Since Donald Trump launched his chaotic trade war earlier this year, it has become a truism to say he has plunged the world economy into crisis. At last month’s spring meetings of the World Bank and International Monetary Fund in Washington, where policymakers and finance ministers from all over congregated, the attenders were “shellshocked”, the economist Eswar Prasad, a former senior IMF official who now teaches at Cornell, told me. “The sense is that the world has changed fundamentally in ways that cannot easily be put back together. Every country has to figure out its own place in this new world order and how to protect its own interests.”
Trump’s assault on the old global order is real. But in taking its measure, it’s necessary to look beyond the daily headlines and acknowledge that being in a state of crisis is nothing new to capitalism. It’s also important to note that, as Karl Marx wrote in The Eighteenth Brumaire of Louis Napoleon: “Men make their own history, but they do not make it as they please.” Even would-be authoritarians who occupy the Oval Office have to operate in the social, economic and political environment that is bequeathed to them. In Trump’s case, the inheritance was one in which global capitalism was already suffering from a crisis of legitimacy.
Consider the decade before he was re-elected. In 2014, the global financial crisis and the Occupy Wall Street movement were fresh in the memory. The French economist Thomas Piketty appeared on bestseller lists around the world with his tome Capital in the Twenty-First Century, which highlighted income and wealth inequality. Bankers, billionaires and defenders of free market capitalism appeared to be on the defensive. “Nobody believes any more in a moral revival of capitalism,” wrote the German sociologist Wolfgang Streeck in the New Left Review. The “attempt to prevent it from being confounded with greed has finally failed, as it has more than ever become synonymous with corruption.”
I think we need to be clear about what capitalism actually is:
So, a person with access to sufficient capital buys a factory and hires people to work in the factory, and pays them a wage. The workers make a product that gets sold on the open market. Those proceeds are the source of the company's revenue. Once expenses, including the wages paid to the workers, are subtracted from the revenue, if there is a surplus, that is profit that goes back to the owner. That's capitalism in a nutshell. The point, the objective is to generate a profit for the owner, as a return on their initial capital investment.
Ok, so, what's the alternative? Well, socialism:
So, a government, a group of workers, or a community acquires a factory. If it's a government or a community that acquires the factory, they hire people to work in the factory and pay those workers a wage. If it's acquired by workers then it's worker owned. In either case, the workers make a product. That product can either be sold on an open market or distributed by other means. If it is sold, those proceeds are the source of revenue. Once expenses are subtracted from the revenue, if there is a surplus, that surplus either gets reinvested into the factory (to buy new machines or hire more workers), or, in the case of the worker owned company, that surplus might be distributed among the workers as profit, since they are also the owners.
People act like socialism is just some hypothetical that only exists in theory, but that's not true. The fact is, socialism exists and works right now, today. All over the world, products and services are produced and made available to people by organizations that are government, community, or worker owned, either for a profit or non profit.
There's a lot of countries, like Canada, that run on a social democracy as well. It's supposed to be a well-regulated type of government but unfortunately capitalism has a heavy hand on the steering wheel right now.
Social democracy isn't really an alternative to capitalism, it's more of a progressive modification of capitalism. Under social democracy, the factory would still be owned by a capitalist and operated for their profit, but the government would use its authority to regulate the factory, tax the owner's profits (to help fund public services), protect workers, etc.
Based Richard Wolff listener/reader/watcher
For example: The Mondragon Corporation is a federated, worker-owned company with 12 billion euros annual revenue and 24 billion in assets.