At the end of 2018, Steve Pearlstein, editorialist for the Pulitzer Prize winner of the Washington Post, published a book that would have been strange a few years ago. This is called Can American capitalism survive? and he begins by exposing the ideological crisis facing the economic system and, just as importantly, the economic philosophy that many Americans take for granted:
Ten years ago, 80% of Americans agreed with the statement that a market economy is the best system. It is today 60% lower than that of China. A recent survey revealed that only 42% of millennia supported capitalism. In another country, a majority of millennia declared that they preferred to live in a socialist country rather than in a capitalist country.
In 2016, Senator Bernie Sanders of Vermont ran on a platform that many thought had ruined his political chances. He portrayed himself as a democratic socialist, renouncing the long-standing American capitalist consensus and proudly weaving himself in a label described as political poison by the experts. And it worked.
In American politics, and especially in the Democratic Party, the primacy of capitalism is, for the first time in a long time, an open question. Sanders is expected to run again in 2020 and with the support of a popular movement that marveled at breaking with the capitalist convention. He will face, among others, Elizabeth Warren, Senator of Massachusetts, who says that the essential difference between her and Sanders is that she is "a full-fledged capitalist".
But what are the real differences between the liberal reformers of capitalism, such as Warren and Pearlstein, and the Socialist Democrats, such as Sanders? I invited Pearlstein to discuss his book and the broader division between capitalism and socialism with Bhaskar Sunkara, editor of the newspaper Jacobinand author of the forthcoming book, The Socialist Manifesto. Their debate follows, slightly modified for style and length, giving Sunkara the kickoff of the conversation.
I just finished reading two interesting leaflets this weekend, the Council of Economic Advisers of the White House. "The opportunity costs of socialism"Report and your new book Can American capitalism survive?
Yours was better, do not worry. But it seems fascinating to me that "capitalism" and "socialism" are back in the popular debate.
You are firmly descending on the capitalist side, but see the need for major changes. In your opinion, old-school liberal models (highly regulatory, skeptical of consolidation, supported by powerful unions that imposed expansive wages and benefits) encouraged stagnation and made US firms less competitive internationally.
But the neoliberal correction that was brought – mantras that the government could do nothing, that the companies were tied only by maximizing returns for investors and that any market outcome was right – was a radical overcorrection. This has fueled a backlash that threatens the fundamentals of the system itself.
I am a socialist so I can only disapprove of some of the solutions you are proposing to the problem: employee profit sharing, renewed but not stuffy regulatory control, and the exit of corporate money from politics. I do not think it goes far enough.
However, I am interested in opening this conversation with our different perspectives on the crisis of the 1970s and on what motivated the transition to the supply economy. Unlike some Liberals, I do not deny the fact that there was a crisis in the 1970s: companies could not keep up with militant trade union demands, the consequences of the OPEC oil shock, and increased international competition. Profitability has dropped.
But in your book, I noticed that your ideology had a much bigger role than me. In my account, without a broader ideological agenda, capital knew that it had to restructure itself to restore its profitability. Strong regulation and unions are seen as obstacles to achieving this goal. The neoliberal ideology seems to just follow these developments but does not play a very important role in itself.
I also wonder if there was really a different mentality that invaded capitalism during the post-war boom years. A CEO like Charles Wilson could say "what was good for the country was good for General Motors and vice versa," but he reacted exactly to the same market pressures as CEOs today. The only difference is that he was forced by unions and a liberal political coalition.
Social democracy has always been based on economic expansion. Expansion has rescued the working class and capital. When growth slowed down and workers' demands had a bigger impact on corporate profits, business owners rebelled against the class compromise. And they were in a structural position to impose their own solutions, even in countries like Sweden where experiments had been carried out with wage funds and other left-wing solutions to the crisis.
It seems to me that the goal is not to defeat the neoliberal ideology, but rather to try to recreate the political movements of the working class that help to make possible shared prosperity. And that means intensifying the polarization – between the workers and the corporate interests – of the left and trying to build the kind of political movements that could perhaps solve the "next crisis of the 1970s" in a more radical direction.
