Capitalism beyond the crisis

6 posts / 0 new
Last post
Doug Woodard
Capitalism beyond the crisis

A really excellent article by an able economist.

Capitalism Beyond the Crisis

by Amartya Sen

Doug Woodard

St. Catharines, Ontario


remind remind's picture

admitedly did not read the article, but can there be any?


Read the article, it argues that capitalism can get beyond the crisis through "lumpen" fiddling with it. Capitalism is necessarily marked by the 'boom and bust' cycle. At best, the extremes of the 'boom', and the, 'bust' can only be reduced.

The question is, "Do we want to eliminate the boom and bust cycle through a planned economy?"

Marxists would say, "Yes".


I'll throw this in as it's in a similar vein:

The 20th century is well behind us, but we have not yet learned to live in the 21st, or at least to think in a way that fits it. That should not be as difficult as it seems, because the basic idea that dominated economics and politics in the last century has patently disappeared down the plughole of history. This was the way of thinking about modern industrial economies, or for that matter any economies, in terms of two mutually exclusive opposites: capitalism or socialism.

We have lived through two practical attempts to realise these in their pure form: the centrally state-planned economies of the Soviet type and the totally unrestricted and uncontrolled free-market capitalist economy. The first broke down in the 1980s, and the European communist political systems with it. The second is breaking down before our eyes in the greatest crisis of global capitalism since the 1930s. In some ways it is a greater crisis than in the 1930s, because the globalisation of the economy was not then as far advanced as it is today, and the crisis did not affect the planned economy of the Soviet Union. We don't yet know how grave and lasting the consequences of the present world crisis will be, but they certainly mark the end of the sort of free-market capitalism that captured the world and its governments in the years since Margaret Thatcher and President Reagan.

Impotence therefore faces both those who believe in what amounts to a pure, stateless, market capitalism, a sort of international bourgeois anarchism, and those who believe in a planned socialism uncontaminated by private profit-seeking. Both are bankrupt. The future, like the present and the past, belongs to mixed economies in which public and private are braided together in one way or another. But how? That is the problem for everybody today, but especially for people on the left.



State capitalism can always survive as long as socialist methods are used to bail it out. The US has used socialist methods and even nationalised key parts of their economy since the collapse of laissez-faire capitalism in 1929. Even Pinochet resorted to socialism in effort to save his country's economy from neoliberal induced collapse post 1985. Laissez-faire capitalism tends to consume itself in the end.


I am in favor of many of the reforms suggested pertaining to a substantive embeddening of markets in public systems of control and a fostering of institutions not regulated by market incentives, providing that such measures could have a trajectory consonant with anti-authoritarian values that embrace the full realization of capabilities and potentialities. Insofar as he ultimately promotes the continuation of private profiteering of banks and businesses I doubt that Sen's mixed economy can seriously meet the burden of defending his own limited values. I think think that at this stage we should be at least critical enough to pose the question whether labor, land (and the larger natural environment) or money should be marketable commodities at all.

I do have many reservations with Sen's article, probably too many to cover in a single post. I noticed that when Sen attempts to describe the special characteristics that makes a system capitalist his selection of essential institutions is so generic that it would probably be more apt as a description of petty commodity production rather than what we currently have, or even any of the capitalisms that were extant in the 20th century. Does anyone else think it is strange that he would obfuscate the institution of wage labor when attempting to describe the essential characteristics of capitalism? This analytic failure would be of less import to the rest of his analysis if it was not in fact emblamatic of the fuzzy/uncritical approach that previals throughout the article. Compared to several other commentators (Foster, Harvey, Bello, Panitch), Sen does not have much concrete to say, beyond moralizing generalities, about the causes and effects of the economic crisis nor does he convincingly place the crisis in historical perspective. But hey, at least he is talking to his fellow elites, such as the "eloquent" Tony Blair, in soothing tones, while reminding others that  "present economic crisis is partly generated by a huge overestimation of the wisdom of market processes, and the crisis is now being exacerbated by anxiety and lack of trust in the financial market and in businesses in general."

Sen also reserves some criticisms for those who have distorted the writings of Adam Smith by mythologizing Smith as a one-sided advocate of laissez-faire. This is good - the only problem is that in doing so Sen supplants one mythology of Adam Smith with another. In "The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation", political economist Michael Perelman shows in exhaustive detail that far from being a humanistic figure "overwhelmingly" concerned with the conditions of the poor and underprivileged, Adam Smith's writings concerning the downtrodden were extremely contradictory and often problematic. I have no time to go into the details at the moment, suffice to say that Perelman shows that Smith often displayed contemptuous, dehumanizing and condescending attitudes towards the rural poor and the larges masses of poor workers in the cities: moreover Smith was extremely fearful that the degraded urban poor would invade property, while the book also delineates many authoritarian and elitist tendencies in Smith's writings.