David Schweickart at
Marx's Democratic Critique
of Capitalism, and Its Implications
for
Presentation to the Fifth Forum of
Humanities and Social Sciences of
By David Schweickart
Professor of Philosophy
Introduction
As we all know, Marx's powerful and compelling
critique of capitalism provided no explicit model for a viable alternative to
capitalism, no "recipes for cookshops of the future," in his
disdainful phrase.[1] Marx shouldn’t be faulted for this
omission. He was a
"scientific" socialist.
Although there were sufficient data available to him to ground his
critique of capitalism, there was little upon which to draw regarding
alternative economic institutions. No
"experiments" had been performed.
We no longer have that excuse.
Lacking any blueprint, successful socialist
revolutionaries have had to improvise.
Mistakes have been made. Lessons
have been learned. Let us reflect for a
moment on the economic
history of the two most important revolutions of the past century:
When the Bolsheviks seized power in 1917, they
immediately issued a decree nationalizing all land, while giving the peasants
to right to use. This decree essentially
legitimized what was already taking place in the countryside, as landlords
fled. But giving land to the peasants is
one thing; requisitioning agricultural surplus to feed the cities, and the
Bolshevik armies during the ensuing civil war, is quite another. Giving factory committees control over
production--another early decree--is one thing; ensuring that factories are
well managed is another. Soon enough
grain and other foodstuffs had to be seized by force, while Lenin called for
strict discipline and order in the factories.
Attempts were made at wholesale nationalization, the banning of all
market exchanges, centralized planning, even the abolition of money, but
wartime conditions were so chaotic that none of these measures had much
effect. The Bolsheviks won the Civil
War. (The Russian peasantry did not want
the landlords back.) But the economy lay
in ruins. Famine stalked the land. Uncounted millions died. "War communism," as an economic
model, had failed.
In 1921 Lenin changed course. The New Economic Policy (NEP) was
introduced. The ban on private
enterprise was lifted. Attempts were
made as securing foreign investment.
(Little was forthcoming.) Forced
requisition of grain was halted. (After
payment of tax, peasants were free to market their produce.) Bukharin, in 1925, proclaimed the slogan,
"Get rich!" (but was forced to retract
it.) Price controls remained in effect,
and the government continued to own--and manage--most large and medium-sized enterprises. During this period, Lenin died; Stalin
consolidated his power; the economy gradually recovered.
But there was a problem. The economy had recovered, but the
Intense debates raged among the
Soviet leadership, but all agreed that it would have to come from the
peasantry. The small peasant plots would
have to be consolidated. Modern
agricultural techniques would have to be introduced. Could this be done gradually, through example
and persuasion, or were more drastic measures called for? There was also the issue of class strata in
the countryside. If agricultural
surpluses were to be forthcoming non-coercively, the wealthier peasants (middle-income
peasants and kulaks) would have to cooperate.
But these classes were the least sympathetic to the Bolsheviks and to
socialism in general.
We all know what happened. Suddenly and without warning, Stalin launched
a massive campaign to collectivize agriculture and to liquidate the kulaks as a
class. Soviet society was convulsed from
top to bottom. Peasants were terrorized
into joining the collective farms--but the urban cadre dispatched to run them
knew little about agriculture. Indeed,
no one had any experience with large-scale, mechanized agriculture. Many of the most skilled peasants--the richer
ones-- were killed or deported to
This "great leap forward"
in agriculture was accompanied by a similar "great leap" in
industry. The first Five-Year Plan was
drawn up and put into effect. Market
exchanges were abolished. Centralized
planning was introduced. The principle
of one-man management was established at the enterprise level. Consumption was kept low. All surplus went to
industrializing the country.
Workplace discipline was enforced by punishing
absenteeism and providing material incentives.
(Stalin declared that egalitarianism was "petty-bourgeois"
until full communism arrived.) Moral
incentives were also employed, and with success. After all, a new world was being build while
the old one was experiencing in the worst economic crisis that capitalism has
ever seen.
It cannot be denied.
This effort succeeded. The human
costs were horrific, particularly in the countryside, but at a time when the
Western economies were mired in the Great Depression, (a seeming vindication of
Marx’s prediction), the
This, of course, was not to be. In the 1980s Soviet growth ground to a halt,
whereas the West, following the deep recession of 1980-82, surged ahead. The Soviet system underwent a severe
"legitimation crisis," abandoned its socialist heritage--and promptly
collapsed.
