Reviewed by Andrew Levine
In the preface to this remarkable book, David Schweickart proclaims himself a hedgehog who, as Isaiah Berlin put it, "knows one big thing" (Russian Thinkers [New York: Penguin, 1978], 22). In fact, he is also a fox who knows many things in both philosophy and economics.
But the one big thing Schweickart knows, the institutional structure of post-capitalist economies, is literally- of world historical importance.
Nowadays, this has become a non-topic in academic circles where it is assumed that, in Margaret Thatcher's words, "there is no alternative" (TINA). Thatcher meant that there is no alternative to the neoliberal version of capitalism she and her American co-thinkers promoted. Fortunately, that view is already in retreat, even as it remains entrenched in ruling circles in Washington and London. But TINA thinking, the idea that there is no (ethically defensible and/or economically feasible) alternative to capitalism, is still the conventional wisdom.
Schweickart knows better. In 1980, he published a book, Capitalism or Worker Control? An Ethical and Economic Appraisal (New York: Praeger, 1980), which deserved far more attention than it received, and in which he set out the case for a democratic form of socialism. Then in 1993, after Communism's demise and in light of a decade's worth of developments in political philosophy and economic theory, he returned to "economic democracy," as he now calls it, in a new book, Against Capitalism (Cambridge: Cambridge University Press, 1993). There, addressing mainly professional philosophers and economists, Schweickart further elaborated his account of the economic system he defended years earlier.
Despite the cogency of its arguments, this second book also received scant attention. It therefore failed to move the "conversation," as we now call it, away from the TINA thesis, which was, by then already generally assumed. This latest effort is aimed both at professionals and at a general audience.
But it is emphatically not a "dumbed down" version of what Schweickart has already published. Quite the contrary; it represents the results of yet another decade's worth of sustained reflection. By now, Schweickart's account is so well honed that he is able to present his case with magisterial clarity and without mathematical pyrotechnics. One hopes that, at last, Schweickart's one big idea will attract a wide enough audience to become a significant presence in the mainstream political and academic culture. Should this happen, only the willfully blind will still be able to endorse Richard Rorty's TINA-ish contention that we should "stop using the term `capitalist economy' as if we knew what a functioning noncapitalist economy looked like" (quoted on xiv).
In this book, Schweickart does many things, some of which will stand as invaluable contributions if and when TINA thinking subsides and the socialism versus capitalism debate resumes. Among other things, his accounts of noncomparative justifications for capitalism—arguments that do not depend on capitalism's purported superiority to feasible alternatives but on capitalism's nature itself—are particularly incisive. Schweickart reconstructs and assesses such claims as these: that capitalist profit is a fair reward for the contribution capital makes in the production of commodities; that it is a fair and perhaps even indispensable reward for entrepreneurial activity; that it is justified by the risks that capitalists take; and that it is a just recompense for deferred consumption.
These positions are diagnosed, evaluated, and dispatched. Schweickart is largely silent, however, on noncomparative deontological justifications of the sort that neo-Lockeans like Robert Nozick advanced. Those who want to quarrel with the claim that capitalists have, as it were, pre-social entitlements to their market-generated holdings will find little guidance in this book. However definitive his rebuttals of arguments that appeal to confused understandings of economic theory or to consequentialist intuitions may be, Schweickart's brief against noncomparative justifications of capitalism is therefore incomplete. In any case, Schweickart's main concern in this book, as in the others, is to compare capitalism to economic democracy. His contention is that economic democracy—which could as well still be called "worker control" or, for that matter, "democratic socialism"—is better than capitalism on ethical and economic grounds. To make this case, it is necessary first to clarify precisely what is being compared with what. This is not a trivial task. What capitalism is, is generally understood, though there is so much that is confusing in the existing literature that Schweickart's clarifications, though hardly original, are helpful. What socialism is has never been well understood. For a long time, it was widely assumed that the Soviet model was exemplary. This was never Schweickart's view. Economic democracy differs from the Soviet model mainly, but not only, in its thoroughgoing rejection of authoritarian allocation mechanisms at the macro-and microlevels. Thus it is a form of market socialism—where markets play a definitive role in allocating economic factors, and some role in generating the distribution of income and wealth. The principal contribution this book makes is to set forth a clear model of such a system at a level of abstraction that permits plausible speculations about how it would operate economically, and about how it would fare with respect to such values as justice, freedom, and solidarity.
