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February 27, 2013

On Post-Capitalism


What lies ahead be­yond Cap­i­tal­ism? How will this come about? Is there a sim­ple uni­fy­ing the­o­ry which we, mere mor­tals, can un­der­stand? It is pos­si­ble that no such the­o­ry will ev­er ex­ist per­haps be­cause the sub­ject is too com­plex. It is al­so like­ly that… “Post-cap­i­tal­ism” is al­ready start­ing to man­i­fest it­self on­to the dai­ly scene. There­fore, we should not ex­pect some grandiose dec­la­ra­tion by some “au­thor­i­ta­tive” in­sti­tu­tion. In or­der to for­mu­late a pos­si­ble “post-cap­i­tal­ism” sce­nario, let us first de­fine cap­i­tal­ism.

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Dead things such as The Ban­ner are on­ly the fi­nan­cial fer­til­iz­er that will make it pos­si­ble. It is their prop­er func­tion.

— Gail Wynand the powerful newspaper mogul
in The Fountainhead; an Ayn Rand novel.


Cap­i­tal­ism is not a form of gov­ern­ment. Many peo­ple are not clear about this point and reg­u­lar­ly use the words cap­i­tal­ism and Democ­ra­cy in­ter­change­ably. Cap­i­tal­ism is an eco­nom­ic sys­tem in which the means of pro­duc­tion, price, in­vest­ment and dis­tri­bu­tion, etc., are held in pri­vate hands. Fur­ther­more, the ul­ti­mate goal of cap­i­tal­ism is to grow in­def­i­nite­ly by any means pos­si­ble to the ex­clu­sion of all else, i.e. more prof­it.

This view of cap­i­tal­ism as­sumes that there are no phys­i­cal bar­ri­ers to its con­tin­ued growth. And in here lies a ma­jor hur­dle; we live in a fi­nite world. This last point will be ar­gued by many, sug­gest­ing that we will even­tu­al­ly col­o­nize oth­er plan­ets; there­fore, the po­ten­tial for growth is bound­less. How­ev­er, in the here and now, the un­re­strained eco­nom­ic growth has meant a sig­nif­i­cant ero­sion of our ecosys­tem, threat­en­ing our very ex­is­tence.

Tra­di­tion­al­ly, cap­i­tal­ism had been pit­ted againstcommunism  Com­mu­nism to con­trast its achieve­ments. The dif­fi­cul­ty lies in that, as we said ear­li­er, cap­i­tal­ism is an eco­nom­ic sys­tem and com­mu­nism is a so­cial struc­ture in which gov­er­nance and eco­nomics are in­clud­ed. Nev­er­the­less, for pur­pos­es of il­lus­tra­tion let us try to de­fine what lies at the core of both ide­olo­gies.


Agent Smith and Morpheus“Ev­ery mam­mal on this plan­et in­stinc­tive­ly de­vel­ops a nat­u­ral equi­lib­ri­um with the sur­round­ing en­vi­ron­ment. But you hu­mans do not. You move to an area and you mul­ti­ply and mul­ti­ply un­til ev­ery nat­u­ral re­source is con­sumed and the on­ly way you can sur­vive is to spread to an­oth­er area. There is an­oth­er or­gan­ism on this plan­et that fol­lows the same pat­tern. Do you know what it is? A virus.”

Agent Smith — The Matrix


Caveat emp­tor: The fol­low­ing ob­ser­va­tions are an over­ly sim­pli­fied ex­pla­na­tion of com­mu­nism vs. cap­i­tal­ism of which sub­ject-mat­ter-ex­perts read­ing this ar­ti­cle (economists and philoso­phers alike), might prob­a­bly cringe up­on.