There are, of course, many parallels
between the Soviet and Chinese experiments--as well as dissimilarities. The Chinese Communist Party came to power after its civil war, not before, and so
did not have face the challenge of building a socialist economy under wartime
conditions. The Chinese Communist Party
had far more experience with the peasantry than did its Russian counterpart.
To oversimplify a history that this audience knows
better than I, the Chinese Communist Party began its rule with its own
"NEP"--land to the peasants, nationalization of the "commanding
heights" of the economy, toleration of market relations and even of
"national capitalists" (as opposed to the "bureaucratic
capitalists" who had actively opposed the revolution). Like those of the Soviet NEP, the policies of
this period (1949-52) brought about a rehabilitation of a war-devastated
economy.
The first Five-Year Plan (1953-57) was less drastic
than its Soviet counterpart.
Agricultural collectives were formed, but without the trauma and
violence of the Soviet experience. Basic
industries were developed, giving
Then came the Chinese
"Great Leap Forward" (1958-60).
Agricultural collectives were amalgamated into much larger
"communes" at an extraordinary rate.
The central planning apparatus was partially dismantled in favor of
regional decentralization and small-scale, labor-intensive technologies
("backyard blast furnaces").
Moral appeals replaced material incentives as the locus of motivation.
The overall effect was
disastrous--agricultural collapse, terrible famine--which prompted a second NEP
(1961-65) that encouraged petty capitalism in the countryside, reorganized
industry along more conventional (Soviet) lines, and shifted emphasis to
material incentives and technical expertise.
Agricultural and industrial production revived markedly.
The Cultural Revolution soon followed. The focus this time was not on economic
policy per se, but on character, ethics and motivation. It was believed that the economy would
function better, in human terms, if people were motivated, not by narrow,
potentially counter-revolutionary “bourgeois” economic interests, but by a
proletarian consciousness that kept the well-being of the masses ever in view.
The experiment did not succeed. It was followed by a set of reforms,
introduced first in the countryside, that was to transform yet China again,
more profoundly, perhaps, than ever before.
Agriculture was decollectivized.
Market mechanisms were reintroduced, and gradually extended from rural
areas to urban. Foreign capital was
invited in. Large numbers of public
enterprises were privatized. It was
proclaimed, "To get rich is glorious!"
A period of stability exceptional in the history of
modern ensued that endures to this day, accompanied by astonishing economic
growth, material improvements that have affected every layer of society, as
well as rising inequality, unemployment, and environmental degradation.
What conclusions can be drawn from the history I
have briefly surveyed? Looking at the
history of the great socialist experiments of the twentieth century, we see
that two controversies dominated much of the theoretical debate, not only in
the
In the twentieth century various combinations of
plan and market, material and moral incentives were tried. We have surveyed the results. Market won out in the plan/market
controversy. Material incentives won out
in the material/moral controversy. We
now know what we couldn't have known a century ago: modern industrial economies
are simply too complicated to organize under a detailed central plan; material
incentives cannot be abandoned in a world of on-going scarcity. These are two of the great lessons of
twentieth century economic history.
Marx's
Critique as a Democratic Critique
What would Marx say to all this? This issue has been much debated. Some argue that Marx would be aghast. He maintained, did he not, that markets are
fundamentally irrational, and that markets pervert human sensibility, rewarding greed and
duplicity? Others argue that Marx would
endorse these developments. After all,
Marx did not think that society could pass quickly from capitalism to a society
regulated by the principle, "from each according to his ability, to each according
to his need." In his Critique of the Gotha Program, he stated
clearly that society would have to pass through a "lower stage of
communism" (now commonly called "socialism") which would be
"stamped with the birthmarks of the old society from whose womb it
emerges."[2] His brief remarks on this "lower
stage" explicitly endorse material incentives. Payment, he said, would be according to
contribution.
I submit that a careful reading of Marx's critique
of capitalism suggests a different perspective on this debate. The central issue is neither plan versus
market nor material versus moral incentives, but something else. Something important.
