Speaking about the contradictions of capitalism, G.K. Chesterton observes the following in The Outline of Sanity:
When most men are wage earners, it is more and more difficult for most men to be customers. For the capitalist is always trying to cut down what his servant demands, and in doing so is cutting down what his customer can spend. As soon as his business is in any difficulties, as at present in the coal business, he tries to reduce what he has to spend on wages, and in doing so reduces what others have to spend on coal. He is wanting the same man to be rich and poor at the same time (43).
But is this still the case? Is there still a contradiction today, that of “keeping the same man rich and poor at the same time,” within the present iteration of financier capitalism? Some on the left answer yes: given that 70% of the US economy is driven by consumer spending, it is therefore in the business class’s interest to seek a “middle out” rather than trickle-down solution. This point is made rather convincingly in Robert Reich’s excellent Inequality For All (watch the trailer!).
Though there might be a significant problem with such an outlook. Economists Richard Wolff and Gar Alperovitz offer a more robust analysis, pointing out that the nature of capitalism has drastically shifted, to say nothing of the class political winds. Although consumer spending still accounts for a large portion of growth, dependency on the US consumer is quickly dwindling. Hence the reason why we’ve seen a surplus in production but consistent, year over year stagnation in wages and massive unemployment. Economists now refer to the US economy as a “mature economy,” which, according to Wolff, is economist’s jargon for: no more growth here; move along.
As Alperovitz highlights, the solution offered by Reich and others relies too heavily upon political conditions that no longer exists, such as a strong labor movement and the prospect of war to stimulate growth. Lacking the confluence of these (and other factors), there simply is not enough brute political force to mount a traditional liberal or Keynesian solution. In short, the role of middle class’s spending power is undermined by deeper systematic problems. The middle class is a luxury capitalism can, or no longer needs, to afford, as John Gray writes.
Still, the solutions offered by Alperovitz and Wolff bear many similarities to Chesterton’s distributist ideals. Both figures advocate worker owned enterprises, ESOPs, municipal utilities, and traditional cooperative businesses. Alperovitz and Wolff are also fond of citing Mondragon, a large scale Spanish cooperative started by a Catholic priest – a point too easily glided over. What they offer is a bottom up solution rather than a middle out or trickle down. It’s no longer a question of left vs. right, but of something akin to communitarianism – small, decentralized communities – vs. libertarianism and it’s sickly mirror image, statism (watch the trailer!). One fundamental difference, however, is that Alperovitz and Wolff refuse to downplay class interest.
But can this really work outside a shared commitment to the common good and shared material values? R.H. Tawney reminds us in Religion and the Rise of Capitalism that it was the rejection of ends and values in the first place that created the conditions for what has become today’s rapacious capitalism. Trading one form of functionless economic efficiency for another leaves us right where we started.
We therefore need something more than appeals to self-interest in order for “New-Economy Movement” to get off the ground. So the next question is: what is the social glue or reciprocal bond that binds people together to form a worker-owned enterprise, as just one example? Further, in the absence of political moral commitments, rather than freely-contracting individuals, or as Rowan Williams describes it, a “picture is of atoms spinning apart in the dark,” what do we have left if not more capitalism?
“Whether it is an urban rioter, mindlessly burning down a small shop that serves his community, or a speculator turning his back on the question of who bears the ultimate cost for his acquisitive adventures in the virtual reality of today’s financial world, the picture is of atoms spinning apart in the dark.”
More to come, but it seems clear that Tawney’s social vision offers one of the more fruitful ways forward – and one that critically engages today’s financierism.