by Umair Haque
August 16, 2018
from Eudaimonia Website







Why Capitalism

isn't the First World



Here's a tiny question:

do you think (North) America is still a 'first-world' country?

Life expectancy in Chile's higher. Kids in Pakistan, Nigeria, and Thailand don't get massacred at school. Even Rwanda's building a public healthcare system.


So if "first-world" means "well-off", then something's gone badly wrong...

The way that we still think about the world today is usually using the old Three Worlds model.

  • The first world - capitalist countries.

  • The second world - countries aspiring to a global communist revolution.

  • The third world - everyone else.

This model of thinking was made for and by capitalism - and so it's no surprise that it limits to thinking of capitalism as the Best Thing That Can Ever Be.

But as capitalism collapses, it's fatally unworkable.


(North) America might be a "first world country"... but so what? If Chileans live longer, LOL - what does it matter? Such a model of thinking basically said:

the richer a nation gets, the better - capitalist logic...

But in (North) American collapse we see the fact that riches alone are no guarantee that people live decent lives.


In fact, those very riches, especially if they're earned through greed, hate, and injustice - in predatory ways - seem to cause a nation to collapse.


So riches alone aren't sufficient for prosperity today. They must turn into something else. But what, precisely...?

As I think about how the global economy has changed, and what its future looks like after capitalism, I've begun to use a very different idea of what successful societies are and aren't - a new three worlds, if you like.

At the top are what I'll call humanized societies...


Think of Western Europe. Scandinavia. Canada. Why are these societies so much more successful than (North) America?


"Social democracy," you'll probably say... And in a way, you're right. But I think there's a reason underlying even that - which makes social democracy, as a kind of political economy, possible in the first place.


All these nations have human history's most sophisticated and advanced sets of rights.

  • Healthcare

  • Education

  • Transportation

  • Retirement,

... all these as genuine constitutional, inalienable rights.


Because they belong to everyone, all of a society's institutions, from governments to corporations, must go on innovating to provide them, at higher levels.


Because they're rights, these societies have evolved norms and values of decency, dignity, gentleness, and sanity... at least to a degree.

So by "humanized societies", I mean,

those that made the transition to being societies where human lives can genuinely flourish.

Who didn't? (North) America...


Why not? It's not just that "social democracy could never happen" - more deeply social democracy could never happen because rights simply cannot ever seem to change in (North) America.


Americans just don't understand - and they're never taught - that those sets of rights they consider the world's best are in fact now poor and threadbare ones.


Guns and God don't help you much you much when what you need is healthcare and an education. "Freedom of speech" doesn't mean a whole lot when you have no real public media to give voice to anything that matters much in the first place.

So (North) America only made it to a lower stage of development:


The problem, though, is that one can't stay at this level of development - industrialization - forever.


Industrialization is a phase, a period - a way to get richer - and its gains should be reinvested in hospitals, schools, libraries, and so forth, before all those factories, jobs, and sectors, migrate, as they inevitably will, to places who can do the same work, cheaper - unless, like Florence, perhaps, you place artisanship over innovation.

(North) America never understood any of this; instead, it lets the gains of industrialization be concentrated into a tiny number of hands.


And so industrial capitalism, instead of maturing into social democracy, undergoing a process of humanization, by investing in healthcare, education, and so on, imploded instead into monopoly capitalism by the 2000s, which, by the 2010s, had degenerated into the quasi-fascism today, as falling middle classes turn to extremism and authoritarianism, just as in the 1930s.

The lesson is that if a nation gets stuck in the capitalist phase, its growth will soon turn predatory.


America's elites got rich by impoverishing the middle classes into precarity, turning their every day into a constant struggle against perpetual ruin. Such "growth" was really a nation eating itself, and it's still going on today.


But the price of that growth, ultimately, is political - the people being preyed upon will eventually revolt, usually by turning to authoritarians, fascists, and demagogues.


And when a nation reaches that point, it usually begins to regress at light-speed, doesn't it?

  • Reverting back to something like a feudal caste society, of genuine tribal violence and repression?


  • Why is that?

Let me explain it by going to the next level.


Below this level lie nations which are struggling to achieve capitalism and democracy - what you might call basic liberalism - at all.


Take Pakistan. It's always on the edge - is it a democracy? Is this election valid? Can people speak freely? And so forth.


Here, the challenges are something like the basic freedoms that were established by the 1800s in the West - the freedom to trade, freedom from caste, the abolition of feudalism, the end of serfdom, freedom of speech, and so forth.


Now, remember the idea of (North) American regression? Well, what happens if, like (North) America, a nation starts to go backwards? Where does it end up? Maybe right back here...


Let me explain.

America's example also tells us something about the growth and development of societies. They need to become rich enough to provide all these things to people - healthcare, education, transport, etcetera. But that is the point of getting rich, for a nation.


If a nation chooses to do what (North) America does - and treat getting rich as the end in itself, not a means to genuinely creating decent lives for everyone, then it will, like (North) American, implode too - start to go backwards, instead of forwards.

What happens when a society reinvests the gains from industrialization into things like healthcare, education, and so forth?


Well, it's economy changes - radically. You see, the (North) American economy is still 75% consumption - McMansions, SUVs, designer jeans, and so forth. The problem is that 80% of Americans live paycheck to paycheck. They can't afford those things anymore.


But if (North) America had invested in public goods, then the economy would be made less of consumption, and more of investment.

So as societies humanize, they begin to grow in healthier ways. Their lives aren't just about buying pointless, expensive things, in an endless competition for status, as in (North) America - which is what consumption-led growth, and its flipside, export-led growth, really are.


Instead, humanizes societies grow through investment.


They invest in people, and people grow,

healthier, closer, wiser, smarter, kinder, truer - which means they have more creativity, imagination, time, passion, empathy, trust, wisdom, courage, to invest all over again.

It's a virtuous circle - one far more powerful than capitalism's, which was about financial capital growing at a few percent a year, often at the price of people's lives.


And yet the stuff of that virtuous circle is what economics should really be about.

So those are my new three levels, or worlds, if you like:

  • Humanized societies

  • Capitalized societies

  • Struggling societies

Does that make sense?


Think of the old Denmark vs. (North) America debate. Denmark is obviously a vastly more successful society.


But why? Not because it's "homogeneous" (so is Somalia) - but because it has a far more powerful set of rights than (North) America does, which then established a set of institutions which lifted people up, instead of punched them down.


That changed the composition of the economy radically - not mostly things to consume, but more invested in people, which meant people, in turn, had more of themselves to invest, right back in each other.

Capitalism can never achieve that. That is why it's becoming obsolete...


We should probably begin to see it as a kind of dangerously unstable place, something like trying to walk a tightrope, between regress and futurity, between caste feudalism and humanized societies where people live with dignity and equality.


This is a phase societies should try furiously to outgrow, as fast and as hard as possible, because every moment you linger there, you're on a knife edge:

it can all implode, and you can find yourself right back where you began.

I don't know if (North) American will ever learn the lesson - but the world should...