Lecture given by Takis_Fotopoulos on September 1994 in Anogeia-Crete, Greece
I think that today very few people -if any- will attempt to challenge the hypothesis that contemporary society is undergoing a profound and widespread crisis. A crisis that puts into question not just the political, economic, social and ecological structures that came into being with the rise of the market economy, but also the actual values that sustained these structures and particularly the post-Enlightenment meaning of Progress. It is therefore not just the state-socialist society that has entered a state of terminal crisis, as manifested by the collapse of “actually existing socialism” in the East. The presently dominant market society, despite the claims made by its ideologues, is also in a state of serious structural crisis. Therefore, one might reasonably assume that the very type of economy and society that emerged in the aftermath of the Industrial Revolution, what we may call “the growth economy“, is in a state of crisis.
I would like to consider three main issues which -to my mind- are the crucial issues in any discussion today about social change. These issues can be put in terms of three questions:
First, is there a common cause for the crisis of the “growth economy” in its capitalist and socialist/ social-democratic versions?
Second, what are the dominant trends of social change at present and what are the chances – if these trends persist- of overcoming the crisis of the growth economy?
Third, should we create alternative forms of social organisation in order to overcome the crisis?
A. THE CRISIS OF THE GROWTH ECONOMY (estratto)
Following a common classification of the models of development and social change we may distinguish between :
a) the “capitalist growth” model that emphasises capital investment and growth in the GNP through a process of marketizing the economy–today’s dominant model,
b) the “social equity” model that emphasises fair distribution of resources and rights through socialist statism ―a model that has been collapsing for the past 15 years or so, and
c) the “participatory” model that emphasises the activation of creative social energy at the grass roots level– a model that seems rising at present.
I would argue that the first two models, in fact, belong to the same “growth economy” that historically developed out of the industrial revolution in Europe. Furthermore, another common characeristic of the first two models that differentiates them from the third is that both are centralised and associated with top-down power structures, in contrast to the participatory model which presupposes the dispersion of power and -in its ideal form- the elimination of power relations themselves.
But, first, let me explain the terminology I use and in particular the meaning of the terms market economy, growth economy and marketization. By “market economy” I do not just mean an economy where part of the product is bought and sold in the market. It can easily be shown that, although markets have existed for a very long time, the market economy, as an economic and social system, is a new phenomenon, which first emerged at a specific place (Europe) and time (some two centuries ago). So, by “market economy” I mean the self-regulating system in which the fundamental economic problems (what, how, and for whom to produce) tend to be solved “automatically” through the price mechanism, i.e. through individual decisions, rather than through some process of social decision-making.
The emergence of the market economy set in motion two parallel processes that have since characterised social, political, economic and ecological change. The first is what we may call the marketization process and the second is the process that has led to the emergence of what we may call the growth economy, i.e. the economy founded on the partial (at least) identification of Progress with the continual development of the forces of production. The reasons why the emergence of the market economy was bound to set in motion these two processes can easily be explained at the micro-economic level. The fact that, at the time of the arrival of the Industrial Revolution, mechanized production had to be introduced in a commercial society where the means of production were privately controlled had very important implications. It meant that those controlling the means of production, in order to survive competition, had to ensure:
-First, the free flow of labour and land at the minimal cost. However, under conditions of private control of production, this flow is an inverse function of the social controls on the market. Thus, the more effective the social controls on the market, and in particular on the market for the “factors of production” (labour, capital, land), the more difficult is to ensure their free flow at the minimal cost. Therefore, historically, those having private control of the means of production have always directed their efforts towards further marketizing the economy, i.e. minimizing the social controls on the market. The marketization process is therefore a historical process that transformed the socially controlled economies of the past into the market economy of the present.
-Second, they had to ensure a continual flow of investments into new techniques, methods of production and products, i.e. they had to ensure continual growth (this logic was aptly expressed by the motto “grow or die”). Therefore, it is not a coincidence that, as a modern treatise on growth puts it, “the modern idea of growth was formulated about four centuries ago in Europe when the economy and the society began to separate”.
