Postcapitalism: A Guide to Our Future - Paul Mason (2015)
Chapter 10. Project Zero
If you believe there is a better system than capitalism then the past twenty-five years have felt like being - as Alexander Bogdanov put it in Red Star - ‘a Martian stranded on Earth’. You have a clear view of what society should be like, but no means of getting there.
In Bodganov’s novel, the Martians decide to obliterate humanity because we have proved incapable of achieving the postcapitalist society they already possess. That was Bogdanov’s metaphor of despair after the failure of the 1905 revolution.
The possibilities outlined in this book should provide an antidote to such despair. To understand why, let’s update Bogdanov’s metaphor: suppose the Martians really did arrive in orbit, ready to blast us to smithereens. What kind of economy would they see?
Just such a thought experiment was played out by Nobel laureate Herbert Simon in 1991, in a famous research paper entitled ‘Organisations and Markets’. Simon proposed that the arriving Martians would see three kinds of things in our economy: organizations, which would look like big green blobs; markets, which appear like thin red lines between the green blobs; and a set of blue lines within the organizations showing their internal hierarchy. No matter where they looked, said Simon, the Martians would see a system whose dominant colour was green. The message they sent home would say: this is a society primarily made up of organizations, not markets.1
It was a highly political point to make, in the year the triumph of the market was declared. Simon’s lifelong concern was to understand how organizations work. His paper has been used to demonstrate that, for all the rhetoric about free markets, the capitalist system is primarily made up of organizations that plan and allocate goods internally, in ways not directly driven by market forces.
But carried out with greater realism, Simon’s model demonstrates something else: it shows how neoliberalism has opened up the possibility of postcapitalism. Let’s add some detail:
1. The turnover of each green blob (the organization) determines its size; the money involved in each transaction determines the thickness of the red lines between them.
2. The blue lines, which show the internal hierarchy of a firm, have to end in dots as well - the workers: baristas, computer programmers, aircraft engineers, shirt factory employees. Simon didn’t feel the need to model workers separately, but we do. Let’s make them blue dots.
3. To be realistic, each blue dot is also at the centre of a web of thin red lines - connecting each wage earner, as a consumer, to retailers, banks and service companies.
4. Already, the globe looks a lot redder than Simon originally described it. There are trillions of thin red lines.
5. Now let’s add the dimension of time: what happens during a typical twenty-four-hour cycle? If this is a normal capitalist economy we notice the blue dots (the workforce) oscillate in and out of the organizations once a day. As they leave work they start putting out red lines - spending their wages; when they go into the workplace they tend not to - this is a capitalist economy in 1991, remember.
Finally, let’s run the model forward in time, from 1991 to now. What happens to the picture?
First, a lot more tiny red lines appear. A young woman leaves her farm in Bangladesh to work in a factory - her wages generate a new red line; she pays a local nanny to look after her kids, generating a new market transaction: a new red line. Her manager earns enough to start buying health insurance, paying interest to a bank, obtaining a loan to send his son to college. Globalization and free markets generate more red lines.
Secondly, the green blobs split, forming smaller green blobs as firms and states outsource non-core operations. Some of the blue dots turn green - i.e. workers become self-employed. In the USA, 20 per cent of the workforce are now self-employed ‘proprietors’. They too generate more red lines.
Third, the red lines become longer, reaching out across the globe. And they don’t stop when people go to work: buying and selling is now happening digitally, both inside and outside the working day.
Finally, the yellow lines appear.
‘Whoa!’ says the Martian fleet commander. ‘What yellow lines?’
‘It’s interesting,’ says the ship’s economist. ‘We have spotted a whole new phenomenon. The yellow lines seem to show people exchanging goods, labour and services but not through the market and not within typical organizations. A lot of what they are doing seems to be done for free, so we have no idea how thick these lines should be.’
Suppose, now, there’s a Martian bombardier with her finger on the trigger, as in Bogdanov’s novel, asking permission to nuke humanity as punishment for its inability to achieve communism.
Most probably, the fleet commander’s response is: ‘Wait! Those yellow lines are interesting.’
FIVE PRINCIPLES OF TRANSITION
The yellow lines in this construct are just a way of trying to visualize goods, labour and services provided collaboratively, beyond the market. They are weak - but they signal that a new route beyond capitalism has opened up, based on promoting and nurturing non-market production and exchange, and driven by information technology.
Up until this point, I’ve treated postcapitalism as a process emerging spontaneously. The challenge is to turn these insights into a project.
Almost everything that’s driving the change is conceived as a project: Wikipedia, Open Source, open information standards, low-carbon energy installations. But few have bothered to ask what a high-level project would look like if we want to move the world economy beyond capitalism.
In part, that’s because many of the old left are infected by the same despair as Bogdanov’s stranded Martian. Others - in the green movement, or NGOs, or community activists and peer-to-peer economists - are so determined to avoid ‘big narratives’ that they’ve stuck to small-scale radical reforms.
In this chapter I will try to spell out what a large-scale postcapitalist project might involve. I call it Project Zero - because its aims are a zero-carbon energy system; the production of machines, products and services with zero marginal costs; and the reduction of necessary labour time as close as possible to zero. Before we start we should outline some principles based on the knowledge gleaned from past failure.
The first principle is to understand the limitations of human willpower in the face of a complex and fragile system. The Bolsheviks failed to understand it; to be fair, most mainstream politicians of the twentieth century also failed to understand it. Now we understand it well. The solution is to test all proposals at small scale and model their macro-economic impact virtually many times over before we attempt them at a large scale.
Evgeny Preobrazhensky, the murdered Soviet economist, predicted that as market forces began to disappear, economics would become a discipline for designing the future, not just analysing the past. ‘This is quite a different science,’ he said, ‘this is social technology.’2
There’s a chilling quality to that phrase, conjuring the dangers of treating society like a machine. But Preobrazhensky’s description of the tools ‘social technology’ would use were prescient and subtle. He called for an ‘extremely complex and ramified nervous system of social foresight and planned guidance’. Note the terms: foresight and guidance, not command and control. And note the simile: a nervous system, not a hierarchy. All the Soviets had was command, control and the bureaucratic hierarchy, but we have the network. When it comes to organizing change, the network can function better than a hierarchy, but only if we respect the complexity and fragility that comes with it.
