There is No Alternative

*Here is an essay I wrote in 2010 during my undergraduate degree. I have posted it along with my blog this week as it deals with some of the points raised, particularly the idea that society can only exist as a capitalist system. I am aware of its flaws, inaccuracies and limitations (and as I noted in a previous blog, I wouldn’t recommend quoting it!), but I decided to publish it unedited and as I originally submitted it (apart from a few glaring typos). I have done this because, when I look back on the process of writing it, I see this essay as a personal turning point, where I began to see things differently to how I had before (even if it is by no means perfect). The title of the essay ‘There is No Alternative: Critically Evaluate the View that U.S. Capitalism is the Only Viable Economic and Political Option‘ was set as the assessment for a course on Global Political Economy by Dr Paul McVeigh at the University of Portsmouth.

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There is no alternative. Either society has laws, or it has not. If it has not, there can be no order, no certainty, no system in its phenomena. If it has, then they are like the other laws of the universe–sure, inflexible, ever active, and having no exception. (Herbert Spencer)[1]

Although the phrase ‘there is no alternative’ is generally associated with Margaret Thatcher and the Thatcherite version of libertarian ideology, it owes its origin to the nineteenth century political thinker Herbert Spencer. Spencer has historically been connected to the theory of Social-Darwinism (and did indeed coin the phrase ‘survival of the fittest’ after reading Charles Darwin’s Origin of Species). However, Richard Hofstadter first applied the term to Spencer’s theory in his influential work Social Darwinism in American Thought (1944. pp. 4-6). Although Spencer would not have considered himself a Social-Darwinist (at least not by the standards implied today), he did see a deterministic progression in socio-political structure and believed that a natural equilibrium would eventually be reached (Coser, 1971. pp. 89-127). This echoes, at least in the basic theory of natural social change, the ideas of Hegel’s dialectic. Hegel described a triadic system of thesis, antithesis and synthesis[2] that steers an ever-changing society along an evolutionary trajectory, which had a major influence on Karl Marx’s method of analysis and his most famous work- Capital, A Critique of Political Economy (Harvey, 2010. pp. 5 & 11).

At this stage it is important to consider what is meant by U.S. capitalism and the neoliberal structure of the globalised economy. In 2003, Bruno Amable performed an analysis of capitalist country groupings, the first of which was ‘market based’ capitalism. This group included Australia, Canada, the United Kingdom and the United States and is described as the most distinct model of capitalism. The characteristics of this model include deregulated product markets, labour market flexibility, a market based financial system with corporate governance, a liberal model of the welfare state and a competitive education system (Amable, 2003. pp. 172-177)[3].

Focussing on this distinctly Anglo-Saxon model of small government and big business, this essay will critique the no alternative political theory and assess the compatibility of U.S. style capitalism (as an economic and political system) with an apparent growing demand for a socially just and democratic system of governance.

When Thatcher used the phrase ‘there is no alternative’, this demonstrated her belief that the capitalist free market economy was not simply the preferred economic model, but was also the only one viable. Capitalism, in her view, was the natural equilibrium described by Spencer and it was here to stay. The 1989 essay by Francis Fukuyama The End of History (and later the book The End of History and the Last Man, 1992) further strengthened the prevailing view of social-political evolution. Fukuyama believed that there was a ‘larger process at work’ and that society must be moving toward a universal state of homogeneity, stating that‘Western liberal democracy’ is ‘the final form of human government’ (Fukuyama, 1989. p.1). However, in recent years there has been an increase in the number of academics and activists arguing that capitalism, dominated by the U.S. hegemonic model, is a status quo like any other and so will change like any other.

Theories such as Kate Soper’s ‘alternative hedonism’ hypothesise that there is not only a viable alternative but also an inevitable change occurring, which is innately counter-capitalist and is the result of an ‘emerging disaffection with consumerist consumption’ (Soper, 2008. pp. 191-205). Other theorists, such as J.K. Gibson-Graham, believe not that capitalism will collapse but, instead, that it already has[4] and is now in its death throes (Gibson-Graham, 1996 & 2006). Furthermore, some governments have begun to look away from the U.S. for leadership, especially countries that have not fared well under the neoliberal model of global capitalism. Many countries have begun to form alliances with the burgeoning super power, China, while parts of South America, including Cuba, Venezuela and Bolivia, seem to be bent on a socialist future with a largely anti-American/anti-capitalist sentiment (Lanteigne, 2009. pp. 40-56).

