What's at stake? A short text on US elections

 

[This is a short, less than 700 words, piece that “Globe and Mail” asked me to write about the forthcoming US election. They got what they apparently did not expect and wanted me to revise the text substantially. I am always happy to accept all factual and English-language corrections, as well as different turns of phrase etc. I am even accepting deletions of some parts of my texts (as in the case of my books translated in China). But I do not accept changes in content. So I post the original text here.]

 

What are the stakes in the forthcoming US presidential election? I would put them in one word: “normalcy”. But as I write that word, I feel very uneasy. For an East European of my generation it brings back the bad memories of the 1968 Czechoslovak “normalization” when the Soviet Union and (what would be called today) its “coalition partners” invaded Czechoslovakia to snuff out the Prague Spring, and bring back a bad government.  

And this is the second reason for the unease.  The United States prior to Trump could hardly be described as having been in a desirable state of affairs. Not only that: it is that very “normalcy”  that brought Trump to power in the first place. It is useful to refresh one’s memories. Under George W Bush, the  US created endless wars that destabilized the Middle East and killed, according to some estimates, half a million  people. Under the same president, it also produced the biggest economic crisis since the Great Depression. And then under the next president it bailed out those responsible for the crisis, sowed chaos in Libya, and ignored the decimation  of the American middle class.

So, what was “normal” then? But, it could be argued, there are differences—even leaving aside the extraordinary irresponsible and outright callous response of the Trump Administration to the covid-19 epidemic which it largely ignored, and when it did not ignore, contributed to the death of almost quarter a million of Americans. The first difference is that the departure of Trump will put an end to the ceaseless daily fights with journalists, politicians, actors, private individuals, TV producers, and practically everybody who crosses paths with his administration. The new administration will stop the unconscionable attempt to pit different groups of Americans against each other in order to stay in power. It will end an openly racist behavior from the top. It will no longer relish the idea of using alligators to stop illegal immigrants from crossing the US border.

In foreign affairs, it will reduce tensons with China. Trump has exacerbated them and there is no doubt that they will remain.  But his behavior that appears to indicate that he sees covid-19 as a China-orchestrated ploy to oust him from power is extraordinary dangerous. The US relations with China will not go back to what they were before Trump, but at least the danger of two nuclear powers starting a war would be lessened.

But what will “normalcy” bring in “positive” terms--not only what the Biden administration will “not” do? One cannot be  very optimistic. Not only because of Biden’s half-a-century lack-luster record, but because of a narrative that the liberal establishment, which now includes both centrist Democrats and many Republicans,  has become comfortable with. It is a narrative where everything prior to Trump was excellent, and then fell into pieces. That narrative is not only wrong (for the reasons I mentioned above) but would lead to inaction. The United States needs major changes in its distribution of wealth, elitist education system, dysfunctional health care, plutocratic-ruled political system, crumbling infrastructure, declining middle class, unleashed monopolies. Who is going to make all these changes? A new Roosevelt is often invoked. Does Biden fit the role? One should also not ignore that many of Roosevelt’s achievement became entrenched only because of inter-class collaboration that developed with the war effort. There is nothing similar to that now--and hopefully it will not be a war that would bring it forth.

So, after reflection, it is not “normalcy” that one hopes for from the likely new administration but major policy changes, the greatest (albeit in the opposite direction) since Reagan’s 1980 election.  America has often been lucky and surprised the world by its uncommon ability to pull out of seemingly impossible situations. Was not Truman thought a light-weight? Kennedy inexperienced? Roosevelt a scion of the upper classes? The question is, can  Biden surprise the world—and himself?    

 

 

Ban this book! A review of Daniel Markovits’s “The Meritocracy Trap”

 Daniel Markovits has written in “The Meritocracy Trap” such a frontal assault on the meritocratic system that undergirds and sustains today’s US society that, were the book on a similarly self-sustaining ideological rationale written in pre-revolutionary France, or Brezhnevite (let alone Stalinist) Russia, the book would have been burned and its author sent into exile or worse.