The second principle for designing the transition is ecological sustainability. The external shocks discussed in chapter 9 will probably hit us in sequence: short-term localized energy shortages in the next decade; ageing and migration challenges over the next thirty years; and the catastrophic outcomes of climate change after that. The task is to develop technologies that respond to these problems through sustainable growth; we do not have to go backwards in developmental time to save the planet.
The third principle I want to insist on is: the transition is not just about economics. It will have to be a human transition. The new kinds of people being created by networked economies come with new insecurities and new priorities. We already have a different perception of the self from the one in our grandfathers’ and grandmothers’ heads.3 Our roles as consumers, lovers, communicators are as important to us as our role at work. So the project cannot be based purely on economic and social justice.
The French writer André Gorz was right to say that neoliberalism has destroyed the possibility of a utopia based on work. But we will still face a challenge similar to the one the early soviet republics faced with workers: specific social groups may have short-term priorities that clash with the wider priorities of the economy and the ecosystem. That’s what networks are for: to argue things out and model the alternative possibilities. We will need new forms of democracy to arbitrate between valid competing claims. But it won’t be easy.
A fourth principle should be: attack the problem from all angles. With the rise of networks, the capacity for meaningful action is no longer confined to states, corporations and political parties; individuals and temporary swarms of individuals can be just as powerful agents of change.
At present, the community of thinkers and activists around the peer-to-peer movement are heavily focused on experimental, small-scale projects - credit unions or co-ops, for example. When they think about the state, it is at the level of laws to protect and extend the peer-to-peer sector. With the exception of thinkers such as Michel Bauwens4 and McKenzie Wark5, few have bothered to ask what a whole new system of governance and regulation might look like in this new mode of production.
In response, we should broaden our thinking so that solutions can be found through a mixture of small-scale experiment, proven models that can be scaled up and top-down action by states.
So if the solution in finance is to create a diverse, socialized banking system, then setting up a credit union attacks the problem from one direction, outlawing certain forms of speculation attacks it from another, while changing our own financial behaviour attacks it from still another angle.
The fifth principle for a successful transition is that we should maximize the power of information. The difference between a smartphone app today and the programs on PCs twenty years ago is that the modern apps self-analyse and pool performance data. Almost everything on your phone and computer is feeding back information on your choices to a corporate owner. Soon the information will be flowing from ‘smart’ electricity meters, public transport passes and computer-controlled cars. The aggregated data of our lives - which will soon include our driving speed, our weekly diet, our body mass and heart rate - could be a hugely powerful ‘social technology’ in itself.
Once the Internet of Things is rolled out, we are at the real takeoff point of the information economy. From then on, the key principle is to create democratic social control over aggregated information, and to prevent its monopolization or misuse by states and corporations.
The Internet of Things will complete a vast social ‘machine’. Its analytical power alone could optimize resources on a scale that significantly reduces the use of carbon, raw materials and labour. Making the energy grid, the road network and the tax system ‘intelligent’ are just the most obvious things on the task list. But the power of this emerging vast machine does not lie solely in its ability to monitor and feed back. By socializing knowledge, it also has the power to amplify the results of collective action.
The socialists of the belle époque eyed the monopolies and cartels with glee: seize them, and control of society from the centre becomes easy, they believed. Our project is to decentralize control - but there could be no better tool for doing so than the vast physical information machine that is being created.
Once we take hold of it, we can put much of social reality under collaborative control. For example, in epidemiology the focus is now on breaking the feedback loops that create poverty, anger, stress, atomized families and ill health.6 Efforts to map these problems and mitigate them constitute the cutting edge of social medicine. How much more powerful would that medicine be if the poverty and disease that blight poor communities could be mapped, understood and collaboratively dismantled in realtime - with the micro-level participation of those affected?
Maximizing the power and openness of information needs to become an instinct, embedded in the project.
With the above principles in mind, I want to offer not a political programme, but something more like a distributed project. It is a set of linked, modular, non-linear tasks that lead to a probable outcome. Decision-making is decentralized; the structures needed to deliver it emerge during the delivery; targets evolve in response to realtime information. And on the precautionary principle, we should use the new breed of simulation tools to model every proposal virtually before we enact it for real.
If I could write the rest of this chapter as post-it notes on a whiteboard, it would better express the modularity and interdependence. The best method for doing a distributed project is for small groups to pick a task, work on it for a bit, document what they’ve done and move on.
Absent the post-it notes, I’ll stick to a list. The top level aims of a postcapitalist project should be to:
1. Rapidly reduce carbon emissions so that the world has warmed by only two degrees Celsius by 2050, prevent an energy crisis and mitigate the chaos caused by climate events.
2. Stabilize the finance system between now and 2050 by socializing it, so that ageing populations, climate change and the debt overhang do not combine to detonate a new boom-bust cycle and destroy the world economy.
3. Deliver high levels of material prosperity and wellbeing to the majority of people, primarily by prioritizing information-rich technologies towards solving major social challenges, such as ill health, welfare dependency, sexual exploitation and poor education.
4. Gear technology towards the reduction of necessary work to promote the rapid transition towards an automated economy. Eventually, work becomes voluntary, basic commodities and public services are free, and economic management becomes primarily an issue of energy and resources, not capital and labour.
In game terms, these are the ‘victory conditions’. We may not achieve them all but, as all gamers know, a lot can be achieved short of total victory.
In pursuit of these goals, it will be important in all the economic changes we make to send transparent signals. One of the most powerful aspects of the Bretton Woods system was the explicit rules it enshrined. By contrast, throughout the twenty-five-year course of neoliberalism, the global economy has been run on implicit rules or, as with the Eurozone, rules that are always broken.
