Can civilization survive really existing capitalism?

This article is based on a talk given at the Northeastern University Economic Symposium on February 23, 2013.

IN REFERRING to “really existing capitalism,” I have in mind what really exists and what is called “capitalism.” The United States is the most important case, for obvious reasons. The term “capitalism” is vague enough to cover many possibilities. It is commonly used to refer to the US economic system, which receives substantial state intervention, ranging from creative innovation to the “too-big-to-fail” government insurance policy for banks, and which is highly monopolized, further limiting market reliance.

It’s worth bearing in mind the scale of the departures of “really existing capitalism” from official “free-market capitalism.” To mention only a few examples, in the past twenty years, the share of profits of the two hundred largest enterprises has risen sharply, carrying forward the oligopolistic character of the US economy. This directly undermines markets, avoiding price wars through efforts at often-meaningless product differentiation through massive advertising, which is itself dedicated to undermining markets in the official sense, based on informed consumers making rational choices. Computers and the Internet, along with other basic components of the IT revolution, were largely in the state sector (R&D, subsidy, procurement, and other devices) for decades before they were handed over to private enterprise for adaptation to commercial markets and profit. The government insurance policy, which provides big banks with enormous advantages, has been roughly estimated by economists and the business press to be on the order of some $40 billion a year. However, a recent study by the International Monetary Fund indicates—to quote the business press—that perhaps “the largest US banks aren’t really profitable at all,” adding that “the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from US taxpayers.” This is more evidence to support the judgment of the most respected financial correspondent in the English-speaking world, Martin Wolf of the London Financial Times, that “an out-of-control financial sector is eating out the modern market economy from inside, just as the larva of the spider wasp eats out the host in which it has been laid.”

The term “capitalism” is also commonly used for systems in which there are no capitalists: for example the extensive worker-owned Mondragón conglomerate in the Basque Country of Spain or the worker-owned enterprises expanding in northern Ohio, often with conservative support, a matter discussed in important work by Gar Alperovitz. Some might even use the term “capitalism” to include the industrial democracy advocated by John Dewey, America’s leading social philosopher. He called for workers to be “masters of their own industrial fate” and for all institutions to be under public control, including the means of production, exchange, publicity, transportation, and communication. Short of this, Dewey argued, politics will remain “the shadow cast on society by big business.”

The truncated democracy that Dewey condemned has been left in tatters in recent years. By now control of government is narrowly concentrated at the peak of the income scale, while the large majority “down below” are virtually disenfranchised. The current political-economic system is a form of plutocracy that diverges sharply from democracy, if by that concept we mean political arrangements in which policy is significantly influenced by the public will.

There have been serious debates over the years about whether capitalism is, in principle, compatible with democracy. If we keep to really existing capitalist democracy—RECD for short (pronounced “wrecked”)—the question is effectively answered: they are radically incompatible.

For reasons to which I’ll return, it seems to me unlikely that civilization can survive really existing capitalism and the sharply attenuated democracy that goes along with it. Could functioning democracy make a difference? Consideration of nonexistent systems can only be speculative, but I think there’s some reason to think so.

Let’s keep to the most critical immediate problem that civilization faces, though not the only one: environmental catastrophe. Policies and public attitudes diverge sharply, as is often the case under RECD. The nature of the gap is examined in several articles in the current issue of Daedalus, the journal of the American Academy of Arts and Sciences. The researchers find that

109 countries have enacted some form of policy regarding renewable power, and 118 countries have set targets for renewable energy. In contrast, the United States has not adopted any consistent and stable set of policies at the national level to foster the use of renewable energy.