Since economic democracy nowhere exists, Schweickart's account of it, unlike his account of capitalism, cannot be based on observations of real-world economies. His task, therefore, is to describe the institutional arrangements of what is still only an idea with a degree of specificity that can stand comparison with a rival model that is actually instantiated. Moreover, he must do so in a way that avoids charges of utopianism. Nearly everyone in the TINA camp would concede that a more just and efficient economic order is imaginable. They might even agree that the socialist tradition has been animated precisely by such imaginings and that, in the past century and a half, it has produced appealing models. What they would insist, however, is that these models depend on altruistic and/or cooperative dispositions that are incompatible with human nature. For the past century and a half, many socialists and anarchists effectively agreed that human nature is indeed the issue. However, they insisted—contrary to what procapitalists maintain—that human beings would in fact be capable of just the right dispositions if only the yoke of private property and/or the state form of political organization were abolished.
This is not how Schweickart's case for economic democracy proceeds. He is prepared to grant that human nature is what proponents of TINA say it is. For him, then, the case for economic democracy devolves into showing how a better—more rational and just—world can be attained through macro- and micro-level changes in economic institutions, even if the procapitalists are right about human nature. For Schweickart, then, questions of institutional design meld into rebuttals of charges of utopianism. To defend economic democracy is to argue for the historical and psychological feasibility of its institutions.
Because economic democracy can only be imagined, informed (but always inconclusive) speculation must substitute for reportorial description. It would be tempting, and arguably even justified, to rely exclusively on one's own ingenuity in contriving accounts of economic democracy's institutional arrangements. Schweickart resists this temptation as much as he is able. In an effort to ground his speculations on evidence, he combs the world for small- and intermediate-scale approximations of elements of the economic democracy model, It is in this context that Schweickart reflects briefly on contemporary Chinese versions of market socialism and, more in point, on extant cooperative movements, of which the most important, for Schweickart's purpose, are the Mondragon cooperatives in Spain. In the end, though, there is only so much that a defender of economic democracy can extract from reflections on socialist (or quasi-socialist) ventures in capitalist economies or on the experiences of post-Communist economies. What Schweickart concludes about these endeavors does partially corroborate his larger contentions. But the evidence is so sparse and inconclusive that the case for economic democracy rests overwhelmingly on the plausibility of the arguments Schweickart constructs
These arguments are pitched at a level of abstraction that is appropriate for comparing models against models, not models against ideas. Thus Schweickart is concerned to say as much as he can about how the economic and political institutions of economic democracies would operate, and how they would work together. To this end, Schweickart discusses the nature and role of private enterprises in economic democracies and the institutional forms that comprise their "public sector." His discussion of the role of banks and of individual and public savings is especially illuminating; so too is his account of fair (as opposed to "free") trade. Very often, Schweickart's discussions draw on insights marshaled decades ago by John Maynard Keynes. Keynes's express purpose was to save capitalism from itself; Schweickart's is to transcend capitalism altogether. But this difference in no way prevents him from drawing on Keynes's work. In this respect, Schweickart revives a nearly extinct but once vibrant tradition of left (indeed, socialist) Keynesianism.
Arguing for the superiority of economic democracy with respect to efficiency is only part of Schweickart's case for it. There is also the question of establishing its superiority from an ethical point of view. More than a third of After Capitalism is devoted to this task. Schweickart's account of the evils of capitalism is concise and to the point. He discusses, among other things, the enormous and savage inequalities capitalist economies generate, how unemployment and overwork are systemic under capitalism, how democratic governance is limited by capitalist economic arrangements, and how capitalist ownership encourages ecological degradation. There is little that is new in Schweickart's discussions of these issues. But his summary accounts are useful. Schweickart explains, with admirable clarity, why capitalism fares poorly on these and other counts, and why economic democracy can be expected to do better. Adherents of the TINA thesis, even if they are sympathetic to the case against capitalism, will probably deem his speculations on economic democracy exercises in wishful thinking. Their skepticism is not easily dismissed. But, at the level of abstraction at which the debate is posed and with a dearth of pertinent empirical evidence, Schweickart makes his case as securely as one can.
