To meet an ever-growing questioning of capitalism since the crisis of 2007-08, the system’s defenders look to theoretically justify its continued rule. The latest effort, by the renowned former World Bank economist Branko Milanović, which claims that capitalism is now unchallenged for the first time in history, is reviewed by PETER TAAFFE.
Capitalism, Alone: The Future of the System That Rules the World
By Branko Milanović
Published by Belknap Press, 2019, £23-95
Like the majority of capitalist economists, the author of this book hails what he proclaims is the ‘victory’ of capitalism over ‘socialism’ and ‘communism’. However, Branko Milanović goes further than his predecessors by seeking to argue that the only choice on offer for mankind now is between so-called ‘liberal capitalism’ exemplified by the US, Western Europe and most of the rest of the world, and what he describes as ‘political capitalism’, for which China and Vietnam are the authoritarian models.
This is despite the fact that he starts his book by pretending to pay homage to Marx and Engels by quoting the Communist Manifesto, and continuing to cite them throughout in defence of his theories. However, he is far from being a Marxist; in reality he is a prophet of an all-conquering capitalism! Milanović situates himself within the framework of those like Francis Fukuyama, and his false perspective that the collapse of the Berlin Wall represented the ‘end of history’. Fukuyama drew the conclusion that liberal capitalist democracy was the only political system possible in perpetuity! The class struggle, economic crises and disruptions to the system of capitalism had all been conjured away, and the future now belonged to an unchallenged capitalism.
Fukuyama’s ideas were answered theoretically by us, the Marxists, and brutally in practice in the 2007-08 world economic crisis, the greatest collapse in the productive forces since the Great Depression of the interwar period, 80 years previously. We predicted in advance that this was more likely to be the future of capitalism, and this has been confirmed in our analysis of economic and political perspectives for capitalism in many articles in the Socialist newspaper and the monthly Socialism Today.
Moreover, rather than the triumphalism of victorious capitalism predominating together with the political and social tranquillity that was promised, a period of colossal instability, mass political upheavals marked by the emergence of right-wing and left populism, even in the advanced industrial countries, has become a feature in a whole series of continents and countries. Confirmation of this is seen in the current political earthquakes throughout Latin America, the magnificent movement of young people in Hong Kong, and the outpouring of mass anger in the Middle East.
Monstrous concentration of wealth
Milanović goes further in this book by arguing that capitalism is now the “sole ruler” of the planet and this “is without historical precedent. In the past, capitalism, whether in the Roman Empire, sixth-century Mesopotamia, mediaeval Italian city states, or the Low Countries in the modern era, always had to coexist… with other ways of organising production”. He goes on: “As recently as one hundred years ago, when the first incarnation of globalised capitalism appeared, the world still included all these modes of production”. However: “Following the Russian revolution, capitalism shared the world with communism, which reigned in countries that contained about one third of the human population. None but capitalism remain today, except in very marginal areas with no influence on global developments”.
The author seeks to explain that capitalism no longer has competitors because China now has 80% of production in the private sector, compared to just below 50% in the late 1990s and effectively zero before the reforms of 1978. Moreover there is a process of ‘convergence’ in the concentration of wealth in the hands of a plutocratic elite throughout the world.
Milanović is of course the originator of the famous and much quoted ‘elephant chart’. This sought to show that the world’s low-income countries are rapidly catching up with Western capitalism. Yet he himself shows that “Switzerland is 53 times better off than India”, with almost a hundred times more wealth per adult! Nevertheless he claims that “the world’s low-income economies are rapidly catching up with the West”. The main body of the elephant shows income growth for the bulk of the world’s population. The downwardly curving trunk captures the ill-fated ‘Western middle classes’, amongst whom he includes significant sections of the Trump-supporting US ‘white working class’. Finally, the trunk tips sharply upwards to reflect the outsized gains of the West’s top ‘1%’, in reality 0.1% of the population, a new plutocratic elite which effectively rules the capitalist world.
It is true that the charmed circle of globalised elites in China, the US and elsewhere has ‘never had it so good’. But that is not the reality for the majority in the poor countries, in the neo-colonial world or even amongst the working class in the formerly ‘advanced’ industrial countries. Milanović also claims that almost everyone benefits from what he calls “global convergence”, in terms of income and living standards. This is more evident at the top of society than amongst those at the bottom.
