Introduction - Postcapitalism: A Guide to Our Future - Paul Mason

Postcapitalism: A Guide to Our Future - Paul Mason (2015)


To find the river Dniestr we drive through cold woodlands, past decomposing flats and railyards where the dominant colour is rust. The freezing water runs clear. It is so quiet that you can hear little pieces of concrete falling off the road bridge above, as it slowly crumbles through neglect.

The Dniestr is the geographic border between free-market capitalism and whatever you want to call the system Vladimir Putin runs. It separates Moldova, a country in Eastern Europe, from a breakaway Russian puppet state called Transnistria, controlled by the mafia and secret police.

On the Moldovan side, elderly people squat on the pavements selling stuff they’ve grown or made: cheese, pastries, a few turnips. Young people are scarce; one in four adults works abroad. Half the population earns less than $5 a day; one in ten lives in a poverty so extreme it can be measured on the same scale as Africa’s.1 The country was born at the start of the neoliberal era, with the breakup of the Soviet Union in the early 1990s and the entry of market forces - but many of the villagers I talk to would rather live in Putin’s police state than in the disgraceful penury of Moldova. This grey world of dirt roads and grim faces was produced by capitalism, not communism. And now capitalism is already past its best.

Moldova, of course, is not a typical European country. But it’s in these edge places of the world that we can watch the economic tide receding - and trace the causal links between stagnation, social crisis, armed conflict and the erosion of democracy. The economic failure of the West is eroding belief in values and institutions that we once thought were permanent.

In the financial centres, behind plate glass, things can still look rosy. Since 2008, trillions of dollars of confected money have flowed through the banks, hedge funds, law firms and consultancies to keep the global system functioning.

But the long-term prospects for capitalism are bleak. According to the OECD, growth in the developed world will be ‘weak’ for the next fifty years. Inequality will rise by 40 per cent. Even in the developing countries, the current dynamism will be exhausted by 2060.2 The OECD’s economists were too polite to say it, so let’s spell it out: for the developed world the best of capitalism is behind us, and for the rest it will be over in our lifetime.

What started in 2008 as an economic crisis morphed into a social crisis, leading to mass unrest; and now, as revolutions turn into civil wars, creating military tension between nuclear superpowers, it has become a crisis of the global order.

There are, on the face of it, only two ways it can end. In the first scenario, the global elite clings on, imposing the cost of crisis on to workers, pensioners and the poor over the next ten or twenty years. The global order - as enforced by the IMF, World Bank and World Trade Organisation - survives, but in a weakened form. The cost of saving globalization is borne by the ordinary people of the developed world. But growth stagnates.

In the second scenario, the consensus breaks. Parties of the hard right and left come to power as ordinary people refuse to pay the price of austerity. Instead, states then try to impose the costs of the crisis on each other. Globalization falls apart, the global institutions become powerless and in the process the conflicts that have burned these past twenty years - drug wars, post-Soviet nationalism, jihadism, uncontrolled migration and resistance to it - light a fire at the centre of the system. In this scenario, lip-service to international law evaporates; torture, censorship, arbitrary detention and mass surveillance become the regular tools of statecraft. This is a variant of what happened in the 1930s and there is no guarantee it cannot happen again.

In both scenarios, the serious impacts of climate change, demographic ageing and population growth kick in around the year 2050. If we can’t create a sustainable global order and restore economic dynamism, the decades after 2050 will be chaos.

So I want to propose an alternative: first, we save globalization by ditching neoliberalism; then we save the planet - and rescue ourselves from turmoil and inequality - by moving beyond capitalism itself.

Ditching neoliberalism is the easy part. There’s a growing consensus among protest movements, radical economists and radical political parties in Europe as to how you do it: suppress high finance, reverse austerity, invest in green energy and promote high-waged work.

But then what?

As the Greek experience demonstrates, any government that defies austerity will instantly clash with the global institutions that protect the 1 per cent. After the radical left party Syriza won the election in January 2015, the European Central Bank, whose job was to promote the stability of Greek banks, pulled the plug on those banks, triggering a €20 billion run on deposits. That forced the left-wing government to choose between bankruptcy and submission. You will find no minutes, no voting records, no explanation for what the ECB did. It was left to the right-wing German newspaper Stern to explain: they had ‘smashed’ Greece.3 It was done, symbolically, to reinforce the central message of neoliberalism that there is no alternative; that all routes away from capitalism end in the kind of disaster that befell the Soviet Union; and that a revolt against capitalism is a revolt against a natural and timeless order.