The events of 9/11 (described by Slavoj Zizek in his Marxist/ Lacanian analysis, 2002, as the moment the U.S. was forced to wake up to ‘The Desert of the Real’) serve as a harsh reminder of a cultural, religious and ideological dissent or a ‘Clash of Civilizations’ that cannot (seemingly) be satiated by capitalism alone (Huntington, 1993). In the activist world, this discontent has manifest itself in movements such as the World Social Forum, which operates as a platform for ideas that are opposed to the dominant neo-liberal model under the slogan ‘Another world is possible’ (World Social Forum, 2006).

Conversely, those who continue to argue in favour of capitalism claim that it is (in addition to being the only option) the ‘fairest’ way for society and economics to function. Johann Norberg (2001) synthesises many of the traditional arguments for U.S capitalism in ‘In Defence of Global Capitalism’ where he argues that capitalism is good for everyone; yes, the rich are getting richer, but so are the poor[5]. He cites freedom and economic growth, environmental sustainability and consumer choice as inevitable results of, and exclusive to, a free market economy. However, a major flaw in Norberg’s theory is that he equates freedom and self-determinism directly with individualism; he believes that economic freedom (competition) leads to political freedom and democracy. This theory of individual freedoms is based on two assumptions –

1. That people in general want to be individualist and
2. That this individuality and freedom should be economic first and political second

Neither of these assumptions, however, can be relied upon. Elliott & Lemert (2006) in ‘The New Individualism – The Emotional Costs of Globalization’ succinctly describe the innate contradictions of the individualistic ideology.

As regards individualism in our own time, there are three major socio-structural features throughout the Western world that serve to disrupt, displace and at times dwarf the core liberal project of realizing a self legislating society of autonomous individuals. These features are those of commodification, the new cultural politics of the political Right, and privatization. (Elliott & Lemert, 2006. p. 38)

The intensification of capitalist/ economic ‘freedom’[6] over recent years may itself have created the desire for individualism through increased social exclusion[7]. Elliott & Lemert describe this as a pathological fear of society, which leads to a constant and manic attempt to fill a social void with capitalist consumerism (2006. p. 41). What is being described here is a result of alienation (in the traditional German philosophical sense[8]) and demonstrates the paradox of individualism; being economically free may well encroach on our social and political freedom. This is reminiscent of John Locke’s analysis of inalienable rights, which describes the natural rights (that have arguably become the basis of modern Human Rights theory) of life, liberty and property, which should be protected by society at all times. Many theorists, from Marx onwards, have criticised Locke’s theory of property, but the central idea of inalienable/human rights continues to influence political philosophy[9](Sandell, 2010).

The idea that U.S. capitalism[10] is the ‘end of history’ (as Fukuyama described it, 1989) is often the basis of the neoliberal argument for neoliberal policies. This argument put forward by Friedrick Hayek and vigorously implemented by Margaret Thatcher and Ronald Reagan, asserts that any deviation from a liberal market economy will inevitably lead to economic failure. The neoliberal view is that the state’s role in the economy should remain laissez faire and do no more than facilitate the functioning of the price based market (Barma & Vogel, 2008. pp. 87-89). Milton Friedman (1962, pp. 110-115) claimed that freedom, one of capitalism’s professed values, is only possible under such a system and built on the argument previously put forward by Hayek (1944, pp. 91-104) that –

‘The almost boundless possibilities of discrimination and oppression provided by such apparently innocuous principles as ‘government control of the development industries’ have been amply demonstrated to all those desirous of seeing how the political consequences of planning appear in practice’  (Hayek, 1944. p.104)

