I am not sure that the theoretical work has been undertaken.

Possibly the understatement of the century.

I might start by differentiating between the market (a method of allocating resources) and capitalism (a system of ownership).

Ah, the old “capitalism has failed” chestnut! This is despite privately owned energy companies making more money than ever, as well as a number of other privately owned businesses making the most out of a hard year across most sectors.

The banking sector failed, the banking market collapsed spectacularly…and along with it due to it’s hand being a part of most of the rest of the world’s business some ventures have suffered, usually those *least* capitalist or at least smallest.

The only other thing that can be claimed to have failed is the system of business ownership based on credit and short-mid term losses leading to mid-long term profit.

Capitalism is still alive and kicking, and is actually doing perfectly fine considering, no matter how much people wish to try and paint this one sector failure as proof of something that isn’t happening.

It depends on what you mean by detailed. There are lots of ideas that have been worked out to varying levels of detail, but obviously none of them have been tried. For a start, you might look at:

* Michael Albert and Robin Hahnel’s “Participatory economics” (parecon), several books and articles online, the key text if you want the gory details is probably “A Quiet Revolution in Welfare Economics”

* David Schweickart’s “Economic democracy”, some articles online, or his books “Against Capitalism” and “After Capitalism”

But I don’t know how much luck you’d have in designing a sales campaign with mass appeal around these ideas (or indeed any sufficiently detailed idea).

Before basing a campaign for socialism on a blueprint for a better society, shouldn’t we ask whether or not that’s the most effective thing to do? Seems to me like there are many reasons why it wouldn’t be: a detailed blueprint is too much information for most people to handle (including experts); if there were actually any will to implement it, the details would anyway likely change in the process of doing so; providing too many details focusses the debate on excessively technical aspects of the problem (no idea could be so perfect that it stands up to all possible criticism).

Realistically, in the short term we’re not going to overthrow capitalism so it makes more sense in campaigning terms to discuss variations of it, but crucially it has to be variations that work towards a more revolutionary change (like the two I mentioned above). Maybe the best thing to do is to push for more workplace democracy and worker ownership. It’s consistent with many of the more liberal, anarchistic socialist ideas (bottom up rather than top down). If it can be shown to work it would provide living evidence that alternatives to capitalism can work. And by engaging in workplace democracy and having joint ownership, workers get a feel for what the theoretical ideas mean in practice, realise that self management is possible in practice and that top down authoritarian control isn’t necessary, and develop their abilities to engage in and understand their economic activity.

After reading such a load of pony, I take solace in the fact that extremists, stuck in a 19thC mindset, such as you, are a widely ignored minority. The danger is when you reinvent yourself as a smarmy respectable politician, as with too many ‘former’ commies in the Labour party. I guess, by writing for this site, you are already skipping along that red brick road.

The system of fractional reserve banking, fiat money and central control of interest rates has failed. Shut down the BoE, back up the pound 100% with gold and if that system collapses I’ll accept that booms and busts are an inevitable part of free market capitalism.

Call me stoopid, but what exactly is/was so daft about some forms of market socialism discussed in the book of that name edited by Bardhan and Roemer, or with the ideas of the real utopias project:
http://www.ssc.wisc.edu/~wright/RealUtopias.htm
to name but two?
The problem isn’t that there’s no alternative to capitalism, but that there are so many to choose.

I think all it demonstrates is that a financial system run by the state has failed. We need a system based on sound money, rather than politically legitimated regulation of unsound money.

Anyway, as P.J. O’Rouke said: “The free market is dead. It was killed by the Bolshevik Revolution, fascist dirigisme, Keynesianism, the Great Depression, the second world war economic controls, the Labour party victory of 1945, Keynesianism again, the Arab oil embargo, Anthony Giddens’s “third way” and the current financial crisis. The free market has died at least 10 times in the past century.” ( http://www.ft.com/cms/s/0/2802e3a8-f77c-11dd-81f7-000077b07658.html?nclick_check=1 )

So the free market will be back in some form or another. The question is whether we are going to let special interests and classes get their claws into it even further, or whether we can finally offer a more purified version of the market, without state licensed monopolies, especially when it comes to our financial system.

