Monday, June 12, 2006


More thoughts on capitalism - state intervention

In comments to my "reasons to be socialist" post, Chris Young asked:

By "capitalism" how broad a set of alternatives do you mean to mark out. I mean, wow, a lot of things go by that name, including versions that involve quite a bit of state intervention in order to help the market function more smoothly, often with the explicit goal of improving human lives, rather than improving profit. Since all modern economies seem to be managed to a greater or lesser extent with these goals, at least officially, this should make some difference, no?

Oh it makes a tremendous difference. Unsurprisingly, I find the Swedish, or even the French (unemployment and all) socio-economic model very much preferable to that of, say, the US. I suppose I should say that there is no such thing as an exclusively capitalist economy. The Keynesian/welfare state means that every economy now has a capitalist ("private") sector and a non-capitalist (state) sector - as well as what might be called the "social" sector, wherein all sorts of goods and services are provided by neither the state nor profit-seekers.

Nevertheless, any state intervention that merely, as Chris says himself, "manages" the capitalist economy will not escape from the logic of capitalism as I have described it. It can to some degree "harness" the capitalist economy in order to direct it towards human needs. But I contend that the state remains caught in capitalism's logic - partly because of the power of capitalists in society, more fundamentally because the state remains dependent on the succesful operation of the the private economy for its own fiscal resources.

In fact Keynesian/welfare state interventionism actually proves my point. I say that in capitalism technological advances will tend to increase unemployment if total levels of production remain static.

I also say that the alternative within a predominantly capitalist economy is to expand production exponentially in order to prevent such unemployment. And this is precisely where the Keynesian state comes in. Following the crisis years from 1929 to 1945, mass unemployment was, for economic and political reasons, unacceptable, thus the state intervened to maintain full employment, effectively displacing the contradictions of the economic system into the political system. Hence, instead of labour-capital clashes in the economic sphere, conflicts over education, health and welfare in the political sphere.

The state, under pressure from working class (and other popular) mobilisation (through the institutions of representitve democracy or otherwise) and in order to solve the collective action problem posed to capitalists by their interest in low wages on the one hand and their need for consumers to buy their goods on the other, sought to guarentee, through various redistributive measures, full employment and some minimal level of equality. But this could be successful only by systematically and exponentially expanding production (and, necessarily, consumption), without which unemployment will tend to increase.
The problem is that the pursuit of economic growth, above, or as a precondition of, all other goals is not without its downside, very obviously in terms of ecology, but also in terms of the construction of a better, more humane and fulfilling society.

If we could construct a democratically controlled economy, thus one that would be oriented towards human needs rather than profit, technological advance could be experienced as the liberation it rightly should be. We could then choose between expanding production (if we felt our material needs were still inadequately sated) and/or reducing, in an equitable manner, the time we spend working (if we wanted extra free time more than we wanted extra expensive shit).

I'm not sure if this has answered your point exactly, Chris, but it has at least allowed me to write more stuff I wanted to. And even if it doesn't convince you through it's argument, I think my use of italics is pretty persuasive.

Yes, your use of italics is absolutely brilliant.
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