Abstract
The common word in the titles of these books by Standing and Streeck sums up the topical focus of both authors. As the verb ‘end’ (in the case of Streeck) and the noun ‘corruption’ (Standing) suggest, both are negative about ‘actually existing capitalism’. This does not mean that their books are substitutes for one another, however. Rather they are complementary, as their analytical scope and theoretical underpinning differ. This in turn guides their differing conclusions, suggested by the titles. Is capitalism corrupted or is it doomed?
The defining feature of capitalism – as Streeck points out – is that ‘capital is accumulated in the hands of a minority…The vast majority of the members of a capitalist society must work under the direction, however mediated, of the private owners.’ This arrangement has been – as Standing states in his subtitle – corrupted: ‘rentiers thrive and work does not pay’. Anybody lacking capital (or assets, as the financial sector calls it) is in trouble if they cannot find work and even if they can there’s a good chance it will be part-time, ill-paid, temporary, highly taxed or, in a word, precarious.
Standing proposes that this state of affairs is a corruption of ‘a claimed ideal – “free markets”’ and that ‘economies are being rigged to favour owners of assets’, resulting in a ‘system that is radically different from what its advocates claim’. Standing makes his case by providing a plethora of examples, including tax-evading corporations, rising inequality and surging marketing budgets. He discusses at some length the assault of so-called ‘trade agreements’, such as TTIP (a ‘charter for multinational…capital’), on democracy and the privatisation of medicines via patents.
Standing uses the inductive method convincingly. Together the examples show that there is no entrepreneurial, high-tech post-capitalist ‘sharing economy’ on the horizon, rather a ‘deepening penetration of capitalist logic and rules, in which rent seeking has been legitimised’. The result is a plutocracy, ruled by an asset-owning elite. (Marxists would call this elite simply ‘capitalists’.) The reign of the rentier class has thus not proven to be a ‘transitional phase which will disappear when it has done its work’, as Keynes famously hoped. Quite the contrary, capital has subdued social democracy and now dominates.
This means that capitalism – understood in terms of ‘free markets’ in the neoclassical sense – and democracy do not work, at least for the many. This conclusion, even if one generally agrees with it, however, begs several questions. Is this a blip in capitalism or a feature of capitalism? How did we end up in this predicament? And how might crony capitalism further evolve? Standing, however, does not address the historical trajectory, the political power shifts and the sociological class structures of contemporaneous capitalism. The section From Bretton Woods to crony capitalism covers the period from 1944 to the 1990s in less than two pages. Standing mentions that the Mitterrand presidency showed that ‘Keynesianism’ could not work in one country, but does not discuss how and why. This is all the more pressing as ‘military Keynesianism’, ‘privatised Keynesianism’ (as Colin Crouch called debt-financed private consumption) and ‘financialised Keynesianism’ (bailouts for banks) are practised and even seem to work in terms of preserving capitalism.
Standing’s book ends with a call to arms. He states that ‘we need to achieve Keynes’s “euthanasia of the rentier”’ and the restoration of the commons (public parks, museums, libraries). This is supposed to come about by public pressure, which Standing adds should be called a ‘revolt’, as ‘we cannot expect…the elite to turn protectors of the precariat’. Even if one sympathises with this political call to arms, it is thin on scientific analysis. It is rather voluntarist, as it suggests that capitalism can be reformed by an act of (collective) will. That is probably a necessary condition but it does not – at least according to Streeck – come near to being a sufficient condition.
Streeck does give a lengthy sociological account of the historical trajectory of the capitalist mode of production, which nowadays has been transformed into post-democratic financialised capitalism. After the Second World War capital and labour reached a truce. Labour got what have come to be known as ‘Keynesian’ policies (full employment and social security), whereas capital got to keep private ownership. Capital furthermore paid its share of taxes, with falling inequality as a result. This truce was re-calibrated every few years in the political arena of representative democracy, with unions keeping up the pressure.
This all changed from the 1970s onwards. Capital successfully rebelled against the ‘Keynesian’ standoff. Exhibit A of the success of this rebellion is that companies no longer pay much tax due to a combination of tax avoidance, tax breaks, subsidies and fiscal deals with governments. Pivotal in this development has been the withering away of capital controls – which Bretton Woods had installed – after Nixon ended dollar–gold convertibility. The resulting globalisation and financialisation turned – according to Streeck – the ‘financial sector into an international private government disciplining national political communities’. States now borrow from capital, instead of taxing it. Capital reigns and governments are under strict austerity.
Whereas Standing suggests that a democratic ‘revolt’ could change things for the better, Streeck proposes that democracy has become an empty shell. The real decisions are made by unelected bodies such as the ECB (the ‘de facto government of the biggest economy on earth’), the European Commission, the IMF and the European Council. Streeck concludes that the ‘neutralisation of democracy does not take place via repression but by moving the governance of the political economy to a level where democracy cannot follow’. Elections are still held but they are increasingly meaningless and have become a form of ‘politainment’. The victory of capital in the economic sphere has its counterpart in the desertion of social democrats in the political realm. Unions and social democratic parties fully take part in fiscal consolidation (making a state attractive for financial investment by signalling that it will put its obligations to its creditors above everything else). Afterwards politicians – left and right – are rewarded and now ‘high public office has become an apprenticeship for richly rewarded private sector jobs’.
Streeck rejects any voluntarist call to arms, insisting that the problem runs deeper. In the EU – his exclusive focus – the absence of democracy is not a design-flaw but functionally necessary for the neoliberal project to run its course. This functional aspect cannot be changed at will. Indeed, these days a ‘revolt’ might not be much more than ‘replacing political conflict with the public expression of private moral convictions’. In the long run capitalism and democracy are incompatible. In capitalism real power – that is, ownership of the means of production – is privatised whereas democracy presupposes equality. Therefore there cannot be a primacy of politics under capitalism. All capitalism will become crony.
Capitalism is not corrupted but is corrupting. This sets Streeck apart from Standing, who wants to save capitalism – understood as ‘free markets’ – from capitalists by democratic means. Instead, Streeck is clear that democratic capitalism has run its course and will end. As such the title is a little imprecise and should have the adjective ‘democratic’ placed before capitalism. Streeck predicts a lingering twilight zone in which capitalist logic will exist in a democratic vacuum, in which increasingly important pre-modern social ties have to patch up the demise of social security. This post-post-democratic limbo is summed up in Gramsci’s famous words ‘the old is dying but the new cannot yet be born’, leading to ‘an interregnum in which pathological phenomena of the most diverse sort come into existence’.
One does not need to share Streeck’s analysis, or indeed his pessimism, to be convinced that capitalism did not become crony overnight nor by accident and that reforming it will take more than voting another party into office. Streeck’s account is thus analytically deeper and theoretically richer than Standing’s book. Standing, however, makes the abstract and sometimes sweeping statements of Streeck concrete. He discusses examples of tax avoidance instead of assuming (that we all know) this to be the case. As such the two books are complementary. In terms of a course of late capitalism – or whatever analytical concept one wants to use to depict the current political-economic constellation – the two books could be read in turn, starting with Standing’s concrete examples and ending with Streeck’s historical account; or starting with the relatively positive notion that capitalism is crony but can be democratically redeemed and ending with the proposition that democratic capitalism cannot be saved. Jointly the books then embody the academic imperative to always be concrete, but never to mistake the trees for the forest. And they can be further reconciled by that other famous dictum of Gramsci, to be a pessimist because of intelligence and an optimist because of will.