  • In com­mu­nism we start with the premise that hu­man be­ings are fun­da­men­tal­ly good. There­fore, they will gen­er­ate wealth for the com­mon good be­fore they do it for them­selves; this as­sumes high lev­els of al­tru­ism. In prac­tice, how­ev­er, it seems that com­mu­nism re­quires an in­cred­i­bly strong amount of tyran­ni­cal-arm-twist­ing in or­der to con­vince, coax or sim­ply force their con­stituents to mod­i­fy their be­hav­ior and fol­low suit with the the­o­ry. And when it comes to the pro­duc­tion of goods and ser­vices, it does so at huge costs. At a first glance, it is not a very ef­fi­cient sys­tem, al­though, at times it can be quite ef­fec­tive as was the case with the enor­mous in­dus­tri­al­iza­tion of Rus­sia, dur­ing Joseph Stal­in’s So­vi­et era.
  • Cap­i­tal­ism, starts at the oth­er end of the spec­trum. Its premise states that hu­man be­ings are fun­da­men­tal­ly self­ish and they will on­ly pro­vide marginal wealth to the com­mon good, if and on­ly if, they ben­e­fit first. A cur­so­ry look will show that in­deed, when it comes to the pro­duc­tion of ma­te­ri­al wealth, i.e. goods and ser­vices, cap­i­tal­ism is very pow­er­ful. Even Karl Marx ac­knowl­edged the in­cred­i­ble pow­er of cap­i­tal­ism to cre­ate wealth in 19th Cen­tu­ry Eng­land. The enor­mous down­side of this the­sis is the heavy cost paid such as huge in­equal­i­ties, mas­sive en­vi­ron­men­tal de­struc­tion, re­cur­ring boom-and-bust-cy­cles, un­em­ploy­ment, hunger, etc. In­ci­den­tal­ly, these costs are not ac­count­ed for and are sim­ply chucked to “ex­ter­nal­i­ties.”

No soon­er had the So­vi­et Union col­lapsed when Fran­cis Fukuya­ma wrote a fa­mous es­say called “The End of His­to­ry” in which he ar­gued that West­ern lib­er­al democ­ra­cy [cap­i­tal­ism] rep­re­sent­ed the fi­nal form of hu­man gov­ern­ment. Twen­ty years lat­er with huge world­wide fi­nan­cial, eco­nom­ic, wars and en­vi­ron­men­tal crises, one won­ders if such the­sis needs some re­vi­sion.

It is in­ter­est­ing that in some prac­ti­cal sense, both cap­i­tal­ism and com­mu­nism share a lot in com­mon. We need not go fur­ther than the typ­i­cal cor­po­rate Board of Di­rec­tors and see that it is man­aged very sim­i­lar to the ex-So­vi­et polit­buro. But more im­por­tant­ly, they both cen­ter on the idea that ul­ti­mate­ly the “state” will hold all the pow­er. In the case of West­ern democ­ra­cies it has tak­en a while but the con­cen­tra­tion of pow­er has in­deed in­creased to un­prece­dent­ed lev­els. The un­der­ly­ing struc­ture for both ide­olo­gies is Hi­er­ar­chy. Strong hi­er­ar­chi­cal struc­tures are the quintessen­tial foun­da­tions for both states.

We should not be sur­prised at their sim­i­lar­i­ties. Both ide­olo­gies were born dur­ing the in­dus­tri­al rev­o­lu­tion. They were strong­ly in­flu­enced by those philo­soph­i­cal and sci­en­tif­ic thinkers that per­ceived the world as an enor­mous causal­i­ty ma­chine. Even­tu­al­ly, they ar­gued, hu­man­i­ty would dis­cov­er all there was to be known about this com­plex ma­chine. It is amus­ing how on sev­er­al oc­ca­sions’ peo­ple have por­tend­ed dec­la­ra­tions that hu­man­i­ty had dis­cov­ered and in­vent­ed it all.

There is no ques­tion that cap­i­tal­ism has aceo pow­er­ful per­son­al al­lure which in­duces many peo­ple to adopt its tenets with pas­sion; crav­ing its po­ten­tial re­wards. We get bom­bard­ed with pow­er­ful im­agery of wealth and pow­er which fur­ther re­in­forces this ide­ol­o­gy. For ex­am­ple, we might hear about a CEO who has been able to amass enor­mous sums of mon­ey dur­ing his or her tenure and who goes out and flaunts a lav­ish and at a times deca­dent lifestyle, think­ing that the whole af­fair rep­re­sents a com­plete suc­cess. How­ev­er, what we are not told is that the op­por­tu­ni­ty cost of such suc­cess is on­ly a tepid step to what might have been an op­por­tu­ni­ty to tran­scend to high­er lev­els.

The 20th Cen­tu­ry brought about new sea-change dis­cov­er­ies which put in­to ques­tion such de­ter­min­is­tic world view. Quan­tum physics holds a lead po­si­tion in this new chal­leng­ing vi­sion. But oth­er fields such as mi­cro and exo­bi­ol­o­gy, as­tro­physics, in­for­mat­ics, ge­net­ics, robotics, AI, com­mu­ni­ca­tions, nan­otech­nol­o­gy, trans-hu­man­ism, etc., give us a fun­da­men­tal­ly dif­fer­ent cos­mo­log­i­cal per­spec­tive.

