Postcapitalism: A Guide to Our Future - Paul Mason (2015)
An all-round increase in wealth threatened the destruction - indeed in some sense was the destruction - of a hierarchical society.
Emmanuel Goldstein, in George Orwell, Nineteen Eighty-Four1
Chapter 8. On Transitions
It can be a shock to find out capitalism has not always existed. Economists present ‘the market’ as the natural state of humanity. TV documentaries re-create in fantastic detail the Egyptian pyramids or Beijing under the emperors, but gloss over the totally different economic systems that built them. ‘They were just like us,’ dads confidently tell their kids as they wander around the Herculaneum exhibition in the British Museum - until confronted by the statue of Pan raping a goat, or the wall painting of a couple having a threesome with their slave.
When you realize that capitalism, once, did not exist - either as an economy or a value system - a more shocking thought arises: it might not last for ever. If so, we have to get our heads around the concept of transitions, asking: what constitutes an economic system and how does one give way to another?
In the preceding chapters I’ve shown how the rise of information technology disrupted the basic institutions of capitalism: price, ownership and wages. I’ve argued that neoliberalism was a false dawn; that the post-2008 crisis is the product of flaws within the economic model which prevent the exploitation of new technologies, and the takeoff of a fifth long wave.
All this makes postcapitalism possible, but we have no model for the transition. Stalinism left us with a blueprint for disaster; the Occupy movement came up with some piecemeal good ideas; the so-called P2P (peer-to-peer) movement has evolved collaborative models on a small scale; while environmentalists have developed pathways for the transition to a zero-carbon economy, but tend to see these as separate from the survival of capitalism.
So when it comes to planning the transition from one kind of economy to another, all we have is the experience of two very different events: the rise of capitalism and the collapse of the Soviet Union. In this chapter I will focus on what we can learn from them, and in the final part of the book I will try to apply these lessons to the design of a ‘project plan’ for moving the economy beyond capitalism.
Twenty-five years of neoliberalism have forced our thinking about change to become small. But if we are bold enough to imagine we can rescue the planet, we should also imagine rescuing ourselves from an economic system that doesn’t work. In fact, the imagination stage is critical.
A BOLSHEVIK ON MARS
In Alexander Bogdanov’s vintage sci-fi novel, Red Star (1909), the hero - an organizer in the Russian Bolshevik party - gets taken to Mars on a spaceship. He finds the Martian factories modern and impressive but the most stunning thing is what he sees in the control room: a realtime display provides an hourly snapshot of labour shortages in every factory on the planet, together with a summary of sectors where there is a labour surplus. The aim is for workers to move voluntarily to where they are needed. Since there is no shortage of goods, demand is not measured. There is no money either: ‘Everyone takes whatever he needs, in whatever quantities he wants,’ explains the Martian guide. The workers, controlling but never touching giant pieces of machinery, also fascinate our earthling: ‘They seem to be inquisitive, learned observers who had no real part in what was going on around them … To an outsider the threads connecting the delicate brains of the men with the indestructible organs of the machines were subtle and invisible.’1
In Red Star, Bogdanov not only imagined how a postcapitalist economy could work, he imagined what kind of person would be needed to make it possible - information workers, their brains connected by something ‘subtle and invisible’. But by portraying the communist future, he was defying the conventions of his time: all wings of socialism were opposed to discussing castles in the air. But this was no mere whimsy.
Bogdanov, a medical doctor, was one of the twenty-two founder members of Bolshevism. He had been imprisoned, exiled, led the party in the Petrograd soviet, edited its newspaper, managed its funds and organized the raising of them - through bank robberies. It is Bogdanov we see playing chess with Lenin in the famous photograph at the party’s training school on Capri in 1908.2 But within a year of that photo, Bogdanov would be expelled from Lenin’s party. He had formed an opposition to Lenin, based on disagreements that prefigured the tragedy that was about to unfold.
The 1905 revolution, said Bogdanov, showed that workers were not ready to run society. Because he thought postcapitalist society would have to be a knowledge society, any attempt to create it through blind revolutionary action could only bring to power a technocratic elite, he warned. To prevent this, Bogdanov said, ‘a new proletarian culture must be disseminated among the masses, a proletarian science developed, a proletarian philosophy worked out’.3
All this was anathema to Lenin. Marxism had become a doctrine of imminent breakdown and revolution, where the workers would make the revolution happen despite the ideas and prejudices in their heads. Bogdanov also had the temerity to suggest that Marxism should adapt to new ways of thinking in science. He predicted that mental labour would replace manual labour; that all labour would become technological. Once this happened, our understanding of the world would have to go beyond the dialectial methods of thinking Marx had inherited from philosophy. Science would replace philosophy, Bogdanov predicted; and we would come to see reality as connected ‘networks of experience’. Separate sciences would become part of a ‘universal organisational science’ - the study of systems.
For becoming, effectively, the first systems theorist, and for his prescient warning about what might happen in Russia, Bogdanov was expelled - at a fractious meeting in Lenin’s Paris apartment in 1909. Within months, his novel Red Star was published, and widely circulated among Russian workers. In the light of what actually happened under Stalinism, its treatment of the postcapitalist economy is far-sighted.
In the novel, Martian communism is based on abundance: there is more than enough of everything. Production takes place on the basis of realtime and transparent computation of demand. Consumption is free. It works because there is a mass psychology of cooperation among workers, based on their high education and the fact that their work is primarily mental. They shape-shift between male and female genders, remain calm and selfless in the face of stress and danger, and live an enriched emotional and cultural life.
Bogdanov’s outline of the back-story is also provocative: Mars was industrialized under capitalism; a struggle for control of industry began, followed by a revolution - largely peaceful because it was conducted by workers rather than peasants. There had then been a 100-year-long transition period during which the need for work was progressively eroded, by shortening the compulsory working day from six hours to zero.
