Late Capitalism

Posted on February 22, 2010 by


My brother, Todd, sent me the following email:

“In my art history class, I have come across a term I have never encountered until now, Late Capitalism. Turns out to be a Marxist term, shock, shock, that assumes capitalism is just a phase. Sounds like wishful thinking on the Marxist part to me. Even if Capitalism was a phase, how could someone possibly know they are writing in the late period of an economic phase without some historical distance. You CAN’T! The classic assumption is that things like capitalism do not evolve and change with the times.

Capitalism works on a principal of ‘the path of least resistance,’ and if regulations and nation states find ways of squashing capitalism, it just goes underground or creates new ways of getting around those blocked paths. Even the Hoover Dam can not completely hold back the Colorado River. I think it is time we start reframing capitalism as a force of nature and not a historical period. Then again, Mercantilism was a period in history that had its beginnings and ends. Some nations are currently going through that phase. Can there be a post-Capitalist period like there is a post-Mercantilist period? ”

Here is my response:

I’ve heard the term before it’s in the title of a book by Fredric Jameson, “Postmodernism, or, The Cultural Logic of Late Capitalism.” There are other terms for it, like “neoliberalism” — in the European sense of the term “liberal,” of course.

One of the features of a spontaneous order is that the elements of the system have to be essentially equal. There may be local hierarchies, and there may be hierarchies within a corporation (which is local), but in a global sense, since we cannot actually know everybody, we cannot actually relate to them in a hierarchical fashion. We have to treat everyone as equals, being more-or-less strangers. Insofar as capitalism/free markets are a spontaneous order, you would have to argue that we can get to a place beyond equality among members of an economic system to argue that we could get “beyond” capitalism.

However, what do we mean by “capitalism”? Is it in fact equivalent to the free market system? Perhaps not. Perhaps mercantilism is a stage in the evolution of free market economics. As peoples become more interconnected, globally connected, and thus are dealing with people they cannot know well enough to relate to them in a hierarchical fashion, the market economy becomes increasingly a free market economy. Capitalism follows mercantilism as yet another form of the free market economic system. Over time the economy becomes increasingly self-or ganizing in a global rather than merely a local sense. If we take Marx seriously as the person who coined the term “capitalism” and thus accept his definition of it, then there is in fact plenty of room to move beyond capitalism — and into a truly free market economy. Certainly one would have to move beyond protectionism and cronyism in political economy (two of the things Marx identified with capitalism). In many ways Marx is in fact right — up until he begins to make predictions about the future. He in fact lays the groundwork for materialist top-down determinism, a half-step that is necessary to develop systems theory and the theory of emergence (where what has emerged now affects what it emerged from, in a top-down fashion). Ironically, systems theory led directly to Hayek’s idea of the market economy as a spontaneous order and, thus, a systems-theoretic defense of the market economy against communism. Marx’s foundations were used to disprove Marx’s conclusions.

The mercantilist economic system was a transitional economy, from the Medieval feudalist system to the capitalist system. I would argue, with Jameson, that postmodernism is indeed Late Capitalism precisely because the welfare state is still fundamentally capitalist. Many government officials defend themselves against charges of being socialists, saying they support capitalism. Indeed, they do. Crony capitalism. Billions of dollars go to very select corporations. Large corporations. While the largest banks get billions, small banks across the country get nationalized by the FDIC and sold off to the highest bidder — and the highest bidders are of course the largest banks. This sort of thing is crony capitalism. It is more how third world countries run things, with only slightly less direct control than occurs under fascism.

One doesn’t have to move forward. One can move backward. Crony capitalism is practically another word for mercantilism. Most people in government are protectionists, and protectionism is also fairly mercantilist in nature. Mercantilism essentially sees the economy as a fixed pie, a zero-sum game. Even Marx recognized that economic growth was in fact a permanent feature of the economy. Of course, he was only half right. It’s a permanent feature in a free market system. There are many ways to stop growth, but none of them have anything to do with the nature of the economy itself, but rather political concerns.

In fact, late capitalism refers to bureaucratic capitalism. We are ruled by bureaucracies– both government and corporate. That, too, is a feature of postmodern culture, and is what Kafka warned us about. In bureaucratic capitalism, you have the situation where nobody is in charge, and nobody owns anything in a direct fashion. Nobody can to be blamed or held responsible, there is no head to chop off to kill the beast.

Whatever the economy evolves into, it won’t be socialism or communism — those are moves backwards, as Hayek demonstrated in “The Road to Serfdom.” I suspect the economy will evolve toward a more personalized economy — meaning corporations will have to be more personal and personable. Meaning, an effective end to bureaucracies, which are in fact neither. Perhaps a globalized localism — all the benefits of localism without the negatives of Othering. So long as governments maintain the kind of control over economies they now enjoy (and wish to expand upon), we will stay in late capitalism, which is really just another term for the welfare state. Right now it’s being expanded at a rapid rate, much like a cancer. But cancer is not an organism; it must be destroyed in order for the organism to survive.

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