Although Marx offers us no blueprint for a socialist
economy, much of his critique of capitalism focuses on the workplace--his early
writings, particularly his 1844 manuscript on "Alienated Labor," but
also volume 1 of Capital, both in its
theoretical solution to the "riddle of capital" (How is profit
possible when equals always exchange for equals in the market?) and in its
detailed description of the actual conditions of work in mid-nineteenth century
Britain.
But what might be the solution to "alienated
labor"? The product of labor, the
embodiment of a worker's energy and skill, does not belong to her. Nor does she have any control over what is
produced, how it is produced, or her conditions of work. All of those decisions reside with he who
owns the means of production--the capitalist.
"If the product of
labor is alien to me, confronts me as an alien power, to whom then does it belong?
If my own activity does not
belong to me, if it is an alien and forced activity, to whom then does it
belong?
To a being other than
myself.
Who is this being?
The alien being
who own labor and the product of labor, whom labor serves and whom the product
of labor satisfies can only be man himself.
That the product of labor
does not belong to the worker and an alien power confronts him is possible only
because it belongs to a man who is other
than the worker. If his activity is
torment for him, it must be the pleasure and life-enjoyment of another. Not gods, not nature, but only man himself
can be this alien power over man."[3]
So what might be the solution to "alienated
labor"? The answer would seem to be
obvious--although not stated explicitly by Marx. The
workplace should be democratized! Not
that democratization would solve all the problems of psychological
alienation. Democratic decision-making
is no panacea. Bad decisions are
sometime made. The losers in democratic
debate can become embittered, especially if they consistently lose. But still, democratizing the workplace
responds directly to Marx's critique. The product now belongs to those who
produce it. They have control over the
conditions of its production. Scope for
collective action emerges that is far wider than that which exists under
capitalism.
Another part of Marx's critique has a different
emphasis. At the theoretical heart of Capital is Marx's solution to the
above-mentioned riddle. Profit is
possible because workers are required to work more than the labor-time
necessary for their own reproduction.
This surplus labor produces surplus value--the source of capitalist
profit.
It might be supposed that the resolution of this
"injustice" would be for workers to work only long enough to give
back to society the equivalent of what they consume, i.e. the labor-time
embodied in the objects they purchase with their wages. But this tempting solution cannot be correct,
for an economy that produced no surplus would be a stagnant economy, with no
means available for enhancing the quality of life of its citizens. There would be no surplus for research and
development, no surplus to be directed to those parts of the economy that may
have lagged behind the general level development, no surplus to be used for
"free" goods, such as education, health care, state pensions.
Indeed, Marx makes it very clear, not in Capital, but in his later Critique of the Gotha Program, that a
socialist society would still need to generate a social surplus. It is not true, Marx argues, that every
worker in a communist society should receive the full proceeds of his
labor. From the "collective
proceeds of labor" must be deducted funds for the expansion of production,
insurance funds against accidents and natural disturbances, funds to cover the
general costs of administration not pertaining directly to production, as well
as "that which pertains to the general satisfaction of needs, such as
schools, health services, etc." a part which "grows considerably in comparison
with present day society, and grows in proportion as the new society
develops."[4]
In short, Marx's critique pertains not to the fact
that surplus value is produced, but to the fact that the producers, collectively, do
not have control over the disposition
of that surplus.
Thus we see that Marx's critique of capitalism is in
essence a democratic critique.
Workers have no democratic control over their conditions of work. Society lacks democratic control over the social
surplus, the disposition of which determines the general developmental
trajectory of society.
Marx and the
Market
There is something else about Marx's critique of
capitalism that should be noticed, something Marx himself seems not have realized. Marx's
critique is not really a critique of the
market. Generations of Marxists have
assumed that it is, but I think this is wrong.
It is true that Capital
begins with "the commodity," and then traces, in rather abstract,
Hegelian fashion, the development of the market, from barter (C--C), to
money-mediated exchange (C--M--C), to
money-initiated exchange: money being advanced for the purpose of making more
money (M--C--M). But that brings Marx to
his paradox: how can money produce more money, when equals are being exchanged
for equals? How can M become M', where
M' > M?
