, it has its limits in coordinating a complex modern economy. Financialisation has damaging effects, but we must look to reform to combat them.

The feasibility of socialism

Socialism+FeasibleHeterodox institutional economist Geoffrey Hodgson, who blogs here, also has a new book out, Is Socialism Feasible?, which conducts a thorough analysis of the meaning and practice of socialism, drawing on a range of theoretical and historical evidence, and also making a strong case for what he calls ‘liberal solidarity’. The latter is along the lines of social democracy or a reformed and evolving capitalism.

Marxists and socialists often argue that there are serious limits to reforming capitalism, and that only socialism can allow for a truly democratic and just society. Hodgson argues just the opposite, that abolishing markets and making socialism nation-wide (what he calls ‘big socialism’) tends to produce stagnation and despotism, even among well-meaning people who believe that things can be better ‘this time around’.

As Hodgson points out, the financial crisis of 2008 and its aftermath have increased disaffection with capitalism and support for socialism. It is therefore important to define and debate socialism, what it might mean and how it would work as a politico-economic system in ways which avoid the problems of previous attempts to establish it.

From Labour Party leader Jeremy Corbyn in the UK, to presidential candidate Bernie Sanders in the US, self-defined socialists have, perhaps grudgingly, accepted a role for markets, but they have not made a positive case for them, as well as private property, alongside state regulation and intervention in a complex, modern economy.

Hodgson also argues that capitalism and private ownership are compatible with a mixture of self-interested and cooperative behaviour, as well as morality, all of which have evolutionary functions and have evolved with the progression of humanity. For him, a significant increase in democratic control in all sorts of institutions throughout society, with the aim of establishing democratic socialism, would likely mean, to echo Oscar Wilde, too many meetings, and these would often lack a necessary expertise. This is not to argue for wholesale technocracy instead, as this represents another undesirable extreme.

On the contrary, liberal solidarity or social democracy allow a significant role for markets and the private sector, as well as a role for the state, a strong welfare state, democracy and some redistribution.

The theoretical extreme of atomistic individualism ignores social institutions and contexts which shape individual behaviour: individual freedom is sustained by institutions. One such institution is the market, shaped by rules and norms, and sustained by the state. ‘Free’ or ‘unregulated’ markets are misleading terms, are probably infeasible in practice in their pure form, and ignore the realities of politics, power and social structure in general.

Small socialism and big socialism

In the book, Hodgson explores case studies of what he calls ‘small socialism’, which have been established in small communities, and ‘big socialism’, which have involved, as far as possible, nationwide planning in the place of markets. Both conceive of common ownership and the abolition of private property and markets.

Historically, experiments with small socialism have tended not to last for long, particularly where collective decision-making has had a primarily rational basis: this has typically led to much dispute between community members over the details of organisation. Socialist communities with a religious basis seem to have lasted longer. However, small socialism requires either frugality or a role for markets. In the absence of some market exchange with external organisations, they tend to lead to isolation and come at the cost of losing the benefits of the national or global division of labour in production, and have to be self-sufficient.

Some worker-owned cooperatives have been successful within capitalism, among a plurality of forms of enterprise, if they have had supportive legal, political and financial institutions, as well as some market discipline which provides incentives to install and observe internal rules.

So small socialism is possible, but the transformation to nationwide big socialism and abolishing markets and private property have historically required centralised state coercion. Market incentives are needed to encourage cost-cutting, efficiency and innovation, and these are lacking under big socialism. They penalise inefficiency and promote efficiency. In addition, the centralisation of political and economic power seems to be inevitable under big socialism and leads to authoritarianism and the undermining of democracy. In order to be sustained, democracy and human rights require countervailing powers such as independent judiciaries, trades unions, employer associations, consumer associations, and other lobby groups.

Direct democracy, which if taken far enough could mean voting for everything, is simply not viable in a complex economy. Compared with state socialism, capitalism does a better job of sustaining a more dispersed concentration of power and ownership, perhaps not automatically but with the right institutions and policies.

More problems with arguments for pure socialism or individualism

A common trait in arguments for socialism is their ‘immunology’: proponents compare an imagined ideal society with an inevitably flawed capitalism. In fact, a modern complex economy, however labeled, has a need for a mix of hierarchical organisations, markets and other institutions, and a culture of ongoing practical experimentation rather than top-down, centralised, ‘rational’ planning.

