When the world economic crisis erupted in 2008, something that’s usually denied or not understood about global capitalism came into sharp focus and demanded some straight talk about its character and the price it exacts. In the following years, Greece suffered a debt crisis that almost ended in a revolution, the Arab Spring came and went, Brexit battered Europe, life expectancy in the U.S. began to decline for the first time in a century, and now we have the coronavirus pandemic. The longer the present crisis persists, the more its character shifts and its true significance is revealed.
It’s already clear to everyone that the crisis is not only about health: The “danger” accompanying it, which will linger long after it ends, is the collapse of global capitalism. To paraphrase a popular Hebrew song, it can be said that behind everything we do now lurks the global financial system. This state of affairs reminds us persistently – and contrary to those who think that society is a collection of individuals and separate spheres of life – that our whole way of life is ultimately bound up with the capitalist order.
To some degree, we have been anticipating the apocalypse for some time already. The immense popularity of hundreds of films, novels and television series revolving around global catastrophe is only one indication of the childish desire to have someone come and put a stop to everything.
This exercise of the imagination attests simultaneously to two complementary tendencies. On the one hand, an all-consuming but repressed rage against an existing system that not only foists a life of futility on us but also demands that we treat everything as “awesome” and “mind-blowing”; and, on the other hand, vast conceptual poverty and intellectual and political feebleness. As the American cultural theorist Fredric Jameson noted, it’s easier to imagine the end of the world than it is the end of capitalism. It follows that what is needed now is not only a vaccine for the coronavirus but also serious thought about the end of the existing order and a transition to a post-capitalist way of life.
Intuitively, to encourage post-capitalist thinking, we will mention what befell the social order during the pandemic. Across the world, functioning states grasped that, above all else, they had to ensure that their citizens remained healthy and had food, water and hopefully a roof over their head, along with access to essential services such as electricity, internet and the like. The purpose of having the state take responsibility for such things, it’s quite clear, is to fulfill basic human needs with a minimum of working hands. A great many people were not working, and money in the form of government payments has reached them with no direct connection to work. This is an order in which surplus consumption has plummeted to zero and ceased to be a formative social desire; air pollution also decreased; and people discovered how difficult, or how wonderful, it is to spend more time with those close to them. With time, more and more social services were offered for free , and those who had no immediate income worries found time to do things they had never been able to do before.
Beneath the panic and hoarding of toilet paper, we can discern principles of a sustainable alternative order. We would note, then, that the crisis does not stem from the spreading death or from the collapse of the social order – on the contrary, those aspects of life were more or less under control. What really has collapsed and been exposed as superfluous has been the capitalist system, which sits like a parasite on top of the existing order. That system is collapsing not because we are unable to take care of our needs, but because it is impossible to make profits under the current circumstances.
Accordingly, post-capitalist thought in the global era begins with a distinction between two world orders, two social orders. One is the capitalist order we are familiar with, in which the purpose of work and the purpose of human relations are subordinated to profit-making. This is an order that, though it improves technological capabilities and well-being, also endangers our health, destroys nature, renders work insipid, nullifies the value of academic knowledge and condemns multitudes to a wretched existence. The subordination of human endeavor to profits is at the heart of the coronavirus crisis and determines the form it takes in each country. Those who thought that the purpose of human life transcends profits imposed a lockdown very quickly; those who tarried or, worse, thought that the elderly could be sacrificed, preferred economic profit over human life.
Unlike the socialist and communist attempts at remaking society in the 20th century, a post-capitalist existence does not revolve around work, but the opposite: around humanity’s liberation from work as a necessity.
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An alternative post-capitalist order entails acting according to the following principle: doing away with the subordination of life to profit-making and gradually steering life toward common human goals. Within an order of this kind, the true resources of human life are not money but work, knowledge, time and nature. And the purpose of life is not profit but freedom.