Schweickart's account of the transition from capitalism to economic democracy is more problematic. I would venture that he underestimates the difficulty of getting from where we now are to where he thinks that we ought to be, in part because he exaggerates the extent to which reason controls economic and political behavior. On his telling, the task of building an overwhelming consensus in favor of economic democracy, and with it the conditions for a peaceful and even painless transition, devolves into the task of demonstrating, to the vast majority, how much better off they would he living in the kind of regime he favors. As if to make this claim true, he proposes policies that would assure that individuals with unearned income could continue to benefit from their investments for a generation or more. Schweickart's aim is to ensure that everyone, beneficiaries of the system as well as victims, can be won over by appeals to self-interest.
This is not exactly "utopian socialism" in Marx's sense; Schweickart's account of revolutionary agency is, like Marx's, focused on material interests, not moral concerns. However, with the demise of anything like the "proletariat" of industrial capitalism's infancy, of a working class with "nothing to lose but . . . [its] chains," the absence of a revolutionary agent has become an intractable problem for utopian socialism's rival, "scientific socialism." Schweickart's account of the transition to economic democracy flounders on this issue. Apparently out of loyalty to the Marxist tradition, Schweickart is loathe to declare himself a utopian socialist. But, in appealing to the interests of everyone, not just the working class, he is closer to that position than he thinks. I think that he would be wiser to embrace utopian socialism unequivocally.
Of course, Schweickart is right in a sense: injustice and irrationality do make everyone worse off in one way or another. But this has always been so. Even Marx thought that capitalists, not just workers, are "alienated." Presumably', he thought that they too would be happier (and therefore better off in a material, not just a moral, sense) under communism. But, for reasons Marx made clear, to form an agent capable of bringing about revolutionary changes in economic structures, it is not enough to appeal to general human interests in material ends. People are too myopic to set their ultimately irrational short-term interests aside. In Marx's time, there was a class "in society but not of it," a nascent industrial working class, that actually could be mobilized around short-term material interests to undertake a protracted struggle to sever its "radical chains" ("Contribution to the Critique of Hegel's Philosophy of Law: Introduction," in Karl Marx and Friedrich Engels, Collected Works [New York: International, 1975], 3:186). A by-product of its doing so, Marx argued, would be the general liberation of humankind. Because that class has become integrated into the system that exploits it, and because there is no functional equivalent for a classical proletariat in the world today, there is no alternative but to appeal to expressly moral considerations. For better or worse, "utopian socialism" has become socialism's—and, if Marx and Schweickart are right, humanity's—only hope.
The sunny but unwarranted optimism that pervades his hook's concluding chapter on reform and revolution does not, however, undo the fact that Schweickart has provided a powerful antidote to TINA thinking and the politically disabling conclusions it underwrites. In this book, even more than in earlier accounts of his one big idea, Schweickart demonstrates conclusively that there is indeed an alternative to capitalism, one that partisans of efficiency and justice and a host of cognate ethical values too ought to endorse.
Institute for Policy Studies
and the University of Maryland
Book Review May 2005
by David Schweickart.
Rowman & Littlefield. 2002.
$70.00; paper, $23.95.
Pp. xxiii, 193.
Reviewed by James G. Devine
If a well-read non-socialist leftist were to ask me for the best current book on socialism, I'd recommend After Capitalism. In addition to being well-written, it is presented in a very logical way, using little of the standard jargon that discourages outsiders. It also lacks the paralyzing tone of depression infecting some leftist authors these days.
There are two chapters (2 and 4) criticizing capitalism, first from an abstract ethical viewpoint (undermining the system's legitimacy) and second in terms of its effects (inequality, unemployment, overwork, poverty, lack of democracy, and environmental destruction). There are also two chapters (3 and 5) presenting Schweickart's alternative, "Economic Democracy." The first sketches the proposed system, while the second argues that it can solve the problems of capitalism limned in chapter 4. Finally, in a seeming effort to avoid accusations of utopianism, Schweickart uses chapters 1 and 6 to put the whole enterprise into the context of history and broadly defined historical materialism.
In an era when many or most see no obvious real-world "models" of socialism for us to learn from, I see nothing wrong with a little utopianism as long as it's not reified. While Utopian experiments and propaganda about ideal schemes do not create the needed socialist movement, a socialist movement can learn from debate about them.
