Abstract
Paul Adler has written a provocative book that is especially timely as economies and societies face possibilities for transformative changes in the wake of the Covid-19 pandemic. In 156 incisive yet hopeful pages of tightly argued text the book highlights the crises and contradictions of financialized capitalism and points the way to a democratized and efficient economy. Adler provides a unique perspective. He is both a prolific organizational scholar and a democratic socialist steeped in Marxist inquiry. These characteristics create a rare synergy in a presentation that is detailed, nuanced, and argued with passionate enthusiasm. The book begins with description of one percent capitalism as it has evolved during and after the 1980s, continues with an examination of alternative organizing possibilities, and then describes what a democratic socialist society might look like and how that might be achieved.
Capitalism’s Six Crises
His analysis of the capitalist system is grounded in Marxist political economy and draws heavily on recent writings by economists, sociologists, and journalists who study capitalism’s evolution and its effects on individuals and communities (Case & Deakin, 2020; Hochschild, 2016; Piketty, 2014). Adler argues that capitalism has spawned six crises: (1) economic irrationality that produces profound inequality and creates financial uncertainty for many, perhaps a majority, of the 99%; (2) workplace disempowerment neither giving voice to employees nor acknowledging their intellectual and creative contributions; (3) unresponsive and, in many countries, authoritarian government at local and national levels; (4) environmental unsustainability; (5) social disintegration while unmet material and emotional needs engender anxiety, disillusionment, and anger; and (6) international conflict. Capitalism’s drivers are hardwired into its structure. The endemic and inevitable drive for profit, growth, and maximization of corporate valuation overwhelms citizens’ needs and desires for better quality of life. According to Adler the dynamics of the capitalist system are the “root cause” of these overlapping crises, precisely because each of them influences, and is influenced by, the other five in a spider web of redundant, mutually reinforcing connections.
Using largely American examples, this section explains how patent and copyright regulations privilege corporations, how the oil and other extractive industries gain tax preferences, and how, at great expense, corporate and financial institutions fund lobbying efforts to fight for deregulation of the banking and securities sectors. He notes that the state has been reluctant to produce legislation and create policy that supports the rights of workers, the poor, and people of color. Moreover, while the response to gender equity issues has established new opportunities for women, sexual harassment is a persistent problem as is discrimination in promotion and compensation. Equally important, quality affordable child-care has not grown at a rate that recognizes women’s labor force participation. And because capitalism’s dynamics creates entropic forces towards greater and greater centralization of influence and power and corresponding increases in inequality, these issues have not been fully addressed, at least in the United States.
And, as Marxists have argued since the mid-19th century, capitalism galvanizes contradictions that at times threaten its hegemony. Especially during or just after wars and at other times of economic uncertainty, the dispossessed, especially those in workers’ unions, have united to fight for reforms. And escalating inequality and the decline of family wage jobs due to automation and outsourcing of manufacturing, computer services, call centers, and other sectors has disrupted millions of lives and destabilized politics. This results in both intangible, quality-of-life costs to individuals, and also tangible costs—poor pay, little job security and, in the US, shorter life expectancy, and minimal or no medical insurance.
Adler’s argument is particularly strong in his definition and discussion of socialization, that is, in his words “the extent to which producers . . . absorb and leverage the capabilities of other producers and of other parts of the broader society, benefitting from their know-how and their technologies” (p. 50). Firms have increasingly become clusters of interdependencies and networks of short- and long-term relationships with their national or global suppliers and customers, whether these are other companies or retail chains large and small. Their very size gives them immense, often monopoly, power. Moreover, in the US and elsewhere, tax-generated government funding of research, education, and infrastructure collectivizes costs that firms might otherwise have to pay. Most critically, the levers of socialization are in private hands and serve private interests. Socialization in its current form underpins technological innovation and productivity growth, while it deprives much of the 99% of benefits resulting from what is ostensibly remarkable progress. In contrast, rentiers accumulate a greater share of societal wealth and income and top managers command salaries that vault them into the one percent. The system has an inertia, efficient for shareholders and executives but not for the rest of society.
Organizations: The Promise and Limits of Reform
Can this change? Adler discusses structural changes at the enterprise level and suggests new possibilities for those re-imagining how individual organizations operate. His own research and practice in a variety of organizations gives credibility and weight to these observations.
He believes that the crises of capitalism cannot be resolved unless property is socialized so that enterprise decisions reflect the priorities of the broader society, including employees, communities, and the physical environment. To be clear, his vision of socializing property is not synonymous with nationalizing property as the term is commonly understood. Rather, stakeholders—including managers, line employees, local communities, customers/clients—acquire a formalized voice in setting organizational goals and strategies. He asserts that decision-making must be democratic and that actors must have meaningful ways to be involved on a regular and systematic basis.