Markovits argues that “what is conventionally called merit is actually an ideological conceit, constructed to launder fundamentally unjust allocation of advantage” (p. 268). The system is relatively easy to explain by writing it as a modified Marx’s famous M-C-M’ scheme (invested money => production of commodities => more money). Here it is M-E-M’ where E stands for production of children’s education. The moneyed elite, itself well educated and hardworking, dedicates an enormous amount of effort and money to place its children through the most expensive, elitist and competitive education system in the world that begins with pre-K and ends with the graduate school—in order to make sure that children earn even higher incomes and stay on top. “Meritocracy” is thus just another way to create and maintain a de facto ruling class, an aristocracy, where the birth advantage (fundamental to its power) is concealed by educational credentials. In a number of instances, Markovits indeed likens today’s meritocracy with the old-fashioned aristocracy (and not always favorably).

Meritocracy has several features. Its members are highly educated and credentialed; they are hardworking (“[t]oday’s Stakhanovites are the one-percenters”, p. 81) and combine “progressive virtues” of inclusion and privacy, with “conservative virtues” of hard  work, saving and contempt for the poor.

Through such contempt and their belief that advantages they enjoy are fully merited, meritocrats have created a deep chasm within the US polity between themselves and the rest, most notably between themselves and the middle class (the poor never played much of a role anyway). As Markovits argues, not only in income, but in consumption patterns, beliefs, attitude to and health outcomes etc. the gap between the meritocrats and the middle class is wider today than the gap between the middle class and the poor.

Education is the key mechanism through which meritocracy reproduces itself. The investment in children’s education begins at age 2. By the time children of the rich get out of the graduate school, the cumulative difference between parental investment and subsidies provided by the elite schools they have received, and investments along the similar path taken by the children of the middle class, attains an astronomical amount of 10 million US dollars.

The scions of the rich thus become managers of an enormous fortune, their own personae. Their behavior can then in turn be best understood to be that of a wealth manager who is in charge a peculiar and huge wealth portfolio: themselves. No moment may be lost in not putting that capital at work, for every moment lost is a loss of income. The children too become Stakhanovites.

The numbers that Markovits cites about the sky-rocketing tuition costs from the private kindergartens to graduate schools are by now such common knowledge that they are not worth repeating here. Equally well known, thanks to the work by Chetty et al. is the skewed top college admission system where the elite schools cater only to the top decile of US income distribution and the likelihood of those whose parental income is below the median of entering these schools is approaching zero.

One will find many (at times, too many) such data in Markovits’s book. But its main point lies elsewhere: to explain how such outcomes are not accidental but fully consistent with the pattern that enables the elite to reproduce itself and to fend off challenges from the lower parts of the distribution. “Meritocracy sustains dynasties [and the ruling class] by reconstructing the family on the model of a firm, the household on the model of a workplace, and the child on the model of a product.” (p. 116).

While the meritocratic project is a success since its values of hard work, personal responsibility and transmission of advantage to the next generation are widely admired and emulated throughout the world (China may be perhaps an even more extreme example than the United States), meritocrats’ lives are not a bed of roses. Meritocrats (called by Markovits the “superordinate" workers) work longer hours than the less paid workers, their life is a continuous stream of income-maximizing decisions, devoid of being “rooted” in a community and its neighborhood. Meritocrats’ relationships with the rest of the world are wide, they include people of equal status and money from many parts of the world, but they are shallow.

The economic and cultural divide that has opened between the meritocrats and the middle class feeds the cultural and political wars in the United States. As Markovits writes, the middle class that was left behind does not resent billionaires and entrepreneurs; it resents meritocrats and their supercilious attitude towards the “lamentables”.

It is not an easy book to read—at many levels. Its messages are harsh and brutal. It is not always best written. There are long and repetitive passages.  Were it cut in half, it would have gained in power. But its main message is clear and loud: “Meritocracy has become the single greatest obstacle to equal opportunity in America today” (p. 27).

