Capitalist triumphalism: a brief history

Ken Burns’ history of the Vietnam war is getting many plaudits. What’s not been noted about it, though, is that it reminds us of something we’ve forgotten – that the victory of capitalism over communism was not generally regarded as inevitable at the time. The idea that it was owes more to the hindsight bias than to historic fact. Indeed, capitalist triumphalism – of the sort we see from CapX, the IEA and Very Selective Reading of Wealth of Nations Institute – is relatively new.

What I mean is that the American government did not commit mass murder, sacrifice tens of thousands of its own young men, cause vicious domestic social divisions and jeopardise the economy in order to save Vietnam from a flawed economic experiment. It did so because it feared communism would succeed, not that it would fail – that communism could supplant capitalism. Equally, the Macarthyism of the early 50s was aimed not at rooting out cranks but genuine threats to American capitalism.

When Khrushchev spoke of “burying” and “overtaking” western capitalism, nobody laughed. The danger was a serious one. And the launch of Sputnik suggested to the world that Communism could produce technologies that eclipsed capitalist ones. As Francis Spufford showed in Red Plenty (discussed here and here) the Soviets had a genuine optimism that they could beat capitalism – and cold warriors feared they were right.

Yes Friedrich Hayek did warn that central planning was unsustainable. But he was regarded as a crank and outsider for most of the 50s and 60s. His was not the mainstream view.

In fact, fears for the viability of capitalism pre-dated the cold war. The classical economists all thought that capitalist growth would eventually cease. In 1848 – after decades of expansion – John Stuart Mill wrote:

The increase of wealth is not boundless: that at the end of what they term the progressive state lies the stationary state, that all progress in wealth is but a postponement of this, and that each step in advance is an approach to it.

(Marx’s view that a declining rate of profit would eventually cause the collapse of capitalism was, in essence, just a riff on Ricardo’s theory of diminishing returns.)

Yes, the classicals mostly approved of free markets. But they didn’t think growth was inevitable. They were free market pessimists. In this tradition, Joseph Schumpeter wrote in 1943:

Can capitalism survive? No. I do not think it can…[Capitalism’s} very success undermines the social institutions which protect it, and “inevitably” creates conditions in which it will not be able to live and which strongly point to socialism as the heir apparent…Prognosis does not imply anything about the desirability of the course of events that one predicts. If a doctor predicts that his patient will die presently, this does not mean that he desires it. One may hate socialism or at least look upon it with cool criticism, and yet foresee its advent. Many conservatives did and do. (Capitalism, Socialism and Democracy (pdf), p61-62)

On top of this, there was throughout the 19^th and 20^th centuries the constant fear of revolution. Bismarck’s creation of the welfare state in the 1880s was an attempt to buy off working class unrest: that retreat from pure free market capitalism would of course be followed across the west over the next few decades.

And of course, anybody in the 1930s, seeing that capitalism had produced catastrophic war, hyperinflation and then depression, could not have been at all assured of its desirability or viability.

Capitalism, then, like bull markets, has climbed a wall of worry. Confidence that it is the best way of achieving sustained increases in living standards is quite a new phenomenon. It dates from the 1980s. And given that productivity and real wages have stagnated in the last decade, justifiable belief in such a proposition was tenable for only around 20 years.

Why, then, is it so widespread? I’d offer two suggestions.

One is that our ideas are disproportionately influenced by our formative years. Many people in their 40s to 60s were deeply impressed by the collapse of social democracy in the 70s and of communism in the 80s, but are less influenced by the capitalist stagnation of the last decade.

The second is that the alternatives to actually-existing capitalism have for years lacked salience: I’m not sure how far Labour’s mild social democracy counts as a genuine threat to it. Yes, there are alternatives along the lines of participatory economics or market socialism for example. But these are sadly neglected. It’s easy to be a capitalist triumphalist if you think the only alternative is Soviet-style central planning, just as you can believe yourself fit if you compare yourself to a fat slob.

Yes, capitalism has seen off one rival. Whether it can see off all - and whether it deserves to - is an open question.

Comments

[Anarcho]

If the soviet experiment showed anything, it was that the anarchist prediction that it would just be State capitalism (and a source of tyranny) were proven right.

So don't call Stalinism (or Leninism) by the word "communism" -- call it what it was, State-capitalism.

