The Triumph of Capitalism?

...The difference in wages between a Swedish factory worker and a manager in the auto industry are one to three...

...The smarter pundits of the American right, like Kevin Phillips, predict SPRING • 1990 • 179 Triumph of Capitalism...

...that in the nineties the pendulum will swing away from conservative dominance...

...in real life is an enormously wide one, with the political and social outcomes not at all predictable...

...It is therefore a continual threat to those who would build a multiparty democratic order...

...What follows is that a main ideological prop in the Third World—the cold war—is now gone...

...From love of that idea almost as much suffering may be visited on Eastern Europe as has been for the equally abstract idea of centralized planning...

...Social brutality seems now to be an Anglo-American specialty...

...180 • DISSENT...

...It will take some time for the magnitude of these changes to sink in...

...In brief, these are the collapse of the communist dictatorships in Eastern Europe, the end of the cold war, and the growing pace of European unification...

...But that's not what the market is all about...

...Seen from this perspective, capitalism is in considerable trouble in at least three places: Eastern Europe, Western Europe, and the Third World...

...It is difficult to treat somebody as a convincing rival if he comes requesting loans and technological aid...

...Eastern Infatuation Large sections of the East European intelligentsia, it is true, are now fascinated by the idea of "the market...

...Happily, many of these people will lose their shirts—the fates are sometimes just...

...Tolerance of differences is essential in order to build stable democratic regimes...

...We will have all of that in Eastern Europe, and whatever else, it will not be capitalism as SPRING • 1990 • 177 Triumph of Capitalism...

...without a threat, real or supposed, of Soviet expansionism...

...Despite the brief celebration of the economic results of the Chicago school in Chile, Brazil, Ghana, the Ivory Coast, and Argentina, it turns out that the notion that markets and capitalism necessarily bring about democracy is not true...

...That is why it is essential to help democratic institutions, trade unions, and civic groups with massive moral, political, and material support from the West...

...So, when we say that Sweden is a capitalist society, that needs to be qualified over and over again...

...Neither represents quite the victory of capitalism now being celebrated in the Western press...

...It is very hard to be democratic and carry out the World Bank's economic cure, which includes cutbacks in already miserly social spending, freezing wages, and letting prices find their natural level...

...It is important to try to keep these ghosts quiet...

...A parliamentary democracy with powerful unions, parties, and social movements is the optimal terrain on which to work for democratic change...

...Once you have said a society is capitalist, you have not said much, or enough, about it...

...described in textbooks or the kinds of prose poems about the "free market" that have been appearing in the American press...

...that peculiarly puritanical version of capitalism that is really a part of Anglo-Saxon exceptionalism...

...Such democratic socialist goals are not to be counterposed to the institutionalization of a democratic polity...

...In other words, a social-democratic type of neocorporatism, somewhat like the West European welfare states...

...In Hungary national populists have already begun attacking "cosmopolitan," read Jewish, big-city liberals...

...Presumably, this mortgage can be called in when the private property in question no longer serves socially acceptable ends...

...Their policies are dangerous to democracy itself...

...What has triumphed is the notion that socialism is not something that can be wished into being overnight...

...Fighting for these goals requires stable democratic institutions and development of a democratic political culture...

...The Soviet Union is no longer a convincing rival in the Third World...

...Second, the Catholic Church and the social-Christian parties allied with it do not take to possessive individualism with any more enthusiasm than do the social democrats—as a matter of fact, their formulation is that private property is acceptable provided society holds a mortgage on it...

...Their prospects for increased political power are increasing...

...My prediction is that after the kissing stops, some very grim economic and social issues will come up...

...Nationalism is the red meat of the organic "genuine" Heideggerian national community, all too easy to mobilize against a mere "cool" legal and rational democratic universalism...

...Genuine democracy requires at least minimal commitment to social justice...

...This requires tolerance, a virtue rare enough anywhere and positively priceless in Eastern Europe, where common sense argues against pushing political and national differences to the limit, at least until democratic institutions develop firmness and stability...

...This will, of course, not be socialism as we democratic socialists understand it...

...As the communist bloc collapses, so does its model for the Third World collapse...

...Similar national populist attacks on economic reforms and pluralistic democracy, with or without anti-Semitic subtexts, can be expected in Poland, Romania, and Serbia...