The current crisis not only spells the end of the neoliberal model, it is a symptom of the longer-term mismatch between market systems and an economy based on information. The aim of this book is to explain why replacing capitalism is no longer a utopian dream, how the basic forms of a postcapitalist economy can be found within the current system, and how they could be expanded rapidly.

Neoliberalism is the doctrine of uncontrolled markets: it says that the best route to prosperity is individuals pursuing their own self-interest, and the market is the only way to express that self-interest. It says the state should be small (except for its riot squad and secret police); that financial speculation is good; that inequality is good; that the natural state of humankind is to be a bunch of ruthless individuals, competing with each other.

Its prestige rests on tangible achievements: in the past twenty-five years, neoliberalism has triggered the biggest surge in development the world has ever seen, and it unleashed an exponential improvement in core information technologies. But in the process, it has revived inequality to a state close to that of 100 years ago and has now triggered a survival-level event.

The civil war in Ukraine, which brought Russian special forces to the banks of the Dniestr; the triumph of ISIS in Syria and Iraq; the rise of fascist parties in Europe; the paralysis of NATO as its populations withhold consent for military intervention - these are not problems separate from the economic crisis. They are signs that the neoliberal order has failed.

Over the past two decades, millions of people have resisted neoliberalism but in general the resistance failed. Beyond all the tactical mistakes, and the repression, the reason is simple: free-market capitalism is a clear and powerful idea, while the forces opposing it looked like they were defending something old, worse and incoherent.

Among the 1 per cent, neoliberalism has the power of a religion: the more you practise it, the better you feel - and the richer you become. Even among the poor, once the system was in full swing, to act in any other way but according to neoliberal strictures became irrational: you borrow, you duck and dive around the edges of the tax system, you stick to the pointless rules imposed at work.

And for decades the opponents of capitalism have revelled in their own incoherence. From the anti-globalization movement of the 1990s through to Occupy and beyond, the movement for social justice has rejected the idea of a coherent programme in favour of ‘One No, Many Yes-es’. The incoherence is logical, if you think the only alternative is what the twentieth century left called ‘socialism’. Why fight for a big change if it’s only a regression - towards state control and economic nationalism, to economies that work only if everyone behaves the same way or submits to a brutal hierarchy? In turn, the absence of a clear alternative explains why most protest movements never win: in their hearts they don’t want to. There’s even a term for it in the protest movement: ‘refusal to win’.4

To replace neoliberalism we need something just as powerful and effective; not just a bright idea about how the world could work but a new, holistic model that can run itself and tangibly deliver a better outcome. It has to be based on micro-mechanisms, not diktats or policies; it has to work spontaneously. In this book, I make the case that there is a clear alternative, that it can be global, and that it can deliver a future substantially better than the one capitalism will be offering by the mid-twenty-first century.

It’s called postcapitalism.

Capitalism is more than just an economic structure or a set of laws and institutions. It is the whole system - social, economic, demographic, cultural, ideological - needed to make a developed society function through markets and private ownership. That includes companies, markets and states. But it also includes criminal gangs, secret power networks, miracle preachers in a Lagos slum, rogue analysts on Wall Street. Capitalism is the Primark factory that collapsed in Bangladesh and it is the rioting teenage girls at the opening of the Primark store in London, overexcited at the prospect of bargain clothes.

By studying capitalism as a whole system, we can identify a number of its fundamental features. Capitalism is an organism: it has a lifecycle - a beginning, a middle and an end. It is a complex system, operating beyond the control of individuals, governments and even superpowers. It creates outcomes that are often contrary to people’s intentions, even when they are acting rationally. Capitalism is also a learning organism: it adapts constantly, and not just in small increments. At major turning points, it morphs and mutates in response to danger, creating patterns and structures barely recognizable to the generation that came before. And its most basic survival instinct is to drive technological change. If we consider not just info-tech but food production, birth control or global health, the past twenty-five years have probably seen the greatest upsurge in human capability ever. But the technologies we’ve created are not compatible with capitalism - not in its present form and maybe not in any form. Once capitalism can no longer adapt to technological change, postcapitalism becomes necessary. When behaviours and organizations adapted to exploiting technological change appear spontaneously, postcapitalism becomes possible.

That, in short, is the argument of this book: that capitalism is a complex, adaptive system which has reached the limits of its capacity to adapt.