To anybody with a knowledge of orthodox Marxism, it is easy to read between the lines of Red Star. Bogdanov was using the novel to outline a complete alternative to the ideas that would dominate the far left in the twentieth century. He advocates technological maturity as the precondition for revolution, the peaceful overthrow of the capitalists by means of compromise and compensation, a focus on technology as a means to reduce labour to a minimum and a relentless insistence that it is humanity itself that has to be transformed, not just the economy. Furthermore, a major theme of Red Star is that postcapitalist society has to be sustainable for the planet. The Martians voluntarily commit suicide if they perceive there are too many of them for their planet to support. And as their natural resources fail, they begin an agonized debate about whether to colonize Earth.
If you are thinking: ‘What might Russia have become if Lenin had fallen under a tram on his way to the meeting where they expelled Bogdanov?’, you are not the first to do so. There is a whole literature of ‘what if?’ focused on Bogdanov - and rightly so. Though he could not imagine a computer, he had imagined the kind of communism that society based on mental labour, sustainability and networked thought might produce.
After 1909, Bogdanov retired from activism and spent ten years writing a pioneering book on systems theory. In the early years of the Soviet Union he formed a mass workers’ cultural organization - the Proletkult - which was shut down after it became allied with an opposition group advocating workers’ control.4 He returned to medicine and died in 1928 after subjecting himself to an experimental blood transfusion.5
When they began to construct socialism by diktat in the 1930s, Soviet planners were fond of citing Red Star as their inspiration.6 But by then the facts and the utopia had diverged.
THE RUSSIAN NIGHTMARE
The Russian Revolution went wrong in stages. Under conditions of civil war, from 1918 to 1921, banks and major industries were nationalized, production was directed by commissars (with trade unions subject to military discipline), factory committees were banned and crops simply requisitioned from the peasants. As a result, output declined to 20 per cent of its pre-war level, famine spread through the countryside and the rouble collapsed; some companies resorted to barter and wages had to be paid in kind.
In March 1921, the USSR was forced to switch to a form of market socialism known as the ‘New Economic Policy’. Letting the peasants keep and sell their crops revived the economy, but created two dangers that the beleaguered revolutionaries in Russia had trouble understanding. First, it channelled money towards the better-off peasants, known in slang as ‘kulaks’, and gave the agricultural sector a de facto economic veto over the speed of industrial development - summarized in the slogan ‘Socialism at a snail’s pace’. Second, it solidified a privileged bureaucracy running factories, distribution organizations, the army, the secret police and government offices.
Against the rich peasants and the bureaucrats, the Russian working class pressed for more democracy, for rapid industrialization through central planning and for a crackdown on speculators. Soon this three-way struggle in society was reflected within the Communist Party itself.
A factional dispute broke out, between a left opposition led by Trotsky, arguing for more democracy and more planning; a pro-market wing led by Bukharin, who wanted to delay industrialization, telling the peasants ‘enrich yourselves’; and in the centre Stalin himself, defending the interests of the bureaucracy.
In November 1927, at a parade celebrating the anniversary of the revolution, around 20,000 supporters of the left-wing faction carried banners calling for the party to suppress the kulaks, speculators and bureaucrats. When several Moscow factories marched out to join them, the police attacked and street fighting followed.
Stalin expelled Trotsky and the leaders of the left and sent them into forced exile. Then, in one of those U-turns that Orwell would later parody in Nineteen Eighty-Four, Stalin implemented the left’s programme - but in a much more extreme form, with maximum violence and brutality. In 1928 it was Bukharin’s turn to be purged, together with the market-oriented right of the party. The kulaks, were ‘liquidated’ in a programme of forced collectivization of their farms. Estimates vary, but a combination of famine and mass shootings in the countryside killed about 8 million people over three years.7
The scale of Stalin’s ambition in the first Five Year Plan (1928-32) was captured in his statement: ‘We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they crush us.’8
The official figures show a massive growth in output during the first Five Year Plan: the doubling of coal, steel and oil production; colossal infrastructure projects completed ahead of time. But, unlike in the sci-fi world of Red Star, planners faced two absolute impediments. The economy was still dominated by agriculture, and the technical base of the industrial sector was weak and had been undermined by ten years of chaos. Far from planning in a situation of abundance, Stalin imposed planning on a society with high levels of scarcity and a semi-feudal farming system. To make any kind of progress, he needed a brutal process of reallocation: from the countryside to industry, and from consumption to the sectors producing heavy machinery. The industrial targets were met, but at the cost of mass starvation, mass executions, slave labour conditions in many workplaces and, in the end, a further economic crisis.9
The USSR did not catch up with the West in ten years. But by 1977 its GDP per head was 57 per cent of the USA’s - which put it on a par with Italy. From 1928 until the early 1980s, the average growth in the USSR, according to a CIA-commissioned survey, was 4.2 per cent. ‘This clearly qualifies as a sustained growth record,’ concluded analysts at the RAND Corporation.10
But Soviet growth was never driven by productivity. The RAND study found only a quarter of the USSR’s growth was driven by better technology, with the rest by rising inputs - of machinery, raw materials and energy. After 1970, there was no growth at all in productivity: if you needed double the number of nails produced, you built a new nail factory alongside the old one - productivity was off the agenda.
Economists call this ‘extensive growth’ - as opposed to the intensive growth that raises real wealth. In the medium term, a system based on extensive growth cannot survive. It is likely that, with flatlining productivity, the Soviet system would have collapsed at some point from its internal problems, even if it had not been confronted with pressure from the West in the 1980s.
One lesson - spelled out in advance by anarchists, agrarian socialists such as Kondratieff and dissident Marxists like Bogdanov - was: ‘do not take power in a backward country’. A second lesson is: understand that planning is guesswork. As the economist Holland Hunter showed by data-mining the Soviet numbers, the targets of the first Five Year Plan were never achievable without a 24 per cent slump in consumption.11 Soviet planners were flying blind: guessing at a target, erring on the upside to maintain pressure on their subordinates to deliver, and - when they failed - wasting huge amounts of effort trying to remedy the situation or cover it up. They refused to recognize that even transitional economies have objective laws: dynamics that work behind the backs of the economic players and confound their willpower. ‘It is impossible to study the Soviet economy taking causality as one’s axis,’ announced the party’s economics textbook in the mid-1920s.12 In the fantasy world of Stalinism, even cause and effect were irrelevant.
