An evolutionary dead end

by Pete Brown

(CV #49, August 2014)

Notes on the book What Then Must We Do? Straight Talk About the Next American Revolution by Gar Alperovitz. Chelsea Green Publishing, White River Junction, Vermont, 2013.

From the correct Marxist premise concerning the deep economic roots of the class struggle in general and of the political struggle in particular, the Economists have drawn the singular conclusion that we must turn our backs on the political struggle ….” – Lenin, Two Tactics of Social-Democracy in the Democratic Revolution, Chapter 4

Gar Alperovitz, a professor of political economy at the University of Maryland and a founder of the Democracy Collaborative, is the author of books on atomic diplomacy, the post-capitalist future, etc. Alperovitz is something of a social activist and is familiar with many trends among reformist circles in particular. His latest book – What Then Must We Do? — is of interest because it addresses the present situation in America and tries to formulate general tasks that progressive people should take up.

Alperovitz’s main argument is that political reformism has definite limits, and that movements and campaigns cannot expect to accomplish very much any more. Reform movements of the past like those for Social Security, Medicare, civil rights, etc. had their place, but they no longer work because large corporations have rigged the system to prevent any fundamental change. Fundamental change, he says, comes down to corporate ownership; as long as rich capitalists own the main means of production, we can’t achieve anything fundamental. They’ll bribe, coerce, lobby legislatures, “capture” regulatory agencies, and in many ways subvert any public attempts to control their greed. But if workers and/or the public at large could directly take over corporations, then they could control the main means of production and use them for the benefit of the public.

This sounds like a call for socialism, which progressives have been advocating for a long time. But Alperovitz is worried that the term “socialism” has connotations reminiscent of the Soviet Union and so avoids it. And he doesn’t mention the traditional social-democratic strategy of winning elections as the path to socialism. He argues that even reform movements with goals far short of socialism have their limitations. You might win a few reforms from the capitalists – and Alperovitz is always careful to say activists should continue working on these things and trying to wrest whatever concessions they can from the powers that be – but any such reforms are getting smaller as the economy moves into stagnation. So what Alperovitz advocates instead is a slow takeover of corporations through employee stock ownership plans, co-operative enterprises, municipal ownership plans, regional ownership, and finally (in a crisis) through nationalization. So instead of political reformism Alperovitz advocates economic reformism. He calls this the new fundamental transformation of America.

The decline of liberalism

That Alperovitz barely considers, and then quickly dismisses, the thought of a revolutionary transition to socialism is his big glaring deficiency. But before we get to that, we should first give him credit for the recognition of facts staring reformists in the face. The fact is, liberal reformism has gone bankrupt. Sure, there are still plenty of reformist organizations around, but mostly they promote faith in Obama and the Democrats. Even reformist organizations that try to avoid involvement in partisan politics usually end up, at election time, favoring Democrats over Republicans and then moaning afterwards, “We are disappointed in the candidates we helped elect”.

The Democrats are locked into neo-liberal faith in free markets just like the Republicans. The Democrats haven’t put forth any big reform plans for decades. Obama is concerned with figuring out a way to cut Social Security and Medicare and make these cuts palatable to his Democratic Party base. Obama’s “Affordable Care Act” pretended to be a big reform – and in some states a number of additional people, especially children, have been added to Medicaid — but it’s largely just a scheme to prop up private medical insurance companies.

Alperovitz doesn’t have any criticism to offer of the Democrats, but he does note some basic socio-economic facts: wages have been stagnant for forty years; the minimum wage has not kept up with inflation; income and class inequality are increasing; etc. Alperovitz connects these facts to the decline of unionism, which is now back to a rate not seen since the 1920s. Then he describes how corporations get around any attempts at public regulation: lobbying, “capture” of agencies, avoidance of taxes, etc. What it all adds up to, he concludes, is that the New Deal-era vision of liberalism with political control over the corporations has gone bust. The idea that corporations can be controlled by public political reforms just doesn’t work, if it ever did work very well.

These are important facts any liberal reformist should ponder. What’s wrong with the liberal playbook? Alperovitz’s answer is that to get control over private capitalism, the public needs to take over ownership of the corporations. But how to get ownership control? Here Alperovitz goes into his scheme of economic gradualism.