Knowledge and skills are often necessarily tacit and socially embedded, as well as fragmented and dispersed. While there is certainly a role for planning on the part of the state, as well as in all sorts of organisations, system-wide planning of everything is either impossible or fails to achieve its goals. A lack of prices and competition prevent the necessary incentives required for improving performance, since they play a key role in communicating information for the ongoing dynamic coordination of different plans by entrepreneurs and consumers in a large-scale economy. Here Hodgson draws on ideas from the Austrian School. However, while Ludwig Mises and Friedrich Hayek emphasised the importance of private ownership and market competition, they ignored the possibility and potential of a mixed economy.

Theories of atomistic individualism and big socialism both contain serious flaws. The practice of the former tends to allow the individual to be “swayed by powerful corporate, media and other organised interests”, which in excess is counter to the tenets of a healthy democracy. In this case the institutions that support a meaningful freedom of choice would be undermined. Big socialism centralises political and economic power and undermines pluralism and civil society. Neither atomistic individualism nor big socialism address the complexities of modern capitalism and the need for pluralist solutions to solve key social problems.

The need for states and markets

As already mentioned, the state and the market need each other to function well under capitalism, alongside a range of other institutions. Property rights are buttressed by institutional, legal authority. Hodgson shows in the book that regulation has grown steadily under capitalism, even in the neoliberal era. An important reason for regulation is to remove harmful choices which are too costly for every individual to investigate. Ironically, many libertarians prone to argue against much state regulation end up being against the inevitable harmonised regulation that governs ‘free’ trade. Since markets are social institutions, growing trade requires the growth of commonly accepted rules.

Of course, markets cannot solve every problem, and neither can a centralised state authority. There is a need under all versions of capitalism for state intervention to provide public goods, counter externalities, provide strategic leadership in innovation, promote strategically important sectors, and maintain political legitimacy and stability by redistributing wealth and income.

The author therefore makes a strong case for the benefits of an experimental mixed economy, with cooperation between public and private institutions to enable a dynamic and relatively just capitalism.

People and profits?

Another socialist shibboleth that Hodgson argues against is the refrain of ‘people before profits’. This oft-repeated phrase on the left makes the assumption that profits do not align with people’s interests, so that their abolition would free us all to focus on caring for the whole of society and solving its problems. It also assumes that we can all extend caring beyond our friends, family and community. While this may be possible in some cases, it is perhaps far from universally achievable.

Varieties of capitalism

Hodgson goes on to examine the question of whether different national capitalisms are converging economically and institutionally, due to globalisation for example. If they are, then this implies a considerable restriction of choice in the political, social and economic spheres, or the ‘end of history’ as Francis Fukuyama once put it. For Hodgson, the evidence is that continued uneven development as the global division of labour and specialisation increase means that economies can remain structurally different, particularly at varying levels of development, but also at similar levels. There remains a significant variety of forms of capitalism in terms of the degree of democracy, the effectiveness of law, levels of taxation and public spending, levels of corruption, culture and religion.

He focuses on the Nordic model, often admired on the centre-left for its mix of relative economic dynamism, high quality public goods and services, relatively low inequality and social well-being. He makes the salient point that their small, relatively ethnically homogeneous populations help to provide and sustain a consensus for high levels of tax and public spending, significant redistribution and a strong welfare state. They also have stronger trade unions than many of their rich neighbours, which help to support a progressive politics without being socialist revolutionaries.

Liberal Solidarity

So what of the left alternative to the utopias of atomistic individualism and big socialism? Hodgson spends some time outlining his case for liberal solidarity, which could also be called liberal social democracy or solidaristic liberalism. It draws on the liberal tradition which rejects atomistic individualism and embraces a broad conception of liberty, not simply the absence of coercion or negative liberty.

The principles of liberal solidarity, which remain open to debate and degrees of emphasis are as follows:

  • A commitment to representative liberal democracy.
  • Some degree of emphasis on economic equality.
  • Possible limits to choice and markets.
  • State intervention and a welfare state to support individual self-determination and flourishing.
  • A certain balance between self-interest, and cooperation and morality, so that there is a place for selfish motivation, but also for morality, justice and duty.
  • Consideration of attitudes towards the modern large corporation, to counter problems of excess market power and lack of accountability, despite its potential success in innovation and growth.
  • Some balance between nationalism, and internationalism and openness.

