WGBH Forum Network recently posted a YouTube video, “Yanis Varoufakis: Is Capitalism Devouring Democracy?” (https://youtu.be/gGeevtdp1WQ ), in which Greece’s former finance minister brilliantly explains the evolution of capitalism, beginning with Britain’s enclosure of the commons that kicked the peasants off the land and brought down feudalism, all the way to the triumph of globalized finance and the hollowing-out of democracy that the world is now experiencing. Capitalism, Varofakis concludes, is collapsing, and the choice we face is stark: we can go the way of Germany during the Great Depression and of Hungary now—the way of fascist authoritarianism—or we can go the way of the United States during the 1930s—the way of the New Deal, which stripped the bankers of their power.
This time, though, Varofakis says, we have to make sure the banks don’t regain that power; we have to continue developing from that New New Deal toward a genuinely democratic, international, and, yes, socialist organization of society.
Varoufakis’s analysis is a real tour-de-force, expressed in down-to-earth language; it’s inspiring to see such a vital intelligence at work. Which is why it comes as such a devastating let-down when, near the end of his presentation, he responds to a questioner who wants to know how credit ought to be organized in a socialist economy. The answer: in the socialist future, credit won’t be necessary. Then, as if realizing the complete inadequacy of that reply, Varoufakis kicks the question down the road: “But look, this is going to be the topic of my next book… so I’ll see you in three years.”
Well, I sure hope so. And I hope the answer is as brilliant as his analysis of capitalism’s past. Because socialists continue to humiliate themselves and their doctrines by the kind of magical thinking—if we can dignify it as “thinking” at all—that says, “We can’t possibly foresee what reality under socialism will be like—so let’s not even try to figure it out.”
Varoufakis is in good company, of course. Marx abdicates the responsibility to describe a practical socialist society in Capital; Lenin had a theory, but it morphed into Stalinism. Mao’s gropings toward a coherent theory with experiments like the Great Leap Forward and the Cultural Revolution were both childish and catastrophic. British socialism achieved good things—the National Health Service above all; but, like every socialist regime so far, it failed to reconcile workers’ desire to preserve jobs with society’s need to respond to changing economic demands.
Capitalism is failing—disastrously—to meet the many challenges facing us now: climate change, environmental degradation, rampant inequality, corruption of our institutions—in short, the future of our economies and of the species itself. But regardless of how bad things are, humanity can’t be expected to entrust its future to a Left that refuses even to engage the most fundamental questions about how its vision of the just society could be implemented. If the banks collapsed tomorrow, power would still exist: who would have access to it? How would they exert it? With what limits, enforced by whom?
To focus on the question that Varoufakis shrugged off: it’s utterly silly to say that credit wouldn’t exist under socialism. I don’t care how “comradely” the worker-owners of one factory might feel toward each other—or toward the worker-owners of another factory—when those owners decide to retool the factory in order to improve their products, where do they get the means to do so? Wouldn’t that require financing? And if investor-owned banks don’t provide that financing, who does? What about someone with an idea for a new product or service–where does that person go for startup funding? Who, in short, holds the purse-strings, and who determines whether the funds are being used appropriately?
These are the questions socialists are never prepared to answer—and it’s high time to start fashioning those answers, because time is running out.
Let’s face it: Humanity isn’t going to transform its basic instincts simply because one day we wake up in a society that has relabeled itself “socialist.” The Left needs to get into the weeds and start theorizing—and this isn’t a contradiction—in a practical way. How would a socialist economy really work? How would we want it to, not just from the standpoint of workers but as consumers? Sure, theory never completely corresponds to reality: just look at the ways that capitalism routinely flummoxes its own theorists. But it is absolutely crucial for socialists to put together a reasonably concrete and plausible vision of where we ought to be headed.
This is why it was doubly horrifying to hear Varoufakis say in the same video that he wouldn’t encourage young people to go into economics today. Nothing is more important than for a new generation of Left economists to create a body of theory to explain how a differently modeled economy might work.
There are resources, both historical and theoretical, to draw on. We know a lot about how essentially socialist enterprises—cooperatives, employee-owned businesses, and the like–succeed and fail in a predominantly capitalist environment. And the story of socialists in power provides us with a mountain of evidence about approaches that have failed: Alec Nove’s An Economic History of the USSR: 1917-1991 leaps immediately to mind, and the histories of hybrid enterprises under Tito’s in Yugoslavia and Kadar in Hungary shed additional light. Capitalism itself has tried lots of strategies to organize production over time, including power-devolution schemes such as Total Quality Management. Even fascist economic theory has something to contribute, as Ezra Pound’s economic essays demonstrate.
When the next financial collapse occurs, as it surely will, people who care about the future of the planet and the democracy need to have a game plan, a policy agenda—and that agenda has to be grounded in a solid understanding of where we’ve been and where we’re going. What policy, for example, should we advocate for dealing with the banks? We can’t just turn them into co-ops run by their “workers,” obviously—but that’s about as far as socialist economists like Richard Wolff have taken us.
It’s time to go deeper. Idiotic attempts to “play it by ear” have left the historical record littered with disasters created in the name of socialism. Maduro’s Venezuela is just the latest example. If the capitalist system is imploding, what do we want to replace it? What organization of the economy would meet people’s needs and restore the democracy?
The questions we need to be asking range from the ultra-macro level (how and why do socialized economic sectors, such as Britain’s nationalized industries—and whole economies, such as China’s under Mao—fail to meet the demands of consumers and of the national and international economies?) to the micro level (where does this person with an idea for a new product go for funding?).
Command economies inevitably crash and burn; that much is clear. The failures of past socialisms will reappear in the future. Theorists on the Left need to explain how enterprises and the economy can be organized to overcome those catastrophic tendencies, how markets can meld with democratically controlled, cooperative enterprises to meet the needs of both the immediate and the long-term future.
These theorists need to begin by acknowledging and learning from what hasn’t worked in the past–and how, and why. We can’t move forward without building a theory about how to avoid the many pits we’ve fallen into in the past. Evolving that theory is the greatest challenge for the Left. If we can rise to that challenge and articulate our ideas clearly and persuasively, maybe there’s a chance to escape the desperate future that is already breathing down our necks.