So, the two major historical processes, marketization and growth, constitute the fundamental components of the new system, the market economy. But, let us examine in some more detail these two components and their social and ideological implications.
As regards marketization first, it can be shown that, since the emergence of the market economy, there has been a definite long-term trend to minimise the social controls on the market. The rise in this century of what I will call statism, in other words, the period of active state control of the economy and interference with the self-regulating mechanism of the market, was a historically brief interlude to the process of marketization. The statist phase of this process lasted for only about half a century and was followed by the present rolling back of state control over the economy (I refer here to macro-economic control of the economy, i.e. control of the level of output, investment, employment and so on) within the framework of the neoliberal consensus.
In particular, statism, in its Western social democratic form, represented a doomed attempt from the start to set effective social constraints on the process of marketization. This implies that the project to enhance the civil society, which is proposed by some currents within the Left today, may be just another dream: the marketization process, within the capitalist institutional framework, has proved irreversible.
In other words, once a market economy is established, its own grow-or-die dynamic tends to undermine any serious effort to create self-protective mechanisms for society against the hegemony of the market and transforms society itself into a market society.
Second, as regards growth, we have to notice in advance that economic growth was not just the inevitable outcome of the workings of the market economy at the micro-economic level. Growth was, also, the selected objective of the centrally planned economy at the macro-economic level. Thus, whereas the first component of the market economy ― the marketization process ― had divided the intelligentsia of the industrial era and led to the two major theoretical and political movements, liberalism and socialism, no similar divide had arisen with respect to the second component, i.e. economic growth. From Adam Smith to Karl Marx, the fundamental problem was how humankind would maximize growth, with the help of Science and its technological applications that had created – for the first time in History – the possibility for an effective attempt to dominate Nature at a mass scale. Therefore, growth became a central imaginary signification, to use Castoriadis’s terminology, for both capitalism and socialist statism.
The growth ideology, i.e. the ideology that was founded on the social imaginary signification that “the unlimited growth of production and of the productive forces is in fact the central objective of human existence”, and the implied ideology of domination over Nature, became dominant. Thus, the growth ideology complements the liberal ideology in existing capitalism and the socialist ideology in the ex-socialist countries. In this sense, the growth ideology constitutes the ultimate ideological foundation for both systems, despite the significant differences in economic structures and the hierarchical patterns of concentration of power. Furthermore, the growth ideology plays the role of the “ideology in the last instance”, in the sense that it determines which ideology will be dominant at the end. This is why the economic failure of “actually existing socialism” to create a Western-type consumer society was the main reason that had led to its collapse and the consequent decay of the socialist ideology, for the benefit of the now dominant liberal ideology.
So, the growth economy became a central liberal and socialist objective.
Thus, growth became the main objective not just of social democracy that merely aimed ―in the postwar period at least― at enhancing social controls on the market, but also of the ruling elites of “actually existing socialism”.
This, despite the proclaimed effort in the East to substitute central planning for the market economy and the fact that growth did not inevitably follow from the dynamics of the Planning system itself, as it was the case with the market economy. The result was the formation of a world growth economy that took the form of either a capitalist growth economy, where the basic economic decisions were taken through the price mechanism, or of a socialist growth economy, where most of the corresponding decisions were taken through the central planning mechanism. Therefore, under the “capitalist growth economy” label we may classify the Western postwar economic structures, which expressed the social-democratic consensus, as well as today’s economic structures, which represent the present neoliberal consensus. By the same token, we may classify under the “socialist growth economy” label the pre-1989 economic structures in the East, i.e. the countries of “actually existing socialism”.