Unlike the socialist and communist attempts at remaking society in the 20th century, such an existence does not revolve around work, but the opposite: around humanity’s liberation from work as a necessity. Existing research, as well as our personal experience, shows that capitalism itself is already leading in that direction. Automation, which is increasingly replacing people in many areas of work, as well as the tremendous wealth that has already been produced, enables work as a necessity to be disconnected from wealth. In a world of this kind we ask ourselves, for example, what can be done to shorten the work week to 20 hours, and how the hours that are still bound up with work will be channeled into the future creation of leisure time. In contrast to the Romantic approach, a life of this kind will not be the exclusive preserve of artists, academics or bored millionaires who decide to write a novel; it will encompass the entire population.
Here we propose a number of concrete examples for post-capitalist thought. Some are more radical, others less so, but all of them are oriented in the same direction toward a world in which social life is not subordinate to profit-making.
The common good
It currently looks as though there are private companies that need to be rescued if we are to prevent a world economic collapse. This is a phenomenon that’s familiar from previous crises, notably the 2008 debacle. At that time, the United States printed nearly a trillion dollars to save the Wall Street bankers, the insurance companies and domestic automobile-makers. Whether these entities should have been rescued is arguable, and indeed public discourse focused on that very question. However, there was an even more critical question to consider: How could the sudden weakness of the giant corporations be exploited in order to begin building a far more egalitarian and democratic economic world? Regrettably, that question was not asked. In effect, the administrations of George W. Bush and Barack Obama wrote an open check to corporate America, and did not make the hundreds of billions of dollars of the bailout contingent on any meaningful structural change.
The myriad of rescue packages being offered today by the American government and the Federal Reserve do not appear to be significantly different. Giant corporations are now receiving an incomprehensibly vast amount of money at cheap credit terms from the Trump administration through massive intervention in the capital markets, but there is no guarantee that the money will not remain mostly in the pockets of the ultra-wealthy, as it did following the 2008 crisis.
How can the temporary impairment of the top one-thousandth of the population be exploited to start fashioning a better and far more equitable economic world? A world in which conglomerates, stock market investors and private bankers do not determine our economic, social, environmental and political existence. In which humanity’s loftiest purpose is not to maximize profits and the price of stock shares but to improve the condition of the majority of society.
Undoubtedly, a wide range of conventional, familiar possibilities exists, but there is one idea, at least, that offers considerable potential for deep, structural change: to compel the firms receiving rescue funds to “pay” for them in the form of stock, and with that stock to create a sovereign wealth fund that will be jointly owned and controlled by the citizenry.
This option has many advantages. First, the public must stop accepting a status quo in which states “nationalize” the losses of companies that collapse during a crisis, while in better times their prodigious profits are completely privatized and do not enter state coffers. In this sense, there is nothing especially radical about the idea being proposed here. The state would simply behave very much like a hedge fund, an investment bank or an institutional investor: In return for an investment, a large number of shares are received along with a right to future profits when the companies recover. In this case, however, the future dividends and profits from the most powerful companies would not enter the pockets of a few investors from the uppermost percentile; they would go into the sovereign wealth fund, whose shares are owned equally by all the country’s citizens.
In addition to the egalitarian distributive elements involved, this would also be an opportunity to democratize the economy. In many corporations around the world, ownership of shares is very decentralized. Thus, with relatively few shares, one can exert a powerful influence on the general direction a corporation is taking. Currently, that power is in the hands of a small group of private asset managers.
For example, there is a good possibility that, with a generous enough bailout, the sovereign wealth fund would be in a position within a few years to determine the identity of some board members and even to appoint representatives on its behalf. Through said representatives, chosen by the fund’s shareholders, it becomes possible to start transforming the organizational culture and order of priorities of these companies from within. For instance, a company’s priorities could be shifted from blind maximization of share values at any price, to long-term investments that are beneficial to society’s needs or that enhance employees’ working conditions.
Another outcome of this move could be the democratization of capital and the creation of a situation in which the ordinary citizen has a say in the allocation of resources – perhaps the most fateful decision in every human society. The democratization of capital would be even more meaningful in cases sovereign wealth funds replace our current financial institutions, such as banks, insurance companies or mutual funds. In such instances, not only will it be possible to allow the representatives of the public who are managing the fund to influence the internal policies of specific corporations, but also to decide in which institutions, projects and businesses they should invest their vast pools of capital in the first place.