I think you provide some excellent analysis and clever reasoning against the FT piece, and pose the dilemma we on the left all face in this period of flux.

The problem, one which we all are trying to contend with, is a genuine solution. This blog post, for its excellent reasoning, is a self fulfilling prophecy – the left have yet to offer a credible alternative, I will confirm that fact by repeating that without solution.

That is not an inherent criticism, there are minds far more cognizant than my own struggling with this problem, but I feel we need to be less analysis heavy and bolder (and more explicit) in our prescriptions.

Of course, I am about to do exactly the same I say I haven’t got the solution (I know haha), but a lot of it is about tying together relatively disparate thread of the left wing analysis into one coherent ideological grouping. It’s a problem to consider when you think about the ‘anti-globalisation’ movement, whose greats handicap is its inability to project a united voice.

Whether this is not necessary, with a more pluralistic approach to bringing those threads together being a better approach, is of course a worthwhile point to explore. Perhaps there isn’t a need or indeed cats in hells chance of crystallising that approach, but we do need a better defined approach to a more equal and progressive economic model.

Richard: Don’t you remember what happened last time we implemented the gold standard?

Nick: Don’t you remember what happened last time we attempted to implement the ideas of Friedman?

Lee – 2

This is despite privately owned energy companies making more money than ever,

Really? You mean that they, all of them, are charging the earth and getting away with it. There is no real competition, for if one raises their price the others follow – there is one who says that they will reduce prices – all you get is an idiotic government saying that they will increase the winter fuel allowance.

If they won’t reduce their prices – make them. Take just one of them back into public ownership and see how many people goes over to that company because it is the cheapest.

“Nick: Don’t you remember what happened last time we attempted to implement the ideas of Friedman?”

I’m not advocating Friedman’s “Chicago economic” monetarism, although that worked not so badly in areas it was applied consistently in Eastern Europe (and not in Russia). I think we should be looking at more radical solutions pointed to by Austrian economics, which might involve a return to commodity backed currencies (with a stricter regime for banks that deviate from their means), or simply de-monopolising currencies so that it is no longer just state actors that are allowed to issue them.

What is needed if we are going to keep capitalism is that COMPETITION should become much more important than it is. One of the biggest lies told by capitalist business men is that they like competition, Bullshit, they hate competition because it is hard work. It means they have to keep coming up with new products and services, and that means employing good people and paying them well to do so. When I hear that a bank or business is too big to fail, then my view is that it should never have been allowed to get so big in the first place. Corporations must not be allowed to just take over their competitors. It is the lazy way for business men and shareholders to take.

This requires strong regulation, and not the ‘leave it to the market’ Thatcher/Reagan claptrap that has created this mess. There are too many cartels, rigged markets to allow the benefit of competition to flourish. Shareholders have shown that they are totally useless and lazy when it come to controlling their business’s. They have turned a blind eye to what the boards of the company’s they own do are in no position to lecture about their rights.

Sally – Why restrict yourself to regulation? The owners will simply find loopholes and use their fantastic wealth to ferment opposition. We’ve been here before, of course. We need to break this cycle of disaster-boom-deregulation-disaster. What we need is ownership.

The financial sector is a lot more regulated in Germany, Japan etc than it is in the US and the UK. So the conclusions people reach will depend largely on how well they do. Right now, they are in just as much trouble.

Personally, I cannot but help think of Nassim Nicholas Taleb:http://en.wikipedia.org/wiki/Taleb

http://www.amazon.co.uk/Black-Swan-Impact-Highly-Improbable/dp/0141034599/ref=sr_1_1?ie=UTF8&s=books&qid=1236713520&sr=8-1

12 – 13

100% agree!

Sally,

you might enjoy the book saving capitalism from the capitalists

“Richard: Don’t you remember what happened last time we implemented the gold standard?”

You are presumably referring to the gold exchange standard of the 1920s which we went onto at an overvalued rate and which still allowed for credit inflation by the banks.

