Alternatives to Neo-liberalism

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Advocates of the free market constantly repeat the refrain that 'there is no alternative'. Alex Callinicos believes that for the movement to be able to answer this claim, it needs to reassert the viability of democratic planning.

The tide of revolt against neo-liberalism continues to rise. In Europe this is most evident in France. Within the space of barely a year the neo-liberal pensée unique (sole ideology) suffered two stunning defeats - first the victory of the left No in the referendum on the European Constitution, then the social insurrection against the CPE law aimed at limiting the rights of young workers.

But these victories pose ever more sharply the question of what the alternative to neo-liberalism should be. The tired old gibe against the movement for another globalisation - that it is just against the status quo and lacks any positive programme of its own - gains more of a bite as the movement scores real victories.

There are some efforts within the movement to address this challenge. For example, following the French referendum, activists in the altermondialiste movement (movement for another world) launched a project to draw up a Charter of Principles of the Other Europe as an alternative to the neo-liberal Constitutional Treaty. Following a conference in Florence last November, a seminar was devoted to the subject at the recent European Social Forum in Athens.

The drafts that have so far been made of the charter are pretty uncontroversial. They concentrate on extending existing human rights by giving precise definition to a set of "common social rights" that would, for example, protect public services from being preyed upon by trans-national corporations eager to profit from the policy of privatisation being implemented by virtually every government in the world.

The charter belongs firmly to the ideological world of post-war social democracy. In a classic essay the sociologist TH Marshall traced the way in which the concept of citizenship has been extended over the past two centuries - from civil rights (e.g. personal freedom, private property) through political rights (above all, universal suffrage) to social rights (e.g. employment, welfare provision, education). The neo-liberal "Counter-Reformation" is essentially trying to roll this process of widening citizenship back by taking away the social rights represented by the post-war welfare state.

In this context, defending these rights is essential. But it's one thing to do this, quite another to imagine that, on their own, they constitute an alternative to neo-liberalism. The reigning Washington Consensus represents a very pure version of the logic of capital itself, in which everything possible is turned into a commodity. Rejecting this requires the introduction of a different social logic, but the charter is silent on what this might be.

Challenging private property

One key issue here is property rights. If just about everything is to be made into a commodity then the rights of individuals and corporations to own things - including abstract properties of things such as genes - and to exclude others from using them must be entrenched. One of the main thrusts of the neo-liberal agenda, which has been pursued very strongly by international financial institutions such as the World Bank and the World Trade Organisation, has been to reinforce and extend the right of absolute private property.

So what does the movement for another globalisation say about this? What conception of property does it put forward as an alternative to the neo-liberal drive to carve out the world into plots privately owned by the corporations and the rich? This is not an academic question. On 1 May 2006 Evo Morales, newly elected president of Bolivia, sent in the army to seize oil and gas installations to enforce his decree resuming state control of the hydrocarbon industry. Nationalisation of the industry was the main demand of the mass insurrection of May-June 2005 that drove right-wing president Carlos Mesa from office.

In fact many altermondialistes are uneasy about this kind of demand. Last October I found myself in a minibus negotiating the choked traffic of Mexico City as its passengers - intellectuals and activists from all over the world - argued passionately over whether or not the Bolivian movement was right to raise the demand of nationalisation. Similarly, the draft Charter of Principles waffles on the issue of property:

"The functioning of these public services and the use of common goods - soil, air, water, and energy - needs the implementation of social property projects. What we need to do is inventing a new kind of socialisation, which is not national or governmental property, and which allows people and workers to take part in the decision-making process concerning the organisation, functioning and designing of public services."

These contorted formulations don't just reflect the way in which English is often conscripted into the service of a multilingual movement that struggles to communicate with itself and with the world. Behind the suspicion of nationalisation lies the memory of the bureaucratic state ownership introduced by Stalinism in the East and social democracy in the West. But more immediately influential is the ideology of autonomism, summed up by the title of John Holloway's famous book Change the World Without Taking Power. In other words, we should forget about the state and try to develop localised alternatives to neo-liberalism.

Holloway's approach is hopeless as a general strategy. It is equally hopeless when confronting the issue at hand. The Bolivian people want to reverse the privatisation of hydrocarbons. This poses the question of what happens to the hydrocarbon industry when it is taken away from foreign multinationals such as Repsol YPF and Petrobras. Inevitably this raises the question of ownership. In the first instance, there seems to be no alternative to nationalisation (if anything, Morales could be criticised for restoring state control on a basis that fell short of 100 percent state ownership).

The state is a national organisation with both the coercive power and political legitimacy required in order to carry through something as ambitious as the takeover of the hydrocarbon industry. Moreover, that legitimacy depends critically on the state being able to present itself as responsive to popular demands. This makes it amenable to pressure from below - from mass movements such as that in Bolivia. Before becoming president, Morales, the leader of the Movement for Socialism, actually opposed the demand to nationalise the hydrocarbon industry. The measure was forced on him by the movement that brought him to office.