Because Soviet growth outstripped that of the West for a time, Keynesian economics remained in awe of the planned economy. It was the prophets of neoliberalism - Mises and Hayek - who had from the very beginning predicted its chaotic demise. If we want to design a project of transition towards postcapitalism today, we have to take the criticisms of Hayek and Mises seriously. They were, at their sharpest, not just critics of Soviet reality; they insisted that - even in a developed country - all forms of planning must fail.
THE CALCULATION DEBATE
It’s strange but true: the possibility of socialism was once a central tenet of mainstream economics. Because the marginalists thought the market was the perfect expression of human rationality, they had no problem - as long as it was only a thought experiment - with the idea that an all-knowing state could achieve the same results as a perfect market. ‘Both systems are not different in form and they lead to the same point,’ wrote the Italian economist Vilfredo Pareto in a celebrated textbook, ‘the result is extremely remarkable.’13
In 1908, his colleague Enrico Barone wrote a detailed account of how a socialist state could calculate the exact same outcomes that the market achieves blindly. Barone showed how it would be possible to discover, using linear equations, the most efficient forms of production, consumption and exchange. ‘It would be a tremendous - a gigantic - work … but it is not an impossibility,’ he wrote.14
This was an article of faith for marginalists: in theory, a perfect plan - made by a state with perfect knowledge and the ability to calculate in realtime - was as good as a perfect market.
But there was a catch. In the first place, just like the market, the state can’t calculate what’s needed in advance. So each year’s plan is in effect an experiment - and not on a small scale but on a very large one. The market could correct itself in realtime; the plan would take longer. A collectivist regime would be just as anarchic as the market, but on a bigger scale, according to Barone. And in practice the state can never have perfect knowledge, nor can it do the calculations fast enough, so the whole debate remained, literally, academic.
It was the upheaval of 1917-21 that made the issue of ‘socialist calculation’ a concrete question for economics. In 1919, Germany and Austria had begun their ill-fated ‘socialization’ drives, the early Soviet war economy was being hailed as a form of communism - and in the short-lived soviet republic of Bavaria they had seriously discussed trying to abolish money immediately. Planned economies were no longer a thought experiment, they were an imminent possibility, and being pursued with some fanaticism.
This was the context of Ludwig von Mises’s book Economic Calculation in the Socialist Commonwealth (1920). The market, Mises said, acts as a calculating machine: people make choices, they buy and sell things at a given price, and the market works out whether their choices were correct. Over time, this ensures the most rational allocation of scarce resources. Once you remove private property and begin planning, the calculating machine breaks down: ‘Without economic calculation there can be no economy. Hence, in a socialist state wherein the pursuit of economic calculation is impossible, there can be - in our sense of the term - no economy whatsoever.’15
As to the far left’s determination to abolish money, Mises explained that it did not matter. If you go on using money while overriding the market mechanism through planning, you reduce money’s ability to convey price signals. But if you abolish money, you abolish the measuring stick for supply and demand: distribution becomes inspired guesswork. ‘Thus,’ said Mises, ‘in the socialist commonwealth every economic change becomes an undertaking whose success can be neither appraised in advance nor later retrospectively determined. There is only groping in the dark.’16
Mises targeted three critical weaknesses of planning in reality: a state can’t calculate as fast as a market can; a state can’t reward innovation; and when it comes to distributing capital between major sectors then, without a finance system, this becomes unwieldy and haphazard. Mises predicted that as a result planning would lead to chaos, specifically to the overproduction of shoddy goods that nobody wanted. It would work for a while because the ‘memory’ of the appropriate prices would be imprinted on to the system, but once that memory faded, it would collapse in chaos. Because his predictions were proved right, by both the life and death of the Soviet economy, his book has become a hallowed text of the free-market right. But it was not hugely influential at the time.
Only in the 1930s, amid the Depression, fascism and the USSR’s second Five Year Plan, did the debate on socialist calculation take off. The USSR was inefficient for all the usual reasons cited, said Mises’s pupil Friedrich Hayek: no consumer choice, clunky allocation of resources, no reward for innovation. But on Mises’s main point - the inability of the state to calculate as well as the market - Hayek retreated. A socialist state could mirror the market effectively, as Barone had said, provided that it had the right information. The problem was that it could never do the calculations fast enough.
Hayek’s collaborator, LSE professor Harold Robbins, complained that, to calculate the plan properly, ‘would necessitate the drawing up of millions of equations on the basis of millions of statistical data based on many more millions of individual computations. By the time the equations were solved, the information on which they were based would have become obsolete and they would need to be calculated anew.’17
This sparked a brisk exchange. The left-wing Polish economist Oskar Lange pointed out Hayek and Robbins had effectively made a big concession to the left.18
Lange was part of a school of moderate socialists who rejected Marxism and believed socialism could be implemented using the principles of marginal utility theory. He showed that if you retain a consumer market, and leave people free to choose where they work, but plan the production of all goods, then the process of trial and error in a socialist economy is conceptually no different from the one that operates through prices. Instead of being signalled through price movements, the unmet needs of the economy are signalled through shortages and surplus goods. The central supply board simply reorders production quotas in response.
Most independent observers thought Lange had proved his point. After the war, even the CIA’s expert on Soviet economics concluded: ‘Of course socialism can work … On this Lange certainly is convincing.’19
However, we need to revisit the calculation debate for a reason that should be obvious: technology is today eroding the price mechanism without the parallel rise of a planned economy. And supercomputers plus big data are putting within reach the kind of realtime calculations Robbins thought were impossible. Robbins asked for a million, million, million. That is a petabyte, which just happens to be the unit we use to measure the performance of a supercomputer: petabytes of instructions per second. This has revived the idea among some leftists that ‘planning could work’ - if only you could solve the problem of calculation through technology. In fact, however, there is no calculation problem in a postcapitalist economy - for a reason that was suggested by Mises in 1920.
