How about thinking like a Marxist?

Chris Gray reviews: Kate Raworth Doughnut economics: seven ways to think like a 21st century economist Random House Business Books, 2017, pp384, £20

Kate Raworth: good intentions

For some time now people have been writing books critical of mainstream economics. This volume is one of them and has a lot going for it.

The basic metaphor is very simple. Think of two concentric circles, one inside the other: beyond the outer-circle boundary we have critical planetary degradation; within the inner circle we have critical human deprivation. The objective is to set humanity in position between the two circle boundaries - this area is the “doughnut”, as illustrated on page 11 of the book. It is a powerful image, and it has the virtue of establishing the ecological problem facing humanity fairly and squarely in the centre of political economy - where it should have been since at least the 1970s.

Kate Raworth is adamant that we should stop fetishising growth of GDP, and focus on the doughnut. This involves being aware of “human needs”, “human nature”, “systems”, “distribution by design” and “regeneration by design” (her chapter headings).

Particularly useful is the way she brings basic needs centre-stage. In her view, there are 12 of these:

sufficient foods; clean water and decent sanitation; access to energy and clean cooking facilities; access to education and healthcare; decent housing; a minimum income and decent work; and access to networks of information and to networks of social support. Furthermore, … achieving these with gender equality, social equality, political voice, and peace and justice (p45).

To sum up, “every human being must have the capabilities to lead a life of dignity, opportunity and community” (p164).

Human nature

This demand is linked to a view of human nature nicely at variance with the traditional figure of homo economicus, the ‘rational’ calculator of orthodox political economy. Raworth recognises the importance of this, quoting a certain Robert Frank, to the effect that “our beliefs about human nature help shape human nature itself” (p100) - which is true, of course. In place of the standard model, her view of humanity shows up the following features:

First, rather than narrowly self-interested, we are social and reciprocating. Second, in place of fixed preferences, we have fluid values. Third, instead of isolated, we are interdependent. Fourth, rather than calculate, we usually approximate. And fifth, far from having dominion over nature, we are deeply embedded in the web of life (p102).

Another concept in need of reshaping is equilibrium. In the old political economy, “each market had to have one single, stable point of equilibrium, just as a pendulum has only one point of rest” (p132).

Hence, according to Kate Raworth, the widespread failure to forecast the crash of 2008 - economists were assuming equilibrium and ignoring the dislocation caused by the financial sector (p134). Operations in this sector have been well analysed by Hyman Minsky, who

realised - counterintuitive though it sounds - when it comes to finance, stability breeds instability. Why? Because of reinforcing loops, of course. During good economic times, banks, firms and borrowers all gain in confidence and start to take greater risks, which pushes up the price of housing and other assets. This asset price rise, in turn, reinforces borrowers’ and lenders’ confidence, along with their expectations that asset values will keep on rising (p146).

Raworth quotes Minsky as saying: “The tendency to transform doing well into a speculative investment boom is the basic instability in a capitalist economy.”

The reference to “reinforcing feedback loops” indicates that the author of Doughnut economics has been influenced by systems theory. This is all to the good (see Donella Meadows’ writings). Another plus is the fact that Kate Raworth endorses the desirability of everyone having a “basic income”: “It is simply no longer feasible to expect GDP growth to keep pace with the anticipated scale of lay-offs due to automation, which only reinforces the case for introducing a basic income for all” (p278).

Not surprisingly, she is also in favour of what has become known as ‘people’s QE’ - ie, debt relief for households (see p184). As for taxation, Raworth wants international action on tax havens, and taxation of accumulated wealth rather than income (see pp276-77). Furthermore, companies should not be penalised for employing many workers, but should be discouraged from appropriating an overabundance of resources (p278). Likewise, tiered water pricing should be promoted - a basic charge for essential amounts, but more to be paid on top of that if additional quantities are required (pp213-14).

Overall, the ecological awareness shown is refreshing. For example, Raworth praises what she calls “the circular economy”:

instead of heading for landfill, the leftovers from one production process - be they food scraps or scrap metal - become the source materials for the next. The key to making this work is to think of all materials as belonging to one of two nutrient cycles: biological nutrients such as soil, plants and animals, and technical nutrients such as plastics, synthetics and metals (p221).

In thrall

So much for the good ideas. Where Kate Raworth is disappointing, however, is on the vexed question of markets. In her estimation there are four “realms of provisioning”: ie, households, markets, the commons and the state, which ideally ought to work together (p78). However, she does admit that

a growing range of products and services can be produced abundantly, nearly for free, unleashing potential such as open-source design, free online education and distributed manufacturing. In some key sectors the 21st century collaborative commons has started to complement, compete with and even displace the market (my emphasis, p84).

Here Raworth shows that she is still in thrall to the capitalist mode of production, in spite of the fact that she must surely recognise that it is capitalism which is driving the resource depletion we are currently experiencing. As Marxists, we would like to reach a condition where both the market and the state can be dispensed with.

This reluctance to think outside the bourgeois box is a pity, because Kate Raworth is obviously close to a Marxist position in some ways. This can be seen from her stress on needs, but she will not take the next logical step and consider the possibility of replacing (capitalist) production for profit with production for need.