None of this means that we should repeat the old mistake of traditional social democracy and identify the existing state as the main agency of progressive social change. It is a capitalist state that may respond to mass pressure, but it nevertheless will seek to maintain the domination of capital. To that end it is organised in a bureaucratic and hierarchical manner that seeks above all to exclude popular participation, initiative and control. That's why the revolutionary Marxist tradition has always argued that any successful revolution against capital has to destroy this state and replace it with institutions based on rank and file democracy, through which working people can govern themselves.

So nationalisation on its own isn't enough. This doesn't alter the significance of what happened in Bolivia. After decades when public assets were sold off for private profit, popular revolt against neo-liberalism has actually forced one government to take something back - and not just any old something, as is made clear by the howls of agony sent out by the global political and business establishment when the Morales government seized the oil and gas industry.

This experience confirms these remarks by Antoine Artous of the Ligue Communiste Révolutionnaire in France, "I don't see how we can unleash a dynamic of social transformation without, if not straight away overthrowing, at least profoundly modifying certain property relations." Artous goes on to point out that nationalisation isn't enough, "The whole concept of social appropriation can't be reduced to the simple legal transfer of titles of property. It presupposes a wholesale challenge to the capitalist division of labour (the hierarchical organisation of production) and its replacement by cooperative forms of production."

Market or planning?

Indeed, really to break with the logic of neo-liberal capitalism, any extension of the boundaries of state ownership would have to involve the introduction of forms of democratic self-management through which the workers of the nationalised industry together with the consumers of their products could collectively decide on how it should be run for the common benefit. Again, this is more than an academic question. The radicalisation of the situation in Venezuela, where President Hugo Chavez espouses a "21st century socialism" in defiance of the US, has put onto the agenda the issue of alternative forms of economic organisation.

Seriously addressing this question means breaking another taboo and talking, not just about state ownership, but also about planning. From the 1930s onwards planning became identified with the bureaucratic command economies of the Soviet Union and its client states. As long as these flourished, then planning enjoyed great prestige and was, for example, copied by postcolonial states such as India. The decline and fall of the USSR totally discredited planning and helped to legitimise neo-liberalism. The reigning economic orthodoxy systematically conceals the extent to which some of the most successful economies in the contemporary world - China and South Korea - have depended on state intervention.

The reaction against planning has meant that even those seeking to develop alternatives to capitalism as such have seen some kind of market economy as inescapable. This is most obviously true of the market socialism advocated, for example, by the philosopher David Miller and the economist John Roemer. Here collectively owned cooperatives compete to sell their products on the market. Even the Marxist philosopher Tony Smith, in his new book Globalisation: a Systematic Marxian Account, argues that it would be possible to democratise the market.

The fundamental problem with this kind of strategy is that it is a necessary feature of any market economy that it is based on competition. To put it a bit more technically, in a market economy the allocation of resources is the unintended outcome of competition between the firms that jointly but not collectively control the economy. In other words, each firm's share of resources depends on how successful it is in selling its goods or services on the market. There is no collective decision by society at large about how resources are shared out. And if a firm fails to compete, then it loses its share of resources - it goes bankrupt. So the individual units of a market economy tend to be under systematic pressure to cut their costs of production and thereby reduce the prices of their products in order to stay competitive.

By definition, this setup can't be organised democratically at the level of the economy as a whole, because there are no collective decisions about the allocation of resources, democratic or otherwise. But it's also very hard to sustain democratic organisation within the individual firm as well. Michael Albert of ZNet explains this very well. Let's imagine, he suggests, a worker-controlled enterprise that is organised on a democratic and egalitarian basis but that is failing to sell its products. What will the workers do?

In this context, assuming that they reject bankruptcy, they have two broad choices. They can opt to reduce their own wages, worsen their own work conditions, and speed up their own levels of work, which is a very alienating approach that they are not very emotionally or psychologically equipped to undertake. Or, they can hire managers to carry out these cost-cutting and output enlarging policies while at the same time insulating the managers from feeling the policies' adverse effects. In practice, very predictably, the latter is what occurs. Markets therefore have a built-in pressure to organise a workforce into two groups - a large majority that obeys and a small minority that makes decisions, with the latter enjoying greater income, power, and protection from the adverse effects of the cost-cutting decisions they will impose on others.

The logic of a market economy therefore tends to undermine and eventually to overwhelm any islands of democracy and equality that may emerge within it. This means that socialists such as Roemer and Smith, who believe that it is possible to democratise the market, tend to face a dilemma of their own. Either they impose all sorts of restrictions on the functioning of the market to prevent it from eroding democracy, in which case any economy based on the principles they propose is likely to break down because they prevent the logic of competition from operating properly, or, if they try to ensure this logic will operate, it will destroy the socialist ideals they are trying to realise.

The implication is that any sustainable alternative to neo-liberalism has to be based, not on the market, but on democratic planning. There are some models of how this could work. One is Albert's Parecon, or participatory economics. This involves an economy of workers' and consumers' councils in which individuals and enterprises submit proposals for their share of society's resources. Then a process of gradual adjustments (Albert calls them "iteration") takes place while technical experts come up with a plan that would give everyone as much as possible of what they want.

