Review: Fears about anti-capitalism beset The Economist

“Capitalism and poverty reduction has just had its best few decades in the whole of history…” and yet “…Anti-capitalist demonstrations on May 1st in cities around the world attracted sizeable crowds”.

This is the point of departure in a survey on 28 June by the right wing magazine, The Economist, entitled: “Capitalism and democracy – radical thoughts on our 160th birthday”. The reader will not, however, find anything radical in the survey, but pathetic proposals to get rid of ‘abuse’ and excesses on the part of individual capitalists.

The Economist is an influential voice of capitalism and imperialism, quoted by Marx in his writings on the class struggle in France as early as 1848-50. In recent years, it must be said, The Economist has warned about the bubble economy in the US and elsewhere and predicted a sharp economic downturn. “The risks of a dollar crash or a serious global recession are not insignificant”, concludes its latest survey on the world economy (20 September).

But, for all of its predictions, The Economist of course firmly defends the class interests of the capitalists. On the surface, “Capitalism and democracy” sounds an interesting subject. Historically and today, capitalism has had no problem with the abolition of democratic rights and bourgeois democracy. This year, it is 30 years since General Pinochet, on behalf of capitalism and imperialism, established his bloody dictatorship in Chile. But the brutal and undemocratic regimes of capitalism – apartheid in South Africa or Suharto’s Indonesia – is not what The Economist had in mind.

Today’s editor of the magazine, Bill Emmott, stresses that the founders advocated “Liberty, particularly commercial liberty”. And the purpose of the survey is to warn against any danger for this ‘commercial liberty’, which has nothing to do with the liberty, democratic rights or standard of living of workers.

The survey confesses its awareness of “capitalism’s inherent instability” and “its tendency to create inequality”. It even confesses that the, “gap between ‘the West and the rest’… has been widening” for the last 50 years. But it denies that this is a result of “liberalism” (read: capitalism). Their proof for this argument is that, “Countries in Asia have actually been narrowing the gap”.

The CWI has many times explained the special circumstances which laid the basis for rapid economic development in Japan, South Korea and Hong Kong. The lack of development of capitalism in Africa, South Asia, Argentina, the former Soviet Union etc. are not “failures”, as The Economist claims, but just the other side of the coin. Marxists concluded a long time ago that the development of capitalism is combined and uneven. While there can be development for a few, the general rule is that less developed countries will not catch up. Moreover, all figures presented are averages. But we know that even within the rich countries there is a growing number of poor people.

(The survey’s chart on income distribution per capita is actually distorted. They have the same space between 100 dollar and 1,000 dollar per year, as between 10,000 and 100,000 dollar. The pyramid then looks ‘normal’ instead of having a top needle 100 times higher than the pyramid itself.)

The survey equates capitalism with openness and anti-capitalism with protectionism. But the openness advocated is the ‘right’ for the big trans-nationals to exploit the poor countries. The Economist praises the fact that “Developing countries still seem to want to liberalise their economies”. By countries they mean governments, who mostly already are in the pockets of imperialism, or who have no alternative policy. Opinion among workers and the masses, however, is turning in another direction.

“The economic and financial market boom of the 1990s was so extreme that its bursting is also producing extreme results: a pile of corporate scandals, resentment at an extraordinary widening of inequalities of income and wealth within the rich countries, a ghastly hole in the retirement funds of millions of ordinary people and, most crucially of all, a gathering disillusion about the ability of democratic institutions to hold culprits accountable for their sins”. This is how the survey describes the roots of the current anti-capitalist sentiments. They refer for example to the 15,000 dollar umbrella of Dennis Kozlowski, the boss of Tyco. “When such excesses have occurred in the past, there has been a political backlash to exploit the anger…”.

But the references to the anti-capitalist movement standing for protectionism are not substantiated. True, such ideas are current among some organisations and individuals. But in general, most participants in anti-capitalist demonstrations etc. have a strong feeling of solidarity, although often inchoate. To object to a multinational taking over water supply in a Latin American country is not protectionism. On the other hand, an increasing number of capitalists, not least in the US, are demanding protection of their companies (read: profits).

The Economist has no solutions. Its main point is that company managers should have lower salaries and less power. With extreme salary increases, often via share options, the company CEOs are the scape-goats in this survey. “They are going to kill capitalism”, the survey quotes from a French book title on the subject.

So, which ‘radical thoughts’ are then proposed? According to the survey, the title of the ‘best analysis’ so far is, “Capitalism without owners will fail”. The first step towards change is pressure from shareholders. But it would be wrong to have too high hopes. “That pressure may (!) produce some change, inducing some institutions to be more active rather than passive owners”.

Secondly, they recommend that governments should enforce existing trust laws. They add: “The difficult question is how”. Two ways suggested are: to force big share owners/institutions to vote on company business and to nominate independent directors. Another proposal is that auditors should not be able to work as consultants for the same company (Enron case).

This journal – a major voice of capitalism – refuses to see the big picture. The anti-capitalist movement/mood, which has the support of big sections of workers globally, is not directed against individual ‘mistakes’. The Economist’s position – “pro-market, not pro-business” – amounts to a reactionary utopia. Even if one ‘bad’ aspect of capitalism is abolished, ten new ones will develop. Today’s ‘market’ is the same as ‘business’, i.e. the big transnational corporations. There is no way they will accept the survey’s demand that all state subsidies to companies should be cut, or that governments should stop acting as salesmen for companies. The Economist’s programme of a further slaughter of welfare, combined with a kind of international charity – rich countries funding projects against Aids etc, will sharpen the differences and create an even stronger global anti-capitalist movement.

The theoreticians of capitalism in The Economist have good reason for being anxious. The development of capitalism is not a century-long curve of improvements in living standards, democracy etc.. Democratic rights are the result of mass struggle, and are again and again threatened by new laws, and by the police and the army acting on behalf of the capitalist class.

The only force that can challenge the capitalists is the working class. Organised in democratic and fighting mass organisations on a global scale, the working class can lead a struggle of all oppressed people to abolish the whole system. This means to end the exploitation of workers and of the environment; to abolish economic crises, wars and mass starvation; to lay the basis for a society without racism, national oppression, discrimination and oppression of women – all organic parts of capitalism.

We are now in a period of rebuilding the workers’ movement, and rearming it with a socialist programme. The CWI plays a key role in building new mass workers’ parties.

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