Beyond Capitalism: The Diverse Economies Challenge
What’s the state of capitalism today? Is American capitalism being remade by state power? Are the struggles for a future beyond capitalism having an impact? Two renowned economists, George F. DeMartino and Ilene Grabel, tackle the above questions in this interview by C. J. Polychroniou.
They offer penetrating insights on the current state of capitalism and make the case for the Diverse Economies (DE) project an an antidote to Capitalocentrism, thus providing plenty of food for thought for researchers and activists alike. George F. DeMartino is Professor of International Economics at the Josef Korbel School of International Studies at the University of Denver and author of scores of books, including The Tragic Science: How Economists Cause Harm (Even as They Aspire to Do Good). Ilene Grabel is Distinguished University Professor at the University of Denver and Professor of International Finance at the Josef Korbel School of International Studies of the University of Denver. She is the author of the multi-award winning book When Things Fall Apart: Global Financial Governance and Developmental Finance in an Age of Productive Incoherence.
C. J. Polychroniou: Neoliberalism has been the organizing economic principle for most countries across the globe for the past 40 years or more. Nonetheless, it should be recognized that while capitalism has many ways to extract value from societies--from primitive accumulation and regimes of dispossession to modernized poverty--it is not a monolithic system, and there are even different varieties of neoliberalism. Moreover, the neoliberal world order that the United States has promoted since the end of the Cold War is crumbling under the weight of the Trump administration’s protectionist policies, even though the same administration is doubling down on the neoliberal agenda at home. Having said all that, how really diverse are today’s economies across the world, and what do you consider to be the primary systemic challenges facing capitalism today?
George F. DeMartino and Ilene Grabel: It is important always to distinguish between neoliberalism as a political project, and as a realized economic regime. The political project of neoliberalism emerged by the late 1970s and became the organizing vision for many of the most influential economists of the late 20th century—from Milton Friedman and the Chicago economists to Friedrich Hayek and the Austrians. Neoliberalism was to deliver economic and political freedom, efficiency, fairness in opportunity, and international peace. And we need to keep in mind that this vision came to be embraced in large measure by centrist economists as well, like Paul Krugman and Jeffrey Sachs to name just two of the most influential economists of the past fifty years. Only later did some of the advocates come to recognize the immense social cost of the neoliberal project.
But neoliberalism as an actual regime was never achieved in anything like the form its advocates sought—anywhere. For every measure to “liberalize” the economy, there were measures to extend state protections and privileges to various economic interests. Many would take the United States as the exemplar of the neoliberal vision. But it’s safe to say that even during the long neoliberal moment in American politics, not a dime of new investment happened without state support of some sort or other. Successful entrepreneurs found innumerable ways to extract protection and assistance from their local and state governments as well as from the Federal government. Contrary to the mythology of economic progress being driven primarily by individual initiatives and risk taking, economic projects in the US occur in an environment where they are nurtured by public entities. When projects ultimately succeed, we are encouraged to read them as the achievements of free enterprise and heroic entrepreneurs—when in fact, most are nourished, protected, and sustained by the state. But the veil hiding state protection is ripped away during every economic crisis, when the largest corporations are bailed out supposedly for the public good.
How much variance is there today in economic policy regimes, is quite a bit. What unifies distinct economies today, as always, is not their fidelity to free enterprise. Karl Polanyi was right to argue in the 1940s that a truly liberal market economy is far too dangerous for society. What unifies distinct economies today, as always, is the extraordinary extent of state involvement in economic management. But economies do differ, meaningfully, in the forms that the involvement take—the kinds of policies they use to guide economic affairs, the constituencies that are the prime beneficiaries, and the ends that the interventionism seeks. And they differ in the forms and degree to which they offer protections from the market and make social expenditures, such as support for labor organization, child care, medical care, and the unemployed.
This argument can’t be made often enough because the neoliberal vision has blinded even careful observers to the degree of state management of economic affairs. Free enterprise is far too unstable, fragile, and dangerous to ever be implemented as the neoliberal visionaries would like. It’s time to reject the deceptive heroic narrative that posits the competitive superiority of free enterprise over all other kinds of economic systems. Because that narrative is, in our view, a chief obstacle to the search for and realization of alternative economic forms that might generate better economic and social outcomes—like equality, fairness, and sustainability.