Today, it is obvious that the world growth economy, in both its capitalist and socialist versions, has entered a state of fundamental crisis. Thus, on the one hand, we have just seen the actual collapse of actually existing socialism- a fact that marked the end of the “socialist” version of the growth economy. On the other hand, the crisis of its capitalist version becomes apparent by its dismal failure to become universal. A clear indication of this failure is the fact that today- almost half a century since the adoption of the growth economy model by every country in the world – over 78% of world output, according to the latest World Bank Report, is produced, and 75% of world exports are generated, in a few countries of the North, where only 15% of the world population lives. If we add to this the serious ecological crisis that is directly related to the emergence of the growth economy- not to mention the broader social crisis represented, for instance, by the explosion of crime, drug abuse etc.- then the crisis of the growth economy is apparent.
Could we trace any common cause in the failure of the growth economy, in both its capitalist and socialist versions?
To my mind, there is a definite common cause, which can be expressed in terms of a basic structural characteristic of the growth economy: concentration of power, economic and political power. Thus, concentration of economic power, effected either through the automatic market mechanism, and taking the form of accumulation of income and wealth and consequently of purchasing power in “actually existing capitalism”, or through the concentration of political control over the planning process in “actually existing socialism”, constitutes a basic characteristic of the growth economy.
Therefore, what differentiates the two types of growth economy is the way in which the concentration of economic power is realised. From this viewpoint, the institutions through which the ownership and allocation of economic resources are organised, in both the capitalist and the socialist growth economy, play a crucial role.
B. THE DOMINANT TRENDS OF SOCIAL CHANGE TODAY (estratto)
Let us now come to the second question concerning the presently dominant trends of social change and the chances – if these trends persist- of overcoming the crisis of the growth economy.
Two years ago Riccardo Petrella, director of the Forecasting and Assessment of Science and Technology division of the European Community, wrote in an editorial piece in the Toronto Star:
The new order taking shape in the world today is not the one imagined by obsolete statesmen of the Cold War era.
Rather than nation-states weighing in on a new global balance of power, a hi-tech archipelago of affluent, hyper-developed city-regions is evolving amid a sea of impoverished society. These city regions are actively linked together by transnational business firms which, in their ceaseless pursuit of new customers, are creating new networks that bypass the traditional nation-state framework… It thus appears that the real decision-making powers of the future will be a network of transnational companies in alliance with city-regional governments... Today’s global economy is principally organised through a system of some 30 mega-cities that are the active nodes of the world market.
The basic conclusion that we may derive from the above statement is that the nation-state is withering away and is being replaced by a network of transnational corporations and city-regions. I will make the hypothesis that today’s decline of the nation-state, which is particularly obvious within the European Community ―that is, the very place where the nation-state historically emerged― is closely linked to the present internationalised phase of what I called the marketization process. I shall assume further that the present nationalist conflicts in Eastern Europe represent a transitional phenomenon marking the full integration of the countries concerned into the world capitalist market. In other words, these conflicts represent an earlier phase in the marketization process – a process that was partially interrupted in these countries by the advent of `actually existing socialism’. But, if nationalist conflicts in Eastern Europe might reasonably be assumed transitional, it will be hard to make a similar assumption about the rise in Western Europe of neoracism, which could be traced to the structural changes I described above. Thus, as the void created by the decline of statism has not been filled by a process that really empowers communities, the same marketization process that has led to the present decay of communities and community values, the drastic rise in unemployment and the decline of the welfare state has, also, led to the present flourishing of neoracism.
But, why the nation-state is withering away within the above described process of marketization ? To answer this question we have to go back to the prewar period when, during the Great Depression in the thirties, two different models of statism developed in the West. The Nazi form of statism which, mainly due to political and military considerations, was of a “nationalist” character and the Anglo-American form of statism, which was much more internationalist. The former was to find an inglorious end under the ruins of the Third Reich, whereas the latter flourished for another 30 years or so after the end of the war and, in fact, set the foundations for the present internationalised phase of the marketization process that is associated with the neoliberal consensus.