His solution, as we know, is to focus on a very
special commodity: labor-power, the capacity a worker has to work, which is all
she has to bring to market. But notice:
something has changed. We are no longer
talking about the standard commodity market (the market for goods and services)
but a different sort of market--a labor
market. Moreover, as this market develops, it gives rise to yet
a third market: a market controlling the disposition of surplus value, i.e. a capital market.
Thus we see that "the market" in a
capitalist society is in not unitary. It
is a triple market: a market for goods and services, a labor market and a
capital market. Marx's critique is in
fact not a critique of the market per se,
but of the labor and capital markets.
Suddenly theoretical space opens up, in the heart of Marx's critique of
capitalism, for market socialism.[5]
Economic
Democracy: the Model
From these considerations a theoretical model comes
into view, a socialist alternative to capitalism quite different from the
Soviet model. I call it "Economic
Democracy." It consists of three
defining institutions:
1. A market for goods and services,
which is essentially the same as under capitalism.
2.
3. Workplace democracy, which
replaces the capitalist institution of wage labor.
4.
5. Democratic control of
investment, which replaces the capital markets of capitalism.
6.
But would such a system work? Would it be efficient? Would it be dynamic? Would it continue to embody socialist
values? These are the fundamental
questions upon which my research over the past several decades has focused.[6]
First of all, there is the
theoretical issue. Much effort has been
expended by economists in capitalist countries to demonstrate that, at least in
theory, capitalism is optimally efficient.
Highly stylized models have been developed. Sophisticated mathematical techniques have
been applied. Nobel prizes have been
awarded for these efforts. The
conclusion: with sufficiently restrictive assumptions, laissez-faire capitalism
is Pareto-optimal. That is to say, with
sufficiently restrictive assumptions, an unregulated, perfectly-competitive
capitalism will allocated resources in such a way that no one can be made
better off without making someone else worse off. Whether this allocation is a just allocation
is a separate matter, to be settled by philosophers and politicians. The point is, the
system is efficient.
The question naturally arises. Might a market socialist economy with
enterprises democratically controlled achieve the same degree of
efficiency? This question was settled in
1970 with the publication of Jaroslav Vanek's The General
Theory of Labor-Managed Market Economies.
The answer is yes.[7]
Yes, Economic Democracy can work in
theory, but what about in practice? The
assumptions one must make to prove economic theorems about socialism (or about
capitalism, for that matter) do not hold in the real world. Would Economic Democracy really work?
This question is addressed in some detail in my
published work. It is important to
realize that the past century is replete with economic experiments, not only
the massive experiments recounted in the first part of this essay, but also
small-scale experiments in individual enterprises. I argue that the empirical data now available
to us strongly support the claim that an economy structured along the lines
suggested by the model presented above would work better than capitalism. There is a vast literature now extant on
worker-owned or worker-managed enterprises.
There have been many attempts at macro-economic planning, often involving
the allocation of investment resources.
We can now assert, with a high degree of scientific confidence, that an
economy structured as an Economic Democracy (the theoretical structures
suitable modified to take into account certain practical contingencies) will be
at least as efficient as capitalism, more rational in its development, and more
democratic. It will also be less
susceptible to the glaring defects of capitalism: excessive inequality,
unemployment, poverty in the midst of plenty, overwork, and environmental
degradation.
The Yugoslav
Counterexample
It is sometimes said that worker-self-management of
enterprises on a broad scale is unworkable.
But in the 1980s the Yugoslav experiment--and the
country itself--unraveled. Why? It is natural for uninformed opinion to blame
worker-self-management, for this was the feature of the Yugoslav economy that
was so different from all other models, capitalist or socialist. However, there are no serious studies that
support this contention. Not even Harold
Lydell, a pro-capitalist economist who has written
extensively and critically about the Yugoslav economic system sees
worker-self-management as the problem. Quite the contrary.
It is evident that the principle cause of failure
was the unwillingness of the Yugoslav Party and government to implement a
policy of macro-economic restriction--especially restriction of the money
supply--in combination with microeconomic policy designed to expand
opportunities and incentives for enterprise and efficient work. What was needed was more freedom for independent decision-making by genuinely self-managed
enterprises within a free market, combined with tight controls on the
supply of domestic currency.[8]
Lydell rightly exonerates
worker-self-management as the problem.