Just one last point to make in response to your question: we don’t view Trump as doubling down on neoliberalism at home. In the past month his administration has acquired 10% of Intel for $9 billion, and this on top of the $2 billion that the firm received under Biden’s CHIPS act (which, of course, Trump criticized as a “horrible, horrible thing” during the presidential campaign). The move follows other major ventures in state capitalism, such as the Pentagon becoming the largest shareholder of MP Materials, which runs the country’s only rare earth mines, and Trump’s approval of Nippon Steel’s purchase of US Steel only on condition that the US receive special “golden shares” that give it significant control over corporate decision-making. And he has of course used sanctions, threats, and rewards to alter the behavior of corporations across the economy. This extraordinary degree of interventionism has rightly earned him the moniker “Dirigiste in Chief” by the Financial Times. Libertarian US Senator Rand Paul goes further, calling the Intel investment “a step toward socialism.” Perhaps it’s not surprising, then, that Socialist US Senator Bernie Sanders has endorsed the deal, arguing that "If microchip companies make a profit from the generous grants they receive from the federal government, the taxpayers of America have a right to a reasonable return on that investment."
To sum up—whatever we call the kind of regime of economic governance now under construction, it is not neoliberal. Cronyist state capitalism might be a better descriptor. Critiques from the left should be careful not to refer to every economy that is so damaging to working people as neoliberal. Neoliberalism is but one of an unbounded set of unjust economic arrangements that cause serious harm to many for the benefit of the few.
C. J. Polychroniou: The history of capitalism is intrinsically linked to a host of anti-capitalist struggles, although the actual shape of future society has always divided those movements of the radical left fighting for an alternative future. In your own view, how do you assess the ways through which progressive and radical movements across the world are challenging capitalism today? Are they making an impact?
George F. DeMartino and Ilene Grabel: One of the most interesting things about current progressive and radical movements today is the degree to which they are building new economic forms that are non-capitalist, and yet are doing so in ways that are, paradoxically, both easily visible and yet hard to see. We’re thinking of what is sometimes now referred to as the ‘diverse economies’ project, though we warn against thinking that this is a centralized movement with one shared vision—like communism or socialism. It is instead a loose collection of economic experiments. Many of these experiments have been inspired by the path-breaking work of JK Gibson-Graham, the pen name of Julie Graham and Kathy Gibson, two economic geographers whose The End of Capitalism (as we knew it) and subsequent work fundamentally altered how many scholars and activists the world over view “the economy” and the socialist project. One of the central principles of their work and the associated political movement is the idea that economies like the United States that we so readily identify as “capitalist” are inevitably heterogeneous economic formations that comprise all sorts of other, non-capitalist arrangements. When we explore economies on the ground, we find that there are many, many institutional forms, patterns, and practices by which people provision for themselves. The household is in fact the most common institution of economic provisioning, where goods and services are produced and distributed, and yet virtually no households are capitalist. Parents don’t “sell” their children the meals they provide them. Beyond the household, innumerable institutions feature volunteer labor and gifting. Much of the caring labor, that feminist economists have rightly highlighted as a fundamental practice in all societies, is performed in the non-capitalist household, and in non-capitalist institutions of all sorts. Religious organizations, civic institutions, formal and informal clubs, nonprofits—all participate in economic provisioning not for material gain, but in pursuit of other objectives. Today it’s undeniable that the internet has become a means for spreading capitalist relations of provisioning and exploitation. It’s hard to navigate the world of commerce without paying tribute to Amazon, for instance. But the digital world is also the site of an extraordinary amount of gifting on a global scale, with typically anonymous individuals laboring freely for others—distant, unknown others. And it has also become a global bazaar where independent producers, who work for themselves with their own means of production, sell their wares. They are not working for a wage from capitalist corporations. As Gibson-Graham convincingly argue, both the market and the financial sector—institutions that we so closely associate only with capitalism—are entirely catholic in their orientation. Markets facilitate the buying and selling of capitalist and non-capitalist goods alike, and financial markets are often utilized by economic actors to fund non-capitalist economic activity. Think of self-employed individuals who use their credit cards to buy means of production to produce goods they will sell on Etsy. No wage labor here, no exploitation. We make a fundamental error when we call that kind of provisioning capitalist.
