Transforming Capitalism
by Sohail Inayatullah

We're heading for a change: What kind do we want?

On one day the markets are bursting with good news, the next day the world is ending. However for the first time in quite a while even optimists have jumped on the doomsday bandwagon. Economist Ravi Batra argued in the 1980's that disparity of wealth does not trickle down and create new jobs but that the centralization of wealth leads to more money going into speculative markets. This then creates a bubble economy, which eventually explodes and greed turns to fear. This normally results in recessions or even depressions, followed by a new cycle of growth. However, there are periods when economic decline threatens the vitality of the entire system. In a depression scenario, it is not only the prospect of unemployment and economic decline that are at stake, but also the legitimacy of the entire system.

What this means is that capitalism as we know it is about to be transformed. In addition to Batra's argument, there are at least six reasons why this might be about to occur.

1.  For Robert Nelson, the moral basis of capitalism has been eroded. This is partly because of the social move­ments who have fought for the social good and for the regulation of global commons. They also contest the idea that hard work leads to wealth, arguing that more often than not speculation and inheritance leads to wealth. With the creation of the global casino economy, the link between effort, wealth and heaven has thus become disrupted. Without a new moral argument for capitalism, Nelson concludes, it will erode since it is the larger meta-story that keeps faith and trust in the system.

2.  For world system  theorist, Immannuel Wallerstein capitalism will collapse  or transform because it relies on imperfect markets, whereas globalism is moving us toward a perfect market wherein profit will be more difficult to achieve. Second, the flight to cheaper wage areas is decreasing as the areas decrease. Third, it is harder for capitalists to externalize costs as social movements and states force them to internalize costs. Fourth is the decline of state legitimacy, neces­sary to create the temporary or relative monopoly for capitalism to make a profit.

3.  Alternative economist Hazel Henderson argues that, through the new information and communication technologies, middleman and money can be eliminated. More information means better, smoother markets. Kevin Kelly, James Dator and others speak of an era of abundance, where economies run better through the sharing of wealth, and not in its monopolization. More for others means more for me, for all, what Henderson calls the economics of love. A system where profit comes through cooperation spells doom for a system based on the economics of scarcity and competition.

4. Indian philosopher and author of Proutist Economics, P.R. Sarkar, takes a different route, arguing that capitalism will collapse like a fire cracker, since individuals cannot express them­selves in the system. One indicator of impending collapse is when intellectuals and warriors become "servants of matter," that is, wage-laborers. Another indicator is when entrepreneurs are taken over by managers, that is, when intellectuals either become co-opted by the system or are forced into roles that don't match their mental ideals. Late capitalism creates a large group of those who are totally oppressed by the capitalists and work for them. At this stage, the system becomes increasingly unnatural, it no longer captures the ideals of the many ways humans know the world. Instead, ways of knowing and the larger economy are homogenized.

5.  For macro-historian Pitirim Sorokin, the system will collapse for similar reasons. As the system errs on the side of sensate civilization, it becomes in­creasingly unstable, as the ideational elements are neglected. The more it becomes one-sided the more likely and suddenly the pendulum will shift back.

6.  A last perspective, the least scientific, but perhaps the most powerful, is the New Age idea of ages: that we have moved from a golden to a silver to a copper and now to an iron age. At the end of the iron age, materialism is in full sway until there is a collective awakening. That awakening is going on now and will bring the circle back to the golden era. This explanation of past and future is significant for its simplicity but also for its ability to capture a yearning for a more just society.

In contrast, liberals point out that capitalism has survived just fine the last 500 years and the new technologies indeed will give it a fresh breath of air to make it last well into the 22nd century. Capitalism will be able to accommodate the social movements, becoming more benign and more caring-a soft landing leading to another 500-year rise. However, from a moral or historical perspective, the current level of wealth disparity cannot be justified.

 What is the world disparity level now?

According to the 1998 United Nations Human Development Report, the 225 richest people in the world have a combined wealth of more than $U51 trillion--equal to the annual income of some 2.5 billion people, or 47% of the Earth's population. The three richest people on the planet have assets that exceed the combined gross domestic product of the 48 least developed countries.

Adele Horin put it another way: it would cost less than 4% of the combined wealth of the 225 richest people in the world to satisfy the basic needs of the world's poor

What then will be the future?

Will it be the:

1.1930's deflationary depression? No jobs, no money, no hope.

2. 1990's Indonesia? No jobs, too much money (i.e. hyper-inflation), with hope coming in the form of social and political revolution. The result would be a series of reforms, a changing of the guard, but in the direction of more accountability and transparency.

3.1990's Yugoslavia? No jobs, hyper­inflation and victory of the fascists.