Hayek is referring to Central Europe, and uses this example as the basis of his claim that government involvement in planning the economy will lead ‘straight to a totalitarian state’ (p. 104). The argument appears to be based on a definitive anti-communist doctrine yet has been powerful in furthering, while simultaneously legitimising, the neoliberal agenda and U.S. hegemony. The idea that the ‘invisible hand’ will regulate the market and create a more efficient economy is central to this dogma, thus ruling out the idea of state ownership of industry or nationalisation of services[11] (save for a few exceptional circumstances). Although market fundamentalism appears to be essential to the economic theory of neoliberalism, it differs from the classical liberalism of Adam Smith and David Ricardo in that most neoliberal economists[12] see a state role in some markets (particularly financial markets) as essential. This is a contentious point because the role of the government in financial markets undermines the idea that markets are truly self-regulating. Furthermore, it highlights the (many, according to Harvey, 2005, pp. 67-70) internal contradictions of the neoliberal system. Critics argue that neoliberal economic policy is fundamentally flawed and is weighted heavily in favour of the dominant economic class. For this reason, Stiglitz (2008) described neoliberalism as a ‘grab bag of ideas based on the fundamentalist notion that markets are self governing, allocate resources efficiently, and serve the public interest well’ but that this has always been ‘a political doctrine serving certain interests’.

Margaret Thatcher repeated the phrase ‘there is no alternative’ numerous times while Prime Minister between 1979 an 1990, so much so that it became the name of her 2008 biography (Berlinski, 2008). This relentless belief that neoliberalism is the only way is so entrenched in the politics of Britain and the United States today that all of the leading political parties in both countries are built on an ideology that rarely veers away from the neo-orthodox free market model. In Britain for example, the ‘New Right’ approach of the Labour Party has become increasingly difficult to distinguish from the policies of the Conservative Party. Richard Heffernan (2001. p. 65) compares the 1997, Labour Party Manifesto directly to the Conservative 1979 Manifesto and finds little difference between the two. The same can be said for U.S. politics; the two dominant parties, Republicans and Democrats, not only work within the established neo-liberal framework but their campaigns are also largely reliant on financial donations that come primarily from big business.

However, it is not only politicians and economists who believe that U.S. capitalism is the only viable economic model. Public opinion, reinforced by political rhetoric and the mainstream media (especially in the U.S.), rarely considers alternative economic models as practical, or even possible, in today’s world or in future.

The nature of mass media in both the U.S. and Europe can, to some extent, explain this public resignation to the ‘no alternative’ dogma. Edward Herman (1990) describes the role of the media in reinforcing the anti-communist/ pro-capitalist ideology in the United States. He calls ‘Anticommunism as a Control Mechanism’ the ‘fifth filter’ that media passes through, explaining that social ownership is the ‘spectre’ that haunts property owners and the social elite as it threatens the very root of their class position and superior status (pp. 83-84). Herman cites the historic example of the Vietnam War (particularly from 1963 to 1975), to demonstrate the power of mass media in the face of growing dissent. During this time there was some ‘media slippage’, to the point where apologists for U.S. policy in Asia blame the loss of the war on the media. However, it is crucial to note that the volume of inconvenient facts that appeared in mass media was a fraction of the reality at the time. Any critical voice was forced to work within the framework of the established dogma (p. 86).

This theory is taken further by Denis McQuail in Western Europe: The ‘Mixed Model’ Under Threat (1990). McQuail argues that the U.S. free market model (with the help of media moguls such as Rupert Murdoch, Reinhard Mohn, Henry Luce and the Warner brothers) was able to undermine the largely mixed post-war European model of broadcasting, severely limiting the control of media to privately owned corporations in place of public service (McQuail, 1990. pp. 125- 137). Although this refers primarily to the change in the media industry, it is demonstrative of the broader socio-political change that was occurring at the time. The success in creating a consensus of anticommunist, pro-capitalist and individualist ideology can be seen as one of the greatest triumphs of U.S. hegemony.

The use of anticommunist propaganda to reinforce the status quo owes its strength to the Cold War and McCarthyism. The impact that this has had on public opinion has created a consensus through a common enemy. If you are not with us, you are against us. If you are not a capitalist (for freedom) you are a communist or terrorist (for authoritarianism). Any attempt at social change (even Barrack Obama’s recent attempts at very limited ‘reforms’) leads to powerful anticommunist backlash[13].

