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Life after the Peak: Capitalism and Market Economy

All over the world there are experiments with renewable energy, solidarity economies and non-profit economic forms. Acceleration policy is impossible when there is no oil. A growth acceleration law will be absurd when fossil energy runs out. We will need a growth de-acceleration law. National politics will have to change or will not play a role any more.

Interview with Elmar Altvater

[The history of humanity has shown that the transition from one energy system to another changes everything, says political scientist Elmar Altvater. This is also true now. Changing from fossil to renewable energy involves a dramatic social reorganization." This interview published May 19, 2010 is translated from the German on the Internet. Elmar Altvater is an emeritus professor at the Otto-Suhr-Institute of the Free University of Berlin and member of the scientific advisory council of Attac.]


Elmar Altvater: Capitalism is a rather flexible system and existed before the massive exploitation of fossil sources of energy. The economic historian Ferdinand Braudel dates the beginning of capitalism in 1492, at the beginning of the great discovery. This was a slower capitalism and a not especially more efficient capitalism.


The industrial revolution was a fossil- industrial revolution. Capitalism's source of energy corresponded to its logic. Oil and coal are independent of space and time. They can be burned at any time. Unlike the sun, they do not depend on times of the day and times of the year. Location decisions can be made independent of energy supply because energy can be transported cheaply and easily. That was impossible with wind or water power. The productivity of labor can be increased or accelerated. This increased productivity is responsible for the "wealth of nations" and its permanent multiplication so praised by Adam Smith. That is what we experienced in the last two hundred or two hundred and fifty years. We were happy. We love capitalism and this prosperity. But now we must accustom ourselves that this cannot continue because the fossil energy on which capitalism is based runs low. Even worse the combustion products produce a climate change that can make our life into a hell. Transitions take a long time. At the beginning of the oil age, fuel was supplied by coaches.


Another capitalism could obviously arise, a capitalism we do not even know after this capitalism based on fossil fuel. Maybe it will still be capitalism. Maybe it will be something different. That would be a social revolution. No one can know what will happen exactly. Clearly we live in a transitional phase. Now we must organize the changeover to renewable energy. Our life will completely change. It will not be the same car and the same tank that we will fill with bio-diesel instead of gasoline. We must redesign the whole transportation system. We must begin right away because all this cannot happen from today to tomorrow..


Restrictions in energy consumption are certain. But we will also win back the nature that we are destroying under some circumstances. Life can become more beautiful.


Supporters include the environmental movement and social movements. Many people who are not yet politically engaged today realize something must change. There are experiments all over the world: with renewable energy, solidarity economies and non-profit cooperative forms. Millions or perhaps billions are experimenting in this direction today.


What is described as "normal politics" will not be normal anymore. Acceleration policy is impossible when there is no oil. A growth acceleration law will be absurd when fossil fuel runs out. We will need a growth de-acceleration law. Normal politics will have to change or will not play a role any longer.


An old question demands new answers

By Elmar Altvater

[This article published in 2009 on www.marx21.de is translated from the German on the Internet, . Elmar Altvater is an emeritus professor of political science at the Otto-Suhr Institute of the Free University of Berlin. He works in the scientific advisory council of Attac and is a member of DIE LINKE (German Left party).

... The legitimation of capitalism as a social system is attacked in the grave crisis of the beginning 21st century. Its high priests, the economists of ideological neoliberalism, have been thoroughly shown up or made into fools. People like to speak of market economy and are silent about capitalism. One term, the market economy, is positive while the others are branded negative (capitalist greed) or even eliminated (the capitalist production method) and dominate discourse with this procedure.

The distinction of capitalism and market economy opens up the possibility of capitalism reappearing in a kindly form as a market economy. In an article from the New York Review of Books (Vol. 56, No. 5, March 26, 2009) and printed in the Financial Times of Germany), Nobel Prize winner Amartya Sen defines capitalism as "forcibly dependent on markets for goods exchange." Exchange relations are at the center of analysis, not production relations. Exchange requires trust between the exchange partners and supervision because faith in the self-regulation of the market economy is unjustified. Should the capitalism term be abandoned and only the market economy emphasized? The great French historian Ferdinand Braudel said refusing to distinguish capitalism and market economy was unfortunate. "Capitalism is the invention of an unequal world," an "ambivalent and contested term" needed to understand economic reality that cannot be grasped with the word "market economy." The word "capitalism" "can be chased out the door but it comes in again through the window." Why is that? There are two forms of exchange: "that market configuring the whole everyday material life as a connecting link between production and consumption" and that "unequal exchange" in "long trading chains" making possible "high profits" and "accumulation of considerable capital." Speculation according to Braudel is one of the original sins of capitalism.

In Braudel's understanding, the extreme inequality in modern capitalism is more a consequence of speculation on globalized markets and of unequal exchange in long trading chains between the center, semi-periphery and the periphery of the capitalist world system than an expression of the class antagonism of paid labor and capital. The contradictions in circulation and the exploitation throu9gh unequal exchange interested Braudel more than the social conflicts in the production sphere. Immanuel Wallerstein also starts there and establishes his world system theory of unequal exchange on markets. World system theoreticians have been criticized for emphasizing the circulation sphere before the production sphere. While they do not deny the capitalist character of the world system, they largely ignore the forms of labor and production, the specifics of the production method. Braudel rightly underlines again and again the central significance of the totality of everyday material life." But he omits analyzing the systematic variableness (not only the historical differences) of the social forms in which the everyday material life of people is organized.