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PS. I am sorry to have to say that but I do not think that I have ever read a book the is so badly produced (Penguin’s is the publisher). The book is chock-full of interesting statistics but there are no footnotes; there are not even end-notes. What exists are pseudo end-notes which are linked to the text by a few words written in the main text. When one reads the book, one has no idea whether there is an end-note or not. Such end-notes are quasi impossible to find and when one finds them, the font is the smallest possible on record, so they are illegible. For all intents and purposes, the book has no notes.

Milton Friedman and labor-managed enterprises

 In the Spring of 1973 Milton Friedman visited Yugoslavia. A few weeks after his trip, he recorded this very interesting conversation (see the link; the link was unearthed by my friend Milos Vojinovic). Friedman’s impressions and conclusions are remarkably clear and spot-on. They were not something new: the problems that he mentions regarding Yugoslav cooperatives (or more exactly, self-managed enterprises, SME) were quite well known by 1973. Nevertheless Friedman summarized them very accurately. He also must have had a very well organized visit and good interlocutors. I vaguely remember reading that his main host was an excellent journalist from Belgrade’s outstanding economics  weekly “Ekonomska Politika” (some of my first ever writings were published by them, so I am always a bit biased in their favor).

I would suggest to everyone to listed to Friedman, but let me say a bit more regarding three major flaws of SMEs identified by Friedman (and of course others). This is of special importance now because the ideas of workers’ management and ownership are becoming popular again.

The first flaw has to do with the maximand of SME. Like US cooperatives, they maximize average output per worker because at that point the wage is the highest. This means that SMEs will not go all the way to marginal product of labor=wage and would thus employ fewer workers  than an entrepreneur-run company. This is indeed something that was confirmed in practice. Yugoslav SME were loath to expand employment. Unemployment in Yugoslavia, despite massive workers’ emigration mostly to Germany, always stayed around 10% through the 1970s and 1980s. Some writers like Susan Woodward see high youth unemployment combined with IMF policies of austerity imposed after the debt crisis of 1980s as responsible for the break-up of the country. (I will leave this aspect aside.) However, the reluctance of SMEs to hire more workers led the government in the 1980s to enact the law on “obligatory employment of new workers” whereas each SME had to increase its employment by 2% per annum. Not the most market-friendly and reasonable policy.

The second problem mentioned by Friedman was that all SMEs can be in equilibrium while having vastly different average products per worker and wages. Since wage depends also on capital-intensity of the enterprise or even on the branch of production, workers in highly capital-intensive areas (like electricity generation) will have much higher wages than those in textile. And for the reasons explained in the previous paragraph, there would be no tendency to move from one enterprise to another. (The high-wage enterprise will have reached its maximum and would not hire more workers.) This was, like the previous problem, noted already in the seminal paper by Benjamin Ward published in 1958. It was expanded in Jaroslav Vanek’s monumental “The General Theory of Labor-Managed Market Economies”. Numerous articles on that problem (and the previous) were published in The Journal of Comparative Economics and Economic Analysis and Workers’ Management, the two prime journals that dealt with market socialism. (I would also like to recemmend this excellent paper by Dinko Dubravcic, published in 1970, as well as James Meade 1972 article.)

The third problem had to do with the fact that capital was “socially” owned. It could not be alienated by workers, i.e. sold to somebody else. Workers enjoyed only usus fructus rights. That led to the following problem (which by the way was also obvious in the Basque Mondragon cooperatives). When workers had to decide how much of net income to use for wages as opposed to plowing back into investment, they tended to go for higher wages. It was not simply because of pure time preference but because wages were fully privately-owned (obviously), and could be used to open a savings account in which the worker owned both the principal and received interest. But if that same amount were reinvested in his company, he will get only the return on investment; the principal will be merged with the rest of “social” capital and will never revert back to the worker. Now, imagine that you are a year before retirement, and you have the option of increasing your wage by $100 or reinvesting that amount in your company. What will you choose?

As Friedman rightly says in the interview, Yugoslav policy-makers constantly complained that companies were distributing too much in wages, and tried  to set, through heavy wage taxation, incentives to move more money into investment. But the results were nugatory.