The sociologist Max Weber believed the rise of capitalism was driven not by technology but by a ‘new spirit’ - a new attitude to finance, machinery and work, not the things themselves. But for a new spirit of postcapitalism to take off, we need to focus on where the externalities are being generated and distributed - and to actively propagate an understanding of the phenomena. We need to answer: what is happening to the social benefit that network interactions produce, and which capitalist accounting can’t usually see? Where does it fit in?
Let’s consider a concrete example. Coffee shops today often advertise ‘our beans are organic’ - i.e. this is how we are serving a greater social good. What they mean subtextually is ‘and you are paying a bit more for the feelgood factor’. But the signal is only partially transparent.
Now reimagine the coffee shop as a co-op, paying its workers well, ploughing profits back into activities that promote social cohesion, or literacy, or post-prison rehabilitation, or better public health. The important thing is to indicate - as clearly as the ‘organic’ label on the coffee does - what social good is being produced and who will benefit from it.
It’s more than a gesture: it’s a transparent signal, just as the loaded cannon placed at the gate of the Cromford cotton factory in England in 1771 was a transparent signal. You could erect a sign saying ‘we sell coffee for a profit and that helps us give away psycho-social counselling for free’. Or as with the grassroots foodbank network sponsored by Syriza in Greece, you could just get on with it quietly.
What follows is my best guess at what a project plan would look like, if we were to follow these principles and aim for these five top-level goals. I will be more than happy to see it quickly torn apart and revised by the wisdom of angry crowds.
MODEL FIRST, ACT LATER
First, we need an open, accurate and comprehensive computer simulation of current economic reality. The sources could be the models macro-economists use - in banks and at the IMF and OECD - and the climate models that generate the IEA’s and other scenarios. But their lopsidedness is striking.
Climate models tend to simulate the atmosphere using advanced maths but simulate the economy like a train set. Meanwhile, most professionally built economic simulators, known as DGSE models, are constructed on the twin fallacy that equilibrium is likely and that all agents in the economy are making simple pleasure-vs-pain choices.
For example, the European Central Bank’s most advanced model of the Eurozone includes only three types of ‘agents’ - households, firms and the central bank. As current events show, it might have been useful to include in that model some fascists, or corrupt oligarchs, or several million voters prepared to put the radical left into power.
Given that we are decades into the info-tech era, it is startling that - as Oxford maths professor J. Doyne Farmer points out - there are no models that capture economic complexity in the way computers are used to simulate weather, population, epidemics or traffic flows.7
In addition, capitalist planning and modelling are typically unaccountable: by the time a major infrastructure project starts delivering results, ten or twenty years after its impact was first predicted, there is no person or organization still around to draw conclusions. Thus, most economic modelling under market capitalism is actually close to speculation.
So one of the most radical - and necessary - measures we could take is to create a global institute or network for simulating the long-term transition beyond capitalism.
It would start by attempting to construct an accurate simulation of economies as they exist today. Its work would be Open Source: anybody could use it, anybody could suggest improvements and the outputs would be available to all. It would most likely have to use a method called ‘agent-based modelling’ - that is, using computers to create millions of virtual workers, households and firms, and letting them interact spontaneously, within realistic boundaries. Even today such a model would be able to draw on realtime data. Weather sensors, city transport monitors, energy grids, postcode demographic data and the supply chain management tools of global supermarket groups are all giving off relevant macro-economic data in realtime. But the prize - once every object on earth is addressable, smart and feeding back information - is an economic model that does not just simulate reality but actually represents it. The agents modelled virtually are eventually substituted by granular data from reality, just as happens with weather computers.
Once we are able to capture economic reality in this manner, then planning major changes in an accountable way becomes possible. Just as aircraft engineers model millions of different stress loads on the tail-fin of a jet, it would be possible to model millions of variations of what happens if you reduce the price of Nike trainers to a point between their present $190 and their production price, which is likely to be lower than $20.
We would ask our supercomputer lateral questions: do young men get depressed because the Nike brand dies? Does the global sports industry suffer because Nike’s marketing spend is gone? Does quality decline when there is no brand value to maintain in the production process? And what would the climate impact be? To promote its brand, Nike has worked hard to reduce carbon emissions. We might decide keeping the price of Nike trainers high is a good thing. Or not.
This, rather than the meticulous planning of the cyber-Stalinists, is what a postcapitalist state would use petaflop-level computing for. And once we had reliable predictions, we could act.
The most challenging arena for action is the state; we need to think positively about its role in the transition to postcapitalism.
The starting point is: states are enormous economic entities. They employ about half a billion people globally, and on one measure make up an average 45 per cent of economic activity across all countries’ GDP (from 60 per cent in Denmark to 25 per cent in Mexico). Plus, through what they choose to procure, and by signalling their future behaviour, they can have a decisive influence on markets.
In the socialist project, the state saw itself as the new economic form. In postcapitalism, the state has to act more like the staff of Wikipedia: to nurture the new economic forms to the point where they take off and operate organically. As in the old vision of communism, the state has to ‘wither away’ - but here the economic withering has to be front and centre, not just the functions of law enforcement and defence.
There’s one change which anybody in charge of a state could implement immediately, and for free: switch off the neoliberal privatization machine. It’s a myth that the state is passive in neoliberalism; in reality the neoliberal system cannot exist without constant, active intervention by the state to promote marketization, privatization and the interests of finance. It typically deregulates finance, forces government to outsource services and allows public healthcare, education and transport to become shoddy, driving people to private services. A government that was serious about postcapitalism would give a clear signal: there will be no proactive extension of market forces. Simply for attempting this, the relatively conventional leftists of Syriza in Greece were overtly sabotaged. The ECB staged a run on the Greek banks and, as the price for stopping it, demanded more privatization, more outsourcing, more degradation of public services.
The next action the state could undertake is to reshape markets to favour sustainable, collaborative and socially just outcomes. If you set the feed-in tariff on solar panels high, people will install them on their roofs. But if you don’t specify they have to come from a factory with high social standards, the panels will get made in China, generating fewer wider social benefits beyond the energy switch. If you incentivize the creation of local energy systems, so that excess power generated can be sold to nearby businesses, you create further positive externalities.