...both are or will be mixed economies with a powerful state sector, a corrupt yet vital private sector, an elite that includes technocrats, decent trade unionists, corrupt trade unionists, as well as the rich and the gangsters...

...Wealth all too easily translates into political power...

...Third, others not exactly committed to free marketeering are the Eurocrats, an increasingly influential bureaucracy in the European Community in Brussels (against which Thatcher leads a valiant and, happily, losing struggle...

...For example, most East Europeans I speak to love the market abstractly...

...Poor as most of the East European cities are, you will not find people sleeping in the streets...

...Since the communist parties are now disabled, an authoritarian repression could come only from the right, or from a curious union of communist technocrats and nationalist populists...

...Whatever else, the upheavals in Eastern Europe did not take place in order to abolish the crude but almost universal welfare systems...

...But that tells us that the political, social, and economic terrain that contemporary capitalism represents 178 • DISSENT Triumph of Capitalism...

...The social solidarity required to make the sacrifices necessary for modernizing the East European economies cannot be generated with an untrammeled "pure" market economy...

...That means no vengeance, no matter how justified, against former communist hardliners, no attempts to illegalize communist parties, and above all no hunt for scapegoats in what will be grim times...

...The prognosis for a decent democratic outcome is best for those countries with powerful, old-fashioned trade unions struggling to make sure that the burden of social transformation is not borne entirely by industrial workers and other employees...

...The economic burden such a policy imposes on the working population is not one that any popular regime or democratic polity can bear...

...It will be a capitalism somewhat like that in Sweden today...

...Insisting on marketizing those economies, on having them abide by the rules of the International Monetary Fund (IMF) and the World Bank is an almost sure guarantee that democracy will be endangered...

...The pessimistic prognosis is for a xenophobic nationalist-populist authoritarian neocorporatism with limited democracy...

...The transition from feudalism to capitalism took centuries...

...First, powerful trade unions allied to the social democratic parties, which have a plurality in the European parliament...

...Let me take these in order, keeping in mind that capitalism in trouble does not necessarily signify good news for democrats and socialists...

...Effective political equality is not consistent with great differences in wealth...

...The road to democratization runs through perilous straits in Eastern Europe...

...the three together mark a profound historical change...

...without the United States as dominant power...

...The market they love means a guaranteed job for them and their children and relatives and of course their friends, cheap housing, public health, free education, and a pension...

...Nor does it help the prospects for democracy that many of the reformist intellectuals in Eastern Europe have fallen in love with the idea of the market...

...It is a historically inflected and changing system, in which political, economic, and social arrangements interact...

...Blocking Democracy in the Third World The third place in which capitalism is not in very good shape is the Third World...

...Necessity of a Democratic State In Eastern Europe the goal of democratic movements has to be the creation of a legal order where the judiciary system is independent of the state, a richly varied civil society autonomous from the state and the dominant political parties, genuine mass democratic trade unions, and a multiparty parliamentary democracy...

...But it will make an enormous difference whether that development occurs in a society where labor and socialist parties are strong, where a measure of social justice is legislated, and where a democratic welfare state exists that is more egalitarian than the communism of the past forty years...

...But, clearly, the capitalism likely to prevail in Europe will be different from the American and British models, perhaps in some instances sharply different...

...Mitigating Factors in the West In Western Europe capitalism is also facing peculiar circumstances...

...Admiration for capitalism in real life is limited to a small section of the population...

...Capitalism has triumphed in the Third World, but in a peculiar sense...

...That seems to be the original sin of intellectuals...

...But once you can no longer wield the threat of dictatorial communism in political debate, a whole host of domestic social issues becomes truly urgent...

...If, then, capitalism faces serious troubles, what has triumphed...

...Professors Friedman and Sachs should be kept at a distance from policy making in Eastern Europe...

...In East European countries lacking a usable tradition of political democracy, the market that is now being introduced could well bring about what I'd call a process of "Mexicanization...

...This also means that the capitalism that will continue to dominate the world is likely to have new and peculiar characteristics, rather different from those propounded by Anglo-Saxon apologists...

...That is, a capitalism modified and defanged by social democracy...

...That "market," however, has rather little to do with the market that functions in the real capitalist world...

...There are at least three forces that militate against capitalism as popularly understood in the United States and Great Britain: that is, the free market geared to profit maximization...