“Evolutionary reconstruction”

Alperovitz calls his scheme “evolutionary reconstruction.” The idea is for trade unions and other public groups to organize employee buyouts of corporations or to build their own co-operative institutions; or for cities, counties and larger administrative entities to take over ownership of utilities, transportation facilities, etc. Alperovitz is insistent that this be started at the community level and then built up. Only eventually, during some deep crisis, would it be possible to carry out successful nationalizations. Alperovitz expects some Wall Street firms to be nationalized someday, but he doesn’t expect it anytime soon and doesn’t urge it for today.

Alperovitz is trying make public ownership and control of the means of production palatable to liberal activists who might be scared off by the word “socialism.” He explains the shortcomings of the present system and then proposes an easy-to-swallow alternative swathed in rhetoric about “democracy” and the “American way.” He presents this as a “radically new” scheme opposed to the old outmoded “movements and campaigns.” Actually the idea of reforming capitalism into a kind of people’s capitalism based on co-ops and employee ownership goes back at least to Proudhon and the utopian socialists of the early 1800s. But, based on experience of the working class movement of the last 150 years and the work of Marx and others, we know such a scheme would not work, and it wouldn’t produce genuine worker-controlled socialism. This brings us to the shortcomings in Alperovitz’s scheme.

First: What makes Alperovitz think private capitalists are going to allow control of their corporations to pass over to the public without opposition? With their control of legislatures and regulatory agencies, they’ll block any significant attempt by the public to take over their companies. And their control of capital will allow them to exercise control over independent firms, even if those firms get started. Alperovitz himself cites cases where employee-owned firms have run into trouble when the workers wanted a raise in wages. The management of such firms is limited in what it can do by what sorts of loans they can negotiate with banks. For that matter, management often have their own interests to look after before considering workers’ needs.

Are co-operatives exempt from capitalist pressure?

Co-operative enterprises run into the same kinds of limits. If they try to grow beyond those limits, it’s only by giving up their original “co-op” ideals; usually they turn into just another corporation. On a smaller scale or locality, co-ops can sometimes be of help to workers or consumers in bringing them goods and services not otherwise available. Many co-ops – bookstores, child care, organic food, etc. – sprang up in the 1960s and 70s, and some are still operating. Electrical co-ops helped electrify the country, especially in the 1930s, and Alperovitz is correct to point to co-ops as a way to help bring the internet and wifi everywhere. On a more sophisticated scale, some fairly normal capitalist companies like REI are organized as consumer co-ops.

Getting involved with co-ops can be a good experience for some workers and activists. But they should also recognize their limits, and that the main strings for the economy are being pulled by fatcat capitalists who will not tolerate serious competition. A good example is the recent collapse of Fagor, one of Mondragon’s flagship co-op companies. Mondragon is a group of worker-owned co-ops founded in the mid-1950s in the Basque region of Spain. The corporation as a whole eventually had 80,000 worker-owners, and Fagor Electrodomesticos eventually became Spain’s largest maker of home appliances.

But in recent years, especially since the Great Recession, Fagor has run into trouble. Fagor lost money for five years straight and ran up debts of $1.2 billion. Sales fell because of Spain’s property bust and because of low-cost competition from Asia. Workers’ pay was cut by 20%, but it didn’t save the company. Management had already moved some production to Poland to get lower-wage workers, and as a last-gasp effort management planned to move most production outside of Spain, asked for emergency loans from other Mondragon companies and also invited in outside shareholders. But capitalists considered this too-little-too-late and refused to help. Late last fall the company collapsed into bankruptcy.

Fagor workers are now laid off and demonstrating outside Mondragon headquarters demanding jobs. Other Mondragon companies will try to absorb as many as possible, but they are also under pressure as Spain continues to labor in recession with 27% unemployment. Fagor workers also lost the life savings they had plowed back into the company, thinking they were helping build security; that money is now tied up in bankruptcy proceedings.