These are some intrinsic drawbacks of labor- or self-managed firms. Most of them stem from non-privately owned capital. This is why this model of cooperatives should not be confused with a privately-owned cooperatives where workers are also shareholders. In that case, the last problem, for example, disappears entirely. The first two do not however, but they are “solved” by the introduction of two types of workers: those who are workers-shareholders and others who are hired workers. Mondragon did precisely that.

The advantage of SME was workplace democracy. Workers indeed had much more extensive rights and power than in similar capitalist firms that are by definition hierarchical and are actually run as mini-dictatorships. Whether democratic nature of SME had positive effects on productivity (adjusted for all the mentioned deficiencies) I do not know, although I think that there were such studies.

Finally, when assessing intrinsic advantages and disadvantages of such a system one should leave aside other characteristics which had nothing to do with the system as such but with specific Yugoslav conditions. They are at least two.  

First, for large and important enterprises, some workers’ rights were curtailed because Republican governments and through them the Republican Communist Parties appointed its nomenclatura members to top positions. It was thus a “controlled” workplace  democracy. Very often these appointees were not well qualified to run companies. They were basically Party hacks who tried to pretend to be businessmen. Slobodan Milosevic is the most famous example. He became the head of one of the largest Yugoslav banks and although he always bragged of dealing skillfully with Rockefeller and Chase Manhattan he probably knew very little about banking (having also graduated in law).

Second, Yugoslavia after the Constitution of 1974 (that was just being discussed as Friedman was visiting the country as he briefy alludes) functioned as a confederation ruled by Republican Communist Party oligarchies. Each of the republics not only tried to control better its SMEs and especially the banking system but to undermine the unitary market by imposing restrictions on the free movement of capital, or even in some cases of goods. Thus SMEs worked in an ever more restrictive market, and under a greater control by political oligarchies.

These two last features (one-party system and extreme decentralization leading towards autarky) need not be present in other countries.

  

 

On several Marxist themes in “Capitalism, Alone”: My reply to Romaric Godin’s review

 

 Romaric  Godin has recently written a very stimulating review of “Le capitalism, sans rival” with a somewhat provocative title “La reflexion inachevée de Branko Milanovic sur le capitalisme”. There are reasons why the reflection may necessarily remain incomplete, but there are also some points on which I would like to define my thinking a bit more clearly and possibly move the discussion further.

Godin’s summary of the book’s main points in the first part of the review is excellent and there is nothing to disagree with except that I would like to clarify a point regarding my definition of communism. I will then follow Romaric Godin’s four very specific critiques and try to answer them.

Global historical role of communism

The clarification on the role of communism is as follows. My definition of communism, written in the italics in the book is: “communism is a social system that enabled backward and colonized societies to abolish feudalism, regain economic and political independence, and build indigenous capitalism.  Note that the definition refers to “backward and colonized” societies. As I explain in the book, the centralized anti-imperialist parties composed of professional militants were in the best position to effect this double transition, that is, to politically free  countries from the outside influence, and to introduce social transformation (land reform, abolition of feudal-like privileges, widespread education, gender equality). It is these regimes which, in turn, have set the stage for the development of autochthonous capitalism (obviously without having this in mind at the time when they did the revolution). This is why I argue that their role was functionally the same as that of the bourgeoisie in countries that were not colonized.   

This is an important point, for at least two reasons. First, by the “cunning of history” the actors of these changes introduced the system of which they were unaware. This is something that we can see only now, with sufficient passage of time. It was entirely impossible to see thirty years ago and even less so at the time of the revolution. The owl of Minerva flies out at dusk.