This, of course, stands miles apart from mainstream economics. In the boom years, economists started to believe the system that had emerged after 1989 was permanent - the perfect expression of human rationality, with all its problems solvable by politicians and central bankers tweaking control dials marked ‘fiscal and monetary policy’.

When they considered the possibility that the new technology and the old forms of society were mismatched, economists assumed society would simply remould itself around technology. Their optimism was justified because such adaptations have happened in the past. But today the adaptation process is stalled.

Information is different from every previous technology. As I will show, its spontaneous tendency is to dissolve markets, destroy ownership and break down the relationship between work and wages. And that is the deep background to the crisis we are living through.

If I am right we have to admit that for most of the past century the left has misunderstood what the end of capitalism would look like. The old left’s aim was the forced destruction of market mechanisms. The force would be applied by the working class, either at the ballot box or on the barricades. The lever would be the state. The opportunity would come through frequent episodes of economic collapse. Instead, over the past twenty-five years, it is the left’s project that has collapsed. The market destroyed the plan; individualism replaced collectivism and solidarity; the massively expanded workforce of the world looks like a ‘proletariat’, but no longer thinks or behaves purely as one.

If you lived through all this, and hated capitalism, it was traumatic. But in the process, technology has created a new route out, which the remnants of the old left - and all other forces influenced by it - have either to embrace or die.

Capitalism, it turns out, will not be abolished by forced-march techniques. It will be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which breaks through, reshaping the economy around new values, behaviours and norms. As with feudalism 500 years ago, capitalism’s demise will be accelerated by external shocks and shaped by the emergence of a new kind of human being. And it has started.

Postcapitalism is possible because of three impacts of the new technology in the past twenty-five years.

First, information technology has reduced the need for work, blurred the edges between work and free time and loosened the relationship between work and wages.

Second, information goods are corroding the market’s ability to form prices correctly. That is because markets are based on scarcity while information is abundant. The system’s defence mechanism is to form monopolies on a scale not seen in the past 200 years - yet these cannot last.

Third, we’re seeing the spontaneous rise of collaborative production: goods, services and organizations are appearing that no longer respond to the dictates of the market and the managerial hierarchy. The biggest information product in the world - Wikipedia - is made by 27,000 volunteers, for free, abolishing the encyclopaedia business and depriving the advertising industry of an estimated $3 billion a year in revenue.

Almost unnoticed, in the niches and hollows of the market system, whole swathes of economic life are beginning to move to a different rhythm. Parallel currencies, time banks, cooperatives and self-managed spaces have proliferated, barely noticed by the economics profession, and often as a direct result of the shattering of old structures after the 2008 crisis.

New forms of ownership, new forms of lending, new legal contracts: a whole business subculture has emerged over the past ten years, which the media has dubbed the ‘sharing economy’. Buzzterms such as the ‘commons’ and ‘peer-production’ are thrown around, but few have bothered to ask what this means for capitalism itself.

I believe it offers an escape route - but only if these micro-level projects are nurtured, promoted and protected by a massive change in what governments do. This must in turn be driven by a change in our thinking about technology, ownership and work itself. When we create the elements of the new system we should be able to say to ourselves and others: this is no longer my survival mechanism, my bolt-hole from the neoliberal world, this is a new way of living in the process of formation.

In the old socialist project, the state takes over the market, runs it in favour of the poor instead of the rich, then moves key areas of production out of the market and into a planned economy. The one time it was tried, in Russia after 1917, it didn’t work. Whether it could have worked is a good question, but a dead one.

Today the terrain of capitalism has changed: it is global, fragmentary, geared to small-scale choices, temporary work and multiple skill-sets. Consumption has become a form of self-expression - and millions of people have a stake in the finance system that they did not have before.

With the new terrain, the old path is lost. But a different path has opened up. Collaborative production, using network technology to produce goods and services that work only when they are free, or shared, defines the route beyond the market system. It will need the state to create the framework, and the postcapitalist sector might coexist with the market sector for decades. But it is happening.

Networks restore ‘granularity’ to the postcapitalist project; that is, they can be the basis of a non-market system that replicates itself, which does not need to be created afresh every morning on the computer screen of a commissar.

The transition will involve the state, the market and collaborative production beyond the market. But to make it happen, the entire project of the left, from the protest groups to mainstream social-democratic and liberal parties, has to be reconfigured. In fact, once people understand the urgency of this postcapitalist project, it’s no longer the property of the left, but of a much wider movement, for which we will probably need new labels.