Should a mutual fund invest, say, in real estate in Warsaw, or perhaps in solar energy infrastructure and a nationwide network of electric trains in Israel? When the private market injects capital into certain resources solely according to monetary considerations – and not also according to the needs of the citizenry and social revenue – it’s easy to figure out which decisions will be made. Many Israelis are caught in traffic jams and breathe dirty air, while their pension funds are used to build more glittering malls in cities where they will never set foot.
Schools, not malls
Credit unions are cooperative bodies that provide various financial services to their members, including management of bank accounts and loans at relatively low interest for diverse purposes. Like other cooperative bodies, these unions are owned and controlled by the members themselves. Their motivation is not profit; rather, they work to further their members’ well-being and financial stability.
Universal basic income is above all a tool to liberate humanity from the oppressive feeling that accompanies economic uncertainty.
This is not an especially new invention. The first credit unions were established in Germany in the mid-19th century. By the end of the century, similar institutions had sprung up in most other European countries; the first credit unions were founded in Canada and the United States in the early 20th century. The World Council of Credit Unions was established in Washington in the early 1970s. It now represents (as of 2018) more than 85,000 credit unions in 118 countries, which provide financial services to about 274 million members and manage assets worth over $2 trillion.
Credit unions play a significant part in the economic development of the communities in which they operate. Instead of the money deposited in them being used to finance luxurious residential dwellings thousands of kilometers away, most of these unions encourage investments in local projects that have some social and community value.
Examples abound. In the early 1990s, the Self-Help Credit Union, which was founded in 1980 in North Carolina and currently serves about 150,000 members, began investing in the purchase and management of local real estate, including affordable housing and property for communal organizations and small businesses. To date, this union has assisted in the development of more than 100,000 square meters of commercial space. Since 2009, VanCity, a Canadian credit union founded in 1946, which currently serves more than half a million members, has invested in increasing the supply of affordable housing throughout British Columbia.
Manhattan’s Lower East Side People’s Federal Credit Union was established in the mid-1980s – a period in which the crime rate and the large-scale departure of well-to-do residents led commercial banks to shut down local branches, leaving an extensive population with no access to financial services. To date the credit union has provided loans totaling more than $100 million for housing, businesses and community projects.
On the assumption that the transition to a post-capitalist society takes place gradually, and not through disintegration of the present social order by way of a violent revolution, the institutions and organizations on which the new social order would rest will have to spring from current economic structures, while contending with the rules of the game as dictated by the existing order. Credit unions can fulfill a significant role in creating the space needed for a development of this kind, by providing financial backing for forms of organizations that are based not on maximizing profits but on cooperation and mutual aid.
This sort of role is being played by the Caja Laboral Popular Cooperativa de Crédito (Workers Credit Union) in Spain, a federation of cooperatives that are active in industry, commerce and knowledge. As the financial arm of Mondragon Corporation, a federation of workers cooperatives in the Basque region, the union provides banking and other financial services to more than 200 organizations and cooperatives and to tens of thousands of workers who jointly own the corporation. Similarly, Desjardins Group, a federation of the largest credit unions in Canada, supports cooperatives in different spheres of activity through a special investment fund and close financial oversight
In the United States and Britain, the importance of credit unions to local economic development is widely recognized. Many are classified as community development financial institutions, which gives them access to governmental funding programs and grants that are unavailable to commercial banks. In Israel, regrettably, the regulator mostly creates serious obstacles, in such cases. The Ofek (Horizon) credit union, founded in 2012, has been waging a persistent struggle to obtain the authorization required to launch banking activities. Even though the protocol for establishing credit unions was formalized as part of the 2016 Arrangements Law (within the state budget framework), Ofek is still waiting for approval from the commissioner of capital markets, insurance and savings to launch its activity.