The lesson is that co-operative enterprises too are forced to obey capitalist logic as long as they operate in a capitalist environment. Workers who want to see co-operative principles extended to the entire economy should take up the task of transforming the entire economy – that is, by going to socialism. But has Alperovitz learned this lesson? His answer was contained in an article titled “Mondragon and the System Problem” that appeared on the Truth-Out website last November 1. (See  http://www.truth-out.org/news/item/19704-mondragon-and-the-system-problem. The article is co-authored by Alperovitz and Thomas M. Hanna.) In this article Alperovitz admits that co-operative principles have their limits in a capitalist economy. As he says, “The question … is whether trusting in open market competition is a sufficient answer to the problem of longer-term systemic design.” And he hints that no, it would be better for those designing large-scale co-operative enterprises to also consider designing an entire system like that rather than trying to compete in a capitalist environment.

All very correct, but stated in a dry academic manner as advice to intellectuals who are “designing systems”. Meanwhile the Fagor workers are without jobs, their life savings are flushed down a capitalist sinkhole, and worker-activists demanding change are left without guidance. Alperovitz treats “the system” as something that intellectuals can toy with at their pleasure, and when they all agree on the perfect system then of course the powers-that-be will be happy to comply and institute such a system. All of this is far removed from the actual facts staring workers in the face. And it totally ignores politics and the question of who actually controls the present system.

Public ownership under capitalism

Municipal-owned firms also have fairly strict limits to what they can do. They’re only set up in the first place when the capitalists see the need for certain things to get done, but no one capitalist firm has the resources to do it on their own. So they set up a public enterprise, for example to provide public transportation. But the firm’s mandate is very limited. And if the demand for these services grows to any extent, and the capitalists think there’s a profit to be made in this area, they’ll privatize the enterprise and allow competing companies to join the party.

Alperovitz has a lot of knowledge about the recent setting up of various public enterprises. But one suspects he’s actually misreading the present situation entirely. In fact the main trend today is toward privatization. Many formerly public enterprises – prisons, schools, police and even the army — are being privatized. Even when public funds are taken for a new “public” enterprise like the new hockey arena in Detroit (while the rest of the city goes bankrupt), it’s often under the control of private corporate interests (like the hockey arena being under the control of the local hockey club).

Alperovitz lives in a dreamland where the U.S. slowly but surely makes a nice even transition to democratic socialism. But he’s wrong to think that public ownership of an enterprise under the general capitalist system ensures public control of that corporation or even more humane conditions for the workers there. Post office workers in the U.S. are treated like dogs just like private-sector workers – even worse in some ways, because they’re threatened with “retarding the mail” and “violating federal law” if they engage in a strike or slowdown. Now, it’s also true that government workers often have guarantees against unemployment and for future pensions, guarantees that are more secure than those of private sector workers. And they usually have benefits (health care plans, etc.) that are fairly stable. But the government did not simply grant these because workers “controlled” the government. Part of it’s due to the different nature of the work, and part of it’s due to workers waging very definite struggles over the years such as the 1970 postal strike.

Alperovitz makes it sound like publicly owned enterprises are socialist, where the workers and mass public are in charge. But even though gaining public ownership can sometimes bring some area of the economy into greater scrutiny, it doesn’t guarantee public control. And right now we’re in a time when many services are being privatized, and government workers are under intense pressure. Detroit city workers are being laid off in the hundreds, their pay and pensions cut to the bone, and federal workers have also seen their pay frozen. Postal workers’ last contract solidified a two-tier pay structure, cutting the pay of new-hires drastically. Obama’s nationalization of General Motors did not result in the workers getting wage raises, guaranteed pensions or job security — just the opposite. And once the “turnaround” had been completed and GM was once again making a healthy profit, it was returned to private ownership.

Alperovitz is wrong to think public ownership is the end of problems. The present situation is one of struggle, as workers try to fight against privatization of public programs and at the same time fight to preserve decent wages and benefits. Besides supporting public workers, the mass public also has an interest in fighting to preserve government services. The increasing frequency of environmental crises shows the importance of public environmental supervision, which the capitalists for their part are fighting to avoid. For example, the carbon lobby has successfully gotten exemptions from the Clean Water and Clean Air Acts for fracking. And the private insurance industry has for now turned back the demand for nationalized health care.

Privatization usually means cutbacks in services as well as drastic cuts in workers’ pay and benefits. Thus it’s in the interest of working class activists to fight against privatizations. But even with public ownership, workers’ pay and benefits are not secure, and a constant battle against capitalist cutbacks needs to be made. Alperovitz ignores all this. There’s also a continuing struggle over government programs that exist, so that they function to actually supervise the capitalists and prevent catastrophes like oil spills, chemical leaks into the water supply, etc. Public ownership is not a panacea as Alperovitz thinks, but it is an invitation to more public struggle.