In the ‘calculation debate’ of the 1930s, both sides rejected the labour theory of value. Lange the socialist and Hayek the ultra-capitalist both believed that marginal utility was the only explanation of what creates value. So for both sides, the idea of a transition - in which a system based on scarcity gives way to one based on abundance - is unexplored territory. If capitalism and state socialism are just two different ways of allocating goods rationally until you reach equilibrium, the transition between them is merely a technical challenge, not a revolution.
But as Mises had already pointed out, if the labour theory of value is correct, there is no calculation problem at all. The problems of allocating goods, deciding priorities and rewarding people who innovate can all be captured within a system based on labour values, because everything can be measured against the same yardstick. Socialism was possible, Mises admitted, but only if there was a ‘recognizable unit of value, which would permit of economic calculation in an economy where neither money nor exchange were present. And only labor can conceivably be considered as such.’20
Yet Mises dismissed the labour-theory for the standard reasons accepted in Vienna in the 1920s: it can’t be used to measure different skill levels, and it can’t be used to apply a market value to natural resources. Both these objections are easily overcome; they are in fact misunderstandings of Marx’s theory. Marx clearly explained how high-skilled work can be measured as a multiple of low-skilled work - and that the labour value embodied in raw materials was simply the work it took to extract and transport them.
And Mises’s work on calculation contains a second valuable insight: it is not trading between enterprises that is the true mediator of supply and demand in a market economy, it is the finance system - which puts a price on capital. This was a perceptive insight, which has relevance today: if we want a postcapitalist economy, not only do we need something better than the market for distributing goods, we also need something better than the finance system for allocating capital.
TRANSITIONS HAVE THEIR OWN DYNAMICS
It was only the Russian left opposition - above all its leading economist Evgeny Preobrazhensky - which understood the centrality of the labour-theory to the transition. For them the goal of the transition was quite simply a rising supply of free, abundant things and the erosion of ‘necessary labour’ as the yardstick of exchange. As in Red Star, the early Soviet planners aimed to produce as much as possible so that work would be de-linked from wages and the ability to consume. In Marxist terms, this was understood as ‘abolishing the law of value’.
But the Russian left could only achieve this by promoting heavy industry and state control. By the early 1920s, there was a shortage of everything: to make consumer goods you needed heavy industry and electrification; to feed people you needed to industrialize agriculture. So they urged the concentration of resources in the sectors that would become iconic in Soviet propaganda - power stations, steel works, big machinery. However, they showed great awareness that equilibrium was unlikely to be achieved, and that planning was likely to be anarchic.
In economic terms, the most important thing the Russian Trotskyists left us was probably the idea that a transition phase generates its own dynamics; it is never just the fading of one system and the rise of another.
Trotsky argued that in the first phase of the Soviet-style transition, both a private business and a consumer sector had to be maintained. It was hubris to suggest the plan could, at this stage, allocate better than the market in consumer goods. Plus, the rouble had to remain exchangeable on the world market. Furthermore, all plans were effectively hypotheses. ‘The plan,’ said Trotsky, ‘is checked and, to a considerable degree, realized through the market.’21
To make even the crudest adjustment requires realtime information feedback. But in a heavily bureaucratic society, where to dissent was to invite a one-way ticket to the gulag, such feedback was strangled. Hence Trotsky’s emphasis on reviving workplace democracy. You needed a rolling plan: a combination of plan and market, with money used as both a medium of exchange and store of value. And you needed workers’ democracy.
Money, said Preobrazhensky, would function normally in those sectors you could not plan, while in the planned sector of the economy, money would start to function as a technical accounting device. And while the aim is for the plan to swamp the market, the market could be expected to constantly ‘pollute’ the plan.
In a memorable passage, whose relevance to the twenty-first century will be clear, Trotsky wrote:
If a universal mind existed … that could register simultaneously all the processes of nature and society, that could measure the dynamics of their motion, that could forecast the results of their inter-reactions - such a mind, of course, could a priori draw up a faultless and exhaustive economic plan, beginning with the number of acres of wheat down to the last button for a vest.22
The absence of such a ‘universal mind’, he said, requires instead the promotion of workers’ democracy - which had been abolished. Only if human beings, with freedom of speech, became the sensors and feedback mechanisms for the planning system could this crude calculating machine work.
Preobrazhensky, Trotsky and their collaborators were the last Marxists with any political power who conceived the transition in terms of labour value. Preobrazhensky was executed in 1936 and Trotsky assassinated in 1940. But their ideas contain powerful implications for the world we face today.
Under neoliberalism, the market sector is immensely more complex than in the 1920s and 30s. The USA in 1933 was vastly different from Russia in 1933 - but they were much closer to each other than the America of today is to the America of thirty years ago. Today’s consumer sector is not only much bigger, it is much more atomized. Production and consumption overlap - and the economy already includes information goods whose marginal production cost is zero. We also have Negri’s ‘social factory’ to contend with: a highly financialized and granular consumer society, in which what we buy has become a question of identity.
So lesson one is: the market sector is much more complex and therefore more difficult to replicate or improve on through planning.
Next, we have to consider the state sector. The modern state as a service provider is massive compared to any capitalist state in the 1930s. Whether it spends its tax dollars on services from private companies or those provided by the state itself, the state pushes the true private economy - private companies producing for privately employed individuals - into a smaller space. In addition, the peer-to-peer economy is large, though not measured in terms of profit and GDP. So lesson two is: any attempt to move beyond the market is going to start from a different place than it would have in the 1930s.
