Wednesday, June 20, 2012

Thinking about capitalism

The other day I was reminded of a presentation given by my friend Daniel Hausknost at a conference in Manchester back in 2008. Though coming to all this from a rather different normative perspective, Daniel talked about how the capitalist market had emerged as an opaque, autonomous domain apart from the state and how this has allowed the state to shield its responsibility for the provision of social reality. This “invention” meant that the state, while maintaining sovereignty, could nonetheless construct itself in opposition to something else, even if that “else” was just the aggregate, uncoordinated effects of millions of decentralized financial transactions in society.

As much as radical socialists would like to abolish the market as an institution and replace it with either centralized planning (ol’ good state communism) or decentralized small-scaled farmer collectives (as favoured by degrowth enthusiasts), here is a thought worth pondering: if the market is indeed abolished, the state/collective immediately becomes politically responsible for the provision of social ontology in its entirety. Without the market to blame for the ills of society, everything becomes a political act and, what was previously enforced with abstract money, must now be enforced through other forms of power. Maybe the utopian socialist thinks that all people will voluntarily contribute with their labour towards the politically chosen aims, but what if some people do not? What to do with those who resist the socialist project altogether? What to do with those who in secret begin their own processes of capital accumulation (maybe by growing their own vegetables or baking their own bread) without sharing the profits?

These are important questions and the lack of compelling answers to them is indicative of a deeper lack of social theory among radical socialists. But before kicking in yet more open doors, let us take a few steps back and return to the fiction of the market as a domain apart from the state. If we think of the state as governed by progressive ideals, this fiction allows the state to be all benign in the eyes of its citizens while “outsourcing” all morally problematic, yet necessary, tasks to the market. Considering that the state already has a monopoly on violence, such a division of labour seems highly desirable if any freedom is to be preserved. Instead of having to lay off people in unproductive sectors of the economy, the state can simply blame the market and focus its energy on offering retraining for the unemployed. Similarly, instead of having to solve social conflicts directly, conflicts can be resolved through a system of courts and abstract bankruptcy laws.

This does not mean that all is well. We should make no mistake, capitalism is inherently socially destructive. But part of that destruction is in fact needed to discipline our energies and to make the kind of painful decisions that we rather like to put off to another day. However, in order to make society work, the capitalist market must constantly be balanced by a progressive state which not only cares for the old and the infirmed but empowers people throughout society through education and other forms of social investments. Only if such a progressive state is strong enough can it keep the capitalist spirits in check and, paradoxically, only through such checks and balances can capitalism itself survive in the long run.


Saturday, June 16, 2012

Social investments

In times of failing economic demand, Keynesian economic theory famously suggests that governments should act in a counter-cyclical manner and boost demand through investments. Developed in direct reaction to the paralyzing austerity and non-activism of the 1930’s, Keynes’ work showed how government belt-tightening, far from restoring economic confidence, had put the economy into a dangerous tailspin.

Today, many people on the Left (but also those with a very different ideological outlook) argue for financial expansionism in response to the prolonged economic crisis. Yet, the situation today is fundamentally different from the situation in the 1930’s. With an ageing demographic and mountains of public debt already accumulated in many countries, it is doubtful that simply spending more borrowed money will be helpful, in particular in a world of international finance and open borders. If anything, it could hasten insolvency and state bankruptcies. This is why I repeatedly have argued that instead of simply spending more, we have to take this opportunity to reconsider what we spend our money on. In essence, my argument has been that if the Left had any imagination, it could have used this crisis to challenge entrenched interests ranging from the military-industrial complex to agricultural subsidies.

Yet, considering that this may be extremely difficult in political terms, a first preliminary step would be to think hard about the role of social investments. Despite the overwhelming success of welfare capitalism in Sweden and elsewhere, many people on the Left have remained ideological hostage to Marxists thinking. Instead of embracing the possibilities of functional socialism, they have insisted that exploitation is an inseparable feature of capitalism and continued to advocate confrontation as their main political strategy. In some countries, such as Sweden, the talk about “resisting capitalism” may have been mostly rhetorical, yet it has definitely reinforced social polarization and made it more difficult for people on the Right to see how they would benefit economically from greater equality and a higher rate of social investments.

While it may be theoretically simple to refute the idea that there is a trade-off between economic efficiency and equality (in an advanced knowledge economy, the rich benefit much more from having more people contributing with creativity and imagination than from the short-term gains that can be had through exploitation), the spectre of this kind of ideas still pops up everywhere, in particular when analysing economic globalization. What is needed is a counter-story, one that persuasively shows how investing in other people, both at home and abroad, make us all better off than we would ever be through exploitation. Considering the work of Peter Lindert (but also people like Gøsta Esping-Andersen), this should be fairly simple. What is often missing however is the radical imagination, the capacity to imagine what all this could mean if we dare to follow our own thoughts into the future.

However, it is precisely when we follow that thought that we begin to realize why the Left has been so hesitant about radical social investments. Draped in working-class nostalgia and uncertain about the long-term goals of emancipation (as seen not the least in its ambivalent stance towards feminism), the Left has become fundamentally uncertain about what purposes its politics should serve. Tied down by postmodern quibbles, people on the Left in academia have not been of much help either. Always quick to criticize “global capitalism”, these academics have had almost nothing to say about what could replace it and how the material needs of the rising poor should be satisfied without causing ecological mayhem.

Thursday, June 07, 2012


At an altitude of 10 200 metres, our Boeing 777-300ER is just about to cross into the Gobi Desert. I am plying a route that feels very familiar after a spring divided between Scandinavia and Korea. But beyond the green line on the IFE screen, I must admit that I know practically nothing about this arid expanse. I remember reading somewhere that the Chinese call it Hànhǎi or “endless sea”. From history I of course know about Sven Hedin and his adventures at the turn of the last century. However, except for such trivia, I am practically lost. The vastness of the desert seems to defy all standard measurements. According to Wiki, the Gobi desert is 1610 km long and 800 km wide. A quick calculation tells me that it would take forty or maybe fifty days to cross the desert by foot, a distance which our two General Electric GE90-115BLs engines will have cleared in less than two hours.

This journey marks the end of my first year at HUFS. Thinking back, I feel a profound sense of gratitude towards all the wonderful people who have made this year one of the best on record, not the least the fantastic students who I have had the privilege of teaching. Of my three courses this spring, I am particularly happy to see the interest that the course on “Globalization and the welfare state” has garnered, both from students and friends. I will definitely try to offer it again in the future. Until then, I thought I should share the synopsis for the course here on Rawls & Me:

From the beginning, the welfare state has been at the centre of many ideological debates. For the Left, it has been a symbol of inclusive citizenship and a path to greater social mobility. For the Right, the same welfare state institutions have been seen as a threat against human freedom and the paradoxical cause behind much poverty and dependency. More recently, in the wake of economic globalization, it has often been argued that the welfare state has become fiscally unsustainable and that it must be dismantled in the name of international competition. Yet, other scholars have argued the very opposite, that in order to compete in the global market, countries need precisely the kind of investment in human capital which the welfare state provides and that higher education levels are crucial for driving economic growth. This course will examine such statements and offer a comparative as well as historical approach to the study of welfare regimes, focusing on difference and similarities between Europe, the United States and Asia. Towards the end, the course will also look at emerging demographic challenges, the possible advantages and drawbacks of universal basic income schemes and new global forms of welfare capitalism.