The main weakness of this model is that it mimics a bit too closely the workings of a market economy, in which claims on resources are driven by individual demands. Albert is an anarchist, and his commitment to decentralisation here goes too far. The allocation of society's resources isn't a neutral technical issue. It's a political question that requires some sort of collective and democratic decision-making process to choose between what would often be competing views of the priorities of the society in question.

From this perspective, the British left wing economist Pat Devine offers a superior model of what he calls negotiated coordination. Here the allocation of resources is largely the outcome of discussion between producers, consumers, and other affected groups, but within the framework of overall decisions about economic priorities made democratically at the national and international level.

Plainly there is much more to be said - and, above all, to be done - about democratic planning. All the same, the importance of the kind of work being done by Albert, Devine, and others is that they begin to break down the prejudice against planning and to sketch out how an economy that rejected the market could manage to be both democratic and efficient.

Fighting for power

But any break with capitalism couldn't take the form of an instantaneous leap into a fully planned economy. Marx long ago argued in the Critique of the Gotha Programme that a new workers' state would inherit a society deeply marked by capitalism. Initially, it would have to make compromises with the old order, and gradually move towards a society governed by the communist principle "From each according to their ability, to each according to their needs!"

Similarly today a society breaking with capitalism would need to make a decisive shift towards an economy in which priorities were decided democratically rather than left to the anarchy of competition. This would critically involve taking control of the financial markets, nationalising under workers' control key sectors of the economy, and extending social provision on the basis of a progressive tax system that distributed wealth and income from rich to poor.

These measures, radical though they are, would still leave in place many aspects of a market economy. Large sectors would remain in private hands. Continuous pressure and the introduction of new measures would be necessary to move the economy as a whole towards the principles of democratic planning. One key step would be to weaken the power of the capitalist labour market, which today rules our lives.

In my view, the best way to do this would be to introduce universal direct income. In other words, every resident of the country would receive, as of right, an income that met their basic needs at a relatively low but nevertheless decent level. This would serve two goals. First, it would ensure a basic level of welfare for everyone much more efficiently than existing systems of social provision - people with greater needs because they had children or were disabled or whatever would receive a higher basic income.

Secondly, having a guaranteed basic income would greatly reduce the pressure on people to accept whatever job was on offer on the labour market. One of the main presuppositions of capitalism - that workers have no acceptable alternative to wage labour - would be removed. The balance of power between labour and capital would shift towards the workers, irrespective of the nature of their employer.

More broadly, the question of power is crucial. One obvious challenge to the kind of vision of change I have just sketched out is how to ensure that the direction of change would be towards a democratically planned economy rather than back to market capitalism or maybe to the kind of state capitalism that ended up dominating the Soviet Union. The only guarantee that counts is that levers of political power are in the hands of the workers themselves.

As long as the state takes the form that it does today - a bureaucratically organised, hierarchical set of apparatuses whose managers' interests are bound up with those of capital - any improvement in society can only be temporary and fragile. This is why the strategy of ignoring the state advocated by Holloway and others is so foolish. If we are to move towards a democratically planned economy, then the existing state has to be confronted and broken.

This task can only be achieved through the development of a different kind of power, one based on the self-organisation of workers and other poor people which develops out of their struggles against capital. The great revolutionary movements of the 20th century offered some glimpses of this power - from the workers' and soldiers' councils of the Russian Revolution of October 1917 to the workers' shoras during the Iranian Revolution of 1978-9. The self-organisation displayed by the Bolivian popular movement during the insurrections of October 2003 and May-June 2005 showed that the contemporary movements against neo-liberalism can generate this kind of power as well.

A democratically planned economy would be a self-managing society, one in which directly elected workplace and neighbourhood councils took responsibility for their own affairs and linked together to make decisions for society at large. The key insight that Marx had during the Paris Commune of 1871 was that these forms of organisation would develop before the new society was created, in the process of fighting the old society. The same methods of self-organisation that would be the basis of a self-managing society are needed by the exploited and oppressed to resist and, ultimately, to overthrow capital itself.

The overthrow of capital is itself a process. The dilemma that Albert imagines confronting a workers' cooperative in a market economy would face any society that was beginning to introduce the principles of democratic planning in a world still ruled by capitalism. This same dilemma was responsible for the corruption and eventual destruction of the Russian Revolution of October 1917. Any breakthrough in one part of the world could only survive by spreading and progressively overturning the logic of capital on a global scale.

This may sound like a tall order, but the globalisation of capital has produced a globalisation of resistance. Struggles in different parts of the world contaminate each other. Chiapas and Seattle had global reverberations. The great struggle against the CPE in France has helped to inspire a student movement in Greece that has just defeated the right-wing government. The movements in Latin America have become a beacon to all those fighting neo-liberalism.

We are still a long way from overturning capitalism even in one country. But the worldwide resistance to the unrestrained market isn't simply putting back on the agenda the idea of an alternative to capitalism. It is also helping to create the conditions in which that alternative can win.


Alex Callinicos is a leading member of the Socialist Workers Party and Professor of European Studies at King's College London