Wanted: Red-Green Alliance for Radically Democratic Reorganization of Production

Private capitalism (in which productive assets are owned by private individuals and groups and in which markets rather than state planning dominate the distribution of resources and products) has repeatedly demonstrated a tendency to flare out into overproduction and/or asset inflation bubbles that burst with horrific social consequences.  Endless reforms, restructurings, and regulations were all justified in the name not only of extricating us from a crisis but also finally preventing future crises (as Obama repeated this week).  They all failed to do that.

The tendency to crisis seems unstoppable, an inherent quality of capitalism.  At best, flare-outs were caught before they wreaked major havoc, although usually that only postponed and aggravated that havoc.  One recent case in point: the stock market crash of early 2000 was limited in its damaging social consequences (recession, etc.) by an historically unprecedented reduction of interest rates and money supply expansion by Alan Greenspan’s Federal Reserve.  The resulting real estate bubble temporarily offset the effects of the stock market’s bubble bursting, but when real estate crashed a few years later, what had been deferred hit catastrophically.

Repeated failure to stop its inherent crisis tendency is beginning to tell on the system.  The question increasingly insinuates itself even into discourses with a long history of denying its pertinence: has capitalism, qua system, outlived its usefulness?

Repeated state interventions to rescue private capitalism from its self-destructive crises or from the political movements of its victims yielded longer or shorter periods of state capitalism (in which productive assets are owned or significantly controlled or regulated by state officials and in which state planning dominates markets as mechanisms of resource and product distribution).  Yet state capitalisms have not solved the system’s crisis tendencies either.  That is why they have repeatedly given way to oscillations back to private capitalism (e.g. the Reagan “revolution” in the US, the end of the USSR, etc.).

Moreover, the history of FDR’s efforts to counteract the Great Depression teaches fundamental lessons about capitalism as a system.  Since the New Deal reforms all stopped short of transforming the structure of corporations, they left in place the corporate boards of directors and shareholders who had both the incentives and resources to evade, undermine, and abolish those reforms.  Evasion was their focus until the 1970s, and abolition since.  Capitalism systematically organizes its key institutions of production — the corporations — in such a way that their boards of directors, in properly performing their assigned tasks, produce crises, then undermine anti-crisis reforms, and thereby reproduce those crises.

Hence, attention is slowly shifting to questioning the one aspect of capitalism that was never effectively challenged, let alone changed, across the last century and more: the internal organization of corporations.  Their decisions about what, where, and how to produce and how to utilize profits are all made not by the mass of workers, nor by the communities they impact, but rather by a board of directors.  Composed typically of 15-20 individuals, corporate boards are tiny elites responsible to only the slightly larger elites comprising corporations’ major shareholders.  Each corporate board is charged by its major shareholders with maximizing profit, market share, growth, or share price.  The mass of workers has to live with the results of board decisions over which they exercise next to no control.  This is a position they share with the communities surrounding and dependent on those same corporations.

This capitalist organization of the corporation consistently generates investment, production, financial, marketing, and employment decisions that produce systemic instability — economic crises.  This system’s profoundly undemocratic organization of production demands radical transformation.

Suppose, as one such transformation, that workers undertook to function as their own board of directors.  All weekly job descriptions would henceforth specify four days of particular production tasks and one day participating in collective decisions about what, how, and where to produce and what to do with profits.  That means workers replacing the economic autocracy that structures capitalist corporations by democratic mechanisms, just as they have forced political autocracy to give way to democratic mechanisms.  The economy and society would then evolve very differently from the capitalist pattern.

As every thinking person knows, climate change is upon us.  Market solutions to stem it, which defenders of capitalism have proposed and implemented, have miserably failed to contain it.  Substituting undemocratic state planning for markets is no solution either: one look at the environmental records of state planning in the former Eastern bloc suffices to corroborate this point.  If we are to redesign our interactions with nature by taking account of the economic and environmental costs of energy sources, especially fossil fuels, as an increasing number of people recognize we must, why not redesign our enterprise structures to take account of the history of failed efforts to contain capitalism’s crisis-producing dysfunction?

Might we consider a mutually beneficial alliance between critics of abusing our energy resources and critics of abusing our productive capabilities?  How about an alliance focused on a radical, democratic, and therefore anti-capitalist reorganization of production?  The point would be to make citizens and workers — those who must live with the results of what enterprises do — conjoint decision-makers focused on meeting collective needs, both productive and environmental.

Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Be sure to check out Rick Wolff’s new documentary film on the current economic crisis, Capitalism Hits the Fan, at www.capitalismhitsthefan.com.