What then was the principal cause of
This policy mistake was greatly compounded by the
central government's allowing republics excessive autonomy in generating and allocating
investment. The richer regions got
richer still, the poorer regions lagged further behind. This widening gap was the economic basis for
the regional and ethnic tensions that soon exploded. As Dijana Plestina's careful, painful study makes clear, "most
often the primary cause [for a lack of governmental consensus concerning
appropriate policies] was not ethno-nationalism per se but economic
interest."[9] Surveying the history of Communist
Yugoslavia, she observes:
Despite generally "good intentions" and a
relatively favorable domestic and international environment, when regional
economic interests conflicted, as they did most often, the priority of
enhancing one's own region's economic interests won out.[10]
The Yugoslav debacle does not refute the claim that
Economic Democracy is a viable economic order. The Yugoslav experience may well
contain lessons of importance for
The Relevance
of
The economic reforms initiated by Deng Xiaoping
began one year after I had completed my Ph.D. dissertation, "Capitalism: A
Utilitarian Analysis." Since the
fundamental principle of utilitarian ethics is "the greatest happiness for
the greatest number," a utilitarian critique of capitalism requires that
one provide a plausible model of a non-capitalist alternative that would
promote more happiness for more people than would capitalism. Hence, I was compelled to set out in my
dissertation the basic institutional features of one such alternative. This became the first presentation of what I
now call "Economic Democracy." (At the time I called it
"worker-self-managed market socialism"--still an apt description.)
The
Chinese agricultural reforms bore striking resemblance to this model. Capital assets (land in the case of the
Chinese reform) remained the property of the state, but workers (peasants in
the Chinese case) were free to manage them as they saw fit, selling their proceeds
on the market.
I held my breath as the Chinese experiment unfolded,
and was immensely gratified to see that it worked--astonishingly well. The experiments with township and village
enterprises also proved successful, and provided further support for the
theoretical perspective I had taken.
The early Deng reforms did not conform precisely to the model of
Economic Democracy, but they clearly demonstrated that the market could be
utilized creatively and effectively without abandoning public ownership of
productive forces or public control over resource allocation. "Market socialism" was not, as it
was fashionable to assert at the time, a contradiction in terms.
It is sad, even tragic, that so many Soviet and
Eastern European economists gave up on market socialism in the late 1980s,
early 1990s, bowing slavishly to the Western experts who were so certain as to what must be done to reform their
economies. The Hungarian economist Janos Kornai is typical:
Classical socialist is a coherent system . . . .
Capitalism is a coherent system. . . .
The attempt to realize market socialism, on the other hand, produces an
incoherent system. . . . The dominance
of public ownership and the operation of the market are not compatible.[11]
Their countries might have been
spared much needless pain had they looked East instead of West for advice, and
been a little more cautious in plunging ahead with the massive restructuring
that was being urged on them by Western "experts." It is now evident that these experts were
driven far more by ideology than by science.
Little concern was shown for the people who would pay the price, if the
reform schemes failed--which they did, almost everywhere. (
The Relevance
of Economic Democracy for
If the success of certain Chinese reforms vindicated
certain claims made on behalf of Economic Democracy, might the theory of Economic
Democracy have something to offer
First of all, the model, when situated within the
context of historical materialism, provides a theoretical framework for understanding
the Chinese experiment. Historical
materialism is a theory of history resting on a particular conception of the
human species. We are regarded as a
pragmatic, problem-solving species that is creative in ways that other species
are not. As Marx observed, we, alone
among the species of our planet, are capable of conscious, collective
action. We are not determined by our
immediate circumstances the way other species are. We are capable not only of understanding the
world, but of changing it.
Historical materialism regards an economic system as
the outcome of pragmatic attempts at solving the pressing problems associated
with material scarcity. It sees the
practices and institutions that constitute an economic system as evolving over
time. Those practices and institutions
put in place to resolve certain problems subsequently create new ones. Over time the negative elements of the system
can come to dominate the progressive elements, to the point that human beings
must search for a new system, building on what they have, but reconstructing
institutions in more or less radical fashion.
In both Against
Capitalism and After Capitalism I
argue that contemporary capitalism is precisely such a system, one in which the
negative elements now overshadow the positive.