Second, this view of global historical role of communism entirely changes our perception of the events in the 20^th century. As I argue in Annex 1 of “Capitalism, Alone”, the Russian revolution’s most important accomplishment was not the introduction of the communist system in Russia (which eventually collapsed) but the unification in the body of the left-wing and communist parties in the Third World, of anti-imperialist struggle and social revolution. For this reason the “Eastern turn” announced at the 1920 Baku conference and the 2^nd Comintern Congress (also in 1920) was crucial.  To quote Lenin: “Capitalism has grown into a world system of colonial oppression and of the financial strangulation of the overwhelming majority of the people of the world by a handful of ‘advanced’ countries”.[1]  Or, “at this Congress [the 2^nd Comintern Congress] we see taking place a union between revolutionary proletarians of the capitalist, advanced countries, and the revolutionary masses of those countries where there is no or hardly any proletariat [my emphasis], i.e., the oppressed masses of colonial, Eastern countries.” [2]

Without the Russian revolution and without Lenin’s redefinition of the global class struggle to embrace also anti-colonialist struggle (often in coalition with bourgeois parties in colonized countries), communist parties in the Third World would have been consigned to a peripheral role. Moreover, it is important to realize that Lenin’s position was a departure from orthodox Marxism. Marx and many “classical” Marxists were ambivalent and even supportive of western imperialism seeing it as a means of introducing capitalism in backward countries (Marx’s writing on India are a good example of that) and setting the stage for an eventual socialist transformation. In this view, there is no natural anti-imperialist role of communist parties. This entirely changed after 1920.

When we look at the Russian revolution today this was its most important achievement. It was indeed an indirect achievement but nevertheless of fundamental worldwide significance. To state it brutally: the rise of Asia and the decolonization of Africa would not have occurred, or would have moved much more slowly. This applies not only to China and Vietnam which are paradigmatic cases, but also to India whose independence movement was led by national bourgeoisie but which, under the left-wing pressure, borrowed many of the more progressive policies from its leftist and secular rivals. Again, without that left-wing pressure, coming not only from several Indian Marxist parties, but perhaps even more importantly from an ideological acceptance of social revolution, industrialization, central planning and the like, Indian independence and reform would have taken many more decades. One may even wonder if India might not have ended up in some kind of “soft” colonial arrangement with Great Britain, the two bourgeoisies collaborating.

I needed to clarify this point because Romaric Godin seems to skip over the  “colonialist” element and to think that I maintain a more traditional view that communism was more successful in less developed countries for economic reasons. I do believe that too (as I write in Section 3.2) but this is of secondary importance compared to the argument that I just sketched in the previous paragraphs.

Moreover that argument explains why I juxtapose China and the United States in the book. Unlike “vulgar” political scientists, I do not merely slap together China and the US to discuss their differences as is often done in popular discussions of the two competitors in the new Cold War. My objective was to provide an ideological genesis of China’s rise and its adoption of political capitalism, not merely to take the snapshot of China today. As communism was, in this interpretation, behind China’s rise, and as the latter has a world-transforming character, I argue that this was indeed one of the main global historical contributions of communism. (Clearly, China is the most important example, but I list another ten countries, from Algeria to Tanzania that could be seen to belong to the same category and to have responded to the same forces.)

This explains also why I do not discuss today’s Russia as an example of political capitalism (as I am criticized by Robert Kuttler in his review of “Capitalism, Alone” in the New York Review of Books). I could indeed discuss Russia too—since it shares many features of political capitalism with China, but Russia does not share the same historical genesis explained above and there was thus no point in discussing her in the book.

Let me now move to Godin’s specific critiques.

Capitalism as a historical system

The first refers to my hesitation between natural and historical characters of capitalism. Is capitalism a “natural” system? Godin correctly says that I believe that our desires and behavior are the product of socialization which implies that capitalism is a historical category. But “L’hypothèse de auteur…que le capitalisme a triumphé grâce à sa capacité à satisfaire les désirs de richesse de la population” seems to imply that such desires are intrinsic to humans which would explain my insistence on the power of capitalism but would be in contradiction with the statement that capitalism is a historical system. Thus either I have to claim that capitalism is a natural system or to accept that capitalism could be transcended.