In reality, we do not dispute much the genesis of the turning point towards more market-friendly policies in the 1980s. I think that there was a set of ideas (as opposed to a well-honed ideology) that was part of this transformation, but the driving force was the urgent need to restore the competitiveness of the US economy, which was seriously challenged by Japan and Europe. at this moment.
Ideas are important at such times, as those involved in political and political debates need a reason to convince the country that a radical change is needed. This process often involves the rejection of old ideas that were useful and we thought this was true in favor of other useful and true ideas. In the political market, ideas matter in terms of results, even if they are not the driving force. It is different to say that ideology or an ideological movement played a leading role.
So, in the book, I state many of these ideas and the reason why they have been pushed so far that they are no longer useful or valid.
The first is that greed is good and necessary for the functioning of a market system, which is now codified in the notion that companies must be managed in ways that maximize shareholder returns.
The second is that market incomes are an objective measure of each person's economic contribution – a marginal utility, in economic language.
The third idea is that we do not have to worry about the level of income inequality because all that really matters, at least in terms of morality and equity, is equality of opportunity.
And the fourth idea is that there is an absolute trade-off between economic equality and economic efficiency – that if we want more equal shares, we will have to accept the fact that the pie (and therefore each part) will be smaller.
These ideas are now at the heart of what might be called "market fundamentalism" and explain why so many in your generation believe that capitalism has lost its moral legitimacy.
A recurring theme in the book is the importance of social norms. Social norms greatly influence the behavior of individuals and businesses. And while you seemingly resist this idea, standards have changed a lot since the '50s and' 60s. At that time, companies were actually headed for a broader purpose and executives who violated those standards were rejected not only by the workers. clients or citizens of the local community, but also by other leaders and financiers.
Law firms and investment banks have not engaged in hostilities. Executives do not pay huge salaries. Very profitable companies shared these profits with all their workers. The companies were loyal to their workers and were expecting loyalty. And that was true, by the way, in unionized and non-unionized companies.
There was a historical basis for these standards. We had just come out of a shared sacrifice experience in wartime in which men of all types were serving one another on the battlefield, and women of all types were working side by side in factories and offices, and many essential goods were also distributed among households. .
This shared experience was based on standards of equality, cooperation and trust. The idea that leaders and companies behaved in this way was due to the fact that unions and a liberal political coalition forced them to do so is false, even though it is certainly true that the unions, voters and supporters of Liberal interests have helped to shape these norms. And then the standards have changed.
What is the power of social norms? Well, just look the # MeToo movement, a wonderful example of a change of social norm. What was accepted and tolerated is no more. It has been a bottom-up process that no one has anticipated and no one controls. With regard to the power structure, on which you like to focus, very little has changed except public opinion.
The language with which you talk about these things, Bhaskar, which defines things in terms of movements and ideologies and well-defined classes and interests, inevitably leads you to see things from a distorting angle. My goal is not to "defeat" any ideology, neoliberal or otherwise. I do not think either that it is necessary to "recreate a political movement of the working class", which would be difficult because, in America, we had never really had one. What do you have in mind – accountants, baristas and computer technicians who gather in cells to plan general strikes and parades at the American Chamber of Commerce?
Our goal should be: To use all the tools available in a democratic society to convince a wide audience – front-line workers, middle managers, professionals, executives, academics, journalists – that certain types of corporate behavior are no longer socially acceptable.
Unacceptable because they offend our moral sensibilities. Unacceptable because they are economically counterproductive. And unacceptable, because they undermine the trust and cooperation necessary for the success of capitalism and democracy.
Change the social norms in this way and the rules and laws follow naturally. It's a goal that's more likely to be achieved and more effective than trying to change things by grabbing power and imposing a different set of rules and standards on everyone's throats.
I think we're looking very differently at not only how to change what's rotten in the United States today, but how we've made improvements in the past. You say our country has never really experienced a "working-class political movement," but we have a long history of trade union unrest – not just at the shop floor, but in broader movements for the eight-hour day and mass organizing campaigns of the 1930s and efforts to extend social protections.
It was the power of the unions and the resulting political culture that helped to ensure that post-war prosperity was more widely shared.
What I think about the future is very simple: people come together to defend their common interests through politics. We are a few years from the 13 million Americans voting for a self-proclaimed democratic socialist, someone who said that people deserved more than they received and that "millionaires and billionaires" were to blame.
