How Will Capitalism End? Essays on a Failing System by Wolfgang Streeck
My rating: 2 of 5 stars

Compulsive Pontification

Streeck's academic thesis is straightforward: Capitalism has adapted successfully to the conditions it itself has created since its formation in the late 18th century. But capitalism now lacks potential responses to future crisis. Economic policy-makers, he believes, have run out of effective economic antibiotics and must simply wait for the next evolved super-bug to strike. Streeck is agnostic about the source of the next crisis - ecological devastation, inadequate consumer demand, technological stagnation, declining returns, social inequality, political un-sustainability - are certainly candidates. But believes that the end of the system which has come to dominate the planet is nigh through some combination of these, or from as yet undetected evils.

The logic supporting Streeck's argument is roughly this: The future of the world economy is not simply indeterminate but what he calls multi-morbid. That is, so many things could go wrong, there are so many bugs out there, that some of them are bound to evolve immunity, and when they do the interactions with the Body Politic and Economic will be so complex that neither economists nor national governments will have a clue about how to treat the effects. His evidence for this claim is mainly the disagreement among economists about what is likely to happen to the global economy. This disagreement, not economic facts themselves, is the foundational datum of Streeck's argument. It’s a bit like medical researchers concluding that because there are a potentially infinite number of hostile bacteria in the world, many of which we haven’t even identified yet, one of them is bound to kill all of us off.

So, as Marx predicted, capitalism will decline and fall through its own internal contradictions, of which there are many more than he realised to worry about. But what will replace capitalism won't be socialism, or any other system that we can now conceive. Instead, according to Streeck, we are heading into an economic and sociological void, an uncharted future of chaos and "social entropy" (interestingly a term of approbation that Freud had used about America in 1909. Could this be Streeck's inspiration?). This forecast seems hardly distinguishable from an economic confession of total ignorance. If read this way, much of what Streeck has to say is merely professional smoke to disguise the absence of anything meaningful at all.

He then proceeds to his institutional analysis. Our existing institutions - economic, financial, social, governmental - will be inadequate to stabilise these emerging conditions according to Streeck. He describes a global situation which is more or less the one that ensued in Russia after the break-up of the Soviet Union. In short, we're in for a rough ride and we don't have any idea of the destination. So we are not only ignorant of the future challenges, we are also ignorant of the ability of our institutions to cope with whatever these challenges might be. In other words, we don’t know which antibiotics we might need, but whatever ones they are, we don’t have them. I suppose this is an economist's version of a double negative making a positive.

Even more fundamentally, Streeck sees a "decoupling" of democracy and political economy. That is, the restraints placed on capitalism by government policy over the last century will gradually disappear. Keynes and Samuelson are out the window; but so are Hayek and Friedman. The union of democracy and capitalism has only really been operational since WWII and has now been rendered sterile, mainly through the globalisation of finance. Governments are powerless; there is no theoretical script to guide policy-making. We can now look forward to essentially unregulated, "de-socialised," capitalist activity involving increasingly corrupt practices and unjust consequences. The idea of Adam Smith that private greed is transformed into public virtue has passed its sell by date. Already the odour of decay is reaching into even the best neighbourhoods. This indeed looks a solid conclusion, but one that most educated non-economists have already made.

Although written before Trump's electoral announcement, Streeck predicts the growing power of populism, especially on the political Right. But he also predicts a dramatic rise in oligarchic power, especially in America. Trumps executive appointments of largely super-wealthy sympathisers during his first two weeks in office appears to confirm Streeck's judgment. Populism after all has nowhere to turn, when it rejects the political class, except to these oligarchs. Labour leaders have been neutralised, racial leadership is fragmented, the middle classes are confused and without effective voice whatsoever. An outstanding observation, obvious once stated, but not before. Well done Professor Streeck.

Surprisingly, Streeck has little to say about China. He dismisses the importance of both the Chinese economy and the system of Chinese state capitalism out of hand.

Surviving in this new "entropic society" will, according to Streeck, depend on four civic virtues: coping, hoping, doping, and shopping. Essentially these involve believing in God but tying your camel first and having a stash at hand for socialising at the mall when the camel gets nicked. Economists are not known for their irony, so I have to take him seriously in these suggestions

The End of Capitalism is the ultimate curate's egg of a book: very good and very bad in about equal parts. Streeck's summary of recent economic thought is tight and informative. His conclusions from the diversity of opinion say much more, however, about the profound ignorance and arrogance of economists than the vulnerability of the world economy, however real that vulnerability may be. Similarly, his political observations are often acute and prescient. But the sociological implications he draws, especially his prescriptions for individual action, are trite, verging on the puerile.

I think therefore that just about half this book should have been written. I am reminded of John Wanamaker's famous quip: "I know that half my advertising budget is wasted; I just don't know which half." Fortunately, in the case of How Will Capitalism End?, it's fairly obvious which half. Economists and pollsters might want to lay off the predictive pontification and concentrate on thinking about why they don't agree with each other. It might improve their credibility enormously. And the rest of us could get back to the apocalyptic Book of Revelation.

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