This failure to engage with Marxist political economy is what detracts from the value of the book. There is no discussion of the overall rate of profit, no review of the literature on markets - such as David McNally’s Against the market, and the writings of Hillel Ticktin and Bertell Ollman on ‘market socialism’ - not even any discussion of the pro-market position put forward by Von Mises and Von Hayek.

It would have been useful if Kate Raworth had managed to grasp the importance of the alienation of the worker under capitalism. This is not just a question of working class psychology, it has economic effects, a negative contribution to productivity being one of them. (This was also the case in the Soviet Union, as witness the workers’ joke: “We pretend to work, and they pretend to pay us”). The reasons for her attitude are probably the usual ones - revulsion against Stalinism, combined with the view that, as far as Marxism is concerned, the Stalin version is authentic and good coin, in which case why bother with Marx’s voluminous writings on political economy, where some of the views advanced may well turn out to be utopian? This is definitely a pity, because it cuts Raworth off from a whole series of insights.

Take, for example, the remarks on alienation contained in the Economic and philosophical manuscripts of 1844:

What, then, constitutes the alienation of labour?

First, the fact that labour is external to the worker: ie, it does not belong to his intrinsic nature; that in his work, therefore, he does not affirm himself, but denies himself, does not feel content, but is unhappy, does not develop freely his physical and mental energy, but mortifies his body and ruins his mind. The worker therefore only feels himself outside his work, and in his work feels outside himself. He feels at home when he is not working, and when he is working he does not feel at home.

His labour is therefore not voluntary, but coerced; it is forced labour. It is therefore not the satisfaction of a need: it is merely a means to satisfy needs external to it. Its alien character emerges clearly in the fact that, as soon as no physical or other compulsion exists, labour is shunned like the plague. External labour, labour in which man alienates himself, is a labour of self-sacrifice, of mortification.

Lastly, the external character of labour for the worker appears in the fact that it is not his own, but someone else’s, that it does not belong to him, that in it he belongs not to himself, but to another. Just as in religion the spontaneous activity of the human imagination, of the human brain and the human heart, operates on the individual independently of him - that is, operates as an alien, divine or diabolical activity - so is the worker’s activity not his spontaneous activity. It belongs to another; it is the loss of his self.1

Production for need

What is the remedy for this state of affairs? In theory, the answer is very simple: it involves the “associated producers” taking production into their own hands and devising a plan which will satisfy the outstanding needs of the population (over time). Will this work? We already have evidence of its potential in the form of the Lucas Corporate Plan, as reported by Mike Cooley:

We then did what we should have done in the first place. We asked our own members [at Lucas] what they thought they should be making.2

The members responded with suggestions for a medical life-support system, energy-saving products, a range of wind generators, a road-cum-rail vehicle, kidney machines and telechiric devices - to mention only the most salient examples (out of 150 or so products). They also laid down certain criteria for “socially useful production” (ie “production for need”).3

Marx actually outlined his vision of socialism in the ‘Marginal notes to the programme of the German Workers’ Party’ (1875), better known as the Critique of the Gotha programme. It is not explicitly stated, but this work surely presupposes political power held by the working class in a number of countries, together with command over a sufficiency of material products. The “proceeds of labour” can then be divided along the lines that Marx lays down, including cover for replacement of means of production, funds for expansion, reserve or accident funds, costs of administration, social wage, disability benefit and so forth.4

Crucially,

Within the cooperative society based on common ownership of the means of production, the producers do not exchange their products; just as little does the labour employed on the products appear here as the valueof these products, as a material quality possessed by them, since now, in contrast to capitalist society, individual labour no longer exists in an indirect fashion, but directly as a component part of the total labour.5

In this set-up the worker receives a time-rate:

the social working day consists of the sum of the individual hours of work; the individual labour time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such and such an amount of labour (after deducting his labour for the common funds), and with this certificate he draws from the social stock of means of consumption as much as costs the same amount of labour. The same amount of labour which he has given to society in one form he receives back in another.6

The task, then, is to develop the collaborative commons: a transition from production for profit to production for need will ensure that humans arrive at the ‘goldilocks’ conditions represented by the doughnut (or bagel, or whatever). Later,

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour, has vanished; after labour has become not only a means of life, but life’s prime want; after the productive forces have also increased with the all-round development of the individual, and all the springs of cooperative wealth flow more abundantly - only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: ‘From each according to their ability, to each according to their needs!’7

There is one error in the text of Doughnut economics, which needs pinpointing: the reference should be to the economist, Silvio Gesell, not “Gessel”.

Notes

1. K Marx CW Vol 3, New York 1976, p274.

2. M Cooley Architect or bee? The human price of technology Nottingham 2016, p118.

3. Ibid pp154-55.

4. See K Marx and F Engels Selected works Vol 2, Moscow 1958, p22.

5. K Marx Critique of the Gotha programme: www.marxists.org/archive/marx/works/1875/gotha/ch01.htm.

6. Ibid.

7. Ibid.