What Comes After Capitalism?
Words by Yanis Varoufakis
Every regime has its legitimizing story.
Let’s look at capitalism.
The story was that nobody likes capitalists, but if you have the market, and the market is competitive, and you have the butcher, the baker, and the brewer - the three professions that Adam Smith mentions in the Wealth of Nations - and each one of them looks after themselves, they will provide the community with the best bread, the best beer, and the best meat at the lowest prices, not because they care for the public, but it is the best way to look after themselves and in looking after themselves, they look after the public interest in the best possible way. In other words, the public interest is best served when no one is trying to serve it. That was the original story for legitimizing capitalism.
The notion of competitive capitalism that Adam Smith was referring to died around 1870 or 1880 at the time when electromagnets were used for the second industrial revolution to create telegraph systems, later with Edison, electricity. Those companies could not be competitive. They were monopolies. So the idea of the brewer, the baker, and the butcher goes and is replaced by Edison, by General Electric, by Ford, today by Google, Facebook, Amazon and so on. That is not competitive capitalism. It is a market of monopolies.
Because the companies are huge, they need a lot of money to finance them. So the banks consolidate. So you have megabanks and megacompanies.
The way in which monopoly capitalism evolved created socialism for the bankers and for the very rich and the arena of the unfettered market for the many. So for the very few, when they have profits, it is their profits. When they have losses, society has to give them money. This is not even working now.
18 trillion dollars of debt is now receiving negative interest rates. That is a symptom that there is something spectacularly wrong with capitalism.
While our job is not to save capitalism for the capitalists, our job is to stabilize capitalism and use its stabilization as a foundation on which to build an alternative to capitalism.
Then we can start having the second conversation. What comes after capitalism? What will post-capitalism look like?
The myth is that wealth is produced individually by the private sector and the state comes and taxes it so the state is the bad guy that comes and takes money away from the privateers that produce things. That’s not how the world works. We all produce value together collectively, but then some very smart and powerful privateers tax it and they become the oligarchs.
This has a touch screen. It’s got a GPS system. It has a Wifi system. Everything I just mentioned was produced by the state.
Today, anything you go onto your Google search engine and you search for something, you add to the capital of Google. When you carry your phone with you when you are driving, then Google maps knows how many people are on every street, so it makes it red. The app becomes more useful to you because you know where it is congested. So people are contributing to the capital stock of Google. In other words, we are producing capital collectively but it is only Google that gets the profits.
So what we are proposing is something very simple.
We propose that every company should contribute 10% of its shares to a welfare fund that collects dividends and the dividends are then divided to every citizen. At first, the money that trickles down to each one of us is going to be very little. But the more production is automated, the more robots are utilized, the higher the revenues and the dividends of these companies, the more money goes to the people. And if we start at 10%, we can push it to 20%, 30%, and think about it, the limit is 100%. That is communism without a state, communism without communists, Star Trek. We all own the machinery, the machinery works for all of us, and we can all sit around here and have philosophical discussions.