Here’s another ref – Amartya Sen in the FT

“The economic difficulties of today do not, I would argue, call for some “new capitalism”, but they do demand an open-minded understanding of older ideas about the reach and limits of the market economy. What is needed above all is a clear-headed appreciation of how different institutions work, along with an understanding of how a variety of organisations – from the market to the institutions of state – can together contribute to producing a more decent economic world.”

http://www.ft.com/cms/s/0/8f2829fa-0daf-11de-8ea3-0000779fd2ac.html

Companies have become like estates managed by stewards for an absent owner ( the share holder) . Consequently, the steward runs the estate for his benefit not the owners. Canada does not have a problem with it’ banks and the Standard Chartered Bank is in a good shape. Therefore let us look at those countries and banks which are successful.

“What is needed if we are going to keep capitalism is that COMPETITION should become much more important than it is”

For once, I agree completely with Sally on something. Though competition or not is largely irrelevant on if capitalism “works”, which is why some arguments here about energy companies only having the profits they have because of oligarchies are irrelevant, since one way or another that level of money (or per person commitment to spend) is going in to a capitalist system regardless of number of providers and they are succeeding.

If you’re talking about social impact of monopolies, oligarchies and unregulated sectors then fine…Capitalism “isn’t working” and hasn’t been for a long while, the banking sector collapsing changes nothing. But this article seems to present it as if capitalism has just crumbled or got worse…it hasn’t.

As for the argument about needing to own these places, I fail to see how that would have averted this situation. Whether privately owned or publicly owned there would have been the same sorts of people a) at the top of our banking sector and b) working in non-socialist systems in the US. The same errors would have been made, the fact that we know our Treasury knew about and agreed to bonuses means that we know recklessness would not have been dissuaded while the profits rolled in, and we also know from our governments actions that they wouldn’t have listened to expert advice if it ran contrary to short term success either.

What failed was the way people acted and made decisions, that would have happened in any other system where such decisions would have been able to be made. Hopefully now we can learn to be more sensible, but again this doesn’t require ownership either…simply regulation so that the experts MUST be listened to, and on that front that regulatory bodies actually do what they’re formed to do (i.e. ofgem actually halting oligarchies and not letting social inequality occur, for once)

“Take just one of them back into public ownership and see how many people goes over to that company because it is the cheapest.”

Why do you assume they would be any cheaper? Take out of the equation some mystical government that would run the business at break even, or even just leave room for capital investment and self-sustaining profit for development and advancement, we know that ours don’t roll that way.

Do we need to remind everyone that in areas where the government, or at least the country, has the ability to put controls on prices they have done nothing to curb them, certainly not until they have already got far more expensive than they should be? See energy prices, see train travel prices…

Sally – I agree entirely with your first paragraph and only disagree on your solutions. Behind most cartels you will find government legislation either deliberately or unintentionally allowing it to function. But you are right in that any de-regulation that does take place cannot be in the fairly gross way that the Conservatives tend to do it, it needs to be targeted to allow competition in and prevent incumbents from getting embedded.

” Behind most cartels you will find government legislation either deliberately or unintentionally allowing it to function.”

I can’t agree with that. Tesco has not become so big because it just offers good service .It also turned itself into a land bank and bought up land that stopped its competitors from opening up stores to compete against it. That is exactly the kind of ant competitive techniques that business use. In America it is common for big corporations to offer shops discounts for their products on the condition they don’t stock their competitors products. This is anti competition, and has nothing to do with govt policies. The Right has always seen this as just ‘business as usual’ and nothing to get involved with.

Some of the more nutty right-wingers in America say that if a company can take over all it’s competitors then that is just fine ,and the free market working . I say it is just privatized communism.

Well, ok I guess I don’t consider Tesco to be a very successful cartel as there are plenty of rivals, both actual and potential (for as soon as Tesco slip up). I am sure they do benefit from the economies of scale required to have a decent legal department to force through various developments. And I believe a strategy of land banking can only really succeed when obtuse planning laws artificially limit the amount of land available for development in the first place.

So I don’t think Tesco is a great example, and in so far as it is, I think you will still find there is plenty of legislation that helps to enable the strong to bully the weak.