We need a new understanding of the state’s role in an economy that includes capitalist and postcapitalist structures. It should act as an enabler of new technologies and business models, but always with an eye on how they fit with the strategic aims and principles outlined earlier.
Peer-to-peer projects, collaborative business models and non-profit activities are typically small scale and fragile. A whole community of economists and activists has grown up around them, but the actual raw material is so meagre, compared to the market sector, that one of the first things you have to do is clear a space in the capitalist jungle for these new plants to grow.
In the postcapitalist project, the state must also coordinate and plan infrastructure: today this is done haphazardly and under heavy political pressure from the carbon lobby. In future, it could be done democratically and with radically different outcomes. From social housing in cities blighted by speculative development to cycle lanes or healthcare provision, even the most progressive infrastructure designs are moulded around the interests of the rich - and assume the market will last for ever. As a result, infrastructure planning remains one of the disciplines least transformed by networked thinking. This needs to change.
In addition, because of the global nature of the problems we face, the state has to ‘own’ the agenda for responses to the challenges of climate change, demographic ageing, energy security and migration. That is to say, whatever micro-level actions we take to alleviate these risks, only national governments and multilateral agreements can actually solve them.
The most pressing issue, if states are to help drive the transition to a new economic system, is debt. In today’s world, developed countries are paralysed by the size of their debts. These are, as we saw in chapter 9, projected to become stratospheric as a result of ageing populations. Over time, there is a danger that austerity plus stagnation will shrink the size of the economies from which the debts have to be repaid.
Therefore governments have to do something clear and progressive about debts. They could be written off unilaterally - and in countries like Greece, where they are unpayable, that might be required. But the outcome would be de-globalization, as countries and investors holding the worthless debt retaliated, cutting off market access or kicking the defaulting countries out of various currency and trading zones.
Some of the quantitative easing money could be used to buy and bury the debts - but even this so-called ‘monetization’ of debt, using the $12 trillion created so far, would not reduce global sovereign debts enough compared to GDP as these stand at $54 trillion and rising, and the global stock of all debts is approaching $300 trillion.
It would be more sensible to combine controlled debt write-offs with a ten- to fifteen-year global policy of ‘financial repression’: that is, to stimulate inflation, hold interest rates lower than the inflation rate, remove people’s ability to move money into non-financial investments or offshore, and thus inflate away the debts, writing off the part that remained.
To be brutally clear, this would reduce the value of assets in pension funds, and thus the material wealth of the middle classes and the old; and by imposing capital controls you would be partially deglobalizing finance. But this is only a controlled way of doing what the market will do via chaos if, as S&P predicts, 60 per cent of all countries see their debt reduced to junk by 2050. In conditions of near-stagnation and long-term zero interest rates, the income generated by pension fund investments is in any case already minimal.
But the state is not even half of the story.
EXPAND COLLABORATIVE WORK
To promote the transition, we need a decisive turn to collaborative business models. To achieve this requires the removal of the uneven power-relationships that have sabotaged them in the past.
The classic workers’ co-ops always failed because they had no access to capital and when crisis hit they couldn’t persuade their members to take lower wages or work fewer hours. Successful modern co-ops, such as Mondragon in Spain, work because they have the support of local savings banks and because they’re complex structures - able to redeploy workers from one sector to another, or soften short-term underemployment through non-market perks for those laid off. Mondragon is no postcapitalist paradise, but it is the exception that illustrates the rule: if you look at a list of the top 300 co-ops in the world, many of them are simply mutual banks that resisted corporate ownership. In most respects, they play the game of financial exploitation - though with a social conscience.
In a network-based transition, collaborative business models are the most important thing we can foster. They, too, have to evolve, however. It is not enough for them to be just non-profit businesses; the postcapitalist form of the co-op would try to expand non-market, non-managed, non-money-based activity against the baseline of market activity it starts from. What we need are co-ops where the legal form is backed up by a real, collaborative form of production or consumption, with clear social outcomes.
Likewise we should not fetishize the non-profit aspect of things. There can be profitable peer-to-peer lenders, cab companies and holiday rental firms, for example, but they would have to operate under regulations that limited their ability to contribute to social injustice.
At the government level, there could be an Office of the Non-Market Economy, tasked to nurture all businesses where free stuff is produced, or where sharing and collaboration are essential, and maximizing the amount of economic activity that takes place beyond the price system. With relatively small incentives, this could create big synergies and restructure the economy.
For example, lots of people form startup businesses - of which about one in three fails - because the tax system incentivizes startups. Often, they create cheap-labour businesses - such as fast-food outlets, building contractors and franchise shops - because, again, the system is stacked in favour of a cheap-labour economy. If we reshape the tax system to reward the creation of non-profits and collaborative production, and reshape company regulations to make it hard to form low-wage businesses but very easy to form living-wage ones, we could achieve a big change for little outlay.
Large corporations could also be very useful for driving change, as much as anything else because of their sheer scale: McDonald’s, for example, is the thirty-eighth biggest economy in the world - bigger than that of Ecuador - and is also the biggest toy distributor in America. In addition, one in eight people in the USA has worked for McDonald’s. Imagine if, on induction day for new employees, McDonald’s had to give you a one-hour course in trade unionism. Imagine if Walmart, instead of advising people to claim in-work benefits to reduce the wage bill, advised them on how to increase their wages. Or imagine simply if McDonald’s stopped dispensing plastic toys.
What could induce corporations to do any of this? Answer: law and regulation. If we legally empowered the workforces of global corporations with strong employment rights, their owners would be forced to promote high-wage, high-growth, high-technology economic models, instead of the opposite. The low-wage, low-skill and low-quality corporations that have flourished since the 1990s exist only because the space for them was ruthlessly carved out by the state. All we need to do is throw that process into reverse gear.
It may sound radical to outlaw certain business models, but that’s what happened with slavery and with child labour. These restrictions, in the teeth of protest from the factory bosses and plantation owners, actually regularized capitalism and forced it to take off.