Moreover, I claim that we can now see what (radical) reforms are
necessary to take us to the next stage of socioeconomic development. We can also see that there are objective
forces at work within most societies pushing, consciously or unconsciously, for
these reforms.
·
·
·
·
Of course there remains a
third possibility. Marx allows that
class struggle can result in the mutual ruination of contending classes.
It is precisely this third possibility that gives the
Chinese experiment such existential urgency.
A choice will have to be made between the first two options. Which choice offers the best hope of avoiding
the third?
The theoretical perspective offered by Economic
Democracy suggests that the second choice is the more promising.
The big challenges that capitalism now faces in the
contemporary world include issues of inequality (especially that of grinding
poverty in a world of unprecedented prosperity) and of "public goods"
(that is, goods people share together, like the environment). The solution to these problems will almost
certainly call for institutions that take us beyond the capitalist market
economy.[12]
In addition to providing a conceptual framework for
understanding the broad contours of the Chinese experiment, some programmatic
theses are also suggested by the theory of Economic Democracy.
Thesis 1:
The theory of Economic Democracy holds to the principle
that a viable socialism must be a market
socialism. Although there remain
socialists who dispute this claim, I consider this issue settled. The socialist opponents of market socialism
are often eloquent in their critique of the market--but they are unable to
articulate a plausible alternative.[13]
Thesis 2:
I have noted that, although Marx offers a powerful
critique of capitalism, he says almost nothing about alternatives. There is something else missing in Marx's
analysis. Marx calls our attention to
the passive function of the
capitalist, the capitalist as supplier of capital. This capital, he correctly observes, is
simply the accumulated, unpaid labor of past workers, and hence (I have argued)
should be under society's democratic control. But Marx pays virtually no
attention to the active function of
at least some capitalists, the entrepreneurial
function: setting up businesses, developing new products, championing new
technologies of production and distribution.
This too is labor, but labor of a particular sort,
often involving exceptional skill as well as a penchant for risk. Neither Marx nor the earlier socialist
experiments paid sufficient attention to the importance of the entrepreneurial
function in society, and hence failed to develop institutional structures that
would assure a sufficient supply of this most valuable resource.
We can see now that sector of small petty-capitalist
enterprises is indispensable to a viable socialist society, certainly in its
early stages of development, perhaps indefinitely. Small businesses offer a flexibility and
sensitivity to consumer demand in many sectors that large enterprises, whether
managed by state-appointed managers or even democratically-elected ones, cannot
match. Moreover, the historical evidence
strongly suggests that the entrepreneurial talent, energy and sense of
responsibility necessary to insure an adequate supply of small businesses
require economic incentives of the petty-bourgeois type. Worker cooperatives may also play an
important role in the small business sector, but these are not likely to be
sufficient in number. It is difficult to
set up a successful small business. It
is even more difficult to set up a successful cooperative.
The existence of a petty-bourgeois sector of
owner-operated small businesses need not threaten the basic socialist character
of a socialist market economy. To the
contrary, to the extent that there also exists a
vibrant cooperative sector in the economy and relatively full employment,
petty-capitalist enterprises will be under competitive pressure to become more
like cooperatives. To attract and hold
the best workers, they will have to institute profit sharing and some
participatory mechanisms.
Although a petty-bourgeois sector may well be
important for job creation and for meeting certain forms of consumer demand,
this sector will not supply much in the way of large-scale innovation. In capitalist countries there exists a
certain mythology concerning the innovative potential of small businesses, but
in point of fact not much productive innovation comes from this sector. Successful small business owners are adept at
copying what other successful small business owners do, but few have the time
or resources to devote to major innovation.
Hence it may be prudent for a socialist society to
have a sector of large capitalist enterprises as well. If the socialist sector of the economy proves
to be insufficiently entrepreneurial, or in need of serious competition to
compel it to be so, then a genuinely capitalist sector might fill that
role. Of course this represents a
danger. Marx is hardly wrong in
stressing that class struggle is a feature of all class-societies. It is not inconceivable (to put it mildly)
that the capitalist class might ally with the petty-capitalist class in an
attempt to establish itself as the ruling class.
