[DEBATE] : Socialism has failed, capitalism is bankrupt. What next? Eric Hobsbawm

[Riaz K Tayob]

Socialism has failed. Now capitalism is bankrupt. So what comes next? 
Eric Hobsbawm

The 20th century is well behind us, but we have not yet learned to live 
in the 21st, or at least to think in a way that fits it. That should not 
be as difficult as it seems, because the basic idea that dominated 
economics and politics in the last century has patently disappeared down 
the plughole of history. This was the way of thinking about modern 
industrial economies, or for that matter any economies, in terms of two 
mutually exclusive opposites: capitalism or socialism.

We have lived through two practical attempts to realise these in their 
pure form: the centrally state-planned economies of the Soviet type and 
the totally unrestricted and uncontrolled free-market capitalist 
economy. The first broke down in the 1980s, and the European communist 
political systems with it. The second is breaking down before our eyes 
in the greatest crisis of global capitalism since the 1930s. In some 
ways it is a greater crisis than in the 1930s, because the globalisation 
of the economy was not then as far advanced as it is today, and the 
crisis did not affect the planned economy of the Soviet Union. We don't 
yet know how grave and lasting the consequences of the present world 
crisis will be, but they certainly mark the end of the sort of 
free-market capitalism that captured the world and its governments in 
the years since Margaret Thatcher and President Reagan.

Impotence therefore faces both those who believe in what amounts to a 
pure, stateless, market capitalism, a sort of international bourgeois 
anarchism, and those who believe in a planned socialism uncontaminated 
by private profit-seeking. Both are bankrupt. The future, like the 
present and the past, belongs to mixed economies in which public and 
private are braided together in one way or another. But how? That is the 
problem for everybody today, but especially for people on the left.

Nobody seriously thinks of returning to the socialist systems of the 
Soviet type - not only because of their political faults, but also 
because of the increasing sluggishness and inefficiency of their 
economies - though this should not lead us to underestimate their 
impressive social and educational achievements. On the other hand, until 
the global free market imploded last year, even the social-democratic or 
other moderate left parties in the rich countries of northern capitalism 
and Australasia had committed themselves more and more to the success of 
free-market capitalism. Indeed, between the fall of the USSR and now I 
can think of no such party or leader denouncing capitalism as 
unacceptable. None were more committed to it than New Labour. In their 
economic policies both Tony Blair and (until October 2008) Gordon Brown 
could be described without real exaggeration as Thatcher in trousers. 
The same is true of the Democratic party in the US.

The basic Labour idea since the 1950s was that socialism was 
unnecessary, because a capitalist system could be relied on to flourish 
and to generate more wealth than any other. All socialists had to do was 
to ensure its equitable distribution. But since the 1970s the 
accelerating surge of globalisation made it more and more difficult and 
fatally undermined the traditional basis of the Labour party's, and 
indeed any social-democratic party's, support and policies. Many in the 
1980s agreed that if the ship of Labour was not to founder, which was a 
real possibility at the time, it would have to be refitted.

But it was not refitted. Under the impact of what it saw as the 
Thatcherite economic revival, New Labour since 1997 swallowed the 
ideology, or rather the theology, of global free-market fundamentalism 
whole. Britain deregulated its markets, sold its industries to the 
highest bidder, stopped making things to export (unlike Germany, France 
and Switzerland) and put its money on becoming the global centre of 
financial services and therefore a paradise for zillionaire 
money-launderers. That is why the impact of the world crisis on the 
pound and the British economy today is likely to be more catastrophic 
than on any other major western economy - and full recovery may well be 
harder.

You may say that's all over now. We're free to return to the mixed 
economy. The old toolbox of Labour is available again - everything up to 
nationalisation - so let's just go and use the tools once again, which 
Labour should never have put away. But that suggests we know what to do 
with them. We don't. For one thing, we don't know how to overcome the 
present crisis. None of the world's governments, central banks or 
international financial institutions know: they are all like a blind man 
trying to get out of a maze by tapping the walls with different kinds of 
sticks in the hope of finding the way out. For another, we underestimate 
how addicted governments and decision-makers still are to the 
free-market snorts that have made them feel so good for decades. Have we 
really got away from the assumption that private profit-making 
enterprise is always a better, because more efficient, way of doing 
things? That business organisation and accountancy should be the model 
even for public service, education and research? That the growing chasm 
between the super-rich and the rest doesn't matter that much, so long as 
everybody else (except the minority of the poor) is getting a bit better 
off? That what a country needs is under all circumstances maximum 
economic growth and commercial competitiveness? I don't think so.

But a progressive policy needs more than just a bigger break with the 
economic and moral assumptions of the past 30 years. It needs a return 
to the conviction that economic growth and the affluence it brings is a 
means and not an end. The end is what it does to the lives, life-chances 
and hopes of people. Look at London. Of course it matters to all of us 
that London's economy flourishes. But the test of the enormous wealth 
generated in patches of the capital is not that it contributed 20%-30% 
to Britain's GDP but how it affects the lives of the millions who live 
and work there. What kind of lives are available to them? Can they 
afford to live there? If they can't, it is not compensation that London 
is also a paradise for the ultra-rich. Can they get decently paid jobs 
or jobs at all? If they can't, don't brag about all those 
Michelin-starred restaurants and their self-dramatising chefs. Or 
schooling for children? Inadequate schools are not offset by the fact 
that London universities could field a football team of Nobel prize 
winners.

The test of a progressive policy is not private but public, not just 
rising income and consumption for individuals, but widening the 
opportunities and what Amartya Sen calls the "capabilities" of all 
through collective action. But that means, it must mean, public 
non-profit initiative, even if only in redistributing private 
accumulation. Public decisions aimed at collective social improvement 
from which all human lives should gain. That is the basis of progressive 
policy - not maximising economic growth and personal incomes. Nowhere 
will this be more important than in tackling the greatest problem facing 
us this century, the environmental crisis. Whatever ideological logo we 
choose for it, it will mean a major shift away from the free market and 
towards public action, a bigger shift than the British government has 
yet envisaged. And, given the acuteness of the economic crisis, probably 
a fairly rapid shift. Time is not on our side.

? Eric Hobsbawm's most recent publication is On Empire: America, War, 
and Global Supremacy guardian.co.uk © Guardian News and Media Limited 2009

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