Our aim would be to regularize postcapitalism: to privilege the free wifi network in the mountain village over the rights of the telecoms monopoly. Out of such tiny changes, new systems can grow.
SUPPRESS OR SOCIALIZE MONOPOLIES
The creation of monopolies to resist prices falling towards zero is capitalism’s most important defence reflex against postcapitalism.
To promote the transition, this defence mechanism has to be suppressed. Where possible, monopolies would be outlawed and rules against price fixing strictly enforced. For twenty-five years, the public sector has been forced to outsource and break itself into pieces; now would come the turn of monopolies such as Apple and Google. Where it’s dysfunctional to break up a monopoly - as for example with an aircraft manufacturer or a water company - the solution advocated by Rudolf Hilferding 100 years ago would suffice: public ownership.
When pursued in its original form - i.e. the public non-profit corporation - public ownership delivered a huge social benefit to capital by cheapening the input costs of labour. In the postcapitalist economy it would deliver this and more. The strategic aim - shining in big letters from a PowerPoint projector in every public sector boardroom - would be to cheapen the cost of basic necessities, so that the total socially necessary labour time can fall and more stuff gets produced for free.
If true public provision of water, energy, housing, transport, healthcare, telecoms infrastructure and education was introduced into a neoliberal economy, it would feel like a revolution. Privatizing these sectors over the past thirty years was the means by which the neoliberals pumped profitability back into the private sector: in countries stripped of productive industries, such service monopolies constitute the core of the private sector and, with the banks, the backbone of the stock market.
And providing these services at cost price, socially, would be a strategic act of redistribution, vastly more effective than raising real wages.
In summary: under a government that embraced postcapitalism, the state, the corporate sector and public corporations could be made to pursue radically different ends with relatively low-cost changes to regulation, underpinned by a radical programme to shrink debt.
It is not in this area, though, that true postcapitalist economic forms emerge. Just as the British state fostered the growth of industrial capitalism in the early nineteenth century by setting new rules, today a mixture of government and highly regulated corporations would create only the framework of the next economic system, not its substance.
LET MARKET FORCES DISAPPEAR
In a highly networked, consumer-oriented society, where people have an individual-centred model of economic need, markets are not the enemy. This is the major difference between a postcapitalism based on info-tech and one based on command planning. There is no reason to abolish markets by diktat, as long as you abolish the basic power imbalances that the term ‘free market’ disguises.
Once firms are forbidden to set monopoly prices, and a universal basic income is available (see below), the market is actually the transmitter of the ‘zero marginal cost’ effect, which manifests as falling labour time across society.
But in order to control the transition, we would need to send clear signals to the private sector, one of the most important of which is this: profit derives from entrepreneurship, not rent.
The act of innovating and creating - whether it be a new kind of jet engine or a hit dance music track - is rewarded, as now, by the firm’s ability to reap short-term gains, either from higher sales or lower costs. But patents and intellectual property would be designed to taper away quickly. This principle is already recognized in practice, despite the protestations of Hollywood lawyers and pharmaceutical giants. Drug patents expire after twenty years, often becoming undermined before then because of production in countries where the patent is not recognized, or because - as in the case of HIV - the patent holders agree to allow generic drug use in the face of pressing human need.
Simultaneously, the increased use of Creative Commons licences - where inventors and creators voluntarily waive some rights in advance - would be promoted. If, as suggested above, governments insisted that the results of state-funded research should be essentially free at the point of use - moving everything produced with public funding into the public sphere - the balance of intellectual property in the world would quickly tilt from private to common use. People who are driven only by material reward would go on creating and innovating - because the market would still reward entrepreneurship and genius. But, as befits a society where the rate of innovation is becoming exponential, the reward period is going to be shorter.
The only sector where it is imperative to suppress market forces completely is wholesale energy. To meet climate change with urgent action, the state should take ownership and control of the energy distribution grid, plus all big carbon-based suppliers of energy. These corporations are already toast, as the majority of their reserves cannot be burned without destroying the planet. To incentivize capital investment in renewables, this technology would be subsidized and the companies providing it remain outside state ownership where possible.
This could be done while keeping the overall energy price to consumers high - in order to suppress demand and force them to change behaviour. But it’s equally important to reshape the way households consume energy. The aim would be to decentralize the consumer side of the energy market, so that technologies such as combined heat and power and local generation grids could take off.
At every stage, energy efficiency would be rewarded and inefficiency punished - from building design, insulation and heating to transportation networks. There is a wide range of proven techniques to choose from, but by decentralizing and allowing local communities to keep the efficiency gains they make, market forces in the retail energy market could be used to achieve a defined and measurable goal.
But beyond energy and the strategic public services, it is important that a large space be left for what Keynes called the ‘animal spirits’ of the innovator. Once information technology pervades the physical world, every innovation brings us closer to the world of zero necessary work.
SOCIALIZE THE FINANCE SYSTEM
The next big piece of social technology would be focused on the finance system. Financial complexity stands at the heart of modern economic life. This includes financial instruments like futures and options, and highly liquid twenty-four-hour global markets. It also includes the new relationship that we, as workers and consumers, have to financial capital. It is for this reason that states are forced with each financial crisis to ratchet up the implicit bailout guarantee that stands behind banks, pension funds and insurers.
Morally, if the risks are socialized, then the rewards should be socialized too. But there is no need to abolish all financial complexity. Where complex financial markets lead to speculation and make the velocity of money needlessly high, they can be tamed. The following measures would be more effective if undertaken globally, but it’s more likely, given the scenario spelled out in chapter 1, that individual states will have to implement them, and with some urgency. They are:
1. Nationalize the central bank, setting it an explicit target for sustainable growth and an inflation target on the high side of the recent average. This would provide the tools to stimulate a socially just form of financial repression, aimed at a controlled write-down of the massive debt overhang. In a global economy made up of states, or currency blocs, this is going to cause antagonism but ultimately, as under Bretton Woods, if a systemic economy did it, other countries would have to follow suit.