In the 1970s, the phrase "economic democracy" was associated with the idea of extending democracy from the political to the economic realm. To his credit, Schweickart rejects this formula. Rather than being democratic, the political system of the United States is a "polyarchy," following Robert Dahl and Charles Lindblom (105). This system involves changing governments in a way that fits best with capitalist rule in the richer countries — and something that should be replaced by true democracy.
Schweickart's Economic Democracy is in the broad tradition of Alec Nove's "feasible socialism." It involves three main elements: worker-controlled cooperatives coordinated using government-regulated markets and centrally planned investment. The first gets relatively little attention in this book, since it was the focus of Schweickart's previous books. However, reference to the Mondragon experiment makes his discussion relatively concrete here. Though these firms maximize their profits, they are "communities": they cannot be bought, sold, or moved. Further, they must provide the nationally specified minimum income per person — or face bankruptcy. So profit-maximizing firms do not treat wages as a cost to be minimized. There should be no "race to the bottom" of cost-cutting that encourages mass poverty.
Similarly, the role of markets is not discussed at length. Schweickart's main assertion is that markets work better than the central planning of the USSR and similar countries. He sees many of the problems of markets as arising largely from class divisions, so that the creation of cooperatives and democratic planning abolishes them. His understanding of market failure seems a bit naive. For example, he ignores such problems as adverse selection (e.g., the "market for lemons"), in which even competitive markets produce bad results for consumers. That is, markets share information problems with central planning.
Schweickart's scheme for distributing tax revenues back to localities and cooperatives gets the most emphasis. As part of the "social control of investment," tax revenues earned from a tax on the means of production controlled by firms are distributed back to regions and communities on a per capita basis (which Schweickart argues would be the most fair). These funds are distributed to "banks" and then to the cooperatives. The criteria here do not involve the profitability of the banks or the per capita rule, but instead profitability of the firms and their employment creation, though a community might impose further standards. The banks do not loan the funds to the firms, but instead give them grants. This is not "free money," however, since such grants add to the tax base of the capital assets tax. In addition, the democratic legislature would likely decide to invest in national projects, such as infrastructure, health, and education.
One interesting idea that comes up in Schweickart's discussion is his proposal for dealing with the fact that his socialism would likely start in one country. Like some others, he suggests that "social tariffs" would be levied on imports in order to make up for the fact that production in other countries benefit from low wages, poor working conditions, bad environmental practices, and the like. Interestingly, he argues that all revenues earned from these tariffs should be sent back to the countries of origin as lump-sum transfers. This "fair trade" seems less likely to invoke hostility from trading partners than does normal protectionism. Of course, it wouldn't be allowed under World Trade Organization rules.
Though this book is a good start, we must remember that the socialist movement has always involved debate. Unfortunately, Schweickart does not even discuss other models. But we can attain insights from another vision of a decentralized socialism, Charles Andrews' From Capitalism to Equality (Oakland: Needle Press, 2000). First, Andrews goes beyond Schweickart's liberal-style government regulation as a method of avoiding the negative sides of decentralization. His scheme involves a full-scale effort to "embed" firms and markets within social networks (to use Karl Polanyi's term). Complementary to this, instead of having his firms maximize profits, Andrews' firms are not-for-profit and have more complex goals. To my mind, this is not only preferable but more realistic: no real-world democratically run workers' cooperative would ever reduce its goals to a single-valued number such as "the bottom line." Further, Andrews' scheme seems more likely to encourage solidarity among firms.
Despite its limitations, After Capitalism is a useful read for all who reject the Thatcherite "there is no alternative" mantra. I especially admire how Schweickart applies his abstract model to address all sorts of specific questions, such as ethnic antagonisms and sexism. In brief, he notes how the simple economic effects of his scheme (e.g., full employment) help undermine such problems. However, he recognizes that they cannot be reduced to simple economics, so that more needs to be done than the institution of Economic Democracy.
[JAMES G. DEVINE Department of Economics University Hall (Rm. 4227) Loyola Marymount University, One LMU Drive, Suite 4200 Los Angeles, CA 90045-2659 firstname.lastname@example.org]