Despite what seems to be a political consensus, criticism of capitalism has, from its inception, never ceased. Modern criticism of capitalism (and subsequently numerous theories of alternatives to capitalism) originates in Marx’s Capital. Marx saw in capitalism a socio-economic system that was unjust and self-destructive and, in a refined version of the Hegelian tradition, predicted a shift toward a more stable and efficient model. For Marx this was communism: a centrally planned and evenly distributed economy that, through the abolition of ‘bourgeois’ property, relieves society from waste and inequality (Marx, 1848). Marx’s insightful and damning critique of capitalism had a profound effect on both social-political thought and the history of the twentieth century[14].

Yet, despite many alternatives being proposed[15] and attempted (in cases such as Russia, Yugoslavia, Cuba etc) U.S. style capitalism has remained dominant. It is not enough to suggest that it is dominant because there is no alternative; there are, in the words of Susan George, thousands of alternatives (Galloway, 2009). How, then. can capitalism’s survival be accounted for? Jon Elster and Karl Ove Moene put forward the following suggestion-

Given that preferences are shaped largely by the social environment, how can they also serve to justify existing social arrangements? If people in a market economy like the kinds of relationships and goods that market economies tend to produce, and people in a communally organised have a similarly endogenous preference for their society, one might conclude that there is no reason to change or prefer the status quo, except on the basis of arguments derived from the cost of transition, which will always favour the status quo. (Elster & Moene, 1989. p.8)

That the viability of the status quo is based on the cost of transition to an alternative is a compelling argument, and to some extent makes sense of the ‘no alternative’ ideology. If the cost (or perceived cost) of transitioning to an alternative economic system is too great, then maintaining the status quo may be justified, even if it is imperfect. However, when assessing the cost of transition the cost of maintaining the status quo must also be considered.

It is the cost of capitalism, both economic and human, that is the basis for the arguments against it. Capitalism itself, according to Alex Callinicos, is based on a (ill)logic of exploitation[16] and corruption, and neoliberalism has stripped away the institutions and practices that made earlier incarnations of capitalism almost bearable (Callinicos, 2003. p.26). Furthermore, capitalism is failing to resolve the current, deep-seated economic crisis. The spread of lawlessness, lack of accountability and the rise of corporate governance have undermined the legitimacy of the capitalist economy. This has created a repressed political environment, an emasculated state and a system that is incompatible with a low growth economy. ‘To survive [capitalism] requires the possibility of perpetual accumulation of profits and expansion of shareholders’ funds’ and without (highly unlikely) growth rates like those of the 1950s and 1960s there is little hope of averting a catastrophic fall in capital asset values or restoring state solvency (Shutt, 2009. pp. 5-7 & 216-217)[17]. Thus, it appears that U.S. capitalism may not be the only option; it may not even survive under its own weight.

This essay has outlined how, despite numerous proposed alternatives and a growing discontent, U.S. capitalism has (at least according to its proponents) remained dominant. The strength of the no alternative argument lies in the argument itself. If those in control of finance, politics and the media are not willing, or are unable, to even attempt to see an alternative none will be visible. Instead of engaging in dialogue, alternative proposals and the demands of society are disregarded as ludicrous, despite the fact that the current system is failing, even by its own standards. In the first two lines of his 1988 satirical poem, The Thatcher Alphabet, Terry Jones summed up the neoliberal/ capitalist approach to political debate –

A for her ABILITY

(to prove black is white),

B for her BELIEF

(that she’s always right),

(Jones, 1988. p. 13)

The doctrine of no alternative is arguably a tool for maintaining a political economy that, in reality, works for a minority while a ‘bread and circus’ economy silences mass dissent. So, from this perspective, it appears that the victors not only write history, but also the future, a future where the paradigm cannot possibly shift out of their favour. However, the capitalists, the neoliberals, the monetarists of the U.S. and Britain may not be as safe as they believe. First, the increasing disaffection for consumerism and individualism may lead to a severe, even violent, backlash (as has been seen recently in the U.S., U.K and Ireland following continued neoliberal policies). If U.S. capitalism does survive its inner contradictions, there is still the question of whether it can survive the rise of the burgeoning economic super power, China.