Who can make this happen? For the old left, it was the industrial working class. Over 200 years ago, the radical journalist John Thelwall warned the men who built the English factories that they had created a new and dangerous form of democracy: ‘Every large workshop and manufactory is a sort of political society, which no act of parliament can silence, and no magistrate disperse.’5

Today, the whole of society is a factory - and the communication grids vital for everyday work and profit are buzzing with shared knowledge and discontent. Today it is the network - like the workshop 200 years ago - that ‘cannot be silenced or dispersed’.

True, they can shut down Facebook, Twitter, even the entire internet and mobile phone network in times of crisis, paralysing the economy in the process. And they can store and monitor every kilobyte of information we produce. But they cannot reimpose the hierarchical, propaganda-driven and ignorant society of fifty years ago except - as in China, North Korea or Iran - by opting out of key parts of modern life. It would be, as sociologist Manuel Castells puts it, like trying to de-electrify a country.6

By creating millions of networked people, financially exploited but with the whole of human intelligence one thumb-swipe away, info-capitalism has created a new agent of change in history: the educated and connected human being.

As a result, in the years since 2008, we’ve seen the start of a new kind of uprising. Opposition movements have hit the streets determined to avoid the power structures and abuses that hierarchies bring, and to immunize themselves against the mistakes of the twentieth-century left.

The values, voices and morals of the networked generation were so obvious in these revolts that, from the Spanish indignados to the Arab Spring, the media at first believed they had been caused by Facebook and Twitter. Then, in 2013-14, revolts broke out in some of the most iconic developing economies: Turkey, Brazil, India, Ukraine and Hong Kong. Millions took to the streets, again with the networked generation in the lead - but now their grievances went to the heart of what is broken in modern capitalism.

In Istanbul, on the barricades around Gezi Park in June 2013, I met doctors, software developers, shipping clerks and accountants - professionals for whom Turkey’s 8 per cent GDP growth rate was no compensation for the theft of a modern lifestyle by the ruling Islamists.

In Brazil, just as economists were celebrating the creation of a new middle class, they actually turned out to be low-paid workers. They’d escaped slum life into a world of regular salaries and bank accounts only to find themselves cheated of basic amenities, at the mercy of brutal police and corrupt government. They swarmed on to the streets in millions.

In India, protests sparked by the gang rape and murder of a student in 2012 were a signal that here, too, the educated and networked generation will not tolerate paternalism and backwardness much longer.

Most of these revolts petered out. The Arab Spring was either suppressed, as in Egypt and Bahrain, or swamped by Islamism, as in Libya and Syria. In Europe, repressive policing and a united front of all parties in favour of austerity beat the indignados into a sullen silence. But the revolts showed that revolution in a highly complex, information-driven society will look very different from the revolutions of the twentieth century. Without a strong, organized working class to push social issues rapidly to the fore, the revolts often stall. But order is never fully restored.

Instead of moving from thought to action once - as the nineteenth- and twentieth-century radicals did - repression forces radicalized young people to oscillate between the two: you can jail, torture and harass people but you cannot prevent their mental resistance.

In the past, radicalism of the mind would have been pointless without power. How many generations of rebels wasted their lives in garrets writing angry poetry, cursing the injustice of the world and their own paralysis? But in an information economy, the relationship of thought to action changes.

In hi-tech engineering, before a single piece of metal is shaped, objects are designed virtually, tested virtually and even ‘manufactured’ virtually - the whole process modelled from start to finish - on computers. The mistakes are discovered and rectified at the design stage, in a way that was impossible before 3D simulations came about.

By analogy, the same goes for the design of a postcapitalist. In an information society, no thought, debate or dream is wasted - whether conceived in a tent camp, prison cell or the ‘imagineering’ session of a startup company.

In the transition to a postcapitalist economy, the work done at the design stage can reduce mistakes in the implementation stage. And the design of the postcapitalist world, as with software, can be modular. Different people can work on it in different places, at different speeds, with relative autonomy from each other. It is not any longer a plan we need - but a modular project design.

However, our need is urgent.

My aim here is not to provide an economic strategy or a guide to organization. It is to map the new contradictions of capitalism so that people, movements and parties can obtain more accurate coordinates for the journey they’re trying to make.