As for alternatives, well, models of market socialism are around which are much more appealling than Roemer's -- which seems stuck in neo-classical economics and not that bothered about workers' self-management of production.

There is, most obviously, David Schweickart who bases his on self-managed workers' cooperatives -- in this, he follows Proudhon and not Marx (I discuss this in my recent paper "Proudhon’s Constituted Value and the Myth of Labour Notes," Anarchist Studies, vol. 25, No. 1). And as you mention him, Schweickart also follows John Stuart Mill who came to market socialist conclusions.

[Benis]

You seem to be completely unfamiliar with today's most radical libertarian Marxists, people like the economist Harry Cleaver and the theorist Massimo De Angelis.

I highly recommend taking a look at Harry Cleaver's books:

"Reading Capital Politically":

https://libcom.org/library/reading-capital-politically-cleaver

"Rupturing the Dialectic: The Struggle against Work, Money, and Financialization" (which shows how people like Roemer have completely abounded Marx's main theories).

Massimo De Angelis has two of the best books on marxist theory that I've read in recent times:

"The Beginning of History: Value Struggles and Global Capital" (which has a very good critique of Hayek's nonsense).

And his most recent book "Omnia Sunt Communia: On the Commons and the Transformation to Postcapitalism" is a beautiful book on what communism is actually about.

Moishe Postone, at Chicago, is also a very important Marxist theorist.

As for deeper and more historical understanding of neoliberal claim made by Hayek I would direct you to Philip Mirowski's latest book "The knowledge we have lost in information: the history of information in modern economics".

All of Philip Mirowski's books are gems that should be read by any serious economist.

John O'Neil's book "The Market: Ethics, Knowledge and Politics" also a good critique of the market nonsense:

https://libcom.org/library/market-john-oneill

There's also the recent stuff written by the Harvard Prof. Stephen A. Marglin.

[Benis]

(This is also addressed to Anarcho)

The idea of "market socialism" is, in my opinion , completely absurd (as is all this nonsense you hear about "economic planning").

Here is some useful literature on what you might call "anti or non-market-socialism":

"The World of the Gift" by Jacques T. Godbout , Alain C. Caillé:

https://www.amazon.com/World-Gift-Jacques-T-Godbout/dp/0773521364/

"Gifts and Commodities: Exchange and Western Capitalism Since 1700" - Chris A. Gregory:

https://www.amazon.com/Gifts-Commodities-C-Gregory/dp/0990505014/

"Omnia Sunt Communia: On the Commons and the Transformation to Postcapitalism" by Massimo De Angelis:

https://www.amazon.com/Omnia-Sunt-Communia-Transformation-Postcapitalism/dp/1783600624/

"Anthropology and the Economy of Sharing" by Thomas Widlok:

https://www.amazon.com/Anthropology-Economy-Sharing-Thomas-Widlok/dp/1138945552

[Soleus]

Where is the slightest evidence that anyone in the US leadership around 1960 feared that communism would succeed? What is, on the other hand, apparent from Burns's documentary is that Kennedy was intent on disengagement from Vietnam. The analogy he makes on camera between 'taking the first drink' and sending ground troops could hardly be clearer.

He wanted to delay taking the domestic political hit until after his reelection in 1964, as David Halberstam explains in his book 'The best and the brightest'. Dallas, alas, intervened. Then LBJ, a foreign policy primitive, took that first drink.

[chris]

@ Benis - thanks for those suggestions. Although I've been a big fan of Marglin's for years, I've haven't read Cleaver.
One think that holds Marxism back is a tendency among some to sectarianism - to defending one particular true view at the expense of building a coalition. In this context, I think Roemer is unjustly criticised. His is an effort to make socialism appeal to orthodox neoclassical economists. This is I think rhetorically necessary.

[Benis]

I was introduced to Marglin through his beautiful little book "The Dismal Science: How Thinking Like an Economist Undermines Community".

It appears that Marglin is also working with the economic anthropologist Stephen Gudeman (Gudeman has also written some good stuff as well) on some stuff that looks interesting.

Economic anthropologists seem to always get a lot of stuff right(Chris A. Gregory, Thomas Widlok and David Graeber are one of my favorites).

As for Roemer:

Paresh Chattopadhyay has written a book "Marx's Associated Mode of Production A Critique of Marxism" that deals and critiques various interpretations (including the more political ones).

Chattopadhyay's reading is very complete and very compatible with your own critique of managerialism.