But we can learn from both the calculation debate and from the Russian left’s planning experts, if we know how to read them properly. Before that, however, we have to understand that, even with the best supercomputer and the biggest data farm, planning is not the primary route beyond capitalism.
ATTACK OF THE CYBER-STALINISTS
Over the past twenty years, Paul Cockshott and Allin Cottrell - a computer scientist and an economics professor - have worked tirelessly on a problem we thought we didn’t have: how to plan an economy. Though not well known, their work is rigorous and performs an invaluable service; it is a textbook outline of what we should not do.
Cockshott and Cottrell argue that improvements in computer power, together with the application of advanced maths and information theory removes, in principle, the Hayek/Robbins objection: that the planner can never have better realtime information than a market. What’s more, unlike the left in the calculation debate, they say the computer model we would need for planned production should use the labour theory of value, and not try to simulate the results of supply and demand.
This is a crucial departure from the work of Lange. Cockshott and Cottrell understand that the labour-theory gives you a measuring stick against which both market interactions and non-market ones can be compared, and a way of calibrating the transition. They see the planning process as similar to a modular computer program. It would collate the demands of consumers and producers; work out the cost and resources needed to meet them; formulate targets; calculate in advance the resource implications; check the feasibility of the plan; and then instruct producers and suppliers of services to hit the targets.23
But unlike the Russian left of the 1920s, Cockshott and Cottrell don’t see the plan as provisional, or something for the state sector alone to execute; it has to be drawn up and tested in detail, down to enterprise level and individual products.
Once you remove the market, they argue, there are no other signals for the boss of a factory, or care home, or coffee bar to rely on. They have to know exactly what they’re supposed to be producing. Theirs, in other words, is the methodology for a completely prescriptive plan, as imagined (and ridiculed) by Trotsky in the 1930s.
Historically, of course, sophisticated planning at this level is something the Soviet Union never achieved: by the 1980s there were 24 million different products in the USSR but the entire planning apparatus could track the price and quantity of only 200,000 of them, and the actual central plan just 2,000. As a result, factories met the targets for the small number of goods they were supposed to make, and fulfilled all other requests chaotically or not at all.24
In Cockshott and Cottrell’s model, money exists in the form of ‘labour tokens’ which are paid to everybody according to the amount of labour they do, minus a flat tax to pay for state services. This allows for consumer choice. Where supply and demand for a product get out of kilter, the central planners adjust the price to achieve a short-term rebalancing. Then, over a longer period, they compare the prices commanded by a sector, or production unit, to the actual amount of labour it is doing. In the next round of the plan, they boost production in the areas where prices are higher than the labour used and cut them where lower. Planning is ‘iterative’; it is adjusted constantly. But it is not mere trial and error: Cockshott and Cottrell believe the inputs and outputs can be calculated in advance, and they propose a detailed algorithm to do so.
The computing challenge is, first, to calculate what the value of an hour’s labour should be. That is - how much work is going into each product, as listed on a giant spreadsheet. The researchers argue this is doable with a supercomputer, but only if it uses data-processing techniques that prioritize the most relevant information.
For Cockshott and Cottrell, working out the value of an hour’s labour is the hard part. The plan itself - the allocation of resources - is an easier calculation to do, because you do not run the program blind. You ask it feasible questions such as: how much of a product is going to be sold this year; how much of the various inputs do we normally use; what’s the seasonal variation, what’s the expected demand, how much should we order within the boundaries of past experience? They conclude: ‘With modern computers, one could envisage computing an updated list of labor values daily and preparing a new perspective plan weekly - somewhat faster than a market economy is able to react.’25
In an ambitious application of these principles, Cockshott and Cottrell proposed an outline for a planned economy in the European Union. They explained not just how you would calculate the plan, but also how you would have to restructure the economy to implement it. And it is here that the assumptions behind their methodology become clear: for all their dislike of what went wrong in the 1930s, this is still a form of cyber-Stalinism.
In their model, the de-marketization of Europe would be driven not primarily by nationalization, but by reforming the monetary system so that money began to reflect labour value.26 Banknotes would be overprinted with a ‘labour time figure’, allowing people to see the mismatch between what they were being paid for their labour and what they were being charged for products. Over time, the authors expect people to choose products closer to their true value; consumer choice becomes a mechanism for squeezing profit out of the system. A law banning exploitation would allow workers to claim against excess profit-making; the final aim being to eradicate profit altogether. Banking would effectively cease to be a means of building up capital, which would be done by the state, using direct taxation. The finance industry would be wiped out.
The huge service Cockshott and Cottrell perform here is not the one they intend. They show that to fully plan an early-twenty-first-century developed economy, it would have to be stripped of its complexity, see finance removed completely, and have radical behavioural change enforced at the level of consumption, workplace democracy and investment.
Where the dynamism and innovation would come from is not addressed. Nor how the vastly enlarged cultural sector would come in. In fact, the researchers make a strong case that, because of its decreased complexity, a planned economy would need fewer calculations than a market one.
But that’s the problem. In order for the plan to work, society in this project has to go back to being ‘plannable’. Workers interface with every aspect of Cockshott and Cottrell’s plan via ‘their’ workplace - so what happens to the precarious worker with three jobs; or the single mum doing sex work on a web cam? They can’t exist. Likewise, the financial complexity that has come to characterize modern life has to disappear - and not gradually. There can be no credit cards in this world; no payday loans; probably a much-reduced e-commerce sector. And of course there are no network structures in this model and no peer-produced free stuff.
Though the researchers decry the dogmatic idiocy of Soviet planning, their world view remains that of a hierarchical society, of physical products, of a simple system where the pace of change is slow. The model they’ve produced is the best demonstration yet of why any attempt to use state planning and market suppression as a route to postcapitalism is closed.
Fortunately, another route has opened up. To follow it we must exploit a granular, spontaneous micro-process, not a plan. Our solution must map comfortably on to a world of networks, info-goods, complexity and exponential change.