The big exceptions, he says, are the West’s blue-collar workers who “are likely to feel the squeeze for decades to come”. However he claims that support is high in Asia for his new, all-conquering version of capitalism: 91% people in Vietnam say they are fans of globalisation, against just 37% in France. Yet recently in Britain, we have been treated to the terrible spectacle of poverty-stricken Vietnamese migrants, seeking to escape desperate conditions at home, frozen to death in the back of a haulage lorry, fleeing to a ‘better life’ in the West. This does not signify great support for capitalist ‘globalisation’ in their own countries! Indeed China, invoked by the author as a model of “politically-motivated growing capitalism”, is a world leader in colossal inequality, which is growing virtually everywhere in the capitalist world, and is turning into a nightmare for the masses.
The author concedes that, for the first time, the top 0.1% in America now has the same amount of national wealth (22%) as the bottom 90%. Yet as recently as the 1980s the bottom 90% accounted for more than a third of America’s wealth. In other words, wealth has been concentrated in fewer hands along with opportunity – through so-called ‘meritocracy’ – to advance into the top amongst the wealthy elite.
Milanović sketches out a version of a dystopian future society arising from his analysis. He describes the greater and greater concentration of wealth, and the increasing commodification of virtually everything in society – the rich understand the price of everything and the real value of nothing. The young Marx and Engels in the Communist Manifesto noticed the destructive character of capitalism: “Everything that is solid melts into air”. The author confirms this as he describes matter-of-factly that there is already a “marriage premium” amongst the wealthy – the rich marry the rich – and also with a hefty price for the entry of the children of the elite to top schools and universities.
Not grave-diggers but unknowing midwives
Milanović also presents a completely false interpretation of the theories of Marx in relation to the ‘underdeveloped’, colonial and semi-colonial parts of the world. He argues that “Communist revolutions in the colonised Third World played the same functional role that the domestic bourgeoisie played in the West”. Although they didn’t know it, they were the unconscious agents via revolution (and Marx and Engels were the unconscious agents of this process through their theories!) for the ultimate introduction of capitalism.
Karl Marx did show that the bourgeoisie in the West in general played a big role in the development of the productive forces and at the same time assisted in the building up of the numbers and power of the working class, their future ‘gravediggers’.
Milanović draws a very crude analogy with this and what has taken place in China and Vietnam with his interpretation of capitalism today as having similar origins to the capitalism of the 19th century. In the economically underdeveloped countries the working class participated in revolution, naïvely imagining, according to Milanović, that they were fighting for a different kind of society, the beginnings of socialism, employing the methods of revolution both in the towns and in the countryside. The Chinese revolution, the Vietnamese revolution – and the revolutionaries, workers and peasants, who participated in them – were merely the unconscious tools of ultimately laying the basis for a new and higher form of capitalism, manifested in Vietnam and China today.
His schema completely leaves out of account the revolutions that took place in the advanced industrial countries, for instance the German revolution of 1918-23, with a predominantly working class revolution threatening capitalism. The same was true in Spain from 1931-37; also in the revolutionary movements of the Italian masses in 1943 and in the whole period up to 1948-49 when revolution was posed. Just the replacement of fascist leader Benito Mussolini by Marshall Badoglio opened the gates to revolution, which included the occupation of factories and workplaces in the north of Italy.
In the immediate post-war period also, a radical wave swept throughout Europe, with elements of revolution: the election of Labour as a majority government for the first time in Britain, the revolutionary upheavals in Greece, the coming to power of popular front governments in both Italy and France. Did the working class participate in this movement – with the bourgeoisie on the opposite side of the barricades – to establish ‘unconsciously’ a new capitalist society? This whole method of reasoning is absurd not just in relation to the advanced industrial countries but also when Milanović seems to apply this to the revolution in the “colonial and neo-colonial world”.
He seems to be arguing that in China and in other economically underdeveloped countries like Vietnam, which similarly experienced a revolution (as described in our book, Empire Defeated: The Vietnam War), the workers and peasants made a revolution not for their own purposes but “unconsciously” in favour of a new stronger, more powerful capitalism.
Is he suggesting that this was also the case in the colossal movement of 1925-27 in China which saw the industrial working class and urban masses in the lead, with the Chinese Communist Party (CCP) rooted at that stage in a splendid multi-million strong working-class movement, predominantly in the towns? This revolution sought to overthrow the rotten, corrupt, and pro-capitalist, pro-landlords Chang Kai-shek regime. However, they were not, Milanović suggests, fighting for socialism but ultimately a new powerful capitalist regime.