My introduction to Marx was through Ben Fine's "Marx's 'Capital'", Michael Heinrich's "An Introduction to the Three Volumes of Karl Marx's Capital", so I've never had a phase where I was into to the neovlassical and neo-Ricardian interpretations of Marx.

(Though I've now moved away from that to the more political Harry Cleaver - Massimo De Angelis - Silvia Federici school of thought.

Marxist historians like E. P. Thompson and Peter Linebaugh (and of course, CLR James and Christopher Hill) were also a huge influenced on me).

[Guano]

"What I mean is that the American government .......... feared communism would succeed, not that it would fail – that communism could supplant capitalism."

Having lived through those times, and lived in places where these issues were pertinent, I must admit that I don't know the answer to that (implied) question. Hysteria about communism had become a thing in itself and I don't think that the American government itself knew whether it had that attitude because it thought that communism was going to be a success or a failure.

[Dave Timoney]

I think you have to distinguish between US anticommunism in its domestic and international settings. The former, which was by no means limited to the derangements of McCarthy and Hoover, was intimately bound up with the defeat of organised labour and the repression of blacks.

This is why a "staunch anticommunist" like Richard Nixon could be both authoritarian and unyielding at home and pragmatic abroad, e.g. in the rapprochement with China and the start of the SALT talks. There was no contradiction in this.

Internationally, anticommunism was little more than resistance to decolonisation and land reform. Though terms like "capitalism" and "socialism" were employed rhetorically to draw lines, these had little meaning for most people on the ground.

[ltr]

Interesting and important, but why is China not even mentioned?

[ltr]

China is a decidedly successful country and China is a communist country, but those who are liberal never discuss China as a communist country while those who are conservative consider China capitalist which is absurd.

[ltr]

Lastly, why not write when possible on the just completed Chinese Communist Party Congress. The British press was in effect dismissive of the Congress.

[Brian M]

I can just smell that Chinese Success!

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/08/20150813_autoinv2.jpg

https://i.ytimg.com/vi/HePvTuATnjw/hqdefault.jpg

[Maurits Pino]

Nice to draw the distinction between the domestic and the international approaches of the US. Of course on the domestic side, with slogans like "race mixing is communism" communism hasn't failed so badly; the war against trade unions went better; and, with the US rates of religiosity, equating communism with atheism was a victory against communism as well.

But Chris' interest was, I believe, on the international side. Was the west really afraid? Was there a justification?
Some points in addition to the ones mentioned above:
1957, Sputnik, suggested to many people that the Russians were capable of vast technological improvements.
Well into the 1980s NATO officials feared a Russian invasion ("48 hours to the Rine") and CIA estimates of Russian and WP GDP were enormous. Hilarious? Sure. Biases to enhance their own importance? Sure. But nevertheless.

[ltr]

I can just ----- that Chinese Success!

[ A horrid comment and a horrid reference that I would never think of opening. How about not being racist? ]

[ltr]

China has had a wildly successful economy these last 40 years. That China is given no attention as a self-stated socialist economy is shocking and saddening.

[Avraam Jack Dectis]

.
Much as Neanderthals no longer exist but bits of them do through interbreeding with Europeans, Communism no longer is extant but bits survive through interbreeding with Capitalism.

The wide ranging social programs of today, from SOCIAL Security, Medicare and the like, gained impetus from attempts to compete with Capitalism’s opponent.

So in effect, they both won, and the game is not over.
.

[Douglas Marston]

Capitalist claims of victory strike me, at best, as being premature. After all, it was unrestrained capitalism that led to Communism in the first place. Marxism was merely a critique of capitalism.

Of course, Capitalism in the mid 19th century, when Marx wrote, was a very miserable state of affairs. Slavery thrived in the American south. Workers in advanced economies suffered under horrible conditions. Millions around the world died from starvation.

While things eventually improved, it is fair to say that our great great grandparents did not see the fruits of capitalism. Neither did our great grandparents. Most of the improvements seen by our grandparents and parents arose not because of capitalism, but in spite of it.

I believe post-scarcity economies will spell the eventual end of capitalism. Questions abound. If there is enough food for everyone, why should anyone starve? If we can produce enough clothing for everyone, why should anyone go naked? If we can build enough housing for everyone, why should anyone be homeless? We are rapidly at or beyond the point where all human needs and most human wants can be satisfied. Is there any reason not to satisfy those needs and wants?