Today, most Americans support Medicare for all, employment programs and other social democratic policies. In trying to obtain these elements, they will come up against the power of those who benefit from the status quo. It is not the resistance of social norms, it is the resistance of segments of capital – it is the class struggle in the most classical sense.
The standards will follow the organizational efforts and the conditions on the ground and help consolidate the gains, but I think you exaggerate their importance. There are powerful segments of the business community that exist existentially opposed to things like Medicare-for-all and increased unionization, not as individual characteristics but to preserve their livelihoods. I do not think that much can be said about # MeToo and other important struggles against sexism.
Specifically, I think this means widespread left-wing election campaigns, combined with new organizing efforts in strategically placed areas – the current year's campaign. wave of strikes of teachers, new efforts to rally nurses and procurement and logistics specialists, for example, and social movements for areas such as criminal justice, health care and affordable housing.
The words of A. Philip Randolph still seem right: "At the banquet table of nature, there are no reserved places. You get what you can take and you keep what you can hold. If you can not take anything, you will get nothing; and if you can not take anything, you will not keep anything.
Every step forward – from the end of slavery to the very creation of our rudimentary welfare state – has gone through struggles. The world and politics have changed, but I see no reason for the future to be different.
If the left does not speak of anger and does not try to "take power" (and by that I mean win the majority) for our program, it will only benefit xenophobes and alarmists on the right.
Who would disagree with your idea of people coming together to defend their common interests through politics? But I think you're laughing at yourself that the forces that protect the status quo are just millionaires and billionaires and that we're all victims of the oppressive economic system they've imposed on us, or cheated on us.
This does not mean that special interests, including commercial interests, do not have disproportionate political and economic power. Of course that's what they do. But there are all kinds of other special interests that you will probably recognize as belonging primarily to the middle class and that have also shaped our system, such as the ability to buy cheap products from abroad or grants for homeownership.
Our country is still mainly composed of the middle class and its standard of living is equal to or higher than that of most other countries in the world. And these middle-class Americans would not be in favor of medicare for all, especially if you explained to them what it would really mean, or marginal tax rates of 90% on very rich jobs, guaranteed or in free higher education. There is probably a little more inner socialism that a typical American can discover, but not as much as you imagine. Many are as suspicious of the government as they are of Wall Street or big business.
Why not start repairing our capitalism – or as Raghuram Rajan and Luigi Zingales put it intelligently, save capitalist capitalism. As I stated in the book, I would start by withdrawing money from the politics – of the companies money but also from the union money. And put an end to Wall Street's hold on the real economy by requiring companies to be managed in ways that maximize shareholder value. And a more vigorous antitrust application to deal with the old-fashioned consolidation and natural trends of the "win-take-all" of the new economy. We need to reinstate a serious estate tax, a serious and reformed corporate tax, and a 40% marginal marginal income tax.
And while we're at it, why not create a new set of financial institutions – banks, insurance companies, mutual funds and pension funds – that belong to their clients rather than their shareholders. Even a capitalist can understand the logic of an annual "dividend" for every American as his share of the nation's natural and institutional wealth, particularly if it is combined with a three-year national service obligation (ma version of universal basic income).
Do you want to be really radical? How about ending school segregation by class as we did with racial segregation, through expanded school districts, magnetic schools and creative use of school choice.
I am very much in favor of the possibility of reorganizing a union without being fired or going to court in the next decade, which is unfortunately the reality today. But there may be other, more effective ways to reinvigorate the trade union movement and give a little more power to workers in a post-industrial economy. I imagine that many American workers do not want the kind of union you dream of – the ones that undermine the competitive viability of their businesses, those who refuse any compensation plan, and companies with rigid labor rules.
Perhaps in a more professional, service-oriented and technology-based economy, people would prefer unions focused on providing services to their members (pensions, health insurance, legal advice) or providing mechanisms to enable them to to make their voices heard more effectively on the situation of their business. run.
You're right to say that the teachers' strikes were as inspiring as they were effective, but the #MeToo movement also, which changed the behavior of companies without unions or strikes but through publicity and persuasion .
The problem with your favorite model of permanent class struggle is that it ignores the importance of social capital – mutual trust and in our common institutions – in much the same way as our current version of American capitalism, with its cruelty , its inequality and its celebration of greed and indifference.