Of course, all of these are subject to change and need to be managed and the positives promoted over time. There is no final utopia, rather it would perhaps be better to accept an ‘evotopian’ future of relying on experience and experimentation, rather than centrally conceived and imposed blueprints.

Further key points supporting liberal solidarity

For Hodgson, both classical Marxism, despite its nature as interdisciplinary political economy, and neoliberalism, tend to reduce everything to market relations and the economistic, despite being at opposite ends of the political spectrum. There is a need to move beyond ideas of statist socialism on the one hand, and the celebration of unbridled individualism and greed on the other.

A major flaw in the marginalism of neoclassical economics arises from the interdependence of inputs and their combining in particular activities, for example in the production process. Individual contributions to the social output are hard to measure or separate in reality. The private income received by individuals in society is thus not wholly commensurate with their individual effort and contribution to the social product. This allows a good case to be made for social contributions via taxation while preserving some degree of inequality in order to provide incentives. Thus we can argue for redistribution to promote economic and social justice.

Another justification for redistribution lies in the debt owed to past generations. In economies with an improving standard of living, we are all to some extent ‘standing on the shoulders of giants’. The current population of individuals do not have the rights to all the revenues generated from current resources, including what we might call ‘nature’s bounty’ and historically provided resources.

It is also vital to tackle economic insecurity, which if left to fester can undermine democracy, breed intolerance and extremism, as well as a loss of faith in elites and mainstream political parties, as we are witnessing today in many countries.

Democracy itself may also be threatened by ‘over-zealous globalisation’, politically powerful corporations, irresponsible media giants, reckless financial institutions, and proliferating supra-national organisations with limited democratic accountability.

For me, one important consideration that is missing from Hodgson’s book is a developmental perspective on the emergence of a social democratic capitalism and the particular balance of power in society which can support and sustain his liberal solidarity. To be fair, some of this may be covered in his previous book Conceptualizing Capitalism, which I do not have space to examine here.

In sum then, Is Socialism Feasible? is a fascinating and sweeping critique of the case for socialism in today’s world economy. It is also an informative and persuasive polemic on the need for an alternative alternative that has much to offer those seeking greater social justice and freedom in a prosperous and liberal society. There is much more covered in the book than I can include here, so I recommend that you read it. I hope it will change some minds.

 Rethinking Britain

Rethinking BritainAnother recent publication making the case for social democratic reform is Rethinking Britain: Policy Ideas for the Many. Written by a number of progressive academics, it covers a range of ideas for policy to reform capitalism rather than overturn and replace it.

Without going into laborious detail, the policies aim to restore full and decent employment, sustainably raise living standards for the widest possible majority, reduce inequality, substantially increase investment in physical and social infrastructure, increase the competitiveness of the UK economy through industrial and technology policy, make the financial system work for society rather than the reverse, restore collective bargaining in the workplace, and shift in the direction of the mixed economy, for example by renationalising the railways and, gradually, the utilities.

The specific policies are not all compatible with each other, but can be drawn on by progressive policymakers. Much of this sounds similar to Grace Blakeley’s ideas for democratic socialism, but she has a different end in mind and is more ambitious in her desire to abolish private property. Modern social democracy maintains a substantial role for it.

Taming finance – the post-Keynesian solution

Post-Keynesians tend to be highly critical of capitalism, but still believe in reformism as opposed to socialist revolution. Alongside some Marxists, they have been instrumental in analysing the increasing power and influence of finance in today’s capitalism, its damaging effects, and the prospects for reform.

So while the work of Hodgson makes a powerful case against socialism, the need for dealing with finance remains. Post-Keynesians have argued for a range of typically social democratic policies at the national and international level, including much tougher financial regulation. Both for them and for thinkers such as Michael Pettis, redistribution of income and wealth and a faster growth in household income and wages relative to GDP are vital to a peaceful and socially just restoration of successful economic performance in many countries. This would boost sustainable consumption and aggregate demand without the need for ever-increasing public and private debt-fueled growth and also help to sustainably lower unemployment. Global coordination of macroeconomic policy is also highly desirable but tends to require more cooperation between states than is feasible, other than in the midst of a serious crisis.