I do accept the latter. As I briefly write at the end of the book, I can imagine that capitalism can be replaced by another system: when capital becomes plentiful compared to labor and wage labor disappears. Two out of three fundamental definitional characteristics of capitalism would then be gone: no wage labor, and no capital as a social relationship (since it vanishes with the disappearance of hired labor). We are then in a different mode of production. Will this lead to a change in our system of values? Perhaps. But surely if the way the society is organized changes, we can expect that certain values that we hold immutable today, including acquisition of wealth as the primary objective in life, may be altered.

Can capitalism expand forever?

The second critique is that I do not fully allow for the dynamic elements of capitalism, most notably its permanent need for expansion, driven by the search of new profit-generating activities. However, as Godin writes, capitalism today meets certain, apparently unsurmountable limits: on the one hand, capitalism is limited by social rejection of increasing inequalities, and on the other hand, by its low productivity growth (the secular stagnation hypothesis) and environmental exhaustion. Hence, Godin argues, capitalism may be faced with very significant constraints to its further expansion. And without profit, there is no capitalism. This issue, as Godin writes, goes back to Rosa Luxemburg and Henryk Grossman.

But there, I think, it is Godin’s views that are static, not mine. The view that somehow capitalism will not be able to find new fields of activity is based on our own cognitive limits, namely our inability to imagine  what would be new areas of profit-making in thirty or fifty years. We should realize—especially now in the era of expansion of capitalism into our private sphere (from internet influencers to Airbnb), a development which no one could have forecast twenty years ago—that the areas which capitalism can “invade” cannot be told in advance. But by reasoning by analogy, we can comfortably assume that such new areas will indeed be created.

Rosa Luxemburg was, we know today, wrong, but it seemed to her reasonable to argue that the expansion of capitalism is finite because the new underdeveloped areas cannot be found forever. This was however a wrong way of posing the problem, since the dominion of capitalism need not require only new physical areas, but can extend to new ways to organize production (as Schumpeter argued), new products and even to our leisure time. Likewise, we, today, cannot foretell what activities might become “capitalistic”. To each generation, it appears that capitalism has exhausted possible sources of profit, only to find out they were wrong.

The problem here is very similar to the one that I discuss with respect to technological change. There too we are cognitively limited. We cannot pinpoint today the jobs that will be created by new technologies simply because we do know how the new technologies may affect production and our needs. It thus often seems that the new technology will just displace existing jobs, making workers redundant, without creating new jobs. But that fallacy has regularly been exploded during the past 200 years—yet we encounter it every time a new technology comes on the scene.  

Within the same argument, Godin regrets that the book did not pay more attention to the production side of capitalism. This is a valid critique. The book is focused, in the analyses of both liberal and political capitalisms, on the distributional side and on the reproduction of the elites (which itself is correlated with the patterns of income distribution). These are the areas of my knowledge. Unfortunately, the production side, the monopolies, intellectual property rights, hierarchical internal organization of capitalist production with subsumption of labor to capital, trade unions, are very important topics, but I had to leave them out for others who know much more about them than I. Two, among probably many, who have done much valuable work are  Anwar Shaikh in “Capitalism”, and Marshall Steinbaum in his publications on the monopoly nature of US capitalism.

Definition of communism

The third critique refers to the definitions of capitalism and communism. On the latter, I was very aware of the terminological problems. This is why I dedicate an entire section to it in Chapter 3 of the book. To be brief, I use the term “communism”, when I discuss socialist (sic!) economies, in a common way the term “communism” is used, especially in English-language literature: to denote the economies where capital was state or socially owned, and production decisions were centralized. I do not think it is worth entering into an etymological and heavily ideological discussion so long as it is clear what we mean. That system was certainly not capitalist: the differences are stark.