It is not public opinion that drives policy off the international spectrum—quite the opposite. The public is much closer to the global norm than policy. It is also much more supportive of actions to confront the likely environmental disaster predicted by an overwhelming scientific consensus—and it is not too far off; in the lives of our grandchildren, very likely. As the Daedalus researchers found:

Huge majorities have favored steps by the federal government to reduce the amount of greenhouse gas emissions generated when utilities produce electricity. In 2006, 86 percent of respondents favored requiring utilities, or encouraging them with tax breaks, to reduce the amount of greenhouse gases they emit. . . . Also in that year, 87 percent favored tax breaks for utilities that produce more electricity from water, wind, or sunlight. . . . These majorities were maintained between 2006 and 2010 and shrank somewhat after that.

The fact that the public is influenced by science is deeply troubling to those who dominate the economy and state policy. One current illustration of their concern is the Environmental Literacy Improvement Act being proposed to legislatures by the American Legislative Exchange Council (ALEC), a corporate-funded lobby that designs legislation to serve the needs of the corporate sector and extreme wealth.

The ALEC act mandates “balanced teaching” of climate science in K–12 classrooms. “Balanced teaching” is a code phrase that refers to teaching climate-change denial in order to “balance” mainstream climate science. It is analogous to the “balanced teaching” advocated by creationists to enable the teaching of “creation science” in public schools. Legislation based on ALEC models has already been introduced in several states.

The ALEC legislation is based on a project of the Heartland Institute, a corporate-funded think tank dedicated to rejecting the scientific consensus on the climate. The Heartland Institute project calls for a “Global Warming Curriculum for K-12 Classrooms” that aims to teach that there “is a major controversy over whether or not humans are changing the weather.” Of course, all of this is dressed up in rhetoric about teaching critical thinking—a fine idea, no doubt, but it’s easy to think up far better choices than an issue selected because of its importance for corporate profits.

There is indeed a controversy, regularly reported in the media. One side consists of the overwhelming majority of scientists, all of the world’s major national academies of science, the professional science journals, and the Intergovernmental Panel on Climate Change (IPCC). They agree that global warming is taking place; that there is a substantial human component; that the situation is serious and perhaps dire; and that very soon, maybe within decades, the world might reach a tipping point where the process will escalate sharply and will be irreversible, with severe social and economic effects. It is rare to find such consensus on complex scientific issues.

The other side consists of skeptics, including a few respected scientists who caution that much is unknown—which means that things might not be as bad as thought, or might be worse.

Omitted from the contrived debate is a much larger group of skeptics: highly regarded climate scientists who regard the regular reports of the IPCC as much too conservative. They have repeatedly been proven correct, unfortunately. But they are scarcely part of the public debate, though very prominent in the scientific literature.

The Heartland Institute and ALEC are part of a huge campaign by corporate lobbies to sow doubt about the near-unanimous consensus of scientists that human activities are having a major impact on global warming with possibly ominous implications. The campaign was openly announced and includes the lobbying organizations of the fossil-fuel industry, the American Chamber of Commerce (the main business lobby), and others.

The efforts of ALEC and the famous Koch brothers, are, however, a fraction of what is underway. The initiatives are concealed in complex ways but are sometimes partially revealed, for example in a current report by Suzanne Goldenberg in the London Guardian which finds that

conservative billionaires used a secretive funding route to channel nearly $120 million to more than 100 groups casting doubt about the science behind climate change, [helping] to build a vast network of think tanks and activist groups working to a single purpose: to redefine climate change from neutral scientific fact to a highly polarizing “wedge issue” for hardcore conservatives.

The propaganda campaign has apparently had some effect on US public opinion, which is more skeptical than the global norm. But the effect is not significant enough to satisfy the masters. That is presumably why sectors of the corporate world are launching their attack on the educational system in an effort to counter the dangerous tendency of the public to pay attention to the conclusions of scientific research.

At the Republican National Committee’s winter meeting a few weeks ago, Governor Bobby Jindal warned the leadership that “we must stop being the stupid party. . . . We must stop insulting the intelligence of voters.” ALEC and its corporate backers, in contrast, want the country to be “the stupid nation”—and for principled reasons.

