Economic Alternatives to Capitalism | Truthout

A short form of the argument would be: in the first quarter of the century, up to World War I, there was decay, decline, and indeed almost major recession and almost depression. We don’t know what would’ve happened, but World War I certainly bailed out the economy. In the second quarter of the century in the 1920s, you find the same pattern and then the Great Depression and World War II bailed out the economy. In the third quarter of the century, the post-war economic boom partly from savings built up during the war, partly from the Korean War, the Vietnam War, the big military budgets of the Cold War and because the competitors, Germany, Japan, many others have been significantly destroyed, we were boosted in the third quarter. I think you can see that now, even though the military budgets are high absolutely, they are declining as a share of the GDP.

So I think that we are facing that, plus global competition, and I think those forces could be resolved even in a corporate capitalist system if you have sufficient power to mount a traditional Keynesian solution. But what is significant--and this is the heart of the matter--why that solution is not available is that the American progressive or liberal politics has decayed also above all because the labor movement. The labor movement is no longer what it once was. It was 34-35% at its peak just after the war, it’s now down in the 11% range and down in the 6% range. And the muscle behind a traditional way to balance a corporate capitalist system in Keynesian solutions and social programs--that muscle power of labor (in Sweden it was 85% of the labor force unionized)--is declining. So that’s a picture of decay, and there doesn’t seem to be an easy way out of that. And on the other hand, and here’s an oddity: nuclear weapons now prevent, I think, a kind of industrial scale war like World War I or World War II. We can have small horrible wars, but they don’t function economically in a way that they did previously.