Cultural depression

The future can be understood not only as economic depression but cultural and psychological depression as well. Given that most individuals iden­tify strongly with consumerism- 'I shop therefore I am'-an economic crisis will lead to a cultural depression, a loss of meaning, as in the former communist world. Their dreams were displaced by short-term greed, survival and nationalism. 

The challenge ahead of us is not to waste our efforts predicting when or if the depression will occur. Rather we can begin to imagine the depression as a social asset, an event that, while dismal, can help recreate society and our futures.

To do so, we need to cast the present changes in much broader terms. We can ask: is our time, our epoch, merely a change in the last 50 years, that is, the end of communism and the victory of liberalism? Or is it a change of 250 years, the end of industrialism and the creation of post-industrial knowledge economies where technologies work harder and smarter for us?

Or is it something deeper, a change of 500 years, where we are seeing the end of capitalism and the rise of a new system? This would be a global system where the circulation of ideas is not just from north to south (from west to east, rich to poor) but a circulation including global economies, bio-regional development and a world government system.

 Or is our time a change of thousands of years, where patriarchy yields to a coordinated cooperation between genders, that is, the end of patriarchy?

Or is our time more basic, where technology is changing what it means to be human, the very nature of nature?

In any case, there is evidence and counter-evidence for all the above; what we do know, if we step back, is that fundamental change is about us, and current systems of knowing and identity cannot support us.

What then are the ways out?

Ways out:

Community, but in the context of global consciousness-wherein community economics expands into larger units, that is the local creeps into the global and not the other way around.

 Localism, but in the context of neo­humanism-expanding the boundaries of self  from ego, to family, to community, to nation, to race/religion, to humanism, and then all living beings.

 Economy that is based on a maxi-mini   system wherein there is wealth generation, that is, incentives to work hard but where there are floors, some basic needs.

A vision of the future that is not only about material progress (the linear march of Western history), or cyclical history (the Asian model of the rise and fall of dynasties, classes, clans and varnas). Rather a spiral view of history includes the past, where progress does not lead to imperialism.

 A commitment to a model of the self, which, while postmodern in understand­ing that our identities are pluralistic and have many traditions and more flexible gender/culture roles, has a root in the spiritual: we are essentially spir­itual beings having a materialistic experience, not vice versa.

 An evolutionary  view of the universe. A spiritual story means that there is cosmic intelligence, that life does have a purpose and the universe does have a moral structure, where humans still con­struct the universe even as it constructs them.

A balance between the individual and collective: both exist for each other and have rights and duties on each other. This is different from extreme Western individualism and Asian/indigenous col­lectivism.

A political system of deep democracy; that is multi-cultural, understanding that different traditions have other models of dispute resolution, and inclusive of the role of wise persons-elders-who give overall guidance.

In short: it is the model of PROUT, or the Progressive Utilization Theory, the model outlined by P.R. Sarkar.

In contrast to the three scenarios pre­sented above, I offer two alternative models:

Soft landing into global governance systems characterized by a social democratic type of capitalism: Sweden writ globally

or,

A sudden switch to a planetary civilization characterized by decentralized economic systems: a Proutist model.

 I hope for the latter but expect the former and fear the earlier three scenarios. Let us conclude on a positive note by quoting Sarkar.

'The body, mind and self of every individual has the potential for limit­less expansion and development. This potentiality has to be harnessed and brought to fruition." and, 'The force that guides the stars guides you as well."

 References:

1.  Ravi Batra, The Downfall of Capitalism  and Communism. London, Macmillan, 1978.
2.  Ravi Batra, The Great Depression of 1990. New York, Simon and Schuster, 1987.
3.      Ravi Batra, Stock Market Crashes of 1998  and 1999. Richardson, Texos, Lilberty, Press, 1998.
4.      Johon Galtung and Sohail Inayatullah, eds., Macrohistory and Macrohistorians. Westport, CT., Praeger. 1997.
5. Hazel Henderson, Building a Win-Win World: Life Beyond Economic Warfare,  San Francisco, Berret-Koehler Publishers, 1996.
6. Adele Horin, "For Richer, for Poorer," Sydney Morning Herald (September 12, 1998).
7. Sohail Inayatullah and Paul Wildman, eds., Futures Studies: Methods, Emerging Issues and Civilisational Vision-A Multimedia Reader. Brisbane, Prosperity Press, 1998. This CD-ROM includes interviews and articles by Hazel Henderson, Jim Dator, Johan Galtung, Immanuel Wallerstein, and others.
8. P.R. Sarkar, Proutist Economics. Singapore, Ananda Marga Publications, 1993.
9. Dada Shambhushivananda, Prout-Neo-Humanistic Economics, Mainz, Dharma Verlag, 1989.
10. Pitirim Sorokin, Social and Cultural Dynamics. Boston, Porter Sargent, 1957.
11. United Nations Development Program, Human Development Report 1998. http://www.undp.org/undp/dro/98.htm.