Of course, on the route to postcapitalism, we will have need of planning. Large parts of the capitalist world are effectively planned already - from urban design and construction projects through to the integrated supply chains of a large supermarket. It is the advance in processing power, the use of big data and the digital tracking of individual objects and components - using barcodes or RFID tags - that make this possible. That part of our project which requires planning would be well equipped because of this.
But the nature of modern society alters the problem. In a complex, globalized society, where the worker is also the consumer of financial services and micro-services from other workers, the plan cannot outdo the market unless there is a retreat from complexity and a return to hierarchy. A computerized plan, even if it measured everything against labour values, might tell the shoe industry to produce shoes, but it could not tell Beyoncé to produce a surprise album marketed only via social media, as she did in 2013. Nor would the plan be concerned with the most interesting thing in our modern economy: free stuff. Such a plan would see time spent curating a Wikipedia page, or updating Linux, exactly the same way as the market sees it: wasteful and incalculable.
If the rise of the networked economy is beginning to dissolve the law of value, planning has to be the adjunct of something more comprehensive.
André Gorz once wrote that the source of capitalism’s superiority to Soviet socialism was its ‘instability, its diversity … its complex multiform character, comparable to that of an ecosystem, which continually triggers new conflicts between partially autonomous forces that can neither be controlled nor placed once and for all in the service of a stable order’.27
What we’re trying to build should be even more complex, more autonomous and more unstable.
But change from one economic system to another takes time. If the postcapitalism thesis is right, what we’re about to live through will be a lot more like the transition from feudalism to capitalism than the one the Soviet planners envisaged. It will be long; there will be confusion; and in the process the very concept of an ‘economic system’ will have to be redefined.
And that’s why, whenever I want to stop myself being too Marxist about the future, I think about Shakespeare.
BIG CHANGE: SHAKESPEARE VS MARX
If you could watch Shakespeare’s history plays back-to-back, starting with King John and ending with Henry VIII, it would at first sight seem like a Netflix drama series without a central plot: murders, wars and mayhem - all set within an apparently meaningless squabble between kings and dukes. But once you understand what a ‘mode of production’ is, the meaning becomes clear. What you are watching is the collapse of feudalism and the emergence of early capitalism.
The mode of production is one of the most powerful ideas to come out of Marxist economics. It influenced a wide range of historical thinkers, and has come to shape our view of the past. Its starting point is the question: what is the prevailing economic system based on?
Feudalism was a system based on obligation: peasants were obliged to hand part of their produce to the landowner and do military service for him; he in turn was obliged to provide the king with taxes, and supply an army on demand. In the England of Shakespeare’s history plays, however, the mainspring of that system had broken down. By the time Richard III was slaughtering his rivals in real life, the power network based on obligation had been polluted by money: rents paid in money, military service paid for with money, wars fought with the aid of a cross-border banking network stretching to Florence and Amsterdam. Shakespeare’s kings and dukes killed each other because money had made all power based on obligation susceptible to being overthrown.
Shakespeare managed to get to the essence of it long before the words ‘feudalism’ and ‘capitalism’ were even invented. The signal difference between his history plays and the comedies and tragedies is that the latter depict the contemporary society his audience lived in. In the comedies and tragedies we are suddenly in a world of bankers, merchants, companies, mercenary soldiers and republics. The typical setting for these plays is a prosperous trading city, not a castle. The typical hero is a person whose greatness is essentially bourgeois and self-made, either through courage (Othello), humanist philosophy (Prospero) or knowledge of the law (Portia in The Merchant of Venice).
But Shakespeare had no clue about where this was going to lead. He saw what this new kind of economy was doing to the human character: empowering us with knowledge, yet leaving us susceptible to greed, passion, self-doubt and power-craziness on a new scale. But it would be another 150 years until merchant capitalism, based on trade, conquest and slavery, paved the way for industrial capitalism.
If you interrogate Shakespeare through his texts, and ask him: ‘what is between the past and the time you’re living in?’, the implicit answer is ‘ideas and behaviour’. Human beings value each other more; love is more important than family duty; human values like truth, scientific rigour and justice are worth dying for - far more so than hierarchy and honour.
Shakespeare is a great witness to the moment when one mode of production begins to falter and another begins to rise. But we also need Marx. In a materialist view of history, the difference between feudalism and early capitalism is not just ideas and behaviours. Changes in the social and economic system are critical. And at root, the change is driven by new technologies.
For Marx, a mode of production describes a set of economic relationships, laws and social traditions that form the underlying ‘normal’ of a society. In feudalism, the concept of lordly power and obligation pervaded everything. In capitalism, the equivalent force is the market, private property and wages. To understand a mode of production, another revealing question is: ‘what reproduces itself spontaneously?’ In feudalism, it is the concept of fealty and obligation; in capitalism, it is the market.
And here’s where the mode of production concept gets challenging: the changes are so huge that we are never comparing like with like. So when it comes to the economic system that replaces capitalism, we should not expect it to be based on something as purely economic as the market, nor on something as clearly coercive as feudal power.
For Marx, the modes of production concept led to a strict historical sequence: there are various pre-capitalist forms of society, where the rich get rich through legally authorized violence; then there is capitalism, where the rich get rich through technical innovation and the market; finally there is communism, where the whole of humanity gets richer because there is abundance instead of scarcity. That sequence is open to criticism from two angles. First, it can read like a quasi-mythology: human destiny looks pre-programmed to happen in three logical stages. Second, when used by historians looking backwards, it can lead to the application of simple labels to complex societies, or to imputing economic motives that simply didn’t exist.