Adler lauds “ethical capitalism” and the “high road firms” that incorporate and build democratic values into organizational structure and process. Such firms-Kaiser Health, Patagonia outdoor wear, NUMMI, a collaboration between Toyota and General Mothers, and CMMI, a software development firm rely on democratization, participation, and on de-emphasizing hierarchy. These companies develop and sustain widespread collaboration to strategize, innovate, learn, and work. Goals, working routines, and standards are negotiated and mutually reinforced. Another set of examples includes large and small cooperatives that represent a significant economic and employment niche and include neighborhood groceries; Sunkist which distributes fruit juices on a national scale, credit unions; local medical clinics; and municipally owned utilities. These companies in entirely different industry sectors are successful and visionary, but by no means utopian.
While these organizations may be exceptions, they nonetheless demonstrate possibilities that are not often considered in the management literature. They are often as efficient or even more efficient than their industry competitors because their “profits” are returned to the organization to fund training, innovation, and growth. However, they are not without contradictions and challenges, especially because once they achieve scale they must confront challenges of balancing the competing efficiencies of hierarchy and widespread participation. They also struggle to maintain not only employee motivation, but also their willingness to participate in the decision-making process. Group decision-making is not just a matter of voice and voting. Similarly, they need to foster strategies and mechanisms that incorporate and integrate those individuals with technical skills and/or specialized expertise into a non-hierarchical and egalitarian workplace.
Do these pioneering organizations represent actual guideposts for overhauling an entire economy in the context of an unfriendly economic culture? Transitioning to a work- and community-oriented ethos that values open-minded discussion where voices from below are respected and heard as clearly as those of formal leaders and experts is a political as well as an organizational challenge. Progress might be fitful, especially because smaller high road firms and co-ops are not protected from such externalities as economic ebbs and flows, a financial crisis as experienced in 2008, and the trade wars that characterized the years from 2017 to 2020. By contrast, Kaiser and NUMMI are enormous and have the corporate and financial slack to lower the dangers of taking the high road.
Politics: A Democratic Socialist Society?
Over the past quarter century, Adler’s work has illustrated the potential for collaboration and the possibility that enterprises that build consensus around goals and strategies can be successful in a competitive world. The externalities, however, are powerful restraining forces that resist progressive change. However, there are (at least) three potential scenarios that might jolt citizens and governments to embrace systematic change. The first possibility is an economic or financial meltdown even more serious than that of 2008. Second, an environmental catastrophe, for example storms or tsunamis clearly linked to climate change, that put populated coastal cities under water.
A third possibility might include a revival of progressive political action on a broad scale whereby a growing body of activists and presently apolitical citizens build electoral support for socialist solutions, effecting change “in our workplaces . . . in our communities . . . in our schools” (p. 153). The responses to the Black Lives Matter movement in the US suggests there may be more likelihood of this than conventional wisdom would have led us to expect. At present we confront a fourth scenario that Adler could not have anticipated or even imagined: a world-wide pandemic that has destabilized economy, society, and politics and resulted in rethinking the status quo.
Adler is not naive about the barriers to an economy for the 99%. In the US, concentration has given financial elites enormous leverage that enables them to resist challenges to their corporate power. As increasingly skeptical Americans have noticed, the three branches of government have been in a stalemate for most of the past three decades. As the capitalist ideology became increasingly hegemonic, opportunities for egalitarian democracy seemed to have almost completely eroded. And the degradation of work and the long-term rise in living standards may have eaten away at the collective motivation and appetite for risk within the population. The rise of populist movements in the past decade may indicate that this complacency is no longer the norm. In the US racial, social, and economic inequities have become starkly evident as the pandemic and the Black Lives Matter movement highlighted society’s contradictions and inequities. But American society is bitterly divided, with a “left populism” driven for the moment by the demand for racial and economic justice and a “right populism” combining anti-immigrant fervor and resentment towards individuals and institutions perceived as indifferent to and contemptuous of those who have not fared well in the 21st-century economy. The cultural gap feeds into the political divide and vice versa.
The 99 Percent Economy explores the foundation of our current reality and offers a glimpse of how it could be made different. The book is extraordinarily relevant in the present moment when economy and society have become so profoundly destabilized. But it is far too soon to know whether Adler’s analysis and prescriptions will be viewed as prescient about the consequences of potential shocks to the capitalist imperatives which until now have reigned supreme. Will we have an alternative reality, democratic and no longer strictly capitalistic? Locked as we are in the present, we unconsciously share assumptions about how society works and these make it difficult to imagine a truly alternative future. But, as the writer Ursula LeGuin (2014) pointed out, “We live in capitalism. Its power seems inescapable. So did the divine right of kings.” If we reach the inflexion point, Adler’s book will provide a template for a viable and humane alternative future.