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

| Comment is free | The Guardian

Socialism has failed. Now capitalism is

bankrupt. So what comes next?
Whatever ideological logo we adopt, the shift from free market to
public action needs to be bigger than politicians grasp

Eric Hobsbawm
The Guardian, Friday 10 April 2009

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

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Eric Hobsbawm: Socialism has failed. Now capitalism is bankrupt. So what comes next? | Comment is free | The Guardian

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

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Eric Hobsbawm: Socialism has failed. Now capitalism is bankrupt. So what comes next? | Comment is free | The Guardian

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

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