Notes on the Economy: The Barrier to the End of Capitalism

NEW – June 1, 2022

For the past three decades, we have lived in the right-wing liberal paradigm of the “end of history”, where the development of the economy was considered exclusively within the framework of the supremacy of capitalist principles and the inevitability of globalisation. All this was accompanied by mantras about the transition of the world economy to a crisis-free stage of development and unlimited linear growth. Times, however, have changed, old ideas have been destroyed, and an answer to the question of what the economy of the future will be is urgently needed.

The crisis of 2008 clearly showed the illusory nature of the principles and slogans of the “end of history” voiced by Francis Fukuyama, and the collapse of dreams of further calm and sustainable development based on capitalist principles. After 2012, however, there was an understanding of the fundamental unsolvability of many problems, after which economic issues suddenly disappeared from the main topics of the international agenda.

In January 2020, the resignation of the “all-liberal” government of Dmitry Medvedev took place in Russia, and the economic course began to change smoothly and slowly. With despondency and trembling, you imagine the complete preservation of the old approaches and personalities during, for example, the entire epic with COVID-19 – with the European tightening of the screws and the complete absence of even minimal help!.. And in February 2022, we entered a new era in general: having clearly and deliberately severed with the global world falling into catastrophe and disintegrating, our country gave a bold start to building its own future. The question of creating a new economy has risen to its full height, but there are no answers to it yet.

The end of capitalism

Before we can be puzzled by the description of post-capitalism, we need to consider two questions – the finiteness of the model of capitalist development and the possibility of further evolution. Otherwise, it may suddenly turn out that capitalism is eternal and is the crowning achievement of the development of human society, or in another way: it is still finite, but there can be no other form outside of it – and what, we are now one step away from ending social evolution?

The capitalist system, which requires constant expansion, has been the alpha and omega of Western European civilisation for more than 400 years. The driving force and bonus of constant widening/expansion was the possibility of dumping crises from the metropolis to the periphery, which was largely achieved by reducing tension and countering social changes caused by the development of technology and the economy. The overall result of robbing the periphery, accelerating the development and introduction of new technologies, is well known to everyone. This is scientific and technological progress. The figure shows the principles of development of this system, its growth is based on constant aggressive expansion with robbery and exploitation, as well as with the dominance of the division of labour over the division of knowledge/deepening of labour.

Dark blue small circle – “centre of the capitalist system”; light blue medium circle – “capitalist periphery”; grey-ish large circle – “non-capitalist periphery”; small striped blue circle – “absorbed part of the periphery”; line from “centre of the capitalist system” to “non-capitalist periphery” – “non-equivalent exchange and issue of senior currencies”; line from “centre of the capitalist system” to “absorbed part of the periphery” – “direct robbery of resources and assets”

The capitalist center/metropolis used two mechanisms to maintain rapid growth and reduce social tension due to faster development:

  • direct, full and hard plunder of resources and assets of a part of the non-capitalist periphery, with its transfer to the capitalist periphery [the colonial system, PSA agreements, the destruction of the Soviet bloc, etc.];
  • soft systemic plunder of the capitalist periphery by creating rules for non-equivalent exchange [WTO principles, Washington Consensus, etc.].

In the colonial period (17th-19th centuries), the first mechanism was used on a larger scale, through non-economic methods of coercion; in the 20th century, adjustments were made to the process, under beautiful words about equality, development, civility, etc., unequal exchange prevailed, and the non-capitalist periphery began to shrink rapidly.

