Capitalism and the fallacy of reform

Recently, Sir Keir Starmer announced his ambition for a ‘patriotic economy’ through the championing of home ownership and the building of new model towns. Evidently, the Labour leader is attempting to harness the middle ground, by blending Thatcher and Attlee. Many recall the faux revolution of ‘right to buy’ which, forty years on, has spawned a social housing crisis. Throw in the legacy of the 1946 New Towns Act, which sought to construct model towns in the aftermath of the Second World War, and you have yet another Social Democratic fudge to reform capitalism.

Starmer is not alone in seeking to reinvent the wheel. Every Labour leader has bound themselves to the yoke of the system. Ramsay Macdonald all too willingly succumbed to the protracted economic crisis of the interwar years, content at playing establishment bank manager in a period of decline. The Attlee Government, despite the strides made in welfarism, struck the rocks, and yielded to the rules of capitalism, laying the course for twenty-five years of Butskellism. Harold Wilson had us believe that a new Britain could be forged in the white heat of technology, but this fire burned in the hall of capitalism, prostrated by markets and a depreciating pound. James Callaghan surrendered what vestiges of leftism remained, implementing the kind of monetarism Thatcher later claimed as her own. Need anything be said of Tony Blair and Gordon Brown – the would-be heirs to the Iron Lady?

No, the British labour movement, like so many Social Democratic movements the world over, has always been a willing hostage to capitalism, engaging in a futile quest to reform it, rather than introduce socialism. In some respects, they cannot be blamed, for the boom-and-bust integral to the existence of capitalism has attracted many in vainglorious quests to improve it and acquire the eternal elixir of socioeconomic harmony. Many also point to the idea that capitalism has in fact undergone transformations as justification for reform, such as the shift from industrial capitalism to the information age. The rise of technology and globalisation has apparently altered the dynamics of production, trade, and employment. Some have also claimed the attainment of adaptation within capitalism – the Nordic model, exemplified by countries like Sweden, Norway, and Denmark, supposedly combines capitalist elements with a strong welfare state. This model allegedly seeks to prioritise social equality, education, and healthcare, challenging the notion that capitalism must follow a rigid, laissez-faire approach.

However, reformist approaches are an illusion and cannot ameliorate the structural antagonisms which provide the fundamental basis for capitalism. Even in the venerated Nordic economies high inflation and interest rates, youth unemployment and poverty persist. Finland is in recession while the Swedish economy is weakening. Norway, propped up by oil and gas exploitation faces fiscal challenges with high public spending. The message is clear: under capitalism, boom will always lead to bust.

The system requires inequality and the exploitation of workers, else there would be no profit or incentive to accumulate. Over the past hundred years, Social Democratic efforts to introduce welfarism and redistribution have failed to eradicate this inequality and exploitation. Today, the rich are richer and the poor poorer. The gap has widened, and reformism has served only to pacify the masses so that the top one per cent can acquire more. Today, the poorest 50 percent hold only 8 percent of global wealth, while the richest 10 percent earn over 50 percent. The top 1 percent alone owns 35 percent of global wealth, takes 19 percent of income, and emits 17 percent of global carbon emissions (International Monetary Fund, Global Inequalities). This has occurred despite the founding of welfare states in some countries, free healthcare, state education, social security, and the ‘redistribution’ of wealth.

It appears the capitalist system has assimilated Social Democracy and turned it into a weapon to perpetuate exploitation. Harold Macmillan once said of Britons in the 1950s that they had never had it so good – (hardly an accolade considering decades of economic instability and destructive war). In truth, any semblance of prosperity is nothing more than the offering of more crumbs off the capitalist plate. You may receive sustenance, but the people at the top still get a hearty meal. If anything is true of today it is that the rich have never had it so good.

Alas, Social Democrats have been hood-winked, in no small way thanks to the Social Democratic theorist Eduard Bernstein (1850-1932). In Evolutionary Socialism: A Criticism and Affirmation (1899) Bernstein did not believe in capitalism’s inevitable destruction; he accepted the strength of its capacity to adapt and advocated reform so that humanity could transition from capitalism to social democracy. He contended that as workers attained greater rights, their grievances would diminish, making revolution implausible. In this, he is perhaps accurate. The extension of rights and the offering of the ‘crumbs’ have pacified the masses and encouraged social democrats to continue along the path of reformism. However, his call for reform contradicts his appraisal of capitalism’s adaptational strength. Everything promulgated within the system is consumed by the system. Nothing changes.

Like Bernstein, today’s Labour and Social Democratic parties do not champion any meaningful alternative – in fact, they are complicit in the perpetuation of capitalism. As Bernstein’s contemporary, the socialist revolutionary Rosa Luxemburg (1871-1919) contested:

‘…people who pronounce themselves in favour of the method of legislative reform in place of and in contradistinction to the conquest of political power and social revolution, do not really choose a more tranquil, calmer and slower road to the same goal, but a different goal’. Consequently, their goal is ‘not the realisation of Socialism, but the reform of capitalism.’

She did not mean workers should not fight for mitigations within the system – indeed we cannot suspend ourselves nor exist outside of it – but we must acknowledge that meaningful change can only be attained by transcending the capitalist system. Once this has been achieved and socialism established, humanity must then work to continually improve socialism so that it fulfils its basic mission of meeting the needs of all. Here, and only here, is where socialism truly becomes evolutionary.

Socialists can take some comfort from the fact that, notwithstanding the futility of Social Democratic attempts to reform the system, capitalism is by no means an eternal fact, nor inherent to human nature. Closer examination reveals that it is more accurately understood as a phase in human development. Throughout history, economic systems have undergone significant transformations, and capitalism is just one stage in this ongoing progression.

The advent of capitalism brought forth key principles, such as private ownership of the means of production, free-market competition, and the profit motive. The transition from feudalism to capitalism was not without conflict, as evidenced by the social upheavals and labour movements of the 18th and 19th centuries. These movements sought to address the challenges posed by the industrialisation of society, including issues of worker exploitation and poor working conditions.

There is, therefore, hope that humanity can transcend capitalism. It requires a widespread global consciousness, an acceptance of the truth that the system we currently perpetuate is harsh and damaging to us all, and that reforming that system equates to nothing more than that perpetuation.

While capitalism has undoubtedly played a significant role in shaping modern economies, it is not a reflection of human nature, as its apologists, ignoring the historical and cultural evidence, have claimed since the time of Adam Smith, if not before.

Human societies have demonstrated adaptability and a capacity for diverse economic systems throughout history, and while no thinking socialist can dispute the transformative impact of capitalism; the extent of technological advancement and human dominion over the environment, one would do well to remember that it does not symbolise the culmination of all conceivable endeavours to organise as a species. To rest on the laurels of capitalism is to commit the mistake of previous generations, specifically those who held up religion, imperialism, feudalism, and slavery as essential preconditions for civilisation. We must take what we have learned under capitalism and use it to build a better version of the world – one of peace, community, and equality. In short, a socialist world.


Next article: A fair day’s pay for a fair day’s work? ⮞

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