In addition to its classic functions - monetary policy and financial stability - a central bank should have a sustainability target: all decisions would be modelled against their climatic, demographic and social impacts. Its bosses would, of course, have to be democratically elected and scrutinized.
The monetary policy of central banks - probably the most powerful policy tool in modern capitalism - would become overt, transparent and politically controlled. In the late stages of the transition the central bank and money would have a different role, which I will return to.
2. Restructure the banking system into a mixture of utilities earning capped profit rates; non-profit local and regional banks; credit unions and peer-to-peer lenders; and a comprehensive state-owned provider of financial services. The state would stand explicitly as lender of last resort to these banks.
3. Leave a well-regulated space for complex financial activities. The aim would be to ensure the global finance system could, in the short to medium term, return to its historic role: efficiently allocating capital between firms, sectors, savers and lenders, etc. The regulations could be a lot simpler than the Basel III Treaty, because they would be backed up by strict criminal enforcement and professional codes in banking, accountancy and law. The guiding principles would be to reward innovation and to penalize and discourage rent-seeking behaviour. For example, it would become a breach of professional ethics for a chartered accountant or qualified lawyer to propose a tax avoidance scheme, or for a hedge fund to store uranium in a warehouse to drive its spot price higher.
In countries such as the UK, Singapore, Switzerland and the USA with globally oriented finance sectors, governments could offer a deal whereby, in return for coming clearly and transparently onshore, some limited lender of last resort facilities were made available to the remaining high-risk, profit-oriented finance firms. Those which did not come onshore and become transparent would be treated as the financial equivalent of Al-Qaeda. After a suitable amnesty offer, they would be tracked down and suppressed.
These short-term, strategic measures could dismantle the ticking timebomb of global finance, but they do not yet constitute a design for a true postcapitalist finance system.
A postcapitalist project would not seek - as the money fundamentalists do - the end to fractional reserve banking. In the first place, if it was attempted as a short-term remedy to financialization, it would cause demand to slump. Also, we need credit creation and an expanded money supply to wear down the debt pile that is strangling growth.
The most immediate objective is to save globalization by killing neoliberalism. A socialized banking system and a central bank attuned to sustainability could do this using fiat money - which, as we discussed in chapter 1, works as long as people believe in the credibility of the state.
However, over the long transition to postcapitalism, an elaborate finance system is going to run into a brick wall. Credit creation works only if it makes the market sector grow - so the borrower can repay the loan with interest. If the non-market sector begins to grow faster than the market sector, the inner logic of banking would break down. At this point, if we want to maintain a complex economy, where the finance system acts as a realtime clearing house for a multitude of needs, then the state (via the central bank) would have to take on the task of creating money and providing credit, as advocated by supporters of so-called ‘positive money’.8
But the aim here is not to achieve some kind of mythical, steady state capitalism. The aim is to promote the transition to an economy where many things are free, and where returns on investment come in a mixture of money and non-monetary forms.
By the end of the process, decades in the future, money and credit would have a much smaller role in the economy, but the accounting, clearing and resource mobilization functions currently provided by banks and financial markets would have to exist in a different institutional form. This is one of the biggest challenges for postcapitalism.
Here’s how I think it could be solved.
The objective is to maintain complex, liquid markets in tradable instruments, while removing the possibility that there will ever be payback in monetary form (because the profit and ownership system disappears). One model could be what’s happened with carbon.
Though the creation of a carbon market has not achieved enough progress against climate change, it has not been useless. In future we might see all kinds of socially benign instruments traded - health outcomes, for example. If the state can create a market in carbon, it can create a market in anything else. It can use market forces for behaviour change, but ultimately there must come a time when it imbues these instruments - which effectively form a parallel currency - with greater purchasing power than actual money.
As people are dumping money - because the market sector is being replaced by collaborative production - it is possible that they will accept what is effectively ‘techno-scrip’ until the moment when a state-administered bid/offer system for goods and services comes into being, as Bogdanov envisaged in Red Star.
In the short term, the intention is not to reduce complexity - as the money fundamentalists want - nor simply to stabilize banking, but to promote the most complex form of capitalist finance compatible with progressing the economy towards high automation, low work and abundant cheap or free goods and services.
With energy and banking socialized, the aim in the medium term would be to retain as extensive as possible a private sector in the non-financial world, and to keep it open to a diverse and innovative range of firms.
Neoliberalism, with its high tolerance for monopolies, has actually stifled innovation and complexity. If we break up the tech monopolies and the banks, we could create an active space for smaller companies to replace them and deliver - at last - on the unfulfilled promise of info-tech.
The public sector could, if we wished, outsource functions to the private sector, provided that the latter is not allowed to compete through differential wages and conditions. One byproduct of promoting competition and diversity in the service sector is that, once you can’t relentlessly drive down wages, there would have to be a surge of technical innovation, the outcome of which would be to reduce the number of work hours needed across society overall.
And that leads us to what is probably the biggest structural change required to make postcapitalism happen: a universal basic income guaranteed by the state.
PAY EVERYONE A BASIC INCOME
The basic income, as a policy, is not that radical. Various pilot projects and designs have been touted, often by the right, sometimes by the centre-left, as a replacement for the dole with cheaper administration costs. But in the postcapitalist project, the purpose of the basic income is radical: it is (a) to formalize the separation of work and wages and (b) to subsidize the transition to a shorter working week, or day, or life. The effect would be to socialize the costs of automation.
The idea is simple: everybody of working age gets an unconditional basic income from the state, funded from taxation, and this replaces unemployment benefit. Other forms of needs-based welfare - such as family, disability or child payments - would still exist, but would be smaller top-ups to the basic income.
Why pay people just to exist? Because we need to radically accelerate technological progress. If as the Oxford Martin School study suggested, 47 per cent of all jobs in an advanced economy will be redundant due to automation, then the result under neoliberalism is going to be an enormously expanded precariat.