In the last 20 years, after the end of the main stage of the robbery of the Soviet bloc, the capitalist world system has passed into a state of stagnation and permanent crisis. Revenue from plundering the shrinking non-capitalist periphery has ceased to grow so reliably and steadily as to allow the metropolis to continue to turn a blind eye to the amplification and accumulation of crisis signals. At the moment, all the current and expected resources of the third world have already been taken into account, and the metropolis/centre of the world-system, without receiving redundant, additional resources, has begun to stagnate. The countries of the capitalist periphery (China, Russia, etc.) approached the centre/metropolis in terms of development and influence and began to challenge the right to positions and privileges. That is, it turned out that the capitalist periphery alone is not enough to preserve capitalism, as well as the fact that the capitalist centre is poorly able to increase efficiency by dividing knowledge/deepening labour. It turned out that the underlying capitalist use of resources (everyone plans for themselves, violating the plans of others), guided, according to Adam Smith, by the will of the “unseen/Divine Providence” (a more accurate version of “invisible hand”), is, in essence, suboptimal and, with a lack of resources, restricts any development.

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In this situation, it will be possible to preserve capitalism only by “rolling back” and lowering the overall level of development of the world system by 100 years. This can be done, for example, through a global catastrophe and the creation of a new non-capitalist periphery/Wild lands. It is in this direction that work is being done within the broad framework of inclusive capitalism, environmentalism/combating global warming, digital and medical concentration camps, etc. But it is also possible to achieve post-capitalism – with the primacy of deepening labour/sharing knowledge (reducing costs and improving quality, this is from the Stalinist economy), combined with directive centralised planning for large companies, recommendation (economic mechanisms, incentives) planning for medium-sized companies, and free initiative for small forms.

And, yes, this principle is a transitional one, since in the 6th order (in 2035-2040) it will be necessary to move from economic planning to planning the entire public sphere…

Thus, there is no doubt that the extremely aggressive form of expansion of the capitalist world-system of Western European civilisation allowed it to take control of almost all of humanity in just over 400 years and launch the idea of the inevitability of scientific and technological progress. The accelerated development of the centre was ensured precisely by plundering the non-capitalist and exploiting the capitalist periphery.

By the time it became clear that further development on the old principles was impossible, that capitalism was not capable of accepting the primacy of the division of knowledge over the division of labour, that the principles and laws of the free market that underpinned the capitalist system were very inefficient within limited resources, within this world-system almost the entire planet is now. And now the capitalist system is confronted with the following prospects:

  • transition to state capitalism or fascism;
  • crash and roll back to re-traverse the path;
  • transition to post-capitalism.

In the next 10-15 years, apparently, a catastrophe is coming, then a recovery, a rollback, after which the idea of transition to post-capitalism will become as relevant as possible. Let’s see now whether it is worth believing in all the venerable specialists and scientists who, by and large, were not able to describe further development.

Utopias and the end of history

In the natural sciences, where there is evidence that can be confirmed/verified empirically, there are clear barriers to the application of theories. References to well-known laws are usually carried to exhaustive limits, and all attempts to expand the boundaries and come up with new theories often do not bring results. If the problem is clear, and all the new theories put forward are not always confirmed experimentally, then we have to resort to constructing more and more new crutches, patches, and exceptions on top of exceptions.

For example, for the last hundred years, there have been attempts in physics to create a general theory for which relativity and quantum mechanics are only special cases. There is still no positive result, look at how many dimensions have been introduced into string theory, turning it from a slender, symmetrical and compact building into a wild skewed pile of favelas on a hillock. Everyone understands perfectly well that humanity is not yet able to break through this barrier and that it is only a matter of time, we will not give up.

In the social sciences, the situation is more complicated, there is no experiment as a criterion of truth, everyone is free to invent something of their own, truth is determined by the presence of predictive power, which is often – behind the verbal lace and intricacies of author’s delights – not so easy to detect and comprehend. This often leads to an abundance of different models and constructions without any guarantee that the correct one is available. Socio-scientific theories (economics, sociology, political science, etc.) are divided into four groups:

  • claiming (to) and actually providing predictive power for a certain period of time;
  • utopias (ignoring contradictions and creating perfect pictures);
  • dystopias (highlighting one of the most important contradictions);
  • “ends of history”.