...This means, to use an old-fashioned term, that the contradictions of the capitalist system itself become the terrain of political struggle...

...This is true whether the dominant party is officially procapitalist or prolabor, conservative or social democratic...

...Nor is it only the left that believes that America has desperately overdue social agendas if this is to be a minimally decent society...

...It is the precondition for a democratic civic culture...

...The talk about markets in former communist states often serves as a synonym or code word for seeing to it that the state and especially the party are deprived of control over the economy and society...

...The Eurocrats are economic and social interventionists or statists, anything but free marketeers...

...Quite the contrary...

...To the contrary, improvements in services, health, education, and pensions, not to speak of living standards, are expected to result from toppling the party dictatorships—and sooner rather than later...

...Eastern Europe is populated today with ghosts of chauvinist, populist, and right-wing corporatist parties...

...That means the actual socioeconomic differences are smaller in Sweden than in the Soviet Union or Eastern Europe...

...It will, however, be a capitalism almost unrecognizable to American businessmen and their intellectual cheerleaders...

...These are necessary but not sufficient prerequisites for a genuine democracy, which should also move toward workers' control in the workplace, popular grass-roots participatory authority in the various institutions, and the abolition of gender oppression...

...So the capitalism of Western Europe will be a sort of neocorporatist arrangement, with powerful trade unions, an advanced welfare state, and a great deal of controls—conscious, politically imposed controls over what can and cannot be done with the movement of capital and where investments should go and what social policies should be...

...Apologists for capitalism are not very good at fighting over these issues...

...It will be a world capitalism without the familiar cold war...

...Now that communism has defeated itself, the issues of social justice, trade union rights, public squalor and private wealth will become central...

...Provided they have all these things they would love to have a market in which they could get jeans that fit...

...A new postcapitalist order called socialism may also take centuries to develop...

...The visible exception is Great Britain...

...And neither represents a victory of socialism...

...You are only beginning to describe that society...

...Nor is it simply an economic system (whatever that might mean...

...Both Mexico and a "Mexicanized" Eastern Europe have to cope with giant superpowers pressing down upon them...

...What has triumphed is the notion that there may be an extremely long period of transition during which most countries will be a part of a single world market that is essentially capitalist...

...In consequence, the optimistic prognosis for Eastern Europe would be for parliamentary democracies with strong unions, mixed economies, and a substantial socially owned or nationalized sector...

...The idea of introducing the raw market of Thatcherite capitalism is therefore—short of authoritarian repression—politically unviable, even if it were morally and economically desirable...

...Capitalism has its institutions and legal systems, its armed bodies of men, its dominant ideology, and certain kinds of political relations on a world scale...

...Each by itself would represent a major development...

...And one cannot keep saying "Free trade unions are a nice thing but of course we will postpone that until we defeat communist insurgency...

...No longer can one say (not that it was ever morally valid), "Yes, yes, we, or our paid thugs, murder nuns and priests, but there is a more dangerous communist menace...

...One likely consequence will be a relative decline in the economic and military position of the United States, with a consequent loss of moral and political authority...

...But what has not triumphed is the worldview of the Chicago school, Margaret Thatcher, Reaganauts, and the others...

...An open socialist party campaigning on these issues came within an inch of winning the first democratic election in Brazil since the end of decades of military regime rule...

...For capitalism is not an abstract entity, beyond the impact of time and historical change...

...But, nota bene, this market economy will be subject to considerable corruption as former bureaucrats of the nomenklatura join foreign investors in a scramble to grab the more lucrative chunks of the economy at knock-down prices...

...There is no such thing as a "pure" economic policy that can be isolated from social and political consequences...

...There are a number of obstacles to such a mythopoetic system dominating a unified European Community...

...There seems to be no limit to how much suffering can be imposed on living bodies in the name of abstract ideas...

...Most of the free-market supporters in Eastern Europe would be utterly shocked at the poverty and social injustice imbedded in American society...

...Nor in most of Western Europe...

...Rather, it will be a highly politicized system, with political dominance manifesting itself through the economy, although at least in part it will include a functioning market...

...That system is, of course, a myth, although a very powerful myth...

...It is also a system in which the political rule of parties committed to its maintenance—as it exists in actuality, and not as a theoretical "model" —is necessary...