When studying and trying to understand the past, we always do so in order to cope with the present and be better equipped for the future – that’s a truism. But our endeavors become difficult when the past provides us with contradictory signals so that the future turns into mystery. Then it can happen that our certainties waver and we look for completely new orientations and even concepts.
Take capitalism, for example
For at least two hundred years, every serious thinker has been convinced that there is something fundamentally wrong with it. Karl Marx saw in the capitalist mode of production an instrument for the exploitation of workers, who in his time were the largest population group along with the peasantry. Nowadays, however, the labor force is in rapid decline in all technologically leading states. With the help of artificial intelligence, most industrial consumer goods from washing machines to electric cars could already be produced in fully automated factories. If the world could dispense with innovation and changing fashions in equipment design and composition, automation could be applied to not only most, but all industrial products. In other words, the definition of capitalism as an instrument of exploitation of an industrially active labor force even if valid in the past has lost its validity for the future.
The definition of capitalism in terms of private ownership
of the means of production and the control of production and consumption via the market has also become much less meaningful. Even Joseph Schumpeter had thought it possible for the state to monitor the production and consumption activities of all individual actors through a central planning authority. In his time – in the middle of the 20th century – this was, of course, not more than a theoretical option, but with Big Data it has now become a real alternative. This would then be a centralized economy that in principle works in exactly the same way as a decentralized market economy – except that production and consumption are not controlled by thousands of decisions made by individual market participants but by a central computer that faithfully registers and evaluates all these decisions. In this case, an entrepreneur-to-be turns for venture capital not to private investors but to the state. Private profit is then replaced by the allocation of goods or money by the state (as formerly happened in socialism, but with greatly reduced efficiency, since Big Data was not yet available at that time. Only China has practiced central regulation with extraordinary success).
Things do not, however, significantly change, when private capitalism is replaced by capitalism of the state, because this system too only works properly if the private suppliers of ideas and initiative are rewarded accordingly. Whether we call this reward private profit and private property or recognition and reward by the state does not make much difference (the mind-numbing work on an assembly line is not made one iota more bearable by making the worker a co-owner of the company through share ownership. Alienation, to use the Marxian term, remains the same in either case.) The innovative individual necessarily plays a crucial role in both systems – which means that both must provide him with the necessary incentives to make his skills available to the community. In other words, the definition of capitalism on the basis of private property does not really help us either to better understand our future.
It was left to Max Weber to hint at a decisive characteristic
„Capitalism /is/ identical with the striving for profit in the continuous, rational capitalist enterprise: for ever renewed profit, for ‚profitability‘.“
At first glance, this definition seems strikingly similar to that established by Karl Marx. However, while the latter insists that workers are deprived of a legitimate profit, the withholding of which Marx calls exploitation, Max Weber treats the pursuit of profit as an ethically neutral fact. And for good reason: No one can have an interest in using raw materials and working people for the production of certain goods if he is not rewarded (intellectually or materially) for his own initiative and ideas. Such reward is called profit. It becomes exploitation only when it can be increased at will under conditions of monopoly or restricted competition. In order to prevent this from happening, competition therefore belongs to the constituting preconditions of any functioning market economy.*1* As Marx himself has rightly shown, in the case of perfect competition profit (and wages) may even drop to zero – then companies compete with each other to their very death.*2*
For Marx, all social and economic problems are basically
solved once the seizure of power by the proletariat puts a definite end to the exploitation of the majority by a minority. Marx understands history as a permanent class struggle, which can only be abolished through the expropriation of private owners. From Marx‘ theory it can be deduced that after this social revolution mankind will consummate history with a final happy end. Marx created a modern fairy tale, which still enchants his spiritual followers: „And they all lived happily ever after.“
But Marx was wrong
During the more than one million years of his historical existence, Homo sapiens has known class struggle only in a single percentage of this time, namely during the last ten thousand years. All the time before, namely 990 000 years, when hordes of maximum 50 people roamed the expanses of the globe, classes simply did not exist. This struggle first emerged in populous agrarian societies (from Mesopotamia and Egypt to China, India, and Europe to the Incas and Aztecs of the New World) because a minority of 5 to a maximum of twenty percent armed men could effortlessly keep a majority of 80 to 95 percent sedentary peasants in check and systematically exploit them. The minority consisted in soldiers and rulers, the large remainder served them as food suppliers. After all, the conditions before the Industrial Revolution were fundamentally different from those today. We think of those prosperous farmers of our days and project this image into the past – in this way we create one more fairy tale.