The lure of socialism and the case for social democracy

In the aftermath of the 2008 crisis, which has variously been called a crisis of financialisation or of capitalism itself, socialism has seemed increasingly appealing to many. At least idealistically, it could involve caring more for others, reducing injustice, getting rid of volatile markets and enabling greater control of the economy. But we have been here before. As Geoffrey Hodgson puts it: if only the resistance of the rich could be overcome and we could take advantage of new technologies and build on the planning that already exists in large scale corporations and other organisations, we could be on the brink of dramatic change to a socialist system. For some Marxists, this is historic destiny. But it ignores lessons from history which to date have demonstrated that the path towards socialism is one towards stagnation and despotism.

Perhaps no less radical, certainly in countries such as the UK, a left path of reform, embracing a cautious experimentation which defends democratic and liberal values, and rejects populist and extremist threats on all sides, is more feasible. To return to our original brief, financialisation has caused real problems in its scale and embeddedness in modern capitalism, but reform is possible with sufficient mobilisation and political will. We live in unsettling times, but such a direction might just be the best we can aim for.

15 thoughts on “Financialisation is a problem for capitalism. Is socialism the solution? (Part 2)

  1. This is a masterpiece of an article.

    I like how you manage to come back to financialisation (the subject of the first part) while at the same time broadening the picture by analysing the societal platforms/models — conceivable between pure capitalism and extreme socialism — that may provide the framework for specific policy options (such as taming financialisation).

    Your discussion of the continuum between socialism and capitalism with its different and mixed variants is both comprehensive and incisive, quite a feat.

    It is awareness of the difficult and subtle themes that you discuss which makes the difference between a crude and ideological view and an open-minded, creative and realistic assessment of the issues.

    I admire your courage and aptness to think carefully. This circumspection carries over into your lucid writing, which is another huge bonus to the reader, next to your service of putting in a nutshell the most essential questions from an expansive range of topics.

    I wish this article (and, of course, the first part, and the blog) as many readers as possible.

  2. There is so much to unpack here that it is hard to know where to start. Advocates of reformism have to appreciate that so many attempts to change things cautiously have failed. Experimentation is all very well, but it seems to speak to a technocratic and elitist agenda. How will popular support be gathered for a liberal project? Over 130,000 people in the UK have died prematurely because of austerity according to properly gathered statistics. I really do appreciate the breadth of your reading, but I fear that you underestimate the resistance of big business to the kind of adjustment agenda that you are promoting. And the massive ecological crisis means that late capitalism cannot be tinkered with. History suggests that “unsettling times” often lead to bold behaviour from the right. It is my view that the left must bury its internal differences and form a Popular Front to resist creeping neofascism.

    • cheepcheepcopy,

      I have a number of questions concerning your above comment:

      (1) What is “non-reformism” (presumably your alternative to “reformism”) and how is it “to bury its internal differences [with other factions of the left] and form a Popular Front” when large parts of the left are open to social reforms?

      Or is the term “left” reserved for “those seeking revolution”? Well, revolutionaries (of which there are many competing brands) tend not to be easily persuaded “to bury [their] internal differences [with other factions of the left] and form a Popular Front”.

      (2) “Advocates of reformism have to appreciate that so many attempts to change things cautiously have failed.” Which failures are you thinking of?

      And what about the many reforms that have succeeded?

      Also, failure is part of progress, In fact, it is what progress is made of, unless “progress” is to be achieved Soviet style, dictatorially posited and enforced.

      (3) Over 130,000 people in the UK have died prematurely because of austerity according to properly gathered statistics.

      Can we see the “properly gathered statistics”?

      (4) Who is this perfectly coordinated monolith “big business” with a single view of matters? How does it organise its uniformity? Why does one part of “big business” meekly humour the reactionary green left by committing economic suicide (notably the German automotive industry), when other parts resist the green agenda to destroy the industrial base?

      And what about green crony capitalism, the ecological.industrial complex – is it part of big business?

      Is battery-based e-mobility — for decades praised but recently excommunicated by the greens — suddenly big business (i.e. big business = evil business)?

