Cooking the Books: Reform or Revolution?

‘Capitalism Needs Reform, not Revolution. Dealing with the trouble spots will work better than starting over’ was the headline of an article by Noah Smith in the US financial magazine Bloomberg on 29 March.

‘When’, Smith began, ‘even leading economists are questioning the very idea of capitalism, you know the system is in trouble.’ One of those he named was Raghuram Rajan, a former governor of India’s central bank and now professor at a Chicago business school. Interviewed on BBC Radio 4 (12 March) Rajan opined: ‘I think capitalism is under threat because it’s stopped providing for the many, and when that happens, the many revolt against capitalism.’

Smith went on to set out the classic case for mending rather than ending capitalism:

‘For much of the 20th century, the big idea was to construct an alternative system – socialism, communism or anarchism – from the ground up. But that approach largely failed, for any number of reasons. Economic systems are complex constructs that evolve over time – even a very smart group of people is going to make huge mistakes if they try to engineer something totally different. And the implementation of radical social change is never easy – revolutions tend to be violent and chaotic, and the people who wind up in power are often those who are most concerned with preserving their dominance rather than providing for the material welfare of the people they rule over. Instead, it seems overwhelmingly likely that the most successful approach will be to modify the current system – to reform rather than revolt.’

This conclusion begs the question by assuming that capitalism can be modified to work in the interest of the many. All the evidence is that it can’t be. As an economic system capitalism is based on pursuing profits, a pursuit which has to take priority over providing for people’s needs. This explains the ‘trouble spots’ of global warming, unaffordable housing and high education and child care costs that Smith singles out as requiring reforms to capitalism.

Since capitalism is the cause of these and many other problems it is ultimately futile to try to deal with them while leaving capitalism intact. That’s just trying to alleviate symptoms while leaving the cause unchanged. To overcome them requires replacing a system geared to profit-making and the accumulation of capital by one geared to meeting people’s needs. This is only possible on the basis of the common ownership and democratic control of productive resources; a revolution in the basis of society, to remove their cause,

Bringing about socialism is not a question of ‘a very smart group of people’ trying ‘to engineer something totally different’. The revolution from capitalism to socialism is not a ‘revolt’ in which such a minority seizes power. That doesn’t work, as Smith rightly pointed out. Socialism cannot be imposed from above. It can only be established by a majority who want and understand it and are organised and act to bring it about.

Nor does it involve ‘starting over’ and reconstructing society from scratch. Capitalism has already built up the technical and administrative structure that makes socialism possible. The socialist revolution consists in a charge in social relations regarding the control and use of this structure; it becomes commonly owned and democratically controlled. With this revolutionary change in basis of society, production can be geared to directly meeting people’s needs and the problems generated by capitalism solved once and for all. Otherwise they continue, however much reformists try to reform capitalism.