The world has changed: here is a new economics to match

Radical economist Paul Mason’s book, PostCapitalism, identifies the disruption to the system from globalisation and new technology – and argues that this could pave the way for a...

Radical economist Paul Mason’s book, PostCapitalism, identifies the disruption to the system from globalisation and new technology – and argues that this could pave the way for a co-operative future.

Paul Mason left Channel 4 News, where he was economics editor, at the beginning of this year. It feels as if, since then, he has been a constant presence in our lives via newspapers, radios and TV – not to mention giving lectures at universities around the world.

Mason has become one of the best-known faces and voices of left-wing economics, presenting a very different vision from those of David Cameron or Theresa May for how our financial lives should be shaped.

It is to his credit that he has got under the skin of senior Tories. A former member of Trotskyist group Workers Power, Mason now espouses what can be termed radical social democracy. He has rejected the description of him as a “revolutionary Marxist” by sacked chancellor George Osborne.

Mason’s increased fame has been on the back of his book PostCapitalism, in which he predicts a bright future for co-operatives. At the heart of PostCapitalism lies the explanation that global economics has operated through cycles. While political leaders often claim to have broken the boom and bust cycle – remember Gordon Brown’s claim? – they never have. But the bust of 2008 was particularly brutal and what has now been called the Great Recession rivals the Great Depression in impact.

But in some respects our current economic difficulties are unparalleled. In previous cycles, periods of strong economic activity were associated with high employment rates, strong trade unions and good pay, but, as a result, weak profits for the owners of capital.

This led to capitalists investing in new technologies, which reduced the need for workers, cut pay costs and weakened trade unions, creating higher returns for the owners of capital. Typically this is followed by a crisis (such as a depression caused by high unemployment, or war) before the cycle repeats.

But there are indications that this time things are different. Neoliberalism and global trade have created conditions in which it is difficult for trade unions to organise. ‘Financialisation’ has dominated the corporate system, with the manipulation of financial figures becoming more important than the production of useful goods and services. A series of crises has led to cheap money and the risk of permanently low interest rates.

Meanwhile the system of global trade has involved massive levels of financial imbalances – some nations have large surpluses, others substantial debts, with personal debt in countries such as the US and UK at unsustainable levels.

Yet the big difference this time, argues Mason, is the near-elimination of marginal costs as a result of digital technologies. Let us consider the example of software. The ‘production’ costs apply to the writing of software. It is almost free to distribute. Consequently it has almost zero marginal costs. It costs roughly the same to produce software that is used by one person as it does for software used by one billion people.

The same principle applies to music and to journalism. It very nearly applies to many other goods thanks to production on demand, using 3D printers. If we add to that the automation of many professional tasks – auditing, contract writing, financial advice – we can see that we are on the cusp of a fundamental change in the relationship between capital and labour.

What, in these circumstances, is the future for paid labour? We might also ask what is the future for the structure of society and of democracy.

My personal fear is that this reshaping of relations between capital and labour could increasingly erode democratic principles, with governance moving away from the building block of social consensus, tolerance and cohesion, towards that of control and surveillance.

Mason, however, provides a more positive and optimistic vision. For him the model is Wikipedia, where the content is supplied on a voluntary and unpaid basis, using the principle of collectivism.

He writes that “collaborative business models are the most important thing we can foster”. Co-ops and peer-to-peer forms can operate within the capitalist system, he argues, supplying non-market activities that focus on social outcomes. At the heart of Mason’s case is the belief that the construction of a socialist system can begin within the capitalist one.

“The most courageous thing that an adaptive left could do is abandon that conviction [that the socialist system cannot be built up molecularly within the world of capitalism]”, asserts Mason.

“It is entirely possible to build the elements of the new molecularly within the old. In the co-operatives, the credit unions, the peer networks, the unmanaged enterprises and the parallel, subcultural economies, those elements already exist.

“We have to stop seeing them as quaint experiments; we have to promote them with regulation just as vigorous as that which capitalism used to drive the peasants off the land or destroy handicraft work in the eighteenth century.”

PostCapitalism has been seen by some as Mason’s attempt to reinterpret Karl Marx for a 21st Century world. It is certainly an ambitious work and one which has grabbed the attention of Labour’s shadow chancellor John McDonnell. Mason has been co-opted onto McDonnell’s panel of economic advisors and took part in the shadow chancellor’s ‘New Economics’ tour.

McDonnell himself is keen for co-ops to sit at the heart of Labour’s economic policy. He spoke at January’s Ways Forward conference in Manchester, where he revealed his support for workers having a ‘right to own’ through conversion to a co-op if their business faces being dissolved, sold or floated.

McDonnell also indicated support for a dedicated financial resource to capitalise co-ops and for tax incentives for co-ops in line with that provided in Italy.

These initiatives have been welcomed by the Co-operative Party, with which McDonnell seems to have established a positive relationship. It is therefore rather surprising that anti-Corbyn/anti-McDonnell MPs are reported to want to take over the Co-operative Party as an alternative source of power within a Corbyn-led Labour Party (see page 4).

The Co-operative Party has correctly said it wants none of this and intends to firmly step away from the internecine warfare that has enveloped the Labour Party.

I never understood why so many figures on the right of the Labour Party sought the sponsorship of the Co-operative Party. I always saw the co-operative movement as providing an alternative to the raw exploitation of capitalism, in which workers, consumers, tenants and borrowers obtained more personal freedom.

As such, for me, the co-operative economy is an expression of socialism in action and in aspiration. I’m delighted that Paul Mason and John McDonnell take the same view.

  • PostCapitalism by Paul Mason is published by Allen Lane at £16.99.
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