But if we avoid the myth of inevitability and assert simply, ‘there must come a time when there is relative abundance, compared to the scarcity that has driven all previous economic models’, then Marx was only saying the same thing as Keynes said in the early 1930s: one day there will be enough goods to go around and the economic problem will be solved. ‘For the first time since his creation,’ Keynes wrote, ‘man will be faced with his real, his permanent problem - how to use his freedom from pressing economic cares … to live wisely and agreeably and well.’28
In fact, this three-phase view of world history is supported by data we now possess (and that Marx and Keynes didn’t) on population and GDP. Until around the year 1800, only Western Europe experienced a tangible rise in GDP per person, mainly after the conquest of the Americas; then, with the Industrial Revolution, per person growth took off spectacularly in Europe and America until around 1950, when its rate of acceleration increased again. Today, as the graph above shows, GDP per person rates are rising all across the world. The stage where all the lines go close to vertical is the one Keynes and Marx allowed themselves to imagine - and so should we.29
DRIVERS OF TRANSITION
What caused feudalism to collapse and capitalism to rise? Naturally that’s the subject of a gigantic historical debate. But if we think the transition to postcapitalism is going to be of a similar magnitude, then there are lessons to learn about the interplay between internal and external factors; the role of technology versus the importance of ideas; and why transitions are so hard to understand when you’re in the middle of them.
Armed with new knowledge, from geneticists and epidemiologists as well as social historians, we can list four probable causes for the end of feudalism.
Up to about 1300, feudal agriculture had been dynamic, raising GDP per head in Western Europe faster than anywhere else. But famines, beginning in the 1300s, signalled a decline in the efficiency of the feudal systems of land use: productivity could not keep up with population growth. Then, in 1345, the English king Edward III defaulted on his country’s debts, wiping out the Florentine bankers who had lent him the money. Though containable, this was just one symptom of a general malaise, and a warning that crisis in one part of feudal Europe might spread to all parts.
In 1347 the Yersinia pestis bacillus hit Europe. By 1353, the Black Death had killed at least a quarter of Europe’s population.30 For those who lived through it, the experience was spiritually transformative - like witnessing the end of the world. Its economic impact was stark: the supply of labour collapsed. Suddenly farm workers, who had been the lowest of the low, could command higher wages.
Once the plague was over a surge of economic struggles broke out - peasant revolts in France and England, worker rebellions in the key manufacturing towns of Ghent and Florence. Historians call this the ‘general crisis of feudalism’. Though the revolts failed, the economic balance was now tipped in favour of the urban worker and the peasant. ‘Agricultural rents collapsed after the Black Death and wages in the towns soared to two and even three times the levels they had held,’ according to historian David Herlihy.31
With wool prices high, many landowners switched from crops to sheep pasture - and unlike wheat, wool was for trading, not consuming. The old tradition of peasants being forced to do military service was replaced increasingly by cash-based mercenary warfare. And with workers scarce, labour-saving devices began to be invented.
Basically, the rat that brought the Black Death into Cadiz in 1347 triggered an external shock that helped to collapse an internally weakened system.
The second driver of change was the growth of banking. Banking had already become the sure-fire way to amass a fortune in the undocumented space between the official classes of feudalism: nobles, knights, gentry, clerks, etc. The Medicis created a transnational super-company in the fifteenth century, and the Fugger family of Augsburg overtook them once their influence declined.
Banking does not just systematically inject credit into feudal society, it injects an alternative network of power and secrecy. The Fugger and Medici families wielded unofficial leverage over kings through business - even as their activities were seen as borderline un-Christian. Everyone involved connived in the creation of a subtextual form of capitalism within the officially feudal economy.
The third big driver of capitalism’s takeoff was the conquest and pillage of the Americas, beginning in 1503. This created a flow of money to non-aristocrats way in excess of anything generated internally by the market growing, organically, within late feudalism. In a single load, the conquistadores stole 1.3 million ounces of gold from Peru. The huge amount of wealth imported into early modern Europe boosted market forces, craft manufacturing and banking. And it strengthened the power of monarchic states over the old independent towns and the now impoverished dukes in their castles.
Finally, there was the printing press. Gutenberg put the first one to use in 1450. In the following fifty years 8 million books were printed - more than all the scribes of Christendom had managed to produce since Roman times. Elizabeth Eisenstein, the great social historian of printing, points out the revolutionary nature of the print-shop itself: it brought together scholars, priests, authors and metalworkers into a business environment that no other social situation within feudalism could have created. Printed books established checkable knowledge and authorship. They fuelled the rise of Protestantism, the scientific revolution and humanism. If the medieval cathedral was full of meaning - an encyclopaedia in stone - printing destroyed the need for it. Printing transformed the way human beings think.32 The philosopher Francis Bacon wrote in 1620 that printing, gunpowder and the compass ‘have changed the whole face and state of things throughout the world’.33
If we accept the four-factor account given above, the dissolution of feudalism is not primarily a technology story. It is a complex interplay between failing economics and outside shocks. These new technologies would have been useless without a new way of thinking and the external disruptions that allowed new behaviours to flourish.
When we look at the possibility of transition beyond capitalism, we have to expect a similar complex interplay between technology, social struggle, ideas and external shocks. But our minds reel from the scale of it; just as they do when shown the size of our galaxy in the universe. We have a fatal tendency to push the dynamics of transition into simple categories and simple chains of cause and effect.
The classic Marxist explanation of what destroyed feudalism was ‘its contradictions’: the class struggle between peasant and nobility.34 For later materialist historians, however, the emphasis was on the failure and stagnation of the old system, giving rise to a ‘general crisis’. Perry Anderson, the New Left historian, drew an important general conclusion from this: that the key symptom of a mode of production transition is not the vigorous eruption of the new economic model. ‘On the contrary, the forces of production typically tend to stall and recede within the existent relations of production.’35
What are the other general lessons we might draw?
First, that different modes of production are structured around different things: feudalism was an economic system structured by customs and laws about obligation. Capitalism was structured by something purely economic: the market. We can predict from this that postcapitalism - whose precondition is abundance - will not simply be a modified form of a complex market society. But we can only begin to grasp at positive visions of what it will be like.
