What is the alternative to capitalism?
Over many decades, the Two Cows joke has evolved through various different iterations. The first recorded instances appeared in 1936. Before the internet, people circulated jokes like Two Cows on photocopied sheets. Then they got passed around in email and bulletin boards and mailing lists; then they found their way onto BuzzFeed and Facebook. The joke always starts with “you have two cows” and imagines what would happen to them under various different political and economic systems, including capitalism, communism, state communism, anarchism, and so on. Some versions are incredibly detailed. But they very rarely include two very promising economic practices, the creation of co-operatives, and microfinance.
Interestingly, the latest version of “Two cows”, Modern Capitalism Explained, only presents various different flavours of capitalism. It is as if the other socio-economic systems had simply ceased to exist.
The problems with capitalism
One of the problems with capitalism is that investors inject capital into businesses, and then demand a profit. There are a number of issues with this:
- They have not done any of the work to produce the profit;
- They can withdraw their investment at any time;
- They can sell their shares to the highest bidder, thus creating instability in financial markets;
- They usually have no personal connection or involvement with the company they have invested in;
- The need to make a profit inflates the cost of goods and services;
- The creaming-off of profits creates massive economic inequality;
- The short-termism of demanding a quick return on investment leads to the degradation of the environment, the destruction of habitats, and the over-use of resources.
Capitalism is not small traders who make and sell their own goods, or who buy the produce of others and sell it on. Such merchants existed before capitalism, and they will continue to exist after capitalism has collapsed under its own weight.
So what are the alternatives to capitalism?
One way to remove the problem of investors out to make a quick buck is to use the co-operative model. In this model, the business is co-owned by its employees, though non-employees can often become members. This business model is very popular in Europe, and a number of well-known businesses in the UK (the Co-operative group, John Lewis, and Nationwide) use this model.
The co-operative system means that ownership is spread amongst many people who all own a small share in the business and who receive dividends, rather than amongst a small group of powerful shareholders.
Another useful idea is the practice of micro-finance. This has been very successful in helping to empower women and other small traders in the developing world. It means that people can borrow very small amounts of money that large banks wouldn’t be interested in, and pay them back incrementally without being charged exorbitant levels of interest. I currently have a small amount of money with Kiva, which I have lent out to people in Armenia, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Kenya, Liberia, Mexico, Nigeria, Pakistan, Peru, and Vietnam.
The illusion of permanence
Those who stand to benefit from capitalism want us to believe that there are no alternatives to capitalism – that because state communism collapsed, and there are very few successful anarchist societies, there is no alternative to capitalism.
This is part of the baneful magic of capitalism; it weaves a fog of confusion and obfuscation around the very tools and concepts that might liberate us from its spell.
That is why we need to liberate ourselves from the illusion of its permanence as soon as possible, and educate ourselves about the alternatives.