On the eve of the fall of the Berlin Wall, American political scientist and White House influencer Francis Fukuyama declared the end of history. Capitalism had defeated Soviet socialism and was destined to reign supreme, marching in lockstep with the democratic values of an open society. The trauma of September 11, 2001, and the bloody decade that followed did little to shake this faith in fulfilling a universal destiny. Westerners, and especially Americans, still like to believe that this is true. The Chinese economy is looking more and more like our own, Indian nationalism is a temporary deviation from the norm, and Russia will sooner or later become a liberal economy and democracy. But reality proves otherwise – this was clear long before the war in Ukraine. The strategic alliances of the new geopolitics and much more provide ample evidence. Technological exchanges, energy supply networks and trade flows all indicate that the world is organizing into new blocs that tend to accentuate the differences between their component parts.
Aside from the controversial relationship between capitalism and democracy, the question we should ask ourselves in this critical time of liberal globalization is, what made capitalism prosper over the last two centuries? What has kept it alive, and why has it spread worldwide? Was it the superior economic efficiency of capitalism (say its supporters) or its ideological aggression (say its critics)?
None of these explanations seems convincing. Capitalism is, first and foremost, a social system. It has its roots in the combination of individualism and structural inequality that has characterized Western societies since the Modern Age. It self-replicated from these pre-existing conditions and spread to Asia, Africa and Latin America during the empire-building and industrial revolutions undertaken by hegemonic Atlantic powers.
However one thinks of it, understanding capitalism necessarily departs from Karl Marx, its most profound analyst. Marx had two fundamental insights about capitalism. The first was to realize that it is not a natural system but a historical construction. “Capital,” he wrote, “is not a thing, but a social relationship between people mediated by things.” This somewhat opaque sentence means that capitalism, although based on acquiring material goods, is essentially a set of power relationships that change over time. Marx’s second valuable insight is that capitalism is unstable because it focuses on profit, not satisfying needs. A specific and very current example of the gap between profit and needs is the scourge of unemployment. What is unemployment, if not a senseless waste of labor, education, life plans and human aspirations? Marx was somewhat hasty in predicting capitalism’s demise because he underestimated society’s ability to implement compensatory mechanisms such as public intervention in the economy. He also was overly optimistic in assuming that exploitation and class conflict would ultimately lead to the defeat of capitalism.
To be fair, Marx was not the only futurist with an unduly short timeline. In 1930, British economist John Maynard Keynes declared that we would be free from the tyranny of money and living the good life within 100 years. Free of material concerns, we would have plenty of leisure time to nourish ourselves with knowledge and beauty. Keynes was a left-leaning liberal, but even thinkers far to his right were ready to swear that capitalism was digging its own grave. Perched in his Harvard ivory tower, Joseph Schumpeter, a champion of market economics during the interwar period, decried the subversive power of intellectuals and called them parasites of society who were envious of the success of entrepreneurs, the real producers of wealth.
And what about Friedrich Hayek, the father of neoliberalism? He was ready to predict that the differences between economic systems would blur, with capitalism and socialism converging under the umbrella of totalitarian economic planning. However, he neglected to reflect on capitalism’s responsibility in causing World War I and the Great Depression, without which the poisonous fruit of fascism would have been far less appealing.
Considering the damage caused by unregulated capitalism, one can hardly argue that capitalism is an efficient system. But it’s challenging to eliminate, at least in this part of the world. Even when that happens, socialism is not the only alternative or the most likely one. In short, binary thinking limits the range of realistic scenarios.
Those concerned with social justice should consider that capitalism is not monolithic but has existed in different forms, some compatible with radical social democracy. A multipolar world would offer greater freedom to experiment with new solutions. I like to think that the Global South could be the protagonist of a new world stage. For example, Latin America could create the conditions to abandon the neoliberal model and embark on the path of self-determined and participatory development. But Europe should also wake up from Fukuyama’s dream if it doesn’t want to be late for its date with history.
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