Thus, despite the rapid expansion of statism in the immediate postwar period, the growing internationalisation of the market economy, as a result of its grow-or-die dynamic, was also actively encouraged by the advanced capitalist countries, both at the world level (GATT rounds of tariff reductions) and at the regional level (European Economic Community [EEC], European Free Trade Association [EFTA]). The old nationalist rivalries that characterised the first half of the twentieth century and led to two world wars were swiftly overcome, in view of the expansion of `actually existing socialism’ and the flourishing of national liberation movements in the Third World. Thus, commercial rivalries between major capitalist nations were replaced by a rapid expansion of trade (mainly between themselves) so that, by the early 1970s, one-sixth of manufacturing goods consumed in Europe were imported from abroad. Since then, the internationalisation of the economy has accelerated further.
However, growing internationalisation implies that the growth of the market economy today relies increasingly on the expansion of the world market rather than on that of the domestic market, as before. This is a fact that has very significant implications with regard to the state’s economic role. Thus, as the accumulation of capital in today’s internationalised market economy depends much more than before on the world market, the state’s role in enhancing domestic demand is not as important as it used to be in the past. At present, competitiveness plays a much more significant role with respect to accumulation and economic growth than direct expansion of domestic demand through government spending. Under conditions of free trade, competitiveness is crucial not only with respect to an increasingly export-led growth but also with respect to import penetration that could have serious repercussions on the levels of domestic business activity and unemployment. In this context, the prevailing conditions on the supply side of the economy, in particular those relating to the cost of production, become critical. This is why squeezing the cost of production, both in terms of labour cost and in terms of employers’ taxes and insurance contributions, is so important. But, squeezing the cost of production involves a drastic reduction in statism.
Thus, it can easily be shown that the postwar expansion of statism has led to a long-term rise in the cost of production: directly, because the expansion of the welfare state meant a growing burden on employers’ contributions and taxes; indirectly, because, under the conditions of near-full employment that prevailed during the statist phase of the marketization process, organised labour could press successfully for wage rises that significantly exceeded productivity increases. This became a problem particularly painful for those controlling capitalist production in the period 1968-73, when a massive strike movement, not actually controlled by the trades union bureaucratic leadership, led to a fast rise in wages and a corresponding encroachment of profits.
At the same time, concentration of political power cannot be reduced through the decentralization of economic power, supposedly brought about by the freeing of markets, deregulation and so on. On the contrary, minimizing social controls on the markets further reinforces economic concentration– which is simply a by-product of the market economy–whereas, at the same time, it leads to supranational forms of political concentration that correspond to the supranational forms of economic concentration already established.
In fact, the trend towards the formation of a federal super-state in Europe, actively supported by neoliberals and social-democrats, constitutes a characteristic example of political concentration supplementing economic concentration.
C. THE NEED FOR AN ALTERNATIVE FORM OF SOCIAL ORGANISATION (estratto)
Finally, coming to the last question I asked at the beginning, whether we should create alternative forms of social organisation in order to overcome the crisis, I think that today few doubt, and research has conclusively shown, that participation should infuse any model of social change, i.e. that social change should at least be initiated at the local level. The real issue therefore is not whether the participatory model is desirable but whether any real participation is feasible within the present institutional framework, which is defined at the political level by representative forms of democracy and at the economic level by the internationalised market economy and its institutions (TNCs, IMF, World Bank etc.). i.e. the institutional framework which tends to develop, as we saw above, into a series of networks of city-regions within federated structures of political power.
In short, the real issue is decentralisation versus remaking society.
A useful starting point is David Clark’s definition of the concept of community, which is defined in terms of what he calls “ecumenicity” (i.e. a sense of solidarity that enables people to feel themselves part of and not hostile towards wider society) and autonomy (i.e. a sense of significance that enables people to feel they have a role to play in the social scene, a role that is defined by rules that members of the community choose themselves and feel free to modify).