The reality was that they were forced into the countryside by the blunders of the Russian Stalinist leadership and of their own party, the CCP, Mao included. They only then resorted to a mass guerrilla war opened up against both the Japanese invaders and the remnants of the Chang Kai-shek regime. This resulted in the coming to power of the Mao regime, which after zigzags ultimately laid the basis not for a planned economy or ‘socialism’. But, reasons Milanović, they were, in reality, ‘unconsciously’ fighting for the emergence of a stronger, more powerful capitalist regime. This ultimately then laid the basis for a new capitalist development that we see today! This is the logical conclusion of Milanović’s arguments.
Milanović also has no perception of the combined character of the revolution in China, or for that matter in the Russian revolution itself. There is no room with him for the nuanced ideas of Marx and Engels in general, or of Lenin’s and Trotsky’s, particularly in their conception of the process of the revolution in Russia and the underdeveloped countries, nor of what would follow in their characterisation of the transitional societies between capitalism and socialism.
Milanović agrees with other Stalinist authors when he writes: “The shift of emphasis towards anti-imperialist struggle rather than revolution in developed countries, which occurred in the 1920s, ‘changed the role of the Marxist movement for democratic, working-class socialism [in rich countries – PT], to a movement for the modernisation of backward societies’.”
He displays here his complete lack of understanding of Trotsky’s theory of the permanent revolution, the combined character of the revolution in the underdeveloped world. Moreover he takes as good coin the abandonment of genuine Marxism by Stalin and the growing bureaucratic elite that he personified, together with his embrace of the Mensheviks’ position on the revolution in Russia – first came the agricultural revolution with the music of socialism postponed for the future. All kinds of mistakes took place through this false prospectus in the underdeveloped world.
The Russian revolution itself did not develop under this Menshevik/Stalinist signboard of stages. The central idea of Lenin and Trotsky’s programme for the Russian revolution involved the completion of the bourgeois democratic revolution: land reform, land to the peasants, and at the same time the taking over of the commanding heights of the economy into state ownership. This is what gave the Russian revolution its combined character and is what actually happened. The revolution was led by the working class although it was a minority in society – but by its actions it encouraged the mobilisation of the colossal multi-million peasant mass. A proletarian revolution took place in the cities, which linked up with a colossal movement of the peasantry in the countryside to defeat the capitalist-landlord regime of Tsarism.
Milanović also has no perception of the real differences, from a Marxist point of view, of the terms ‘socialism’ and ‘communism’. It’s true that sometimes these terms were employed even by the Bolsheviks in the Russian revolution and also in the description of the state they created. This was used in agitation as signifying either a fundamental political and theoretical difference of the Bolsheviks with other working-class political forces, or as a means of signifying important trends in the direction in which political formations and even states would move.
In the conception of Marx and Engels the beginning of socialism represents the highest stage of development of the productive forces under capitalism. Its starting point, of necessity, begins at a higher level than even the most advanced capitalist regime at the time. This would almost automatically mean that the starting point for socialism today would be on a higher level than that reached in the US and the other advanced industrial countries. Clearly Russia was not on this level in 1917, possessing a small but dynamic working class in comparison to the multi-million peasant population. That is why the Russian revolution and particularly its leaders, Lenin and Trotsky, envisaged that they would be the spark for the international revolution, particularly the working class taking power in Germany. If they had then established a European democratic, socialist confederation of the working class, this in turn would have acted as a magnet for the working classes not just throughout Europe, but in the USA and the world, leading to a world, socialist confederation.
However in October 1917 the democratic workers’ state was a transitional society between capitalism and socialism. This was taking place in an economically underdeveloped country and the Bolsheviks were well aware that unless the Russian revolution spread to economically developed Germany at least, and then through this gateway to the world, it would be difficult to hold out against the forces of capitalist restoration.
Roots of Stalinism
As it turned out, world capitalism was decaying, as the catastrophe of the first world war demonstrated. Moreover, but for the cowardly social-democratic leaders together with their trade union cousins, the worldwide socialist revolution could have begun, following the lead given by the Russian masses through their revolution. Recognising these dangers, the capitalists did attempt to intervene to crush the revolution but failed because of the mass support for Russia from the international working class. On the other hand, the isolation of the revolution together with the economic and cultural backwardness of Russia led over time to the adoption of exceptional measures in the rationing of production and goods. This in turn became the starting point for the growth of bureaucracy – a privileged officialdom – and ultimately of Stalinism. The elements of workers’ democracy were also weakened by the civil war that followed the revolution and were further eroded by the rise of the bureaucracy around Stalin, which more and more came into conflict with the Russian masses and the original internationalist aims of the revolution.
