Let’s talk about this hybrid beast we call capitalism over a glass of wine


“After all, if you do not resist the apparently inevitable, you will never know how inevitable the inevitable was.” – Terry Eagleton

Breaking the Dry

February is a good and happy time of the year. Indeed – it is seeing more and more people break the painful dry of January. So after a full month of committing to all sort of sparkling ginger drinks it is time to reunite around nice dinner tables and celebrate with a portion of food that could easily suit one’s weekly dietary need. February is, therefore, a time for political debates. The ones that get launched over a glass of wine and never really properly end. The ones like “Is capitalism the best socioeconomic system humans can get” and which easily inflame the tone of a large table of friends sharing an upper-middle-class background.

Most probably, a good majority of these friends have been raised surrounded by social-liberal ideas – the kind of centrist ideology that recognises the prevalence of the market as a way of organising the economy, but nevertheless endorses the state for its redistributionary and regulatory role. Now in their thirties, they have all lived enough to observe the drastic shift towards a reduction of the public sector’s involvement in health, education, and transport that happened since the neoliberal turn of the 80s. They have heard the good old mantra of “private does it better” multiple times. They have recently come across the discourse exposing the ‘necessity’ of austerity in times of crisis – one that legitimates further reducing the supporting role of the state for the public while governments choose to make large tax favours to private giants and to bail-out banks with public finance. They have observed the appearance of the periphery inside the core, as demonstrated by the immiseration of countries like Greece1 inside Europe, with its lot of precarity and high indebtedness. They have noticed the tendency of late capitalism in commodifying not only goods and services but also health, arts, nature and basically everything that’s been spared by the magic touch of the market (have we found a way to trade our souls yet?).

But they have also heard about the rising middle class in emerging markets – “look at China, Brazil, South Korea” – and been made aware of the reduction in extreme poverty over the course of the last century. They have experienced the feeling of abundance and relative comfort that defines the era that people from their background currently live in – one that is providing them with infinite ways to travel cheaply, dress cheaply, eat cheaply, at all times of the day and night. They have been confronted to the impressive speeding of innovation in technology and science of the past thirty years, living in an awe of the promise that these discoveries might solve our biggest global challenges, from climate change to hunger.

As a result, some of these folks are still attached to the idea of capitalism as a whole, affirming its benefits and defending its economic functioning with force and a particular emotional attachment. Yet on the other side some have given up the idea that we’re heading in the right direction and have turned towards the left as the sole ideological resort to fight on the issues that define current capitalist era.

So at the end of all that – who is right? Who is wrong? Well, that does not really matter after all. The point is not to glorify an economic organisation over another. We are where we are, living in capitalist societies, and we have to deal with what we have in hands. The point is about fostering a healthy debate with an accurate view of what is going on, exposing the reality of capitalism not only in its goodness but also in its flaws. For only by being critical will we ever succeed in building on its existing framework and explore all the possibilities we can in organising ourselves. It is therefore about fostering a debate that observes the hybrid nature and the contradictions of such a system, renders justice to historical contingencies, and notices how its multiple expressions across time and space all diverge to a certain extent from its theoretical inspirations. And that is usually the part that is cruelly missing in these kinds of political discussions.

The hybridity of capitalism

Since the neoliberal consensus has formed across the globe since the 1980s, there is a misleading tendency to talk about capitalism as some kind of fixed model, as some one-size-fits-all kind of formula which is directly derived from the theoretical precepts of neoliberalism. As the geographer David Harvey explains2, neoliberal theory “takes the view that individual liberty and freedom are the high point of civilization and then goes on to argue that individual liberty and freedom can best be protected and achieved by an institutional structure made up of strong private property rights, free markets, and free trade: a world in which individual initiative can flourish.” This theoretical perspective draws upon the work of two economists from the 20th century, Milton Friedman and Friedrich Hayek, who themselves largely readapted some ideas from the liberal school of Adam Smith.

These scholars affirmed in particular that prices in an economy were fully adjusting to supply and demand and their fluctuations ensured full employment, making state intervention in the economic sphere at best unnecessary, at worst generating inflation. Their doctrine therefore encouraged the privatisation of the economy, export-led growth models of development and free movements of capital in order to promote economic interdependence across the globe3. They imposed their rhetorical devices quite effectively among political circles and were largely behind the rise of the neoliberal consensus of the 1980s which saw the politics of Margaret Thatcher and Ronald Reagan gain prominence.

As it turned out, large-scale privatizations coupled with the curbing of the power of workers unions and the ultra-liberalisation of trade did not result in an effective functioning of free markets. Rather, this combination allowed large multinational corporations to establish their monopolies, allowing private interests to work in conglomerate and to influence public policy and international trade agreements through lobbying activities – a development that some have relevantly called corporatism4 . The presence of these large scale multinationals completely goes against many of Adam Smith’s assumptions, which was quick to encourage countering monopoly effects in order for free markets to function.

The increasing corporate power of these large multinationals had, in particular, a drastic effect on labour’s pricing power – it has broken the adjustment of wages through offer vs demand by artificially capping wages at low levels. As a result real wages have now decoupled from productivity in some dominant developed countries, while unemployment has far from disappeared.