This class struggle, which lasted for ten thousand years, still continued in the early years of industrial capitalism. Especially in England, it produced for about half a century those terrible conditions so poignantly described by Karl Marx. But these initial conditions did not last long. Thereafter, ever broader sections of the population acquired growing prosperity. When Karl Marx died, a majority throughout Europe was already living at a material level that the ninety percent of the peasant underclass, slaving pitilessly for the upper ten percent, had not even dared to dream of for ten thousand years. Remember, before the onset of the Industrial Revolution in the 18th century, the ruling ten percent had to be constantly prepared to forcibly prevent uprisings by the exploited majority (which moreover was exposed to a permanent threat of famines). This class struggle, which had lasted for ten thousand years, was – contrary to Marx’s prediction – not increased by the industrial revolution (organized as private or state capitalism) but, on the contrary, considerably weakened. In a materially fast-growing country like China, the population keeps quiet even though the system hardly grants any political freedoms. Chinese state capitalism has achieved the miracle of helping one of the poorest populations in the world to material prosperity within a few decades – the most effective antidote against class struggle.
Provided that states continue to grow
and all classes participate in this growth (this is true for China, but to a much lesser extent for the barely growing states of the West), the Marxian critique of capitalism is no help in understanding the future. Similar to the ten thousand years of agrarian civilization, exploitation continues to exist, but it no longer leads to famine and early death and is certainly not specific to the capitalist mode of production. When Steven Pinker glorifies our time as the very best (with a few reservations), while his former teacher (in linguistics) Noam Chomsky considers it the worst (with a few reservations), we must, from an objective point of view, rather agree with the pupil and not the teacher. There is, however, a strict distinction between the objective and the subjective view. Subjectively, many materially comfortable people in the West perceive their own situation as dire, while surprisingly, there is much more optimism in parts of the Third World that are actually plagued by hardship and misery.
Weber’s definition of capitalism
presents a completely different perspective from that of Karl Marx. Max Weber does not tell us a fairy tale of a fundamentally changed world, if only property is taken out of the hands of individuals and given to the state. After all, Weber was a hard-nosed realist. But he hides his much more factual view of capitalism in a mere side note. According to him, modern capitalism consists in „the striving for ever renewed profit /my emphasis/.“ Whereas Marx had only perceived static dualism: there exploitation before the seizure of power by the proletariat, here the new society redeemed from exploitation after the proletarian revolution, Weber recognizes the actual characteristic of capitalism as a processual expansion – i.e. as constant renewal and never-ending growth.
For this is precisely the essential characteristic of the new economy
It is based on constant material growth. But this in turn presupposes an infinite supply of raw materials, above all energy, which was first extracted from the bowels of the earth in the form of coal, then as oil and finally as gas. If these subterranean sources had not been tapped, pre-industrial European capitalism would have been as much a brief flash in the pan as similar developments in Asian cultures, such as China and India. Capitalism is a process of permanent growth, but such material growth is only possible if and as long as the raw materials to be utilized are available in sufficient quantities. This was the case at the moment when energy in the form of coal, oil and gas began to be extracted in ever increasing quantities.
Joseph Schumpeter recognized the process nature of capitalism
even more sharply than Max Weber, in that he saw the essential characteristic of capitalism in creative destruction, i.e. in innovation. In this way, he also solved the problem, not understood by Marx, that enterprises by no means necessarily compete with each other to death (in Marx’s eyes almost a kind of natural social law) – this would only occur in an economy without innovation. As long as there is constant innovation leading to new products and more efficient production processes, profits will always accrue to the innovators and allow for constant growth (they will never drop to zero). Schumpeter did not define capitalism as a process in a subordinate clause like Max Weber, but regarded innovation and growth as its very essence.
Nevertheless, even Schumpeter did not grasp the problem that every process inevitably raises, unless it is of a purely intellectual, that is, immaterial nature. We can think of innovation as an infinite field because there are no natural limits to the immaterial processes of the human mind. But a process based on a constantly increasing supply of material substances – (economic growth is nothing else, after all) – such a process necessarily encounters insurmountable limits in a finite world.
In other words, capitalism as an economic way to achieve infinite growth entered the world with a death sentence at its very beginning. It is doomed to become non-creative self-destruction at some point of time. Then the great feast comes to a halt, growth turns into collapse, and its opposite, decay and shrinkage, will take its place. Ever new profits give way to the decay of profitability and a languishing economy, which would only become static at the end of this inevitable process.
The eminent ecologist Herman E. Daly and, more recently, William E. Rees,
the inventor of the ecological footprint, predicted the shift from propagandized growth to forced shrinkage. Capitalism as a growth process will not die because of exploitation – by historical standards this is much less virulent now than in the preceding ten thousand years of agrarian civilizations – but because it lacks the material resources for perpetual growth. A sustainable economy, which uses the various forms of solar energy in a renewable way with present-day technological means, can only provide a Western standard of living for about a quarter of today’s mankind, as William E. Rees was able to show. Conversely, this finding boils down to the fact that humanity must cut its current consumption by three quarters in order to exist sustainably on this globe.
