If Not Capitalism, What?

You are critical of capitalism, but what is the alternative?

When I think about alternatives to capitalism, I go back to basics, to the question of what any economic system actually is and what it does. In every kind of society, whether it’s communal hunting-and-gathering or global industrial capitalism, the answer has two parts.

The first has to do with how a society goes about producing goods and services. In one sense this refers to the method of producing something and what’s used to produce it. Hunter-gatherers don’t plant crops, for example, while agrarian societies cultivate fields with plows, and industrial societies use heavy machinery and other technology to plant, harvest, and process food and even make some of it up in the lab.

In another sense, the act of production is also social—people are organized in relationships through which goods and services are produced. It’s the difference, for example, between shoes being made by independent shoemakers working on their own in small shops and shoes being mass produced by worker-employees in factories owned by someone else.

The second thing to know about an economic system is what happens to what is produced—how it’s distributed among people in the society and who benefits. In other words, what’s the point of economic activity?

If you look at most human societies over the last several hundred thousand years, the point of economic systems has been quite simple and unsurprising—to provide for the needs of the people who participate in them. The tribe needs a way to come up with food and shelter because the people of the tribe have to eat and get out of the rain. Cooperation and sharing have been important values because they make for efficient production and it’s how you make sure everyone gets what they need. Which has been the point in most places for most of history.

The most important thing to realize about industrial capitalism is that it is not organized to meet the needs of the people who participate in it. It is not the first system for which this has been true, but it is the latest version and it dominates the world. It’s true that capitalists have to produce things that people need (or, if not, to persuade them that they do) in order to sell goods and make a profit. If, as a result, capitalism does happen to meet the needs of people, that’s fine, but that is not the point of the system. The point is to allow individuals to compete with one another in order to maximize personal wealth. How this affects everyone else is, within fairly broad limits, largely beside the point.

This means that when a small portion of the population manages to take most of the wealth for themselves, the system is simply operating as it is designed to do. If millions of people don’t have enough food or shelter or decent healthcare, or if roads and bridges and schools are falling apart, or if the planet and other species are being degraded or destroyed, none of this is taken as a sign that the economic system itself is failing. To see how this shows up, all you have to do is look at the list of ‘economic indicators’ used to show how well the economy is doing. There you will find hardly anything designed to measure the quality of people’s everyday lives, the degree to which their needs as human beings are being met. Not to mention the well-being of the planet and non-human species whose fate is inseparable from our own. Such things are not represented because they are not the point of the capitalist economic system.

Over the vast majority of human experience, organizing the world in such a way would have made no sense at all. It would have seemed bizarre and profoundly unwise, even murderous and suicidal, and a repudiation of what it means to live as a full human being. That an economic system would not only allow but encourage a small minority to take almost everything for themselves, that it would support the belief that there is no such thing as too much, that human beings can do whatever they want and imagine a future in which they thrive while the rest of the planet goes under, is so far beyond the boundaries of reality as to be, well, a little crazy. And yet that is precisely where we are, living a kind of systemic insanity based on fantastically insupportable assumptions.

So, if not capitalism, what?

It’s really very simple: An economic system designed first and foremost to meet the needs of human beings and the Earth and the non-human species who call it home, that honors the biological and moral fact of life that we are indeed all in this together.

And how do we get there?

We can only begin where we are, facing the first obstacle in our path, which is the sacred assumption of capitalism that the pursuit of individual greed can be the basis for a moral society and a sustainable planet. Challenging this assumption will mean, among other things, changing the rules that both allow and encourage the unlimited and unaccountable private accumulation of wealth; the massive and reckless gambling and speculation in the financial industry that enriches the few while producing catastrophe for everyone else; and the power of wealth to control major institutions, including the political system.

There are societies that provide an example of what an alternative might look like. Norway is one. It was relatively untouched by the 2008 financial meltdown that rocked the world, because Norway doesn’t allow individual and corporate greed to be the dominating force in their economy. Banks and other financial institutions, for example, are highly regulated and income taxes are high enough to generate the revenue that provides for the basic needs of everyone, such as health care and education.

It’s important to be aware that many of the defining characteristics of capitalism are retained. Businesses are privately owned, for example, by individuals and corporations. One exception to this are resources that are vital to everyone’s wellbeing, such as energy, which are either owned or tightly regulated by the government on behalf of the entire country. Norway’s abundant North Sea oil reserves, for example, are owned by the country as a whole and not private corporations, and the income generated is distributed across the entire population.

There is a name for this kind of economic system. It’s called ‘democratic socialism’. We hear all the time in the U.S. that we’re supposed to be afraid of the ‘socialism’ part because it supposedly means a loss of freedom and the value of the individual. That certainly happened in the first large-scale attempts at socialism—the Soviet Union and China—but there are numerous current examples such as Norway, Sweden, Finland, Denmark, Switzerland, and the Netherlands where socialist principles have worked out much differently (the ‘democratic’ part). If by ‘freedom’ we mean being able to do whatever we want regardless of the consequences, then socialism does mean less freedom than we have in the U.S. But such limits affect primarily the wealthy and corporations, not the great majority of ordinary people. Which is why it is the wealthy and powerful, especially through their control of the mass media, who are continually warning us about the ‘dangers’ of socialism.

Americans are routinely told that we are the most free people on the planet, that everyone wishes they were American, that our standard of living and health care system are the best in the world. But any serious look at the evidence quickly shows this isn’t true. Just ask Norwegians (or Swedes or Danes or . . . ) who routinely come out far ahead of the United States on measures of personal happiness and quality of life, including crime, health care, social mobility, income, wealth, and democracy.

This does not mean that the U.S. can or should become a large and more complex version of a homogeneous country like Norway whose history and circumstances differ markedly from our own. The example of democratic socialist countries, however, can provide a point of view from which the U.S. can ask critical questions about how our economic system works and the consequences that result, something this country has, so far, been unwilling to do in a serious way.

Finding an alternative to capitalism begins with confronting the reality of the economic system we all participate in and how it shapes our lives and the planet we live on.

_______________________

Copyright © 2013 by Allan G. Johnson. All rights reserved. This article may be quoted, reprinted, or distributed for noncommercial purposes only and with an attribution to Allan G. Johnson, www.agjohnson.com, and this copyright notice.
For recent data on how the U.S. compares with other developed nations, see Howard Steven Friedman, The Measure of a Nation, 2012.