Now, it is true that, from the Marxist perspective, the term “communism” used in that context is inaccurate because communism is the higher (never attained) stage where, as Marx wrote, the pre-history--that of all class societies--ends, and the true human history begins. I do not discuss that system because it has never existed. As Machiavelli disparagingly says,  “For many writers have depicted…principalities which have never been seen or known actually to exist.”[3]

Godin has another interesting point regarding socialist economies though.  They were not fundamentally different from capitalist, he writes, because in the “really existing socialism” too the law of value operated (the production was indeed of exchange-values, not use-values), the relations within the enterprises were hierarchical, and the “really existing socialism” was (or might have been; I leave it open) a class society. This is something on which, when much younger,  I have spent numberless hours thinking and even writing (none of that published) and yet…this is an important topic but it does not belong in my book. I dealt in the book with the very clearly defined systems of production: liberal or social-democratic capitalism, socialist economies, and political capitalism. All of them exist or existed in real life. I do agree with Godin that the “really existing socialism” was a system of commodity production. This, by the way, is not contentious even for Marxists as it is fully consistent with what Marx envisaged for the transition period where the surplus value and the surplus labor time still exist in order to allow for the fulfillment of many social functions (education, health, government administration) as well as for investments (see The Critique of the Gotha Program, Part I).

Thus I agree with Godin that “si ces régimes bolcheviques ne relevent  pas du capitalisme, ils ne sauraient être non plus du « communisme » au sens marxien du terme, autrement dit un régime où les classes sociales et l’exploitation auraient disparu” but I do not find this critique relevant. Not only for the book but even for those systems themselves because, strictly speaking, they never claimed to be “communist” in the Marxist sense of the term. They viewed themselves as transitory systems towards communism.

I think that Marx’s definition of communism, while it does represent an interesting “terminus” to human “prehistory”, is most of the time an obstacle to the discussion of the really existing societies. An incredible amount of ink was spilt on arguing that the socialist regimes were, at some point, state capitalist, as Pannekoek, whom Godin quotes, thought, and indeed Lenin too. But I find that an almost  theological discussion, rather sterile.

Do we need to have an alternative to capitalism?

The fourth critique, even if not explicitly labeled as such, refers to the following problem: for capitalism to change, to be superseded by another system, it is wrong to believe that it must have a clear alternative: “la lecture de Branko Milanovic qui consiste à prétendre que les systèmes économiques ont toujours été en concurrence est problématique”. And also “la vision d’un capitalisme ayant besoin d’un rival pour succomber semble issue d’une téléologie de la guerre froide.”

If Godin had made such a conclusion this must be because I was not clear in my exposition. I do not think at all that a change in a dominant mode of production must come only because a different mode of production exists next to it. I fully agree that the change, as in the cases quoted by Godin (North Italian cities and the Netherlands), comes from within the system itself. Because a different way of organizing production is more productive, it increasingly encroaches on the hitherto dominant mode of production until it replaces it and wins over.

The antinomy of liberal and political capitalism was not used to argue that one will necessarily prevail. In effect, it was my disagreement with the Fukuyamist view popular in the 1990s which in part led me to write the book and to posit, especially at the end, the possibility of convergence of the two capitalisms. To quote Godin: “L’hypothèse d’une fusion des deux formes dans une forme hybride, rapidement évoquée en fin d’ouvrage, semble assez séduisante au regard des évolutions récentes : tendance autoritaire et à la corruption à l’Ouest, développement d’une élite économique ailleurs”.

Finally, I do not discard the possibility of transcending capitalism altogether. But, as I have already mentioned, this can be imagined only if the “objective” economic reality changes—in other words, if labor becomes a relatively scarce factor of production. I think that our historical experience has predisposed us to believe that scarcity of capital is inevitable and that the ownership of capital must always be concentrated. I admit that this is how it was during most of recorded history. But it need not be. The concentration of capital can be transcended by policies that would stimulate its much broader ownership, through taxation, workers’ shareholding, and even state ownership (when applicable). This is my definition of “people’s capitalism”. The scarcity of capital can be transcended by accumulation and technological change happening in tandem with slow or zero population growth. These two developments would end capitalism as we know it. But they are developments independent of individual will.   

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[1] Vladimir I. Lenin, Collected Works, vol. 19, p. 87. Quoted in Paul Sweezy, The present as history, Monthly Review Press, New York, 1953, p. 24

[2] Lenin’s speech at the 2^nd Congress of the Communist International, Moscow, 19 July 1920.

[3] Machiavelli, The Prince, Chapter 15.