Derek Wall, whose new book Economics After Capitalism is out this month, places his analysis in context.
‘In 1845, local members of the Conservative Party selected George Hudson as their parliamentary candidate. They wanted support for two failing infrastructure projects – the Monkwearmouth Dock and the Durham and Sunderland Railway. Hudson, also known as ‘The Railway King’, was duly elected MP for Sunderland. His financial wizardry had been used to build a rail line between the North East and London, a kind of HS2 of its day. Hudson’s fall from grace however was swift. All seemed above-board – his rail projects paid generous dividends to shareholders and as a result he raised huge amounts of money for infrastructure projects. However, a pamphlet entitled The Bubble of the Age claimed that instead of the dividends being derived from profit, they came from capital. Hudson was essentially running what is now known as a Ponzi scheme. New shares were issued and dividends paid from the money invested by previous shareholders. Such fraudulent finance could continue as long as new railways generated accelerating profit for investors or new investors could be duped into buying more shares and their investment used to pay previous investors.
Hudson’s scheme was revealed, shareholders sold their stakes and his investments crashed. He was only saved from prison because of his position as an MP. This relationship between political office, the celebration of market forces and a hidden reliance on speculation and fraud seems very contemporary, yet these events took place a century and a half ago.
To truly understand the opposition to figures like Hudson, we must fast forward from the 1845 General Election to Sunderland during the General Election of 2015. Happily, Sunderland is no longer under the fiefdom of the Conservative Party, but a Labour stronghold. The constituency is renowned today for being the first to count its votes and declare its results on election night. On 7th May, once again Washington and Sunderland West was the first constituency to declare a result. The result was a minor sensation, not because of any unexpected election victory by an outsider, but because of the enthusiastic response of the anti-capitalist, we might even say the anti-Hudson, candidate. Gary Duncan from the Trade Union and Socialist Coalition interrupted the electoral returning officer, punched the air and shouted with joy at his result. Gary had come last, sixth out of six candidates, with just 341 votes, but thanks to his ‘raw enthusiasm’, was noticed internationally and reported on in the New York Times and elsewhere.
My new book, Economics after Capitalism, celebrates people like Gary Duncan whilst challenging figures such as Hudson, through economic analysis. It’s notable that whatever the weaknesses or strengths of either Gary as a candidate or his party, and despite the manifest failings of capitalism, voting for an explicitly anti-capitalist candidate sadly remains a minority pursuit, but there is a glimmer of hope to be found. The Green Party of England and Wales has moved leftwards, and increased their vote in the recent General Election. In the USA the socialist Senator Bernie Saunders is considering a Presidential run and from the SNP in Scotland to Syriza in Greece, parties challenging austerity are making some gains. Nonetheless capitalism remains hegemonic. From the financial crisis of 2008/2009 to the fall this year of Sepp Blatta, head of FIFA, a pattern recurs of power being wielded in the name of the common good (investment, growth, jobs and infrastructure projects) to harness market forces leading to catastrophic results of economics crisis, ecological damage, inequality and exploitation of workers.
Economics after Capitalism doesn’t separate ‘bad’ crony capitalism, based on speculation and the abuse of power, from ‘good’ competitive market forces. Instead, it outlines different critiques of capitalism, the market and mainstream economics. It then suggests practical alternatives. I drew my inspiration for the book from two great figures, Karl Marx and Elinor Ostrom. From the days of George Hudson, Marx has haunted capitalism, and in 2015 his critique remains relevant and respected.
Less well known than Marx is the late, great Elinor Ostrom; the first women to win a Nobel Prize for Economics in 2009. While Ostrom was far from being a fiery revolutionary (her inspiration came from market based economists such as Friedrich Hayek and James Buchanan), I argue she is just as important as Marx for imagining a world beyond capitalism. While she would never have described herself as an anti-capitalist, she entitled her Nobel lecture ‘Beyond Markets and States’, and upon reading her work, it is clear she had a very radical approach indeed.
Criticism of capitalism is outlined in chapters dealing with Stiglitz and Soros’ attempt to update Keynes’ opposition to unregulated markets. David Korten and Naomi Klein have both criticised the rise of corporations and their approach is outlined. Green approaches to the economy which are sceptical of growth and ‘free trade’ are discussed, while the Marxist critique of political economy is introduced. Anarchist and autonomist approaches, focusing on Negri and Hardt are also surveyed. The challenge of feminist economics to the mainstream is, in turn, presented. An ecosocialist alternative that fuses red and green is explained and shown to be derived from the most essential thoughts of Marx and Engels.
Economics after Capitalism argues that capitalism must be transcended; it generates rising inequality, distorts democracy and attacks ecological systems. Human beings – rather than being the slaves of an economic system – need to take control and plan a better future. While sophisticated defences of market mechanisms have been constructed, invoking Hayek and Adam Smith capitalism, far from being the best economic alternative on offer, assaults humanity and the rest of nature. Economics after Capitalism argues that social movements such as Occupy, Latin American new left governments in countries like Venezuela and new political parties like Podemos in Spain can construct an alternative beyond markets and states. Communism, attacked as something unworkable, undesirable and unrealistic, is a system of common ownership based on diverse institutions and ecological respect. Marx indicates that to overcome vested interests power must be challenged by popular forces, while Ostrom gives an insight into how the commons can be made a practical alternative. So while this book is survey of why capitalism is flawed, above all, it intends to inspire action to construct an economic alternative.’
Derek Wall is the author of six books including The Rise of the Green Left (Pluto, 2010) and The Sustainable Economics of Elinor Ostrom (Routledge, 2014). He teaches Political Economy at Goldsmiths College, University of London and is International Coordinator of the Green Party of England and Wales.
Economics After Capitalism: A Guide to the Ruins and a Road to the Future is available to buy from Pluto Press here.