This sobering insight is regularly swept under the carpet. The best-selling author Naomi Klein ingratiated herself with the general public by attacking big industry from beginning to end of her book „This changes everything“. The reader is led to believe that mass consumption is caused by fraudulent industries that seduce helpless people into consuming more and more cars, computers and cell phones – as if in reality the Chinese, Indians or even we in the West would rather do without consumption and return to the Stone Age. The fact that we are all responsible and will have to make radical sacrifices, this painful insight is at best hinted at in Naomi Klein’s attacks against big business. She knows that one does not make friends by revealing the truth.
But even this painful insight does not capture the full drama of our situation. The calculations of William Rees only pertain to renewable energy. There is no mention of the many non-renewable minerals that mankind – that is, global industries and the assiduous buyers of their products – is consuming in ever increasing quantities.
For the first time, we are really talking about the future,
namely our future in the 21st century. We will have to accept the fact that every process of material growth inevitably comes to an end. A single great scientist, John Stuart Mill, predicted as early as the mid-19th century that humanity would have to return to a static economy. The historian Arnold Toynbee picked up on this insight a hundred years later when insisting that the industrial revolution invented in England could certainly not last forever. Herman Daly has clothed this insight in the demand for steady-state economics. In the 21st century, the awareness of an impending dawn of industrial civilization has suddenly become diffuse at least among intellectuals – the climate crisis has opened people’s eyes. The only question is whether and how we will be able to say goodbye to growth.
The question is so difficult to answer because this farewell requires radical renunciation. In societies that for more than a hundred years mobilized all the means of propaganda for the exact opposite, namely for increasing consumption, renunciation is a word that belongs to the taboo zone. A book like my „Yes, we can – no we must“ that turns renunciation into a categoric imperative may have won the particular praise of an internationally recognized authority like Herman Daly – but most people don’t even like to hear of renunciation – not even an otherwise critical observer like Robert Menasse. He advised me to embellish my book with a more optimistic title like „The Eighth Day of Creation“. This advice was well-intentioned, of course, but perhaps not so well thought out. If having to reduce our material standard of living to a quarter, most of us will certainly not experience such a dramatic change as a new beginning of creation but rather as a catastrophic loss.
The capitalistic urge for incessant growth
was recognized as a force leading to future doom only by very few clear-sighted thinkers. But it had an immediate stimulating effect on people’s behavior. Whereas the world population had remained almost constant for a whole millennium until about 1800, it shot up from one to seven billion within only two hundred years. As late as 1789, when the industrial revolution had long since begun, the Anglican priest Thomas Malthus considered such a development to be completely impossible. He adhered stubbornly to the age-old law that until then seemed to apply necessarily to all living beings, including man: They reproduce faster than available food increases. But Malthus proved wrong. For the first time in man’s history, there was a sudden and ongoing increase in population, and yet there was enough food for everybody. This miracle was brought about by the use of coal (later oil and gas were added). Thereby so much energy was released that the food base expanded even faster than Homo sapiens could reproduce. Soon there were not only many more people in Europe than ever before but most of them also lived much better.
It is only today that we are forced to realize that Malthus is right after all. His law comes again into force when the energy reservoir stored in the earth is no longer available, either because we have exhausted it or because CO2, the residue of combustion, is overheating our globe in an unbearable way. Today we have to realize that in the entire one-million-year history of man the law lost its validity only for about two hundred years.
However, at present no one wants to recognize this law,
certainly not the emerging countries. China celebrates itself for being able to offer a growing part of its population a standard of living approaching that of the West. For this extraordinary achievement, the rest of the world celebrates it too as a model worthy of imitation. It is, of course, hard to justify why only we in the West should enjoy material abundance.
But hardly one hundred years ago China and India still lived sustainably, i.e. they did not consume more nature than they could find on their own territory. In quite a short time, China and India, then Africa and Inner Asia, will catch up with the West and, just like the latter, consume four to five globes in the shape of still buried but exhaustible energy. In the process, the battle for the last remaining reserves (coal, oil and gas) will inevitably become increasingly fierce. Thus, in the coming decades, the globe is heading ever more dangerously and rapidly toward resource depletion and the concomitant poisoning of air, water and soil, as more and more nations adopt the industrial growth model. Of course, no one can blame a state for doing the same as everyone else – but the overall effect is devastating, especially since in this race of nations, everyone wants to buttress their claims through military strength – so economic growth goes hand in hand with the growth of the military. In this way, our world has become and is becoming more of a powder keg with each passing year, where even small states of the kind of North Korea threaten us with a nuclear arsenal.