Of course, so­ci­eties are some­what slow to chance and it is now in the 21st Cen­tu­ry that we are start­ing to see some of the in­flu­en­tial ef­fects of these pre­vi­ous dis­cov­er­ies. As so­ci­eties be­come in­creas­ing­ly com­plex we re­al­ize that sim­plis­tic cause-and-ef­fect an­swers are more in­fre­quent. In­stead, we have to be sat­is­fied with par­tial and at times in­co­her­ent knowl­edge which does not ex­plain why our com­plex sys­tems are or are not work­ing cor­rect­ly.

Using a loose def­i­ni­tion of cap­i­tal­ism, we can now pro­ceed to spec­u­late about one pos­si­ble path for “Post-cap­i­tal­ism.” How­ev­er, this is not nec­es­sar­i­ly So­cial­ism, which a lot of peo­ple ar­gue is the nat­u­ral evo­lu­tion­ary path for ad­vanced so­ci­eties. I would ar­gue that this lat­er form of “ism” al­so re­lies on an outdated causal­i­ty mod­el in an at­tempt to find the sil­ver-bul­let that even­tu­al­ly ush­ers par­adise on­to earth.

Since cap­i­tal­ism is so per­va­sive through all as­pects of mod­ern so­ci­ety we can­not evolve it in iso­la­tion.

If cap­i­tal­ism in its strictest sense cen­ters on the max­i­miza­tion and growth of cap­i­tal, then “Post-cap­i­tal­ism” will fo­cus on some­thing else. What this “else” is, be­comes trick­i­er. Our al­most knee-jerk re­ac­tion is to come up with a mod­el that we could then try to foist on­to the peo­ple via mul­ti­ple means of be­hav­ioral mod­i­fi­ca­tion and so­cial en­gi­neer­ing. The dan­ger con­sists in re­peat­ing the same mis­takes of the past.

Af­ter all, a mod­el may be some­what ac­cu­rate but it will nev­er be re­al­i­ty it­self. At most, we can on­ly say that some “mod­els” are bet­ter than oth­ers. Typ­i­cal­ly, the mod­els that we con­struct are rel­a­tive­ly sim­plis­tic in con­trast to the com­plex­i­ty of the phys­i­cal sys­tems that they are try­ing to de­scribe. Take the weath­er, for ex­am­ple. Most mod­els will on­ly give us a fair­ly short time­-frame of “ac­cu­rate” pre­dic­tion. As we move out in time, weath­er mod­els sim­ply break down. This is be­cause their lev­el of com­plex­i­ty in­creas­es ex­po­nen­tial­ly.

Be­cause mod­ern cap­i­tal­ism is so com­plex, it would prob­a­bly re­quire vol­umes in or­der to ad­dress all its com­plex­i­ties, e.g. mon­e­tary pol­i­cy, in­ter­est rates, bank­ing, cred­it, lend­ing, debt, in­sur­ance, in­vest­ments, fi­nan­cial mar­kets, deriva­tives, tax­a­tion, ac­count­ing prac­tices, reg­u­la­tions, etc. For the last 300 years but es­pe­cial­ly dur­ing the last 100 years, mon­ey has been cre­at­ed through­out debt. This sys­tem is sim­ply un­ten­able. Re­cent­ly I heard that we used to use as­tro­nom­i­cal num­bers to ex­press im­mense­ness. To­day we sim­ply use fi­nan­cial fig­ures in­stead.

Since cap­i­tal­ism is so per­va­sive through­outcapitol all as­pects of mod­ern so­ci­ety we can­not evolve it in iso­la­tion. It is in the larg­er con­text of civ­i­liza­tion that this prob­lem needs to be re­solved. We can­not sep­a­rate the eco­nom­ic from the gov­ern­men­tal, since the lat­er has been a key el­e­ment in al­low­ing and stim­u­lat­ing the cur­rent state of af­fairs. If we are to fix this prob­lem we need to re­solve the cur­rent prob­lem re­form­ing gov­ern­ment first, or at least, si­mul­ta­ne­ous­ly.

This is es­pe­cial­ly true if we are to re­form the pri­vate sec­tor, as well. Al­though, there are al­ready signs that avant-garde lead­ers in the pri­vate sec­tor are keen­ly aware of changes which are al­ready oc­cur­ring in their mist. Some well es­tab­lished cor­po­ra­tions, for ex­am­ple, are strug­gling in shed­ding their in­flex­i­ble hi­er­ar­chi­cal man­age­ment or­ga­ni­za­tions for the more re­silient, flex­i­ble and on point ones, rep­re­sent­ed by net­works.

