Abstract
In the preface to Postcapitalism, written in October of 2008, Sassower says that “what is new about the current financial crisis has been in fact a crisis in the confidence we have in the marketplace and its self-regulation” (p. ix). Sassower writes to dispel any such crisis in confidence. He writes to defend the fundamental soundness of capitalist institutions. He sees the current economic crisis as an aberration born of a recent abandonment of sound capitalist practices—practices that have been understood by philosophers and political economists since Adam Smith. Central to Sassower’s analysis is the idea that capitalism must be embedded within a complex network of legal, political, social, and moral values and practices. This network of values and practices works to balance and regulate the role of self-interest and competition in the marketplace. Sassower sees this as a “pragmatic” capitalism. He proposes to defend this “pragmatic middle ground” between “two extremes in the spectrum of capitalist analysis” (p. xi). The “two extremes” Sassower mentions here are Robert Reich and Naomi Klein, each of whom has written in ways that challenge our confidence in capitalism. Sassower thinks his pragmatic capitalism “transcends ideological convictions” (p. xi), unlike the theories of Reich and Klien, and unlike some libertarian theories of laissez faire capitalism.
Sassower introduces the term “postcapitalism” as an alternative to Reich’s vision of contemporary capitalism as “supercapitalism,” a stage in the evolution of capitalism that undermines the ability of democratic institutions to control or balance global markets (p. xiv). Sassower means by “postcapitalism” not some economic system that is to come after capitalism, but rather his pragmatic version of capitalism—one that incorporates features that promote “collaboration and collegiality” and that appreciate “the social, political, and moral frameworks that legally protect the marketplace interaction among people”—features that have been “present from antiquity” (p. xvii).
Having introduced this key idea, Sassower goes on to defend this pragmatic capitalism. The book is divided into six chapters. In the first, Sassower appeals to the political economy of Adam Smith and the reformist philosophy of Karl Popper to support his position. In the second he points to the social construction of knowledge, often involving the support of nation-states, to illustrate the limits of libertarian views of capitalism. In chapter 3, Sassower points to the inadequacies of a psychology of greed and fear, and to the important roles of cooperation and benevolence in human affairs, including the marketplace. In chapter 4, Sassower writes about victimhood and entitlement and how these have worked to undermine a sense of the fairness of market institutions. Chapter 5 deals with personal and collective responsibility. While granting the need for more governmental intervention in the economy than accepted by recent libertarian economics, Sassower stresses the importance of individual responsibility. In chapter 6, “From 2008 Crisis to Pragmatic Postcapitalism,” Sassower concludes the book with the recommendation that we follow his vision of pragmatic capitalism, working “to set in place institutions that would promote social benevolence and our happiness” (p. 157).
While Sassower’s rejection of laissez faire capitalism is reasonable enough, it is not his central point. His fundamental aim is to offer a defense of pragmatic capitalism. There are a number of problems with this defense, both in its details and in the thinness of its content. One detail of some importance pertains to Sassower’s use of Adam Smith. It concerns the relationship between the invisible hand of Smith’s Wealth of Nations and the impartial spectator of Smith’s Theory of Moral Sentiments. Sassower rightly notes that Smith thought benevolence was one of the motives present in human beings. He also notes that Smith appealed to the idea of an impartial spectator, both as a psychological tool for assessing one’s own motives and as the basis for deciding what one ought to do. However, Sassower goes on to suggest that in Smith’s view benevolence functions as a motive within market transactions (pp. 11-15, 88-89). This idea colors Sassower’s vision of the way capitalism has actually operated. He sees the current crisis as rooted in fear and greed both encouraged by recent misunderstandings of economic agents. He sees this as a aberration in the history of capitalism: “It is not that we have never been capitalists, but that we always were compassionate or moral capitalists, inspired, as I shall demonstrate, by no other than Adam Smith . . .” (p. x). While there no doubt have been compassionate and moral capitalists, it shows a serious lack of understanding of the history of capitalism to imagine that such moral capitalism was typical of the past. Sassower’s case for postcapitalism rests on a utopian nostalgia for a capitalism that never was.
Sassower’s lack of historical perspective is evident in a number of ways. He repeatedly dates the Manifesto of Karl Marx to 1872 (e.g., pp. 24, 39, 163). He attributes the economic theory that presided over the relatively happy capitalism found in the United States in the post–World War II era to the Austrian and Chicago schools, when in fact these schools were then outside critics of a prevailing Keynesian consensus (p. x). He sees corporate scandals as aberrations rather than constant features of capitalism (p. 148). He mentions lifetime guarantees of employment as characteristic of Japanese capitalism when in fact they are rapidly disappearing (p. 17). He claims that versions of pragmatic capitalism have worked over the past two centuries without any mention of the historical struggles involved in this history (p. 65). This lack of historical perspective leads Sassower to posit pragmatic capitalism as a proven way of life, and this in turn leads Sassower to neglect any serious engagement with either the roots of the current crisis or the prospects for the future. Why did we abandon the pragmatic capitalism that supposedly worked so well? Sassower offers no explanation. He mentions but does not engage with Reich’s analysis of supercapitalism. He views the current crisis as the result of ill-advised mortgages given out as a result of a culture of victimhood and entitlement, but nowhere does he engage with financialization as a deeper cause of the home mortgage bubble. In short, Sassower assumes a pragmatic capitalism more or less successful for two centuries and therefore probably viable into the future—an assumption that masks the developmental nature of the capitalist system.
Finally, it must be said, Sassower displays a strange insensitivity to questions of justice. He does occasionally express some dismay at poverty and unemployment, but nowhere in this book does Sassower mention the great increase in inequality that characterizes recent capitalism in the United States and much of the world, the assault on the social welfare safety net that accompanies this inequality, or the shift in the relative burden of taxes away from upper-income brackets, all of which tend to revive underconsumptionist worries about the viability of capitalism. In one telling example, Sassower discusses a problem of theft in a toy factory where he was an investor. At some point Sassower suggested offering “seconds” (toys that failed quality control and had to be melted down) to employees for free. Eventually, the employees realized that toys for gifts could be had for free. Sassower comments:
Did we solve the theft problem? Of course we did; we also reduced seconds by half and the general attitude improved. We changed the culture. We told the minimum-wage workers that we respected their needs and offered them for free the fruits of their own production. (pp. 120-21)
In the end Sassower’s Postcapitalism cheerily evades the darker and more worrisome aspects of the current crisis.