Flawed Capitalism

Issue section: 

I first met David Coates in the York branch of the International Socialists in September 1971. So it is with great sadness that I learned that he died on 7 August this year.

There are two sides to the way Coates presents capitalism as flawed: the impact that it has had on the mass of the populations in the UK and US, the two societies he analyses in the book, and flawed in the kind of capitalism under review. He believes that the rise of Trump and the populist right mean that we are at a turning point that needs to be seized by all progressives.

Coates examines two phases of capitalism, or two “social settlements”, since the 1940s, the first being the post-war boom and the attendant transformation in people’s lives in the US and UK, followed by the Thatcher-Reagan neoliberal phase from 1979, that he argues is now nearing its end. A key difference between the two settlements is the different balance of power between “labour and capital” brought about initially by the defeat of key unions.

Coates meticulously documents the impact of both settlements. His coverage of deteriorating living and working conditions, low pay and poverty, welfare benefits and housing for the overwhelming majority of workers in both countries can leave no one in any doubt about the impact of the neoliberal mantra of “the market” and the cutting back on state welfare provision since 1979.

Coates argues that neoliberalism ultimately ushered in a period of growth that ended spectacularly with the financial crash in 2008. However, he does not provide a satisfactory account for the decline in rates of growth in either country, nor does he reflect on Marx’s arguments about the long term tendency to declining profitability and financialisation. Thus he does not locate neoliberalism in a (highly successful for the ruling class) drive to reduce the proportion of wealth going to labour even though it is unable to overcome the problems inherent in the system.

Unfortunately, Coates implies the mass of white workers in the UK are racist, not registering the impacts that various anti-racist and black and Asian workers’ struggles had over the years. He blames immigration for racist attitudes, instead of locating rising racism in society in the deliberate scapegoating of Muslims and refugees by mainstream politicians.

Coates looks to Corbyn’s Labour Party and a possible Sanders dominated Democratic Party. He focuses on a Keynesian solution: government spending to increase demand, improve the infrastructure, increase productivity, strengthen women’s position as well as strengthen union rights. Aware of possible (ruling class) opposition to such a programme, Coates stresses the need to win people to it before an election and for a government to implement enough of it sufficiently quickly to provide an “incentive to defend those improvements when they are challenged”. Unfortunately, how that defence should be organised is a question neither posed nor answered.