A basic income paid for out of taxes on the market economy gives people the chance to build positions in the non-market economy. It allows them to volunteer, set up co-ops, edit Wikipedia, learn how to use 3D design software, or just exist. It allows them to space out periods of work; make a late entry or early exit from working life; switch more easily into and out of high-intensity, stressful jobs. Its fiscal cost would be high: that’s why all attempts to enact the measure separately from an overall transition project are likely to fail, despite the growing number of academic papers and global congresses dedicated to it.9
As a worked example, the UK’s benefits bill is £160 billion a year, of which maybe £30 billion is targeted at the disabled, pregnant, sick and so on. The poorest recipients are pensioners, who get about £6,000 a year as basic pension. To give 51 million adults £6,000 a year, as of right, would cost £306 billion - which is nearly twice the current welfare bill. This might be affordable if you abolished a range of tax exemptions and at the same time delivered cost-saving changes to other public spending, but it would represent a significant claim on resources.
A basic income says, in effect, there are too few work hours to go round, so we need to inject ‘liquidity’ into the mechanism that allocates them. The lawyer and the daycare worker both need to be able to exchange hours of work at full pay, for hours of free time paid for by the state.
Suppose, in the UK, we set the basic income at £6,000 and hike the minimum wage to £18,000. The advantages of working remain clear, but there are also advantages to be gained through not working: you can look after your kids, write poetry, go back to college, manage your chronic illness or peer-educate others like you.
Under this system, there would be no stigma attached to not working. The labour market would be stacked in favour of the high-paying job and the high-paying employer.
The universal basic income, then, is an antidote to what the anthropologist David Graeber calls ‘bullshit jobs’: the low-paid service jobs capitalism has managed to create over the past twenty-five years that pay little, demean the worker and probably don’t need to exist.10 But it’s only a transitional measure for the first stage of the postcapitalist project.
The ultimate aim is to reduce to a minimum the hours it takes to produce what humanity needs. Once this happens, the tax base in the market sector of the economy would be too small to pay for the basic income. Wages themselves would increasingly be either social - in the form of collectively provided services - or disappear.
So as a postcapitalist measure, the basic income is the first benefit in history whose success measure is that it shrinks to zero.
THE NETWORK UNLEASHED
In the socialist project, there was to be a long first stage in which the state had to suppress the market by force; the outcome was supposed to be a gradual reduction of the hours of work necessary to maintain and supply humanity. Then technological progress might begin to make some things at negligible cost or for free, and you could move to phase two: ‘communism’.
I am certain the workers of my grandmother’s generation cared more about phase one than phase two - and that was logical. In an economy based primarily on physical goods, the way to make houses cheaper was for the state to build them, own them and supply them at cheap rents. The cost was uniformity: you were forbidden to maintain the house yourself, or improve it, or even to paint the door a different colour. For my grandmother, who had lived in a stinking slum, being banned from painting the door was not a major concern.
In the postcapitalist project the task in the first phase is to deliver things just as tangible and life-changing as my grandma’s council house, with its garden and solid walls, was to her. To this end, a lot can be achieved by changing the relationship between power and information.
Info-capitalism is based on asymmetry: the global corporations get their market power from knowing more - more than their customers, suppliers and small competitors. The simple principle behind postcapitalism should be that the pursuit of information asymmetry is wrong - except when it comes to privacy, anonymity and security issues.
In addition, the aim should be to push information and automation into types of work where they are held back at present because cheap labour removes the need to innovate.
In a modern car factory there is a production line, and there are still workers with spanners and drills. But the production line is intelligently managing what the workers do; a computer screen tells them which spanner to use, a sensor warns them if they pick up the wrong one, and the action is recorded somewhere on a server.
There is no reason other than exploitation why world-class techniques of automation cannot be applied, for example, to the labour of the sandwich factory or the meat-packing plant. In fact, it is only the availablity of cheap, unorganized labour, supported by in-work benefits, that permits these business models to exist. In many industries old disciplines of work - time, obedience, attendance, hierarchy - are enforced only because neoliberalism is suppressing innovation. But they are technologically unnecessary.
In information-based businesses, old style management begins to look archaic. Managing means organizing predictable resources - people, ideas and things - to produce a planned outcome. But many benign outcomes of network economies are unplanned. And the best human process for dealing with volatile outcomes is teamwork - which used to be called ‘cooperation’.
Let’s spell out what this means: cooperative, self-managed, non-hierarchical teams are the most technologically advanced form of work. Yet large parts of the workforce are trapped in a world of fines, discipline, violence and power hierarchies - simply because the existence of a cheap labour culture allows it to survive.
A crucial goal for the transition process would be to trigger a third managerial revolution: to enthuse managers, trade unions and industrial system designers about the possibilities inherent in a move to networked, modular, non-linear team work.
‘Work cannot become play,’ Marx wrote.11 But the atmosphere in the modern video game design workshop shows that play and work can alternate quite freely and produce results. Among guitars, sofas, pool tables covered in piles of discarded pizza boxes, there is of course still exploitation. But modular, target-driven work, with employees enjoying a high degree of autonomy, can be less alienating, more social, more enjoyable - and deliver better results.
There is nothing other than our addiction to cheap labour and inefficiency that says a meat-packing operation cannot enjoy the same kind of unmanaged, modular work - where work is literally interspersed with play, and access to networked information is a right. One of the most telling signs that neoliberalism is a dead end is the hostility of many twenty-first century managers and most investors to the ideal of highly productive, fulfilling work. Managers in the pre-1914 era were obsessed with it.
As we pursue these goals, a general pattern is likely to emerge; the transition to postcapitalism is going to be driven by surprise discoveries made by groups of people working in teams, about what they can do to old processes by applying collaborative thinking and networks.
What we are looking for are rapid technological leaps that make things cheaper to produce and benefit the whole of society. The task of the decision-making nodes in a networked economy (from the central bank to a local housing co-op) is to understand the interplay between networks, hierarchies, organizations and markets; to model them in different states, to propose a change, monitor its effects and adjust their intentions accordingly.