On top of all that, there has been a stunning shift toward the creation of non-capitalist collective economic enterprises. All across the globe today we find people forming worker-owned, democratically controlled businesses. These are emerging in a variety of ways. Sometimes workers band together to buy or otherwise appropriate a failing capitalist business; other times, retiring capitalists take he initiative, gifting or selling their businesses to their employees. And other times, coops emerge as new start-up businesses, with the explicit intent of building non-capitalist forms. One of the remarkable aspects of this movement is that it appeals to people who hold to many distinct and even contrary political ideologies. Where we live, in Colorado, a Democratic governor with strong libertarian sensibilities, whom no one would mistake as a leftist, made it one of his first priorities to facilitate the formation of worker coops in the state. In cities across the United States there are institutions like the Rocky Mountain Employee Ownership Center (RMEOC) in Denver that works with existing businesses on coop conversions while also looking to create new enterprises that embrace worker ownership and control. This summer the RMEOC launched the Drivers Coop Colorado—a worker-run ride-share enterprise that provides an alternative to Uber and Lyft in the Denver metro area.
This rupture with and within capitalism has emerged across the globe. Argentine industrial workers brought global attention to possibilities of worker ownership and democracy when they occupied and then appropriated factories that were closed by their capitalist owners in the wake of the crisis of 2001. Today as in the past, many of these initiatives—like Cooperation Jackson in Jackson, Mississippi--have arisen within economically marginalized communities that were so often preyed upon by formal economic institutions, especially but not only in the financial sector. Many challenge racialized capitalism. Perhaps for that reason, the trials and successes have so often gone unnoticed by the press and academics. They are now being excavated and told by scholars like Jessica Nembhard, and in the case of the Caribbean, the African continent, the Americas, and Canada, by Caroline Shenaz Hussein. The new Handbook of Diverse Economies, edited by JK Gibson-Graham and Kelly Dombroski brings together in one text extraordinarily inspiriting examples like these from across the globe.
C. J. Polychroniou: You say that these initiatives are both highly visible and also subterranean. By that I take it you mean that they are easily overlooked. Why is that?
George F. DeMartino and Ilene Grabel: This question returns us to a point we raised at the outset and immediately above. When we mistake a vision of the economy for the economy itself—the map for the territory—we lose sight of viable alternatives that might be happening all around us. When we see the capitalism everywhere—without qualification, without reservation—then we are apt to dismiss any possibilities for building non-capitalism until after we’ve dispensed with the capitalist beast. The term “Capitalocentrism” was introduced by Gibson-Graham and is often used to describe this way of thinking. Capitalocentrism is not just descriptively incorrect, it is self-defeating. When we understand “Capitalism” as all-powerful, as unrivaled, as sturdy, virile, robust and universal, then there is no place in our imaginations for thinking about how to build viable, sustainable economic alternatives. And so we overlook the community garden, the credit union, the gifting economy, the household, the non-profits that do so much provisioning, and even the worker coops that are explicitly non-capitalist. We treat all of these as marginal, as unworthy of our attention or support since they can’t begin to slay the beast. Or even worse, we theorize them as nothing but supports for capitalism. But if we recognize that no “ism” can adequately describe an entire economic formation, like the US economy, that any actually-existing economy comprises all sorts of economic practices and forms, then we are encouraged to see, support, and build the diverse forms that are all around us, hiding in plain sight, and to look to build networks among these non-capitalist forms that can, together, offer a new constellation of economic practices and new ways of economic provisioning. New ways that matter in the lives of working people and their communities.
If this sounds implausible, it is only because Capitalocentrism so deeply infuses our culture and shapes how we, scholars included, have come to think about the nature of our economic world. Capitalocentrism recruits us to passivity and constitutes us in despair. The diverse economies project is an antidote—one that requires of us first and foremost that we open up our minds to the possibility that meaningful alternative economic arrangements are all around us, and to the idea that we can join in the project to build non-capitalisms right here, right now, wherever we may be. We note in this connection the powerful thinking of development economist Albert O. Hirschman, who rejected the simplistic “paradigm thinking” of his World Bank colleagues which treated economies as simple, knowable, and controllable. He advocated what he called “possibilism” over “futilism,” identifying “the right to a nonprojected future as one of the truly inalienable rights of every person and community; . . . [setting] the stage for conceptions of change to which the inventiveness of history and a ‘passion for the possible’ are admitted as vital actor.” In his diary he asked, “Aren’t we interested in what is (barely) possible, rather than what is probable?”The DE answer to the question is a resounding “yes.” Picking up the thread, feminist theologian Sharon Welch invites us to ask, “What improbable task, with what unpredictable results, shall we undertake today”?
