Life after Capitalism
Robert Skidelsky
Project Syndicate | Wednesday, January 19, 2011

LONDON – In 1995, I published a book called The World After Communism.
Today, I wonder whether there will be a world after capitalism.

That question is not prompted by the worst economic slump since the
1930’s. Capitalism has always had crises, and will go on having them.
Rather, it comes from the feeling that Western civilization is
increasingly unsatisfying, saddled with a system of incentives that
are essential for accumulating wealth, but that undermine our capacity
to enjoy it. Capitalism may be close to exhausting its potential to
create a better life – at least in the world’s rich countries.

By “better,” I mean better ethically, not materially. Material gains
may continue, though evidence shows that they no longer make people
happier. My discontent is with the quality of a civilization in which
the production and consumption of unnecessary goods has become most
people’s main occupation.

This is not to denigrate capitalism. It was, and is, a superb system
for overcoming scarcity. By organising production efficiently, and
directing it to the pursuit of welfare rather than power, it has
lifted a large part of the world out of poverty.

Yet what happens to such a system when scarcity has been turned to
plenty? Does it just go on producing more of the same, stimulating
jaded appetites with new gadgets, thrills, and excitements? How much
longer can this continue? Do we spend the next century wallowing in

For most of the last century, the alternative to capitalism was
socialism. But socialism, in its classical form, failed – as it had
to. Public production is inferior to private production for any number
of reasons, not least because it destroys choice and variety. And,
since the collapse of communism, there has been no coherent
alternative to capitalism. Beyond capitalism, it seems, stretches a
vista of…capitalism.

There have always been huge moral questions about capitalism, which
could be put to one side because capitalism was so successful at
generating wealth. Now, when we already have all the wealth we need,
we are right to wonder whether the costs of capitalism are worth

Adam Smith, for example, recognized that the division of labor would
make people dumber by robbing them of non-specialized skills. Yet he
thought that this was a price – possibly compensated by education –
worth paying, since the widening of the market increased the growth of
wealth. This made him a fervent free trader.

Today’s apostles of free trade argue the case in much the same way as
Adam Smith, ignoring the fact that wealth has expanded enormously
since Smith’s day. They typically admit that free trade costs jobs,
but claim that re-training programs will fit workers into new, “higher
value” jobs. This amounts to saying that even though rich countries
(or regions) no longer need the benefits of free trade, they must
continue to suffer its costs.

Defenders of the current system reply: we leave such choices to
individuals to make for themselves. If people want to step off the
conveyor belt, they are free to do so. And increasing numbers do, in
fact, “drop out.” Democracy, too, means the freedom to vote capitalism
out of office.

This answer is powerful but naïve. People do not form their
preferences in isolation. Their choices are framed by their societies’
dominant culture. Is it really supposed that constant pressure to
consume has no effect on preferences? We ban pornography and restrict
violence on TV, believing that they affect people negatively, yet we
should believe that unrestricted advertising of consumer goods affects
only the distribution of demand, but not the total?

Capitalism’s defenders sometimes argue that the spirit of
acquisitiveness is so deeply ingrained in human nature that nothing
can dislodge it. But human nature is a bundle of conflicting passions
and possibilities. It has always been the function of culture
(including religion) to encourage some and limit the expression of

Indeed, the “spirit of capitalism” entered human affairs rather late
in history. Before then, markets for buying and selling were hedged
with legal and moral restrictions. A person who devoted his life to
making money was not regarded as a good role model. Greed, avarice,
and envy were among the deadly sins. Usury (making money from money)
was an offense against God.

It was only in the eighteenth century that greed became morally
respectable. It was now considered healthily Promethean to turn wealth
into money and put it to work to make more money, because by doing
this one was benefiting humanity.

This inspired the American way of life, where money always talks. The
end of capitalism means simply the end of the urge to listen to it.
People would start to enjoy what they have, instead of always wanting
more. One can imagine a society of private wealth holders, whose main
object is to lead good lives, not to turn their wealth into “capital.”

Financial services would shrink, because the rich would not always
want to become richer. As more and more people find themselves with
enough, one might expect the spirit of gain to lose its social
approbation. Capitalism would have done its work, and the profit
motive would resume its place in the rogues’ gallery.

The dishonoring of greed is likely only in those countries whose
citizens already have more than they need. And even there, many people
still have less than they need. The evidence suggests that economies
would be more stable and citizens happier if wealth and income were
more evenly distributed. The economic justification for large income
inequalities – the need to stimulate people to be more productive –
collapses when growth ceases to be so important.

Perhaps socialism was not an alternative to capitalism, but its heir.
It will inherit the earth not by dispossessing the rich of their
property, but by providing motives and incentives for behavior that
are unconnected with the further accumulation of wealth.

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By Håkon (Norway) on Fri 21 Jan 2011 - 20:48

I’m sure there will be, but I only hope we abandon capitalism of our
own free will rather than through physical necessity.
The fantastic economic growth of the last two centuries could never
have taken place without the unlimited access to energy that we’ve
gotten through fossil fuels
I can’t imagine the “infinite growth” paradigm surviving the end of
oil, and I hope we will have a concrete alternative by that time.

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