Is the capitalist economy stagnating?

Alperovitz also misreads present economic conditions. He sees stagnant wages and increased inequality and concludes the economy is stagnating. But actually the capitalists have been going through boom times. After the big bust of 2008 they began recovering in 2009 (with the help of trillions of dollars from the government) and since have enjoyed five years of growth. 2013 was a boom year for the stock market, with the Dow reaching record highs and profits higher than ever. Alperovitz is correct, of course, about stagnating wages; but that doesn’t mean the capitalist economy is stagnating. There’s a good deal of fragility in the world economy, as the after-effects of the Great Recession are still being overcome. And the capitalists are happy to use any reports of stagnation to bolster their call for cutting wages and benefits. How to create jobs? Cut wages. How to raise wages? Cut unemployment benefits. How to guarantee Social Security? Cut Social Security. The capitalists’ solution to any problem is always: make the working class pay, and pay more. And despite Alperovitz thinking that we are in the process of evolution toward a publicly-owned economy, the capitalists are not in any mood to give up their record profits to public takeovers or competition from public or co-operative enterprises.

What is to be done

If political reformism is stymied by corporate control (as Alperovitz maintains), and if Alperovitz’s economic gradualism is also headed nowhere (as I maintain), “what then must we do?” The title of Alperovitz’s book gives a hint, as his title is actually Alperovitz’s personal translation of a famous Russian pamphlet by Lenin, What Is To Be Done? Alperovitz gave it a new translation to indicate he’s turning Lenin on his head: instead of fighting against Economism and advocating preparation for political revolution, as Lenin did, Alperovitz advises activists to turn away from politics and concentrate on economic evolution. (1)

Alperovitz is what Lenin would call an Economist, someone preaching to neglect politics and put the economic struggle in command. Except that for Alperovitz economic transformation isn’t really struggle in the form of strikes, etc. There’s no call for activists to support actual struggles that exist or might break out. Instead there’s a call to consider “better system design.”

Whenever Alperovitz says political movements and campaigns are worthless and won’t accomplish anything, he’s always careful to parenthetically remark “Of course, such things should still be done. We still need to continue these campaigns.” But he also argues they won’t get anywhere, and he argues for putting the emphasis instead on economic evolution. And as far as politics is concerned, Alperovitz has nothing to say about it. He doesn’t discuss or criticize any parties or trends. He just ignores them. So Lenin’s critique of the Economists applies to him: that by ignoring politics he leaves the field open to bourgeois political trends that preach slow, conservative politics that go along with the “evolutionary reconstruction” in economics advocated by Alperovitz.

Crisis and revolution

Lenin stood for the orthodox Marxist idea of revolution, for workers to seize control of the means of production, to smash the capitalist state machine and transform the system into worker-controlled socialism. This is the genuine alternative to reformism, both economic and political. This revolution cannot be carried out overnight or spontaneously, but in What Is To Be Done? Lenin outlined some of the steps necessary for the working class to prepare for it. In later works such as The State and Revolution Lenin further elaborated revolutionary tactics. Prior to the actual insurrection Lenin advocated workers and their party participating in elections (sometimes), economic strikes, movements and campaigns – all the things Alperovitz writes off as headed nowhere. Lenin also recognizes limits to these movements, but he considers workers’ participation in them as valuable for the experience gained, if nothing else. Even if no tremendous reform is achieved, the workers at least learn to strike together, learn the value of organization, and learn how the capitalists try to undermine and sabotage workers’ demands. Lenin also advocated using the experience gained to help build a workers’ revolutionary political party. None of this is ever mentioned by Alperovitz, who considers any attempt to build a revolutionary movement a waste of time, if not downright dangerous.

Alperovitz does mention revolution, but he tries to prevent any serious consideration of it. For one thing, he’s horrified at the prospect of violence, and considers the winner in any violent confrontation to be reactionary forces. It never occurs to him that workers might get organized enough to carry out mass revolutionary struggle that wins. He thinks any revolution is bound to end in something like Pinochet’s Chile. This is simply defeatism that negates much of history. It also ignores Alperovitz’s own argumentation about how the capitalists control much government regulation and reform legislation. He forgets to mention they also control the political parties that put these regulations and legislation into effect and the election campaigns and laws that help these parties maintain control. These facts make revolution necessary. Even if it’s not immediately possible, preparations for it could be started by serious activists. That means participation in study groups, general propaganda and specific agitation among the widest circles of people with concentration on workers.