The major question hovering over every description of a (nearly) workless world is that of livelihood. In other words, how can the connection between income and work be severed and still enable us to live a dignified existence? A central solution that has generated a great deal of thought for some time is that of universal basic income. The concept refers to an amount of money that constitutes a basic level of income and is granted universally to every citizen, without a time limit and unconditionally. Thus, it makes no difference how much a person has in her bank account, what her job is, the hours she works and what she produces, or even if she chooses not to work at all – she will receive a monthly sum from the government that will allow her to enjoy a dignified existence.
The idea of a UBI is not new. Different versions of it have come up intermittently, starting in the 19th century: Recently, tech tycoons including Mark Zuckerberg and Elon Musk have expressed interest in the concept. They agree with many others who see a basic income as a good solution for ensuring a life of dignity in a world where the automation of assembly lines and of service industries will become so widespread that there won’t be enough jobs that pay a decent wage. In other words, because it is far from certain that in the future we will be able to rely on work to supply the income required for all people in a society to subsist, the guarantee of a regular, unconditional income is a possible and proper substitute. Supporters of basic income can be found at both poles of economic thought, but while those on the left see it as a supplement to the existing public welfare system, with certain adjustments, the right wing sees it as a substitute for the public system.
The first logical reaction to the UBI idea is to ask how much money is involved. In May in the United States, for example, the federal government began to hand out payments of $1,200 for every adult and $500 for every child to help them to contend with the impact of the coronavirus crisis (most U.S. citizens will receive the grant without being subjected to a means test). In Spain, operative plans are being drafted that would provide a universal basic wage totaling about one-fifth of the median wage, and there is a chance it will be launched on a permanent basis even after the crisis ends. Countries from Finland to Canada, to Kenya and Brazil have already initiated similar programs, with the amount provided set at varying levels.
In Israel, the amount of a UBI could be established on the basis of the minimum wage, which is currently 5,300 shekels ($1,536) a month, although already now if the two heads of a household earn minimum wage and decide to have more than one child, they will end up close to the poverty line.
In any event, any determination of the basic level of income is dependent not only on the social-economic situation of any given society and its available resources, but also on the way that income is affected by a whole array of public services and socio-economic arrangements. In countries like the United States, in which public health insurance barely exists, the criteria for the minimum sum required for a dignified existence also would have to include private health insurance. In Israel, where the entire public has reasonable health coverage without regard of income, a UBI might not need to include private coverage.
Accordingly, the second logical reaction concerns the source of funding for universal basic income. This issue has sparked the most widespread arguments, coming from both the right and the left, against implementation of such a scheme. The criticism refers not only to the expenditure side but also to that relating to state income from taxes and the damage to the economy if, as some worry, UBI would lead people to simply stop working, or to very little, thus adversely affecting the overall economic wealth of the country. In other words, opponents will say, on top of the fact that such a plan would add hundreds of billions of shekels to the government’s annual expenditures – the plunge in tax revenues would be so dramatic that the country would simply cease to function.
Naturally, the necessary funding resources would depend on the amount of income that is decided upon and is to be apportioned. Higher taxes on capital and, especially, on use of non-renewable natural resources, savings in the costs of maintaining the existing welfare system and reallocation of other public resources that are no longer needed to the same extent – these are just a few possible ways to underwrite a basic income scheme (without even considering the 50 billion shekels that Israeli citizens deposit every year in the pension savings market, a significant part of which may now be superfluous).
In a competition-driven economic system, each individual is expected to try to augment his share of the pie as much as possible, even though the world is limited in resources. The consequence will ultimately be the eradication of humanity.
Nevertheless, it must be stated frankly that the future of employment markets everywhere is shrouded in a fog so thick that it is difficult today to assess the effect UBI would have on a labor market that’s likely to be very different from the one we are familiar with. In light of this uncertainty, extremely gradual progress toward an arrangement of this kind would seem to be called for.