Economic and political systems work best when there is a sense of shared purpose, shared sacrifice and shared success, when people feel that we are all in the same boat. I fear that the permanent class struggle discourages cooperation and erodes trust – within companies, communities, countries.
Your response creates a fundamental difference between us: you seem to think that the state is neutral and simply responds to the demands of different special interests. So, in the past, when the workforce was strong, it had imposed unreasonable demands on the state, and nowadays big companies are doing the same.
But even if you remove corporate lobbying and withdraw money from politics through publicly funded elections and elected officials such as Bernie Sanders, the state would still have an inherent bias. It depends on income for financing, and this income comes almost entirely from the activities of private capitalists. As long as capitalists have the power to withhold their investments, a minority of people will exert tremendous influence and our democracy will be undermined.
Have people been deceived into adopting a system like this? No, workers and capitalists are dependent on each other. Workers need their businesses to be profitable and this recognition has always tempered the demands. But it is an asymmetric dependency: the workers need their work more than the capitalists need an individual worker.
Political democracy, convinced by the will of the elites, has paved the way for the improvement of the lot of workers through legislation and trade unions (whose power is fundamentally based on the ability of people to strike and suspend their work), and it's a little bit equal, but this inequality has not disappeared.
In the same vein, your definition of "middle class" seems mythical to me. Who are these middle-class Americans? Is it a double-shift nurse, a bartender who saves enough for a house and a car, or is it just a very educated professional? If you define these definitions solely by income level, you omit the important difference in status and relationship between a well-paid union worker and a small business owner who could earn the same salary. . And if you do not get that difference, you do not understand why the former have to organize collectively to make gains.
And finally, of course, I want to encourage cooperation and trust. I just want to do it by resurrecting a new identity based on a unifying central community: the vast majority of us have to work for a living. And we do it under the guidance of other people. And we know that their interests are not the same as ours. It will be an identity filled with community, rituals, solidarity and belonging, like the others.
We live in a society marked by hierarchy and inequality – not as an unwanted side effect, but built in its core. The earlier systems, ranging from feudalism to slavery, constructed in this sense, seemed natural and eternal at the time. I will join you in your quest to humanize capitalism, but I have no doubt that it is necessary to overcome it.
Yes, we live in a society marked by hierarchy and inequality – and, yes, it is intrinsic to capitalism. And yes, power – economic power, political power – is decisive for the distribution of the good things in life. Fundamentalists of the market, who always insist on the fact that they are voluntary transactions in the context of a perfectly competitive and efficient market, which determines in a neutral and objective way the economic results, make fun of themselves. or try to deceive us.
But let us be clear: this somewhat devious economic system called capitalism has enabled billions of people to break out of subsistence poverty since the industrial revolution and has given us a longer, healthier and happier life, to an extent never before seen. by no other system. And while some people have more power, money, security, and happiness than others, and some people may lead other people, the line of demarcation is not between "workers" and "capital". It is between highly skilled and weak workers, coastal and rural metropolitan workers, between white and non-white workers, men and women, religious and non-religious workers.
Let's be realistic: the preferred politician of the oppressed and left-behind workers for whom you idealize is Donald Trump, while the inhabitants of Wall Street titans, Hollywood magnates and technology billionaires support candidates and liberal causes.
One of the fundamental flaws in your analysis is that, like Karl Marx before you, you consider the economy as a zero-sum game: "We know that their interests are not the same as ours," you write. In fact, we do not know. Rather, we know capitalist systems in which, when businesses are doing well, the owners of capital and workers are doing well – and the cooperative nature of their relationships creates a bigger cake to divide.
The other fundamental flaw is that you ignore the power each of us has in a capitalist system as workers and consumers. Most of us are not without choice. We choose the people we work for, the products we buy, and the standards that will govern economic behavior. This economic power is no less real than our political power as a voter and can be exercised individually and collectively.
And within this capitalist system, wealthy and powerful people who play too often with their hands get their reward constantly, losing their jobs, their wealth and their reputation. Sometimes they even lose elections.
Bhaskar, the question is not whether there is an inequality of wealth and power. The question is whether those who have the luck or talent to own wealth and power use it in a socially beneficial way.