The latter option is very common now, there are many theories describing the past and present, in which the authors are not even able to describe in general terms the medium- and long-term future, which differs from a slightly improved/degraded version of the present, and they are not able to make bold and non-trivial changes in approaches. Public consciousness is very changeable, chaotic, there is no place for stasis in it, but, oddly enough, regular scientists repeatedly proclaim the completion of the search and the discovery of a universal law for all time.

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At any given time, society is affected by many forces and factors of different directions with non-linear intensity, but we clearly see only the most noticeable ones. Let’s give an example: with a high average level of education in post-Soviet schools, the choice of school in which a child will study, in the 1990s, 95% depended on the proximity to home, few people took their children even to the neighbouring micro-district. Although there were other factors: specialisation, teachers, the composition of students, the financial level of the family, the need and amount of surcharges, and much more.

Years passed, and secondary facts became the main ones, complicating the task of choosing. Attempts to get a child into a good school, even if it is far away, have become universal, and people sometimes change their place of residence for this purpose. The predictions from the 1990s by the author living in the “end of history” model did not even consider the possibility of such a change in motivation. If the author and apologists of social theory do not see a set of criteria of different strength and significance and are not able to reasonably assume in what period the weights will change, they have a great chance of finding themselves in the position of Francis Fukuyama.

And, yes, inclusive capitalism is a dystopia, and communist theory is a utopia, they have a future, but the picture of the world is very distorted in both.

Thus, it should be recognized that descriptions of the “end of history” are not so rare: not seeing the further development of the theory, going beyond its applicability, instead of breaking through barriers, the authors undertake to predict the future as an extended present. Unfortunately, most modern economic theories have similarly failed to see the completion of the model of capitalism, and political economy has failed to describe post-capitalism.

Economic model for Russia

Ministries, departments, the Central Bank and liberal institutions of the Russian Federation continue to form empty and already meaningless forecasts based on old models by inertia. Political economists talk about the need to return to the Soviet planned economy, ignoring the fact that it requires Soviet people to succeed. The recently published book Crystal of Growth by Aleksandr Galushka and his colleagues deeply analyses the Stalinist economy (systemic anti-capitalism, but not post-capitalism) and can be used as an example, but it does not answer the question of what a post-capitalist economy should be.

You can also recall experts, economists, and followers of Nasreddin Hodja’s parable of the donkey and the Caliph, who are hungry for power and money now, in exchange for which they promise to find answers to topical questions sometime later. It’s a shame, but even many scientists of the Russian Academy of Sciences, who are engaged not in science, but in maintaining the achieved social status, have not gone far from this in terms of productive and useful activities.

So, the question of the future of the economy has been raised. There are no answers. We will highlight the key points and theses of this problem that are necessary for understanding. In the framework of the essays on Russia’s strategy, much has already been outlined, so we will now analyse individual strokes of the question in the medium-term perspective plan and go through the economy in large strokes in order to slightly direct the development of thought:

  • humanity has entered a global catastrophe of the entire social sphere, and not just the economy, the reason is the increased connectedness and convergence with the actual end of capitalism, current events accelerate processes, but do not form new options for the future;
  • the principle of the “end of history” due to the impossibility of expanding the economy comes from a lack of understanding of the difference between the division of labor and the division of knowledge/deepening of labour;
  • Russia has good prospects to recover from the disaster and build its own pan-region within the framework of existing economic models, combining elements of capitalism and systemic anti-capitalism/socialism;
  • the economic principles of interaction between pan-regions are already clear (I’ll post a big article in the next few days);
  • the financial and economic principles of Russia for the transition/mobilisation period (until the beginning of the 2030s) are described earlier;
  • recovery/creating an industry and economy based on technologies of the 4th and 5th orders (until the beginning of the 2030s) is quite feasible (we will analyse it separately);
  • to understand the post-capitalist world, it is necessary to move from the contrasting “economism – political economy” to space: chaos/freedom – order/regulation and macro-micro (we will analyse it separately);
  • after 2030, it is impossible to consider the development of the economy separately, we need to move on to the development of the entire public sphere – this is the most important feature of post-capitalism;
  • managing the entire public sphere is impossible without answers to the most serious ethical, moral and spiritual questions, and avoiding the terrible idea of creating a “digital concentration camp” requires a well-thought-out formation of balances and self-restrictions;
  • for a successful entry into post-capitalism, one should find the optimal balance and areas of application of directive planning and free will/activity (here, in my opinion, an analogy with the theory of relativity and quantum theory in physics is appropriate), and one should also take into account the peculiarities of Russia;
  • in 2035-2040, during the transition to the 6th technological order, it is necessary to move away from planning and managing the economy to planning and managing the entire public sphere, which will become the basis of a post-capitalist society.
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The answers to these theses will allow us to “find” and detail post-capitalism, these theses can and should be widened, expanded with details, filled with examples, refuted, etc. – in short, on their basis to make painstaking scientific work. From the point of view of practice, after understanding the main details and thinking through the answers to these theses, it is possible to safely take “Crystal of Growth” as a basis and adapt this work to the general principles, i.e. answer the questions: what from the described we take without changes, what we will correct/develop further, and what is no longer applicable. It is obvious and reasonable that we should make two models at once – the first, intermediate, for the next 10 years, before the transition to the 6th order begins, and the second – for transformation into a fully-fledged post-capitalist society.

And, yes, I have already told you a lot of this, and I will try to describe some more on the basis of fundamental schemes – maybe this will help professional economists determine in which direction to move, and in the meantime I will return to geostrategy.

So, hard as it may seem to believe, the era of change has indeed arrived, and the old world is leaving without giving an answer to what the economy of the future should be like. In the context of the dominant scenario – the collapse of the global world, increased connectivity and the end of expansion, and hence the existence of the capitalist system that has been familiar for more than 400 years – the transition to post-capitalism, including its economy that has not been comprehended by society, becomes one of the urgent tasks of humanity.

Résumé

In mid-May 2022, the Ministry of Economy published a macroeconomic forecast for the development of Russia. This is a classic example of a document, as if made by the spinal cord, instead of the brain, under the influence of incompetence, ignorance and laziness. People did not even reflect on the changes in the situation in the world, did not bother to think about changing macroeconomic models – they simply filled in new inputs and extended the lines. There is no place for any restructuring of the economy in their heads.

Unfortunately, this is not at all surprising, since there were no personnel changes, the current management is carried out manually, and there are simply not enough resources for the medium term. This “forecast” should be treated as a severe delirium, and it would be good to add the label “unsuitable” to the personal file of everyone who put an official signature on the document without a “dissenting opinion”. In principle, the time is coming for a complete cleansing/dissolution of ministries, and I wrote earlier about how to do this.

The global catastrophe is getting closer and is felt more and more, there are two reasons – the increase in the connectedness of the world and the impossibility of further development of the capitalist world-system. This is the so-called end of capitalism, about which the classics of Marxism wrote a lot. The lack of a non-capitalist periphery suitable for plunder and the problem of exploitation of the capitalist periphery requires a change in the model.

Unfortunately, despite the relevance of the problem, the theory of further development and building the economy has not been presented, although the paradigm that has dominated the Western world for more than 400 years has ceased to work. Meanwhile, the task does not look so unrealisable, in the next 10 years, within the framework of the transition period, the economy can be built on well-known principles that are as close as possible to the Stalinist economy.

In the future, after the formation of the pan-region is completed and as space is “assembled” for restoration and expansion, a transition to new principles is necessary, which will be based not on the division of labour, but on the division of knowledge/deepening of labour, directive planning not only of the economy, but of the entire social spheres and finding a balance between the interests of society as a whole and private initiative on the ground.


Andrey Shkolnikov

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