Alperovitz tries to argue that revolution will never be possible because there’s no prospect for a deep crisis that would bring revolution to the top of the political agenda. In a chapter entitled “Two Dogs That Are Unlikely to Bark Again” Alperovitz argues we are unlikely to see a repeat of the Great Depression or World War II, massive crises that led many people to question the worth of capitalism. He says the capitalists have learned from past mistakes; they know better how to handle the ups and downs of their economy, and they are more adept at smoothing out foreign relations so we don’t have massive world wars.

This chapter is almost laughable as Alperovitz tries to portray the strength and stability of a system he has spent the rest of his book criticizing as oppressive and exploitative. Yes, it lives and grows by generating poverty; but that’s hardly noticeable, he thinks; no one would ever think to overthrow it. Just since 2000 we’ve lived through two big bust cycles, the dot-com recession followed by the Great Recession; but no problem, supposedly the capitalists know how to keep their economy on an even keel. We’ve been engaged in constant Mideast wars since 2001 (with sporadic flareups before that) and our militarist state is on a constant war footing; but there’s no prospect of a major war, Alperovitz says, and we haven’t stumbled into World War III (yet). Alperovitz pretends to consider environmental crises, but he doesn’t give them serious consideration — as he should, because they’re frequent and growing in intensity. Hurricanes Katrina and Sandy grew into political crises that haven’t completely died out yet. Storms and freak weather are becoming more common as global warming increases, and this problem is going to intensify and become a major source of international friction. And environmental disasters are not limited to weather events: just consider BP’s Gulf of Mexico disaster, frequent leaks from oil pipelines, contamination of the water table by fracking, the recent shutdown of Charleston’s water supply because of a chemical leak, or the more and more frequent accidents at aging nuclear power plants. There’s also the growing threats to our food supply, as fisheries in both the oceans and fresh water are collapsing. Overfishing and acidification of the oceans are causing the destruction of marine ecosystems at the same time that droughts and storms are causing serious harm to agriculture.

All these crises generate outrage and public opposition. Throw in the occasional racist outrage such as the murder of Trayvon Martin, and it’s clear that capitalism still has the potential for plenty of crises. Alperovitz himself recognizes that the “fixes” installed in the system by Wall Street “regulation” and Obamacare are very temporary and bound to fail before long. No, capitalism is not immune from crisis, not at all. We can’t say that any one of these crises will be “the one” that sparks revolution, but we can say with confidence that crises are built into capitalism. Any one of them is bound to produce opposition and outrage, and a series of them together may add up to a revolutionary crisis. It’s up to political activists to try and build a revolutionary movement out of them.

It’s not even clear that capitalism requires an overall crisis to generate a revolutionary movement, or at least a serious reform movement. Consider the civil rights movement, which thrived and became the centerpiece of national politics in the mid-1950s. This was not a time of general crisis. Capitalism was in the middle of the postwar boom, the I Love Lucy period economists call the Golden Age of capitalism. Yet even in the middle of that time, the inequities and oppressive aspects of capitalism stuck out like sore thumbs and generated a powerful mass movement that transformed the political landscape. No, it did not produce a revolution; but it produced people who saw the need for revolution.

The task remaining for activists today is to carry through that insight, not devote themselves to economic gradualism. The insight gained by the most conscious activists of the 1960s was that revolution is necessary. That doesn’t mean it’s immediately possible. But it does mean that fundamental reforms can never be carried out as long as capitalist exploiters dominate both economy and politics; it means they must be dispossessed through radical means, and control of the basic means of production must pass into the hands of society as a whole. Activists should be helping others understand the need for revolution and helping prepare conditions for it.

Notes

(1) In another “brilliant transformation”, in a recent article Alperovitz changes the famous Marxist slogan “Workers of All Countries, Unite!” to “Worker-Owners of America, Unite!” This is a gross parody of Marx’s revolutionary slogan. (See Alperovitz’s opinion article in the Dec. 14, 2011 New York Times.) (Return to text)




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