Milanović lived in and was quite clearly influenced by one of these remnants of Stalinism, Serbia and the former Yugoslavia. This colours his perception, of his difficulty in understanding and analysing this version of ‘socialism’, in reality Stalinism. He demonstrates this when he writes: “The issue of the placement of historical communism within Marxist thought is especially difficult… The problem for Marxism is how to explain why socialism, an ostensible prelude to the highest stage of human evolution, after having won in several countries and then spread and established itself even further, suddenly disappeared by transforming itself officially into capitalism (as in the Soviet Union and Eastern Europe) or evolving de facto towards capitalism (as in China and Vietnam). Such an evolution is simply inconceivable from within Marxism”.
Every word here is a mistake and some are two! A familiarity with the works of Trotsky – who is never referred to in this book and that is not an accident! – or the analysis of the Marxists of the CWI would have unequivocally demonstrated that this is just not true. In the pages of Socialism Today and its predecessor magazine the Militant International Review, for instance, we did describe how the former Stalinist regimes threatened to restore capitalism and were able to do this in the post-1989 situation in Russia and Eastern Europe.
There was nothing conscious or preordained in this. The possibility of capitalist restoration was lodged in the situation in Russia and Stalinism, and had been already elaborated by Trotsky in the 1930s in his book Revolution Betrayed, and in a number of important articles at the time! Stalinism represented a privileged, bureaucratic caste that drew its power from presiding over a planned economy, which for a certain historical period actually outstripped capitalism. This allowed Russia to develop from the ‘India of Europe’ to the second industrial nation in the world, after the USA! This was only possible because of the existence of the planned economy, which played a relatively progressive role in its first stages even despite the incubus of Stalinism. Later the Stalinists’ rule became an absolute fetter on the further development of society.
Not the end-point
There is of course no mention by Milanović that at one stage Russia outstripped the capitalist USA in some fields of scientific development; for instance, in the space race when Russia was first to launch a human astronaut, Yuri Gagarin, into space. Russia at one stage also produced more scientists, technicians and engineers than the whole of the capitalist world together. This was just one of the advantages which flowed from the existence of a planned economy, albeit bureaucratically distorted. This allowed Russia for a time to outstrip even the scientific performance and achievements in some fields of the most advanced capitalist country, the USA.
The naivety, indeed the ahistorical approach, of Milanović is clearly revealed when he seeks to explain what happened in relation to his schema about the future. His vision, which he quite clearly sees as ‘superior’ to a Marxist perspective, is the same as Fukuyama’s: that “liberal democracy and laissez-faire capitalism represent the terminus of socioeconomic formations invented by humankind. What Marxists see as an incomprehensible reversal to a much lower (inferior) system, liberals see as a perfectly understandable movement from an inferior, dead-end system (communism) back onto the straight path leading to the end point of human evolution: liberal capitalism”.
On occasions, he seems to recognise the weakness of his case. Of the ‘liberal international order’ before the first world war, he cannot explain how, if “all the key players were capitalist and globalist, and, moreover, were actual, partial, or aspiring democracies (as was certainly the case for the Western Allies but also for Germany, Austria-Hungary, and Russia, which were all moving in that direction) could [they] end up in a state of general carnage?”
“The existence of World War One creates an insurmountable obstacle”, he concedes, to the liberal capitalist “interpretation of history: it just should not have happened. The fact that it happened at the heyday of liberal dominance, both nationally and in international relations, opens up the possibility that the liberal order might lead to a similar outcome in the future. And it is clearly impossible to claim that the system that might regularly end up in worldwide wars somehow represents the pinnacle of human existence, as defined by the quest for prosperity and freedom”.
The pessimistic perspective outlined in this book is that capitalism is, and will remain, the ‘sole’ option for humankind, and is the most efficient form of organising economic and social relations. Yet under his perspective society will be a ‘Hobbesian hell’ of “each against all” – ‘dog eat dog’, where everything, even in the personal sphere has a price, including ‘love and kisses’. Corruption is rife and “unavoidable”, Milanović admits.
This view of the future under capitalism – either the ‘liberal’ or ‘political’ sort – will be a living hell for the majority of society. The working class, particularly the youth, we are confident, will reject his dystopian view of the future in favour of liberating, worldwide democratic socialism.