The meaning of the statement of Germany's most important theoretician of neoliberalism is opened up on this background. The capitalism term is a "hypostatization." Different basic ideal-typical economic-political forms including "the free transportation economy," "central administrative economy" and their mixed forms are part of history. However there is a narrowing of perspectives that makes us blind to social and political contradictions. This is true when a market economy is conceived with a money that as a means of circulation can only circulate goods and cannot fulfill a central function in a capitalist economy: to serve as credit for financing investments and create a work-free interest income to owners of financial assets. Abstraction from the capitalist character of the production method also makes possible the abstraction of money from interest and from the surplus value production in production by workers from whom interest ultimately originates.

A money without interest that cannot be transformed in capital is a fascinating idea for many whose charm John Maynard Keynes could not evade. Thus the market economy could be "liberated from capitalism," the physicist Peter Kafka explained in his well-known book. The troublemaker of money must be operated out of capitalism to leave a well-functioning market economy.

The modern market economy was "disembedded" from society, as the historian Karl Polanyi explained in his book about the "Great Transformation" to the market economy in the England of the 18th and 19th centuries, to the market economy without ifs and buts, without social and ecological nonsense. A thoroughly capitalist market economy arose with a sales market that presupposes the historical social split of paid labor and capital. The market economy produces money-markets and financial markets and with them new uncertainties unknown in earlier centuries. Financial markets tie the past (for example, buildings created with credit reliability), present (in which decisions are made) and the future (in which credits will be paid out of the future returns). Future returns are uncertain, full of risk and prone to crisis. Therefore Polanyi warned of the commodification of workers, money and nature. Its markets cannot even be "social" or "ecological." The4y function as "Satan's mills" in which labor, nature and money are destroyed when there is no resistance in a counter-movement. In other words, the market economy is first social and ecological when this is fought for. The pure capitalist form arises again and again without "social fuss" and "ecological nonsense" after historical defeats in the social conflicts.

Marx was also occupied with the market in capitalism. The division of labor in individual factories, administration and in general is regulated by market forces. The internal division of labor in the workplace must be distinguished from the general division of labor in society even if the connection is obvious. "The manufacturing division of labor assumes the unconditional authority of capitalists over people who are mere links of a mega-machine. The social division of labor sets independent goods- producers against one another who acknowledge no other authority than competition, coercion and the pressure of their mutual interests (... ) The same civil consciousness which the manufacturing division of labor, the lifelong annexation of the worker to a detail execution and the unconditional subordination of part-time workers under capital celebrate3d as an organization of labor increasing their productivity denounces all conscious social controls and regulation of the social production process as an incursion in the inviolable rights of property, freedom and the self-defined "geniality" of the individual capitalist. It is very characteristic that the enthusiastic apologists of the factory system do not criticize the general organization of social work as though they would transform the whole society into a factory" (MEW 23).

Thus the market is a medium of the social division of labor in the circulation that begins in the factory under the individual capitalist authority of the enterprise as a manorial arrangement in production and continues in society as a complex exchange process between formally free individuals. Advances in productivity make possible the production of relative surplus value - today we would say: increasing the competitiveness of locations. Division of labor in particular and general is a unity held together by the capitalist form. Chasing capitalism out the window and rolling out the red carpet for the market economy - with a social attribute - is not a theoretically convincing or politically viable project, even if this has the signature of Nobel Prize winners.

This is also the crux of the matter with the socialist market economy developed as a concept by Oscar Lange in the 1930s. Central planning cannot replace the market. The social division of labor in its complexity cannot be simulated by a central plan. Only a combination of market and planning is viable. Capitalism cannot be forced out through the door or window. Public spaces against private property must be created. This can only succeed when citizens and workers take their fate in their hands, prevent surrender to the market through economic democracy and influence the reproductive process of capital.

Therefore replacing the market with planning is not enough. The production methods, consumer patterns and social relations to nature must be reorganized. Regulating exchange on the market and restoring "trust" are not sufficient when trust is destroyed as in the present financial crisis. Reorganization of relations of production is vital along with the social regulation of all dimensions of production, circulation and exchange.

Video: Immanuel Wallerstein and Grace Lee Boggs in Conversation at the 2010 US Social Forum in Detroit
68 minutes www.commondreams.org

Video: Michael Hudson and Richard Wolff - Europe Under the Crunch
www.grittv.org July 31, 2010
We've heard plenty about the recession in the U.S., but what about the rest of the world? Countries across Europe have faced budget crunches and conservative governments are using the crisis as an excuse to roll back the social safety net that most have enjoyed for decades.

Many of the problems--and the solutions--sound sadly familiar. Lowered taxes on the rich and corporations, falling wages, and deregulation led to the crisis, which is being shifted onto the backs of the working class--as Michael Hudson notes, putting the class war back in business. Hudson joins us in studio, along with Richard Wolff, to discuss the economic crisis in Europe, what we can learn about the response to it and apply back at home. Here's a hint: it involves organized labor.

To watch the interview broadcast on GritTv July 31, 2010, click on
 link to www.grittv.org

homepage: homepage: http://www.rdwolff.com