But for all our attempts at rationality, this is not going to be a controlled process. The most valuable things that networks (and the individuals within them) can do is to disrupt everything above. Faced with group-think and convergence, either in the design stage of an economic project or in its execution, networks are a brilliant tool for allowing us not just to dissent, but to secede and start our own alternative.
We need to be unashamed utopians. The most effective entrepreneurs of early capitalism were exactly that, and so were all the pioneers of human liberation.
What is the end state? That is the wrong question. If you study the graph of GDP per head in chapter 8, it is horizontal for the whole of human history until the Industrial Revolution, then it takes off rapidly, and after 1945 it turns exponential in some countries. Postcapitalism is just a function of what happens when it goes completely vertical everywhere. It is a beginning state.
Once exponential technological change cascades over from silicon chips to food, clothing, transport systems and healthcare, then the reproduction cost of labour-power is going to shrink dramatically. At this point, the economic problem that has defined human history will shrink or disappear. We will probably be preoccupied by problems of sustainability in economics and the interplay of competing patterns of human life beyond it.
So instead of looking for an end state, it’s more important to ask how we might deal with reverses - or escape a dead end.
One specific problem is how to record the experience of failure into persistent data that allows us to retrace our steps, amend them and roll out the lessons across the whole economy. Networks are bad at memory; they are designed so that memory and activity sit in two different parts of the machine. Hierarchies were good at remembering - so working out how to retain and process lessons will be critical. The solution may be as simple as adding a recording and storing function to all activities, from the coffee shop to the state. Neoliberalism, with its love of creative destruction, was happy to dispense with the memory function - from Tony Blair’s ‘sofa’ decision-making to the tearing up of old corporate structures, nobody wanted to leave a paper trail.
In the end, all we’re trying to do is move as much of human activity as possible into a phase where the labour that’s necessary to support very rich and complex human life on the planet falls, and the amount of free time grows. And in the process, the division between the two gets even more blurred.
IS THIS FOR REAL?
It’s easy to recoil from the scale of these proposals. To ask ourselves: can it really be that - on top of a fifty-year crisis - a 500-year change is under way? Can laws, markets and business models really evolve dramatically to match the potential of info-tech? And could it be true that we as puny individuals can have any real impact?
Yet, every day, a large part of humanity participates in a much bigger change, triggered by a different kind of technology: the contraceptive pill. We are living through the one-time and irreversible cancellation of male biological power. It’s causing major trauma: watch the Twitter and Facebook trolling of powerful women, the attempts by cults like GamerGate to get into their mindspace and destroy their mental health. But the advance towards liberation is happening.
It is absurd that we are capable of witnessing a 40,000-year-old system of gender oppression begin to dissolve before our eyes and yet still seeing the abolition of a 200-year-old economic system as an unrealistic utopia.
We lie at a moment of possibility: of a controlled transition beyond the free market, beyond carbon, beyond compulsory work.
What happens to the state? It probably gets less powerful over time - and in the end its functions are assumed by society. I’ve tried to make this a project usable both by people who see states as useful and those who don’t; you could model an anarchist version and a statist version and try them out. There is probably even a conservative version of postcapitalism, and good luck to it.
LIBERATE THE 1 PER CENT
What happens to the 1 per cent? They become poorer and therefore happier. Because it’s tough being rich.
In Australia, you see the women of the 1 per cent jog from Bondi to Tamarama beach each morning, decked out in cheap lycra made expensive by the addition of - what else? - gold lettering. Their ideology tells them it is their uniqueness that has made them successful, yet they look and behave the same.
As the world turns, dawn-lit gyms halfway up the skyscrapers of Shanghai and Singapore see businessmen pound the treadmills in anticipation of a day spent in competition with people exactly like them. The bodyguarded rich of Central Asia begin another day of ripping off the world.
Above it all, in the first-class cabins of long-haul flights, drift the global elite, their faces composed into a routine frown over their laptops. They’re the living image of how the world is supposed to be: educated, tolerant, prosperous. Yet they are excluded from this great experiment in social communication that humanity is staging.
Just 8 per cent of American CEOs have a real Twitter account. Sure, an underling can run one for them, but because of rules on making financial statements, and because of cyber-security, the social media accounts of the powerful can never be real. When it comes to ideas, they can have any ideas they like as long as they conform to neoliberal doctrine: that the best people win because of their talent; that the market is the expression of rationality; that the workers of the developed world are too lazy; that taxing the rich is futile.
Convinced that only the smart succeed, they send their kids to expensive private schools to hone their individuality. But they come out the same: little versions of Milton Friedman and Christine Lagarde. They go to the elite colleges but the fancy names on the college hoodies - Harvard, Cambridge, MIT - mean nothing. You might as well just print Standard Neoliberal University. The Ivy League hoodie is simply a badge of entry to this tawdry world.
Beneath it all lies lingering doubt. Their self-belief tells them that capitalism is good because it is dynamic - but its dynamism is only really felt where there are plentiful supplies of cheap labour, repressed democracy - and where inequality is rising. To live in a world so separate, dominated by the myth of uniqueness but in reality so uniform, constantly worried you’re going to lose it all, is - I am not kidding - tough.
And to cap it all, they know how close it came to collapsing; how much of every single thing they still own was actually paid for by the state, which bailed them out.
Today, the ideology of being bourgeois in the Western world means social liberalism, a commitment to fine art, to democracy and the rule of law, giving to charity and hiding the power you wield beneath a studied personal restraint.
The danger is that as the crisis drags on the elite’s commitment to liberalism evaporates. The successful crooks and dictators of the emerging world have already bought influence and respectability: you can feel their power as you walk through the door of certain law firms, PR consultancies and even corporations.
How long will it take before the culture of the Western elite swings towards emulating Putin and Xi Jinping? On some campuses you can already hear it: ‘China shows capitalism works better without democracy’ has become a standard talking point. The self-belief of the 1 per cent is in danger of ebbing away, to be replaced by a pure and undisguised oligarchy.
But there is good news.
The 99 per cent are coming to the rescue.
Postcapitalism will set you free.