For rea­sons stat­ed be­fore about the vast­ness of the top­ic of cap­i­tal­ism and with­out try­ing to come up with over­ly sim­plis­tic so­lu­tions to what Post-cap­i­tal­ism should be, let’s at least re­view some ideas as to its com­po­si­tion.

acropolisIn a Post-cap­i­tal­is­tic era, try­ing to grow cap­i­tal in­def­i­nite­ly will not be the main fo­cus, pur­pose or driv­ing goal. In­stead, the fo­cus will be de­ter­mined by all the mem­bers of fu­ture or­ga­ni­za­tions as op­posed to just the small mi­nor­i­ty “lead­er­ship.” These new or­ga­ni­za­tions will be sig­nif­i­cant­ly flat­ter. Their pri­mal mode of or­ga­ni­za­tion will be the elec­tron­ic net­work vis-à-vis the hi­er­ar­chi­cal or­ga­ni­za­tion, which is most preva­lent to­day.

Pri­vate prop­er­ty will con­tin­ue, of course, but the share of the “com­mon good” i.e. prop­er­ty that be­longs to all, will in­crease sig­nif­i­cant­ly. We can see this al­ready hap­pen­ing with the Open Source Move­ment which start­ed as Soft­ware de­vel­op­ment mod­el and it is quick­ly be­ing adopt­ed by many oth­er in­dus­tries. A great deal of in­no­va­tive work has now a strong and de­fen­si­ble le­gal frame­work which pro­tects it so that it re­mains in the pub­lic “com­mons;” such is the case with Cre­ative Com­mons.

These be­hav­ioral changes will not oc­cur be­cause of some un­de­ter­mined al­tru­is­tic rea­son but in­stead, they will oc­cur for sheer sur­vival pur­pos­es.

Cor­po­ra­tions, the bas­tions of mod­ern day cap­i­tal­ism, will em­brace high­ly demo­crat­ic forms of gov­er­nance. All the mem­bers of the cor­po­ra­tion will be tapped for their ideas. The de­ci­sion mak­ing pro­cess will be pushed to the net­work. To­day many peo­ple ar­gue that such mode of op­er­a­tion is in­ef­fec­tive and par­tic­u­lar­ly, slow. One should won­der if mak­ing fast-but-wrong-de­ci­sions is prefer­able. How­ev­er, ad­vanc­ing in­for­ma­tion tech­nolo­gies are chang­ing the speed and more im­por­tant­ly, the breath of the de­ci­sion mak­ing pro­cess. Be­sides, the lev­els of pro­ject com­plex­i­ty which cor­po­ra­tions are be­ing sub­ject­ed to, have in­creased and will con­tin­ue to in­crease dra­mat­i­cal­ly. Such com­plex­i­ty puts a lot more pres­sure on the de­ci­sion mak­ing pro­cess.

The cur­rent mode of de­ci­sion mak­ing oc­curs at the top; at least for those high­ly crit­i­cal de­ci­sions. This re­quires that the or­ga­ni­za­tion’s do­main ex­perts severe­ly re­duce or wa­ter-down com­plex knowl­edge so that it can be con­veyed to the top ech­e­lons of the or­ga­ni­za­tion. In turn, de­ci­sions are made by the lat­ter group. This pro­cess is to­tal­ly in­ad­e­quate in an ex­treme­ly fast evolv­ing world. Ad­di­tion­al­ly, de­ci­sion mak­ing can­not be left to the “sub­ject mat­ter ex­perts” ei­ther, pri­mar­i­ly be­cause their views are too nar­row due to the very na­ture of their re­spec­tive and high­ly spe­cial­ized pro­fes­sion’s and train­ing.

Some for­tu­nate or­ga­ni­za­tions will learn that an al­ter­na­tive method which has a bet­ter chance at cor­rect de­ci­sion mak­ing re­lies on the strength rep­re­sent­ed in the breath of di­verse view­points of all its mem­bers. This is al­so re­ferred as “Col­lec­tive In­tel­li­gence.”

Fi­nal­ly, we will spec­u­late that oth­er in­sti­tu­tions and Gov­ern­ment in par­tic­u­lar will fol­low the cor­po­rate lead to­wards a Post-cap­i­tal­ism era. These be­hav­ioral changes will not oc­cur be­cause of some un­de­ter­mined al­tru­is­tic rea­son but in­stead, they will oc­cur for sheer sur­vival purposes. The tire­some slo­gan that “Our peo­ple are our great­est as­set” will take on an en­tire­ly new pos­i­tive mean­ing in years to come.

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