This effect, combined with the politically targeted reduction of the welfare state, has largely contributed not only to higher economic inequalities but also to the rise of precarity and indebtedness in some areas of the global north –  two conditions of dependency and insecurity which have largely endangered humans ability to act freely. Surely Adam Smith must be turning in his grave at the thought of how his intellectual legacy of liberalism got so badly abused throughout history.

Nevertheless, a large portion of the proponents of capitalism continue to depict its functioning as a successful realisation of neoliberal theory, a happy story whereby government laissez-faire makes good use of human’s natural inclination to greed and self-interest, and where price mechanisms adjust the allocation of goods effectively. Such a misleading approach is absolutely misrepresentative of what capitalism is today for a large part of the world. And one could easily formulate the hypothesis that capitalism, far from making good use of a supposedly natural selfishness of men, is instead amplifying it. But it does not seem to matter, advocates of global capitalism seem to maintain their distorted view of the world, holding to their myth without being able to observe that all neoliberal experiments across the globes have been dysfunctional and imperfect. Leftists are often called idealistic in their assessment of human nature. Well, it seems like free trade proponents, with their firm beliefs in the perfect laws of the markets and the greediness of men, are idealistic just as much.

Moreover, this idealised and reductionist vision of capitalism does not render the complexity and richness of the theoretical foundations of capitalism. And because the theory is rich and complex, the numerous forms of expression of capitalism across time and space have varied, sometimes overlapping, offering a nice patchwork of socioeconomic models throughout history. In this regard, late neoliberal expression of capitalism is absolutely different than the dominant capitalist order that got established after World War II in developed countries. David Harvey talks of embedded capitalism2 to describe that system of Keynesian inspiration which granted a central role to the state in order to support full employment and provide welfare.

As much as capitalist societies differ across time and space, one thing stays common to all of them though – capitalism has always exported the pain from the core to the periphery in order for the whole system to survive 5 . It is interesting to note how fast people are to recall the presence of the gulags in Soviet Union in order to provide an argument against socialism. But how quick they are to forget about the atrocity of the colonialist era which flooded empires with cheap enslaved labour and an easy access to imported goods at high human and societal costs. How indulgent they are with the fact that the world of abundance and innovation we have enjoyed in the north since the start of the consumerist era has been in large part fuelled by subtle exploitation in the south through degrading work conditions and the absence of workers rights. And finally how deaf they are to the urgent calls of precarity and debt as rising symptoms of current crisis, two features that prove once again that the capitalist system always finds a way to sustain itself by recreating some relationships of dependency and exploitation.

The socialist experiments

Capitalism cannot be reduced to one form of economic organisation but rather to different and hybrid historical processes that share some commonalities. Everyone can agree to that. So let’s do the same for socialism and stop demonising its theoretical foundations because of the so-called communist experiments that were and are far from the essence of socialist thinking.

Indeed, a common argument tends to reduce socialism to the experiments of China and USSR that have drastically failed, both in terms of bringing prosperity and in finding political stability. Yet these socioeconomic forms of organisations were far from giving justice to Marxist thought. Most of them represented an attempt to rebalance power towards a bureaucratic class through the productivist exploitation of the popular mass – in the name of the party’s interest.

Despite all of this, the debate is often oriented as free markets vs communism, and proponents of capitalism often reject socialist thinking on the argument that communist experiments failed and were fuelled by violence and political instability. This argument is inherently flawed – otherwise we would be quick to simultaneously dismiss capitalism for its own share of violence and instability.

Looking ahead

It is pointless to try to assess if capitalism is better or worse than another system frankly, simply because we can never know what other modes of organisation would have achieved if they had established their prominence. And of course, everyone would try to answer this question depending on his own set of criteria. This one could range from fostering social empowerment and reducing relations of dependency, to providing material comfort and reducing absolute poverty.

One thing is sure though – framing the intellectual debate as free markets vs communism prevents sincere dialogue and honest thinking. It is crucial that we demystify the market and its supposed effectiveness and that we give justice to capitalism for what it really is – a hybrid and complex beast with its lot of failed experiments and its history of violence. Otherwise there won’t be any space for redressing capitalist darkest tendencies – and surely no space for institutional and socioeconomic innovations.

The past ten years have already seen some groundbreaking experiments come to the fore. From the promises of the circular and sharing economy revolutions which challenges the way we own and consume, to the challenges that fair trade and social businesses pose to the way we produce, it seems like capitalism is attempting to morph into fragile new shapes. These efforts do provide some hope for those wishing to counter current hegemony, not only of the neoliberal tradition but also of the productivist way of living. Let’s continue experimenting by granting a safe space to all alternatives, be they from the right, or the left.

Enough said, pour me a glass of wine.

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1 Kyriakopoulos, L. et al., 2014. “Becoming Precarious in the age of neo-liberal bio- politics.” URL http://teachingthecrisis.net/wp-content/uploads/2014/03/Greece_Report.pdf

2 Harvey, D., 2007. A Brief History of Neoliberalism. Oxford University Press Inc., New York

3 Palley T.I., 2005. From Keynesianism to Neoliberalism: Shifting Paradigms. In Neoliberalism: A Critical Reader, edited by Saad-Filho A. and Johnston D, 20-29. London: Pluto Press.

4 Klein, N., 2007. The Shock Doctrine: The Rise of Disaster Capitalism. London: Penguin Books

5 Baudrillard, 1970. La societe de consommation. Editions Denoël.