However, the ecumenicity and autonomy elements can only be described as the necessary conditions defining community relations. I think that community members cannot have a real sense of solidarity and especially a real sense of significance, unless a third element is present, which I call the democracy element. The democracy element, which rules out the concentration of political and economic power, is in fact the sufficient condition for any true community. Historically, this has always been the case. Thus, as Michael Taylor has shown, drawing on the experience of stateless primitive societies, peasant communities and `intentional’ (utopian) communities, a community requires rough economic equality, as well as relations between its members that involve reciprocity (mutual aid, cooperation, sharing) and that are direct (i.e. unmediated by representatives, leaders, etc.) and many-sided. So, taking into account all these three elements (ecumenicity, autonomy, democracy) we may end up with a definition of community like the one recently put forward by Murray Bookchin as “a municipal association of people reinforced by its own economic power, its own institutionalization of the grass roots, and the confederal support of nearby communities organized into a territorial network on a local and regional scale”. I think that starting from a definition of community, like the one given by Bookchin, we could develop a model of a community-based economy and society. Unfortunately, I can not expand further this topic here and I can only refer those interested to some recent bibliography on the matter.
However, as I hinted above, apart from radical proposals to remake society, on the basis of a new community-based social system, there are also community-based proposals to decentralise society, in the sense of empowering communities at the expense of the centre. Today, the concept of community has become fashionable again. Religious “communitarianism”, with its religious notion of “community”, competes with statist communitarianism, where the need to revive the “community” is used as a means to fight crime and strengthen the security state (see eg Clinton’s 1994 “State of the Union” address). Similarly, parts of the old social-democratic movement, like, for instance the British Labour Party, turn today to various forms of “communitarianism”, in the sense of empowering communities as counter-balancing forces to the market and the supranational federal forms of statism presently developing. It is obvious that these fashionable notions of community have nothing to do with the concept of community that a community-based society has to develop, because religious or statist definitions of community take for granted the very institutional framework that a community-based society has to transcend.
Similar arguments could be put forward against the type of communitarianism presently expanding, particularly in North America and Britain, in the form of what is usually called “Community Economic Development” (CED). This involves a strategy of gradual removal of land, labour and capital from the market economy (through the establishment of Community, Land Trusts, community financial institutions, community enterprises etc.) with the double aim to create a community culture and to make private firms and the state socially responsible. However, community economic development, although useful with respect in particular to its first objective, could not seriously challenge the present concentration of political and economic power, as supporters of it admit:
New forms of economic activity and institutions created in the community will never be adequate, within an economy dominated by private enterprise, to generate enough jobs and wealth at a local level to compensate for the consequences of economic centralisation outside of the community…Since communities do not control in any direct way economic resources, partnerships with both government agencies and representatives of business have been accepted as inevitable by CED activists in order to secure both recognition and resources. These are tricky relationships because of the inequality of power.
It is therefore obvious that CED, by not aiming at establishing a political and economic power base at the community level, (which could only be achieved, as the supporters of a community-based society argue, by contesting local elections in order to develop “a new public sphere ―and in Athenian meaning of the term, a politics― that grows in tension and ultimately in a decisive conflict with the State”), could easily end up as another attempt for radical decentralisation. But, radical decentralisation, within the existing institutional framework, is neither feasible nor desirable. It is not feasible, because, in the context of the present internationalised phase of the marketization process, any attempt to create real counterbalancing centres of power would fail, unless these centres of power are compatible with the logic and dynamic of competitiveness. It is not desirable, because the problem of democracy today is not just how to force the present centres of political and economic power to delegate some of their power to local centres of power, which would simply reproduce at the local level the concentration of power at the centre. The problem is how we can create new forms of social organisation that do not presuppose centres of power at all, but the dispersion of power to all citizens, i.e. true democratic forms of organisation and a return to the classical meaning of Politics, in the context of which “neither rule nor being ruled exists”.
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