      (5) What is late capitalism? When was early capitalism, when mid-tern capitalism? What are the differences among these stages of capitalism? How do you know it is “late”? What comes after late capitalism? How long has it already lasted, how long will it last? Why?

      (6) “… the left must bury its internal differences and form a Popular Front …”

      Are you, an anti-austerity leftist ready to join forces with the pro-EU-austerity left?

      (7) How many premature deaths has the pro-EU-austerity left to account for? More than 130.000?

      (8) Who is “the left” that must bury its internal differences? See also question (1).

      Remotely inspired by Brecht’s Fragen eines lesenden Arbeiters — in English here:

      • Hi Georg,

        There are so many questions here I hesitate to answer any of them, but seeing as you’ve levered in some Brecht to your response I will try. When it comes to late capitalism, I would reference Ernest Mandel and say we are considerably further on. With regard to the statistic, it seems that it may have been attacked: (the 10,000 added to the 120,000 was apparently based on the impact of policy since the 120,000 figure was collected).

        I would point out that it was socialism that was being attacked by a liberal, so in the interests of pluralism I defended socialism. With regard to my orientation to the EU, I am not opposed to another referendum on Brexit (depending on the timing and the question). Furthermore, I have collaborated on a project with liberals to oppose Brexit, possibly because they were open to co-operation and did not attack leftists in a sectarian fashion. Given your past comments about the natural environment, I will simply agree to differ. And I accept your excellent point about the heterogeneity of big business.

    • Hi Cheepcheepcopy,
      Thanks for your comments on this post. I think that reform can be as radical as revolution. Indeed, forgive me for questioning semantics, but reform itself can be revolutionary if taken far enough. I would favour a kind of experimentation that engages with citizens and takes them with it, rather than imposes it. If big business is going to resist efforts to establish a more liberal and social democracy, then your own preferred agenda could be even harder work, though I guess that your are not so bothered about taking at least some elements of big business with you. But perhaps big business is less of a monolith in political terms than you imply.

      I am all for the left burying its internal differences, but they seem to struggle with that, not least in the UK. Finally, such reform is an ongoing project, and will obviously not win forever. Taking a step back, my view is that these things are worth going for, but as with the collapse of the post-war Keynesian-social democratic consensus, external and internal events undermine them after a time, and the pendulum swings back.

  3. Hi cheepcheepcopy,

    Thank you for taking time to respond to some of the questions among the avalanche of questions that I have inundated you with.

    I appreciate the link (on presumed austerity deaths) and encourage everybody to look it up, especially regarding the question of causality.

    Aaah, cheepcheepcopy, Mandel was the name that instantly came to mind when I read the term “late capitalism” in your above comment.

    Donkey’s years ago, I read the entire tome “Der Spätkapitalismus”, which I think Mandel wrote in German. Prior to that, I had read Mandel’s “Einführung in die Marxistische Wirtschaftheorie”, (“An Introduction to Marxist Economic Theory”) — an excellent book.

    You probably know better than myself that late capitalism, ever since Sombart coined the term, has been defined and interpreted by a number of scholars in their own ways, including Adorno, Marcuse and Habermas.

    Mandel’s effort is impressive, a thorough and systematic attempt.

    Nice to be reminded of it — and an opportunity to reflect on why I ultimately rejected his approach.

  4. This is such an excellent and in-depth post!

    Regarding how to deal with the effects of financialisation, it’d appear that advocating for Social Democracy on many levels, is perhaps the best solution. And yes, the concept of Social Democracy may appear to some to be too much of a compromise when it comes to getting at the roots of financialisation. However, as noted above, it may be that Post-Keynesian ideas need to be considered first when advocating for reform.

    Along these lines it should be noted that financialisation evolved during an era when some tangible assets, such as natural resources and the products produced by them, lost some of their allure due to questions about their environmental impact. Therefore, the finance revolution that was launched during the 80s and continues to this day, filled a financial void since it allowed for more emphasis to be placed on non-tangible assets.

    Post-Keynesian ideas allow for a taming of the negative effects of financialisation to come into play. As with most economic-political issues, a main determinant of whether these ideas will be implemented will be how these ideas play out with the current political dynamic.