But one should not conflate "not
inconceivable" with "inevitable." If we carefully distinguish the active entrepreneurial function of the
capitalist from the passive capitalist
function, i.e., the function of providing capital, it is not so hard to
envisage institutional arrangements that would at once encourage the former
while blocking the latter, thus providing a barrier against the capitalist
class becoming the ruling class (or vice versa). For example, it could be required that, when
an entrepreneurial capitalist decides to retire or wishes to sell his business,
he must sell his business to the state.
No passing it on to heirs. The
state can then turn it into a democratic enterprise.
Thesis 3:
As I have already noted, workplace democracy accords
with basic Marxian socialist values. I
have also noted that there is considerable evidence, much of it cited in Against Capitalism and After Capitalism, that, properly structured,
democratic firms often outperform conventional capitalist firms. Apart from the evidence concerning workplace
democracy, there is additional evidence that enhancing worker participation and
control in Western firms, even when this falls well short of full worker
control, often results in "high-performance" workplaces, superior to
conventional capitalist workplaces.[14]
There is some evidence that the same is true for
Chinese firms. A recently-published
pilot study of seventy-five firms in eastern
A larger study of some 275 enterprises in
my survey results find that
workers' participation in management has large positive effects on productivity performance of state-owned enterprises. . . . These results suggest that the existing
distrust among economic reformers toward participatory management is not well
founded, and a more open-minded approach of economic change that promotes
workers' participation in state-owned enterprises may be desirable in social as
well as economic terms.[17]
Thesis 4: The Chinese
government should not relinquish major control over the allocation of
investment funds.
A fundamental contention of my research is that the
market, for all its strengths as an allocational and
distributional mechanism, will not allocate investment funds optimally. Competition among existing firms for
customers is a healthy competition . It motivates firms to use their resources
efficiently, to produce what consumers want and to adopt appropriate
technologies. Competition among regions
for access to investment funds is not
a healthy competition. Neoclassical
economic theory suggests that capital will flow from areas where it is
plentiful to areas where it is scarce, but this comforting hypothesis is
contradicted by actual experience. Left
to market forces, rich regions become richer, poor regions poorer. The invisible hand is far from benign in its
allocation of those funds so essential for development. (This is the correct lesson to be drawn form
the Yugoslav tragedy.)
Balanced, sustainable development requires the
government to play a major role in both generating the investment fund
(ideally, by relying on taxation, not private savings) and in overseeing its
allocation. To be sure, the market has a
role to play here also, but it is a secondary role. Governments must dominate, not be subservient
to, investment flows.
Fortunately, investment remains far more controlled
in
Toward
Democracy
The theory of Economic Democracy is concerned
primarily on the economic structure of society.
It advocates a "democratization" of capitalism--with respect to
the workplace and with respect to the allocation of investment. The latter implies some form of political
democracy, since it is political institutions that allocate the investment
fund.
The theory does not specify the precise form of this
political democracy. But whatever the
form, it cannot be, in substance, what passes for democracy in the West
today. I argue in both Against Capitalism and After Capitalism that capitalism is
incompatible with genuine "rule of the people."
Those of us living in the West, certainly those of
us living in the
Of course, the capitalist class owns virtually all
organs of mass media: television, radio, mass-circulation newspapers and
magazines, thus insuring that its interests will be portrayed unfailingly as
the general interests of society.
Moreover, if all else fails, this class can always engage in an
"investment strike," a near-spontaneous reaction to economic policies
perceived to be "bad for business."
Since a capitalist society relies on the private savings of its
citizenry to finance investment, and since owners of these private savings are
free to dispose of them as they see fit, unhappiness with governmental policy
can trigger an exodus of capital, which will throw the economy into recession
and thus guarantee that a recalcitrant administration be removed from
office.
Such is the nature of our Western
"democracies"--which are more properly designated
"polyarchies," not democracies.[18] Things could be worse. We do have relatively honest elections on a
regular basis that are not meaningless.
But as the Indian novelist and social critic Arundhati Roy has so
trenchantly observed:
Modern democracies have been around long enough for
neo-liberal capitalists to learn how to subvert them. They have mastered the techniques of
infiltrating the instruments of democracy--the "independent"
judiciary, the "free" press, the parliament--and molding them to
their purpose. The project of corporate globalization has cracked the code.[19]
As
Notes