Gibson-Graham and the activists in this movement often use the image of an iceberg to help us visualize the diverse economy. Above the waterline, we see capitalist enterprises, wage labor, and commodity markets, and we infer that the economy as a whole is capitalist, full stop. But below the surface, where the largest mass of the iceberg resides, we find a multitude of diverse economic forms and practices. Some are formal, like credit unions, some informal, like “do it yourself” practices, neighborhood sharing, and lending circles. Some depend on the market, some do not. Some are large, some are small. But just like the portion of the iceberg that is hidden from view, these non-capitalist practices are, in the aggregate, massive.
C. J. Polychroniou: But projects for economic transformation so often run up against the problem of scale, and this movement in particular seems ill-suited to resolve that problem. Things that work in my neighborhood, like the community gardens you mentioned, might improve nutrition on a limited basis there, but can hardly provide a basis for an attack on capitalist agriculture, can they? So isn’t this movement, though interesting, doomed to play at most a subordinate role in the lives of those who participate, since their economic prospects are primarily shaped by the exploitative, capitalist sector that controls so much of the world’s resources? Aren’t they destined to remain small, disconnected, and relatively powerless vis-à-vis the interests that constitute the top of the iceberg?
George F. DeMartino and Ilene Grabel: This is the most frequent critique applied to the diverse economies project as a whole, and to individual initiatives. Each initiative can seem so paltry and fragile in the context of the massive constraints they face. And we have no compelling, knock-down argument to respond to the skepticism. Instead, we draw on scholar-practitioners who have confronted these kinds of questions in other contexts. One is the agronomist-farmer-essayist-environmentalist Wendell Berry. The object of his life-long concern was ecological destruction on a planetary scale resulting not least from unsustainable practices of capitalist agribusiness. He worked to discover sustainable, ecologically responsible practices on his own small farm, and to help other farmers make the transition to responsible stewardship. So he knew something about the problem of scale. His response warrants consideration by those looking to revolutionize the economy. In “The Way of Ignorance” (p. 62) we find this wisdom. “I have no large solution to offer,” he writes. “There is, as maybe we all have noticed, a conspicuous shortage of large-scale corrections for problems that have large-scale causes. Our damage to watersheds and ecosystems will have to be corrected one farm, one forest, one acre at a time. The aftermath of a bombing has to be dealt with one corpse, one wound at a time.” Berry cited wisdom he found in Robert Frost: “I bid you to a one-man revolution—It is the only revolution that is coming.” For his part, Hirschman defended the significance of reform “in the small.” For Hirschman, as for Berry, epistemic humility should lead us to see that all our interventions are experiments, with multiple pathways and unknowable outcomes. Much wiser then, to work on small canvases, rather than trying to replace one “ism” with another through any sort of shock therapy that aspired to large-scale, wall-to-wall reform. In this, they echo the wisdom we find in Adam Smith, a great reformer who nonetheless warned against the “man of system” who is “so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it.”
Massive-scale harm, diminutive responses. Disconcerting? The hope is that these experiments generate new insights that can be replicated here, there and everywhere, right now, exploiting the space provided by the crumbling of the neoliberal vision and the absence of the next new “ism” to replace it. Grabel has referred to this moment as one of “productive incoherence” owing to the intellectual and practical space it has provided for economic experimentation. The diverse economies project is ideally suited for the moment, where scholars and activists are pursuing unscripted initiatives that just might make a difference in the lives of working people, their families, and communities.
C.J. Polychroniou is a political scientist/political economist, author, and journalist who has taught and worked in numerous universities and research centers in Europe and the United States. Currently, his main research interests are in U.S. politics and the political economy of the United States, European economic integration, globalization, climate change and environmental economics, and the deconstruction of neoliberalism’s politico-economic project. He is a columnist for Global Policy Journal and a regular contributor to Truthout as well as a member of Truthout’s Public Intellectual Project. He has published scores of books and over one thousand articles which have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into a multitude of different languages, including Arabic, Chinese, Croatian, Dutch, French, German, Greek, Italian, Japanese, Portuguese, Russian, Spanish, and Turkish. His latest books are Optimism Over Despair: Noam Chomsky On Capitalism, Empire, and Social Change (2017); Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (with Noam Chomsky and Robert Pollin as primary authors, 2020); The Precipice: Neoliberalism, the Pandemic, and the Urgent Need for Radical Change (an anthology of interviews with Noam Chomsky, 2021); and Economics and the Left: Interviews with Progressive Economists (2021).
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