Arguments both for and against capitalism talk of social ‘evolution’, or determinism, and have been influenced by both Hegel’s dialectic and Darwin’s Origin of Species. Fukuyama, for example, believed that capitalism was the end of this evolution, while Marx predicted communism would be society’s denouement, but both understood that neither would just happen by accident; they would be created, and maintained by institutions. If either had a better understanding of modern biology, they may have seen things a little differently. Evolution does not have an end goal in mind, it does not stop and it does not conform to restraint. Rather, it is restraint or pressure that forces change and leads to the next stage of development. As our physical and social environments change, so will our economy. The question is not whether there are alternatives, the question is which alternative do we want and how will it be built?

References-

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Brenner, Y. S., 1991. The Rise and Fall of Capitalism. Brookfield: Edward Elgar Publishing.

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Footnotes:

[1] Taken from Coser, 1971, p. 99.

[2] Thesis, antithesis and synthesis were not Hegel’s preferred terminology for his theory, rather they serve as a ‘caricature’ of the idea when explaining the dialectic and, thus, are often misunderstood. A better description is the process of shifting from an inner contradiction to higher-level integration or unification (Stern, 2010).

[3] The discussion of different models of capitalism is itself interesting and extensive but is not the intention of this essay. For models/ varieties of capitalism see Coates, 2000 and Amable, 2003.

[4] For discussion on the historical context of capitalist development and the inner contradictions leading to the demise of capitalism’s success see Brenner, 1991.

[5] Norberg specifically refers to economic development and consumption power as a measure of individual poverty, which in itself is a limited indicator. Furthermore, the assumption that poor people getting richer automatically justifies an economic system is dubious, see John Rawls, Theory of Justice. (Rawls, 1971).

[6] This freedom largely equates to privatisation and competition. For an in depth critique of this definition of freedom see Zygmunt Bauman Liquid Life (Bauman, 2005).

[7] See Naomi Klein, The Shock Doctrine (Klein, 2008).

[8] In the traditional sense alienation is the coming apart of the essence and existence. In the case of Marx, the essence and existence of human beings (Wolff, 2010). For analysis of alienation see eg Wolff, 2002.

[9] Locke’s work had a major influence on the United States Constitution, however, even here Locke’s view on the right to life, liberty and estate was amended to life, liberty and the pursuit of happiness (Sandell, 2010).

[10] Fukuyama uses the term ‘western liberalism’ in place of U.S. capitalism but the two phrases can largely be used to describe the same political economic system of globalised capitalism.

[11] According to Martin Wolf in Why Globalisation Works (2004, pp. 45-46), Adam Smith’s metaphor of the ‘invisible hand’ is as illuminating as ever. He argues that although people may find it difficult to trust a system where ‘no-one is in charge’, a free market is the only way to mobilise an army of inventors, designers, producers and distributors while intermediaries (using financial instruments such as bank deposits, bonds and derivatives) provide the investment capital necessary to fund them.

[12] While Wolf (2004, pp. 64-65) claims that the state should have a role in the protection of private property and in the management of the state’s own funds, he believes that current governments have far too much involvement in sectors that they should not (and cannot efficiently) govern. Joseph Stiglitz (2006, p. iiv), however, argues that this idea of market fundamentalism is not only socially unacceptable, but has also lost almost all intellectual backing.

[13] A current example of this is the ‘Tea Party’ movement (Elverton-Dixon, 2010).

[14] It is not the intention of this essay to discuss the history of Marxism, revolution and wars, or the success and/ or failure of communist states in the twentieth century. For more information on this subject see eg McLellan, 1998.

[15] The proposed alternatives to capitalism are extensive and varied, and thus are beyond the scope of this essay. For some examples see – Callinicos, 2003, Elster & Moene, 1989, or Soper, 2008.

[16] For a Marxist analysis of capitalism, value and exploitation see Hodgson, 1982.

[17] In addition, organisations such as the World Bank and the International Monetary Fund have been heavily criticised for their dogmatic and misguided economic policy. This subject is an important part of the criticism of U.S. capitalism but is far too extensive for this report. For more information see Stiglitz,