One of the dark-money organizations of billionaires funding climate-change denial is Donors Trust, which is also a major contributor to efforts to deny voting rights to poor Blacks. That makes sense. African Americans tend to be Democrats, even social democrats, and might even go so far as to pay attention to science, unlike those properly trained to think critically by “balanced teaching.”

The major science journals regularly give a sense of how surreal all of this is. Take Science, the major US scientific weekly. A few weeks ago it had three news items side by side. One reported that 2012 was the hottest year on record in the US, continuing a long trend. The second reported a new study by the US Global Climate Change Research Program that provided additional evidence for rapid climate change as the result of human activities and discussed likely severe impacts. The third reported the new appointments to chair the committees on science policy chosen by the House of Representatives, where a minority of voters elected a large majority of Republicans thanks to the shredding of the political system. All three of the new chairs deny that humans contribute to climate change, two deny that it is even taking place, and one is a longtime advocate for the fossil fuel industry. The same issue of the journal has a technical article with new evidence that the irreversible tipping point may be ominously close.

A report in Science this past Thursday underscores the need to ensure that we become the stupid nation. The report provides evidence that even slightly warmer temperatures, less of a rise than is currently anticipated in coming years, could start melting permafrost, which in turn could trigger the release of huge amounts of greenhouse gases trapped in ice. Best to keep to “balanced education”—if, that is, we can face the grandchildren whose lives we are busy destroying.

Within RECD it is of extreme importance that we become the stupid nation, not misled by science and rationality, in the interests of the short-term gains of the masters of the economy and political system, damn the consequences. These commitments are deeply rooted in the market-fundamentalist doctrines that are preached within RECD but are observed in a highly selective manner, so as to sustain a powerful state to serve wealth and power—what economist Dean Baker calls a “conservative nanny state.”

The official doctrines suffer from a number of familiar “market inefficiencies,” among them the failure to count the effects on others in market transactions. The consequences of these “externalities” can be substantial. The current financial crisis is an illustration: it is partly traceable to ignoring “systemic risk”—the possibility that the whole system will collapse—when the major banks and investment firms undertake risky and hence profitable transactions. Environmental catastrophe is far more serious: the externalities being ignored include the fate of the species. And there is nowhere to run, cap in hand, for a bailout.

These consequences have deep roots in RECD and its guiding doctrines, which also dictate that the masters should exert major efforts to escalate the threats. This is one reason—not the only one—why it seems unlikely that civilization will survive RECD without severe blows.

A future historian, if there is one, would look back on a curious spectacle taking shape in the early twenty-first century. For the first time in human history, humans are facing significant prospects of severe calamity, as a result of their own actions, that are battering the foundations of decent survival. There is a range of reactions. At one extreme, some seek to act decisively to prevent possible catastrophe. At the other extreme, major efforts are underway to deny what is happening and to dumb down the population so that they won’t interfere with short-term profit. Leading the effort to intensify the likely disaster is the richest and most powerful country in world history and the most prominent example of RECD, with incomparable advantages. Leading the effort to preserve conditions in which our immediate descendants might have a decent life are the so-called “primitive” societies: First Nations, tribal, indigenous, aboriginal.

The countries with large and influential indigenous populations are well in the lead in seeking to preserve the planet. The countries that have driven indigenous populations to extinction or extreme marginalization are racing forward enthusiastically toward destruction. Thus Ecuador, with a large indigenous population, is seeking aid from the rich countries to allow it to keep its substantial oil reserves underground, where they should be. Meanwhile, the US and Canada enthusiastically seek to burn fossil fuels, including the extremely dangerous Canadian tar sands, and to do so as quickly and fully as possible while they hail the wonders of a century of (largely meaningless) energy independence without a side glance at what the world might look like after this extravagant commitment to self-destruction. Throughout the world, indigenous societies are struggling to protect what they sometimes call “the rights of nature,” while the civilized and sophisticated scoff at this silliness.

All exactly the opposite of what rationality would predict—unless it is the skewed form of reason that passes through the distorting filter of RECD.

Issue #78

July 2011

Slavery and the origins of the Civil War

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