The main contradiction today is between the possibility of free, abundant goods and information and a system of monopolies, banks and governments trying to keep things private, scarce and commercial. Everything comes down to the struggle between the network and the hierarchy, between old forms of society moulded around capitalism and new forms of society that prefigure what comes next.

In the face of this change, the power elite of modern capitalism has a lot at stake. While writing this book, my day job as a news reporter has taken me into three iconic conflicts that show how ruthlessly the elite will react.

In Gaza, in August 2014, I spent ten days in a community being systematically destroyed by drone strikes, shelling and sniper fire. Fifteen hundred civilians were killed, one third of them children. In February 2015, I saw the US Congress give twenty-five standing ovations to the man who ordered the attacks.

In Scotland, in September 2014, I found myself in the middle of a sudden and totally unpredicted radical mass movement in favour of independence from Britain. Presented with the opportunity to break with a neoliberal state and start afresh, millions of young people said ‘Yes’. They were defeated - but only just - after the CEOs of major corporations threatened to pull their operations out of Scotland, and the Bank of England, for good measure, threatened to sabotage Scotland’s desire to go on using Sterling.

Then, in Greece in 2015, I watched euphoria turn to anguish as a population that had voted left for the first time in seventy years saw its democratic wishes trashed by the European Central Bank.

In each case, the struggle for justice collided with the real power that runs the world.

In 2013, surveying the slow progress of austerity in southern Europe, economists at JP Morgan spelled it out: for neoliberalism to survive, democracy must fade. Greece, Portugal and Spain, they warned, had ‘legacy problems of a political nature’: ‘The constitutions and political settlements in the southern periphery, put in place in the aftermath of the fall of fascism, have a number of features which appear to be unsuited to further integration in the region.’7In other words, peoples who insisted on decent welfare systems in return for a peaceful transition out of dictatorship in the 1970s must now give up these things so that banks like JP Morgan survive.

Today there is no Geneva Convention when it comes to the fight between elites and the people they govern: the robo-cop has become the first line of defence against peaceful protest. Tasers, sound lasers and CS gas, combined with intrusive surveillance, infiltration and disinformation, have become standard in the playbook of law enforcement. And the central banks, whose operations most people have no clue about, are prepared to sabotage democracy by triggering bank runs where anti-neoliberal movements threaten to win - as they did with Cyprus in 2013, then Scotland and now Greece.

The elite and their supporters are lined up to defend the same core principles: high finance, low wages, secrecy, militarism, intellectual property and energy based on carbon. The bad news is that they control nearly every government in the world. The good news is that in most countries they enjoy very little consent or popularity among ordinary people.

But in this gap between their popularity and their power lies danger. As I found on the banks of the River Dniestr, a dictatorship that provides cheap gas and a job for your son in the army can look better than a democracy that leaves you to freeze and starve.

In a situation like this, knowledge of history is more powerful than you think.

Neoliberalism, with its belief in the permanence and finality of free markets, tried to rewrite the whole prior history of humanity as ‘things that went wrong before us’. But once you begin to think about the history of capitalism, you are forced to ask which events, amid the chaos, are part of a recurrent pattern and which are part of an irreversible change.

So while its aim is to design a framework for the future, parts of this book are about the past. Part I is about the crisis and how we got here. Part II outlines a new, comprehensive theory of postcapitalism. Part III explores what the transition to postcapitalism might look like.

Is this utopian? The utopian socialist communities of the mid-nineteenth century failed because the economy, technology and the levels of human capital were not sufficiently developed. With info-tech, large parts of the utopian socialist project become possible: from cooperatives, to communes, to outbreaks of liberated behaviour that redefine human freedom.

No, it is the elite - cut off in their separate world - who now look as utopian as the millennial sects of the nineteenth century. The democracy of riot squads, corrupt politicians, magnate-controlled newspapers and the surveillance state looks as phony and fragile as East Germany did thirty years ago.

All readings of human history have to allow for the possibility of collapse. Popular culture is obsessed with this: it haunts us in the zombie film, the disaster movie, in the post-Apocalyptic wasteland of The Road or Elysium. But why should we, as intelligent beings, not form a picture of the ideal life, the perfect society?

Millions of people are beginning to realize they’ve been sold a dream that they can never live. In its place, we need more than just a bunch of different dreams. We need a coherent project based on reason, evidence and testable designs, one that cuts with the grain of economic history and is sustainable in terms of our planet.

And we need to get on with it.