    • Hi Perry, thanks for your comment.

      A post-Keynesian programme has much in common with social democracy as, in the spirit of Keynes, it aims for reform of capitalism rather than its supersession. While many PKs dislike the injustices and instability of a more free market capitalism, some have more socialist leanings. But like you I think that Social Democracy is worth going for as a way of mitigating these downsides, as far as possible.

      I read your September blog post on SD with interest. You put it in an interesting way, that SD incorporates elements of socialism into capitalism, which I guess is one way of putting it. In the US at the moment, Bernie Sanders makes the case for what he calls socialism, when in fact much of what he proposes is part of more social democratic systems in many European countries, which are hardly socialist (or with dominant central planning and minimal markets and private property).

      The trouble is that, as you say, with the political dynamic, or what I see as the balance of power between different vested interests in a society, there are forces which seem to prevent a permanent social democratic settlement.

  5. Hi Nick,

    Sorry for the glitch, I was simply referring to the well-known views of Mark Carney:

    “Companies and industries that are not moving towards zero-carbon emissions will be punished by investors and go bankrupt, the governor of the Bank of England has warned. The Bank of England has said up to $20tn (£16tn) of assets could be wiped out if the climate emergency is not addressed effectively.”

    If an instinctively conservative individual has some awareness of where we are, I suggest that ecologically minded folk like Herman Daly are more focused on the extremity of our colective situation. It seems that open-minded liberals and socialists can all agree that the international crisis transcends sectarian differences, permitting for the mutual appreciation of progressive interventions in and outside the discipline of political economy.

  6. As for “permitting for the mutual appreciation of progressive interventions in and outside the discipline of political economy”,

    Michael Moore would disagree,

    the co-founder of Greenpeace, Patrick Moore, would disagree

    or this self-professed leftist and conscientious scientist Ronan Connolly would disagree

    Click to access ccsmc2018-analysis-of-greenpeaces-business-model.pdf

    It is about time that members of the left return to approaching global warming from the point of view of critical thinking and the proper scientific method rather than relying on propaganda and fomentation and collusion with the political establishment (in the style of their treacherous siding with neoliberalism).

    The regressive left are where the funds are, they are unscrupulous crony capitalists, destroying an open society.

    It’s about time that the real left begin to include the regressive left in the analysis of capitalism’s destructive players.

  7. Pingback: Financialisation is a problem for capitalism. Is socialism the solution? (Part 2) — The Political Economy of Development – Voltaweb-Ghana

  8. “For Hodgson, both classical Marxism, despite its nature as interdisciplinary political economy, and neoliberalism, tend to reduce everything to market relations and the economistic, despite being at opposite ends of the political spectrum. There is a need to move beyond ideas of statist socialism on the one hand, and the celebration of unbridled individualism and greed on the other.”

    What does “reduce everything to market relations and the economistic?” Firstly, in Capital capitalist markets arise because labour occurs as private, independent labour; labour is abstract and divorced from the immediate needs of both the immediate workers and the immediate capitalists.

    Secondly, the idea of “state socialism” may have some sources in the Marx of the Manifesto, but it ignores the Marx of the Paris Commune, where Marx argued that the working class could not use the state in its present organizational form as centralized. He seemed to envisage a federation of communes or cooperatives.

    Thirdly, the idea that “reforms” can be radical–which reforms? Reforms that go beyond the limits of the power of employers as a class are certainly radical–but such ideas as a “mixed economy” are hardly radical. First instance, a basic income may or may not be radical. It would be radical if the basic income could not be realized without breaking down the power of employers by enabling citizens to live independently of employers as a class. It would definitely not be radical if it constituted a low floor that provided inadequate living conditions.

    As for the existence of markets in a socialist economy–I doubt that it would be possible to abolish markets immediately since they have existed for much longer than Marx expected (as I argue on my blog). However, if markets are generally required and are permanent, I fail to see how human beings are not to be treated as things to be used by employers (whether cooperative or not–see the book “The Myth of Mondragon.”) Markets when generalized express the subjugation of workers to the results of their own activity and hardly express freedom worthy of human beings (see The Money Circuit of Capital on my blog).

    As far as I can see, this talk of “progressive politics” fails to face up to the nature of capitalist reality.

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