Will we be able to find a way out of this impasse?
This question really concerns our common future – not only that of Austrians, Germans, English, South Africans or Chinese but the future of all mankind. Will we succeed in replacing the industrial capitalism of unending growth with a sustainable civilization?
I would argue that the optimists may well be right in answering the question in the affirmative. If individual countries such as Austria, England or Japan decided to convert their own economies entirely to renewable energy and to increase the durability of appliances many times over, so that consumption would be curbed accordingly, then the goal of reducing material consumption by three quarters could probably be achieved. The standard of living would not even have to be decisively reduced (as I try to show in my book with reference to concrete examples), yet the transition would be exceedingly painful, since production and jobs would, of course, be reduced accordingly. All in all, we would be dealing with an intervention in the existing economy at least as severe as that brought about in the past by the two world wars – in other words, an intervention much deeper and wider than the consequences of the present pandemic.
What a fantastic nonsense!
every so-called „normal“ reader will exclaim at this point. Which state, which politician, which party can even express aloud the thought of imposing a shrinking cure on its own population, which would be similar to the effect of a world war? Politicians and a state daring to do so would be swept away on the spot by the opposition and the electorate. Most people would probably secretly think, even if not openly saying so: Let us rather accept the melting of glaciers, the rise of the seas, the spreading of deserts, the extinction of species, the poisoning of air, water and soils and even the mass emigration of Africans to Europe. After all, who tells us that scientists can’t be wrong? Trump has never believed in climate change, and prophecies about the imminent depletion of raw materials and the creeping poisoning of nature by their residues he considers pure nonsense!
But apart from this spontaneous refusal
to take such threats seriously, there is another objection – and this proves to be the strongest of all. The optimists will rightly point to the fact that a green attitude is becoming more and more widespread and that all kinds of small steps are being taken in this direction. We hear about this every day in the news and almost everywhere in the world, and it is gratifying and very much to be welcomed.
But at the same time, these pleasant facts have an unpleasant, even dangerous side effect: they create a façade of illusion. The green faith has turned into an ideology of self-deception as it serves to cloak a completely different reality. For we are faced with the fact (the figures of an overall increase in resource consumption worldwide speak an unmistakable language) that no state is willing to take measures that would put it at a decisive disadvantage in competition with others. Such a devastating disadvantage would, of course, result from the decision to switch to a sustainable mode by reducing energy consumption by three quarters and to restrict the consumption of non-renewable minerals even more.
The race of nations
for greater economic and military power simply does not permit such a move. It would make any state embarking on such a course a colonial territory for others that do not, and it would bring its own population to the barricades if such a renunciation were imposed on it alone but not on the rest of the world.
The question „Can we save the future by means of a green revolution?“ thus receives an unequivocal answer. Mankind will not be able to save itself as long as the world consists of two or three blocks of competing world powers, none of which wants to retreat even a single step behind its competitors. Our initial optimism turns into pessimism precisely at this point. If the United States or Germany were islands, then of course they could make it – or if humanity took the final step towards unification, because then it too would become an island and the murderous race of nations would have come to an end. However, such a unification is not to be thought of at the moment. Nor can it be any longer achieved by war, as has been the case with almost all unifications in the past. War between the great powers of the 21st century would amount to nuclear destruction that threatens mankind even more than all the dangers conjured up by climate change. Equally unattainable – at least at present – is a peaceful unification in the face of nuclear self-extinction. Even the unification of Europe continues to provoke all kinds of opposing forces.
What remains is an existential threat to our common future
The industrial revolution – rather than capitalism – has set in motion a process of forcible growth, not only in economic but also in military terms – this is the real portent of the 21st century. All countries will continue to strive for growth, if only to avoid falling behind in the global race. Seen in this light, Robert Menasse is certainly right: it would be so much nicer to be an optimist and to welcome our future as God’s eighth day of creation.
*1* In my book „Das Ende des Kapitalismus – Triumph oder Kollaps eines Wirtschaftssystems?“ (The End of Capitalism – Triumph or Collapse of an Economic System?) published by S. Fischer, I myself took my cue from Marx in describing capitalism as the parasitic multiplication of property with the help of other people’s labor. This has the advantage of including all forms of exploitation even those beyond the real economy, for instance, in the financial sector. But it has the disadvantage of misrepresenting capitalism as the latter can well do without exploitation – as Max Weber correctly saw.
*2* For this reason, Marx should have conceded that the right level of profit is somewhere between zero and exploitative. However, this level can never be determined exactly, since every completely new product that is in demand on the market temporarily confers a quasi-monopoly to the producer.