I don’t mean this as a cop-out: the general economic parameters of a postcapitalist society by, for example, the year 2075 will be clear from the next chapter. But if such a society is structured around human liberation, not economics, unpredictable things will begin to shape it. Maybe, for instance, the most obvious thing to the Shakespeare of 2075 will be the total upheaval in gender relationships, or sexuality, or health. Maybe there will not even be any playwrights: maybe the very fabric of the media we use to tell stories will change - just as it did for Shakespeare’s generation when the first public theatres were built.
Marxism, with its insistence on the proletariat as the driver of change, tended to ignore the question: how will humans have to change in order for postcapitalism to emerge? Yet if we study the transition from feudalism to capitalism it’s one of the most obvious issues.
Think of the difference between, say, Horatio in Shakespeare’s Hamlet and a character like Daniel Doyce in Dickens’s Little Dorrit. Both are secondary characters for the hero to use as a sounding board, both carry around with them a characteristic obsession of their age: Horatio is obsessed with humanist philosophy, Doyce is obsessed with patenting his invention. There can be no character like Doyce in Shakespeare; at best he would get a bit part as a working-class comic figure. Yet, by the time Dickens described Daniel Doyce, all his readers would have known somebody like him. Just as Shakespeare could not have imagined Doyce, so we too cannot imagine the kind of human beings society will produce once economics is no longer central to life.
Let’s restate what we know about the way the last transition happened and spell out the parallels.
The feudal model of agriculture collided first with environmental limits and then with a massive external shock - the Black Death. After that, there was a demographic shock: too few workers for the land, which raised their wages and made the old feudal obligation system impossible to enforce. The labour shortage also made technological innovation necessary. The new technologies that underpinned the rise of merchant capitalism were the ones that stimulated commerce (printing and accountancy), the creation of tradable wealth (mining, the compass and fast ships) and productivity (mathematics and the scientific method).
Present throughout the whole process is something that looks incidental to the old system - money and credit - but which is destined to become the basis of the new system. Many laws and customs are actually shaped around ignoring money; in high feudalism credit is seen as sinful. So when money and credit burst through the boundaries and create a market system, it feels like a revolution. Then, the new system gains further energy from the discovery of a virtually unlimited source of free wealth in the Americas.
A combination of all these factors took a set of people who had been persecuted or marginalized under feudalism - humanists, scientists, craftsmen, lawyers, radical preachers and bohemian playwrights like Shakespeare - and put them at the head of a social transformation. At key moments, though tentatively at first, the state switched from hindering the change to promoting it.
There won’t be exact parallels in the transition to postcapitalism but the rough parallels are there.
The thing that is corroding capitalism, barely rationalized by mainstream economics, is information. The equivalent of the printing press and the scientific method is information technology and its spillover into all other forms of technology, from genetics to healthcare to agriculture to the movies.
The modern equivalent of the long stagnation of late feudalism is the stalled fifth Kondratieff cycle, where instead of rapidly automating work out of existence, we are reduced to creating bullshit jobs on low pay, and many economies are stagnating.
The equivalent of the new source of free wealth? It’s not exactly wealth: it’s the externalities - the free stuff and wellbeing generated by networked interaction. It is the rise of non-market production, of un-ownable information, of peer networks and unmanaged enterprises. The internet, says French economist Yann Moulier-Boutang, is ‘both the ship and the ocean’ for the modern-day conquest of a new world. In fact, it is the ship, the compass, the ocean and the gold.
The modern-day external shocks are clear: energy depletion, climate change, ageing populations and migration. They are altering the dynamics of capitalism and making it unworkable in the long term. They have not yet had the same impact as the Black Death - but any financial collapse could easily wreak havoc on the highly fragile urban societies we’ve created. As Katrina demonstrated in New Orleans in 2005, it does not take the bubonic plague to destroy social order and functional infrastructure in a modern city.
Once you understand the transition in this way, the need is not for a supercomputed Five Year Plan, but for a gradual, iterative and modular project. Its aim should be to expand those technologies, business models and behaviours that dissolve market forces, eradicate the need for work and progress the world economy towards abundance. That is not to say we can’t take urgent action to mitigate risk, or address burning injustices. But it does mean that we have to understand the difference between strategic goals and short-term actions.
Our strategy should be to shape the outcome of the process that has begun spontaneously so that it becomes irreversible and delivers socially just outcomes as quickly as possible. This will involve a mixture of planning, state provision, markets and peer production. But space must also be left for the modern equivalents of Gutenberg and Columbus. And for the modern Shakespeare.
Most twentieth-century leftists believed that they did not have the luxury of a managed transition. It was an article of faith for them that nothing of the coming system could exist within the old one - though, as I’ve shown, the workers always held the desire to create an alternative life despite capitalism. As a result, once the possibility of a Soviet-style transition disappeared, the modern left became preoccupied simply with opposing things: the privatization of healthcare, the reduction of union rights, fracking - the list goes on.
Today we have to relearn to do positive things: to build alternatives within the system; to use governmental power in a radical and disruptive way; and to focus all our actions towards the transition path - not the piecemeal defence of random elements of the old system.
The socialists of the early twentieth century were absolutely convinced that nothing preliminary was possible within the old system. ‘The socialist system,’ Preobrazhensky once insisted categorically, ‘cannot be built up molecularly within the world of capitalism.’36
The most courageous thing an adaptive left could do is to abandon that conviction. It is entirely possible to build the elements of the new system molecularly within the old. In the cooperatives, the credit unions, the peer-networks, the unmanaged enterprises and the parallel, subcultural economies, those elements already exist. We have to stop seeing them as quaint experiments; we have to promote them with regulation just as vigorous as that which capitalism used to drive the peasants off the land or destroy handicraft work in the eighteenth century.
Finally, we have to learn what’s urgent, and what’s important, and that sometimes they do not coincide.
If it were not for the external shocks facing us in the next fifty years, we could afford to take things slowly: the state, in a benign transition, would act as the main facilitator of change through regulation. But the enormity of the external shocks means some of the actions we take will have to be immediate, centralized and drastic.