The economic arguments are important but miss the main point. Universal basic income is not only a tool for coping with a jobless world, and not only a tool that ensures that people do not live in poverty. In a post-capitalist world, basic income is not just part of a whole network of social and economic arrangements that would enable such a scheme to be viable: It is above all a tool to liberate humanity from the oppressive feeling that accompanies economic uncertainty. It is a tool of liberation from the oppressive feeling that comes with the need to choose between work and leisure, between the need to provide for one’s family or to be with one’s family and to pursue a lifestyle that is not profit-driven. A universal basic income is a tool of support for our emotional well-being, which is itself a requisite for self-fulfillment. In fact, if there is one clear and agreed-upon finding from Finland’s brief experience with a basic income, it is that the modest payout significantly increased satisfaction with life and dramatically reduced the psychological pressures felt by its recipients.
Competition is a vital part of the capitalist system. When producers improve their products, they do so in order to drive out other competitors from the market. This is the mechanism that economists assume produces constant progress, but reality is much more complicated. The competitive model is based on questionable assumptions about human morality. It presumes that humans are driven solely by self-interest and thus discounts mechanisms of cooperation and dependency that are integral to every human society. Often the laws of competition, producing winners and losers, are organized arbitrarily such that the results do not correspond to the original goals. This is very clear in academic work, where competition over prestigious publications gradually substitutes quality for “success.” Feminist approaches to economics, such as those of Nancy Folbre and Julie Nelson, criticize the concept of competition and its notions of scarcity, individuality and self-interest as prime causes of the exclusion of women.
In a competition-driven economic system, each individual is expected to try to augment his share of the pie as much as possible, even though the world is limited in resources. When this is the objective toward which everyone is striving, the consequence will ultimately be the eradication of humanity. This situation is the basis for what the American ecologist Garrett Hardin termed in 1968 the “tragedy of the commons”: When everyone maximizes their own interests, there’s no one left to maximize the benefit of the public assets that are shared by all, with the result being that these assets undergo systematic annihilation. Hardin’s solution – private ownership – has been refuted by reality numberless times.
But in reality the contradiction between market competition and so-called common systems is less sharp than in theory. American economist Jeffrey Sachs, an ardent advocate of the Nordic model, showed how most of those countries successfully integrate a competitive market that includes private ownership, and a governmental sector that is responsible for the education and health systems and for the police and firefighting forces. The Italian-born economist Mariana Mazzucato showed in her 2015 book “The Entrepreneurial State” that it was the American governmental sector that financed in practice most of the technological innovations of the 20th century: the touchscreen, the internet, GPS, the computer mouse and more.
Of course, models of sharing do not necessarily have to be governmental. Elinor Ostrom, the late American political economist who won the 2009 Nobel Prize for Economics, proposed a distinctive model for managing public resources without governmental regulation, which succeeds in averting Hardin’s tragedy of the commons.
On the basis of international research, Ostrom showed that in many cases residents succeed in optimal management of public assets – such as local water sources or pasture land – not by privatization nor by nationalization, but by adhering to a few basic conditions, such as abiding by clearly defined limits of ownership, internal supervisory mechanisms and arbitration entities that operate with optimal transparency.
Ostrom’s principles of “common pool resources” is especially well suited to instances where local industry is harmful to the environment, such as the Haifa oil refineries or the Dead Sea Works, here in Israel. Severing the connection between the economic return that industries like these provide their owners and their consequences vis-à-vis the environment is disastrous, and one way to improve the situation is to involve local residents in their management.
These suggestions, along with many others, constitute only a first step toward a post-capitalist world. If until 2008 it was possible to conceive of a universal basic income, a short workweek, cooperatives and more as utopian ideas – in the past decade, we have increasingly understood that it is precisely the neoliberals, who think the present system can continue as is, who are deluded.
It is urgent at this time to think not only about local solutions for the coronavirus pandemic, but about principles of transitioning from a profit-based society to one founded on human needs. A political and social approach of this kind requires new political thinking and creativity that transcend the limitations of identity politics on the one hand, and the social-democratic tradition on the other. This is the time to articulate new political demands and to reinvent the universal.
The authors are working on post-capitalist modes of thought and civil action at the Van Leer Jerusalem Institute.