Phil Mullan, Creative Destruction: How to Start an Economic Renaissance, Bristol, UK and Chicago: Policy Press, 2017.
by Barry Curtis
Phil Mullan, business manager and chief economist at the magazine spiked-online, is, by his own admission, ‘obsessed with economic growth.’ This goal, alongside others, is precious to many people. Mullan makes his case that we are currently living through a ‘Long Depression’ that began with the economic downturn in the 1970s. The rate of expansion of Gross Domestic Product in Western nations has shrunk in relation to the levels of the post-war boom. Consequently, rises in living standards, which Mullan the humanist cares about, are held back. Appearances of dynamism in things like the stock market are essentially parasitic upon the real, productive economy where value is created. If that is seizing up, then finance is just another bubble like the dot-com bubble waiting to burst. Another Crash like 2008 is imminent in the context of the persisting Long Depression. The escape from the protracted depression, says Mullan, lies in increasing productivity, for which it is essential to demolish zombification trends.
Mullan deploys Karl Marx’s theory of why the rate of profit falls in capitalism to explain the end of the post-war boom and subsequent post-recovery downturns in the business cycle since then. In Mullan’s words:
The profit arising from the new value created by labour in the production process tends to decline relative to the rising amounts of capital invested in fixed assets and materials. This means that the profit rate measured over all capital deployed––in employing people as well as in fixed assets and other inputs––will also tend to decline. This tendency of the general rate of profit to fall follows as a direct consequence of the development of the social productivity of labour since this is dependent upon increasing amounts of capital investment. [p. 124]
Given that increases in the productivity of labour (henceforth referred to as IPOL) are reliant on a healthy rate of profit, if the rate of profit falls too much, then productivity also stagnates, leading to a general economic malaise. This is what has happened since the 1970s. Mullan (p. 60) says the annual productivity growth rate in Britain is now down to 1.1%, all things considered. This is not exactly an economy that is unleashing the human potential, and it would take almost 70 years at this rate for living standards to double.
IPOL can be an important project to pursue. Sadly, Mullan treats IPOL as the only issue. ‘The capacity to produce more in a shorter period of time is the most fundamental indicator of social progress,’ he says (p. 31). IPOL certainly can increase the mass of commodities in the world; and by cheapening them, it allows the wage to appear to go further in purchasing goods. Furthermore, IPOL makes certain tasks physically easier to perform; for instance, compare the back-breaking farming methods still undertaken in the so-called Third World with the modern machinery deployed in agriculture in the West.
However, IPOL does not, in and of itself, lead to a shortening of the working day, nor does it lead to labour being experienced as more creative and rewarding. Indeed, the reverse is true: labour becomes more rhythmic and routine-like with the worker reduced to an appendage to the machine, unable to use initiative.
The trick with IPOL therefore, is to allow workers full command over its deployment. With workers discussing when and where they want to use the latest machinery, the benefits of IPOL could be realised, and its drawbacks cancelled out. Thus, for example, they may choose to use IPOL in order to leave work an hour earlier, or they may choose to keep productivity unchanged at that moment in order to give their products a more individuated human touch. It is only when it is up to the direct producers whether to use IPOL––that is, when it becomes a matter of conscious control––that IPOL truly indicates social progress. By contrast, under capitalism or any other society in which the direct producers are entangled within hierarchical social relations, IPOL only serves as another weapon in their general oppression. Of course, a society in which IPOL has stalled can also be oppressive in a more lethargic way. But this only shows that IPOL should not be our focus of concern. Instead, the terrain of the social relations that underpin the system is the issue.
Whilst capitalism is crisis-prone, this doesn’t mean it collapses of its own accord. It has counteracting tendencies that automatically activate when production is breaking down. Through these counteracting tendencies, the system destroys some of its value through, for example, writing off assets, and is then able to regrow. One way of conceptualising the crisis was captured in George Orwell’s Animal Farm. There, the animals built a windmill, only for it to be burnt down the next day. Then they rebuilt it but once again it was destroyed, and so on. The process of the accumulation of capital is much like this––it grows up to a certain point, then self-destructs, only to inflate again later, etc. Each post-recovery peak, since the 1970s, is slightly lower than the previous peak. It doesn’t exactly correspond therefore to a society in which the economy is genuinely progressing.
There are other counteracting tendencies in capitalism such as intensifying or extending the working day that effectively increase the surplus in relation to capital investment, or slashing the wage bill which decreases variable capital. It is worth noting that with more women in the workforce now, a family unit conceived as a single entity now works for longer than in the 19th century. Back then, workers scored a victory with the Ten Hours’ Bill, but now, in Britain, a woman and her husband will often be found working 14 hours a day in total, excluding any overtime. Of course, gender equality is an important achievement of the Women’s Liberation movement; my point is only significant for noting that capital has effectively increased the length of the working day.
A counteracting tendency that Mullan finds particularly appealing is that of ‘creative destruction.’ This is when the unprofitable companies go bankrupt and their assets are sold off cheaply (devaluing the constant capital) to a more profitable company who then is able to keep production going, or even elevate it to a higher technological level. The process of creative destruction is a healing, purifying mechanism for capital. By destroying some of the constant component of capital that has overaccumulated, a new round of production is able to get going. So ‘creative destruction’ is what it says: both destructive and creative.
However, Mullan’s originality as an author on the crisis consists in this: he argues that the ‘normal’ processes of creative destruction are being held back by the state. Mullan argues the state is giving too many subsidies to unprofitable companies to keep them afloat, when it should really let them die. The state is propping up a zombie form of capitalism, says Mullan. If, instead, the unprofitable companies were left to die, then the state could invest its money on driving forward newer production at a higher technological level. Note that Mullan doesn’t think the job can be left to capitalists––because they are too concerned with short-term profit, whereas the high-tech stuff is risky and costly. In the absence of other collectivities in society then, Mullan wants the state to take a commanding role in rejuvenating the economy, and he thinks this will create real progress. He has conceded that this will mean the state borrowing a few extra trillion pounds to fund this progress.
His ideas for progress involve employing the youth (who have suffered higher rates of unemployment since the 2008 Crash) in tasks such as building new aircraft made out of the new compound graphene, which is lighter than the current metals. Furthermore, he wants more investment in driverless cars; quantum technology for, among other things, faster computers; and virtual reality. Production in these areas will create ‘decent jobs,’ he believes. He says people who don’t want to go down this route of a high-tech state capitalism have a ‘loss of belief in progress.’ Whilst he recognises he holds a minority view, he thinks strong leaders will emerge that promote these ideas and ensure they have democratic approval.
Sadly, Mullan’s faith in the market is delusional. Firstly, the level of destruction he is proposing is so high, people are unlikely to go for it. ‘There are no pain-free routes out of the Long Depression. The processes of creative destruction will mean economic ruin, adding to areas already severely affected by deindustrialisation’ (p. 272). Yay, economic ruin! To be fair, Mullan believes that such ruin will just be a short-term part of the transition to a high-tech state capitalist society, and also that the people affected will receive welfare benefits as they learn the new skills required to become a quantum computing scientist. So, we are invited to sing ‘Kum ba yah’ as millions get laid off.
The second criticism concerns Mullan’s notion of ‘decent jobs.’ Is there such a thing? Even if the fellow designing a quantum circuit board experiences this as rewarding because he is deploying a high level of skill, the production of enough quantum computers for the world requires hundreds of thousands more low-paid assemblers on the factory line. They are unlikely to feel particularly rewarded.
The third criticism is that Mullan is only tinkering with one particular counteracting tendency, that of ‘creative destruction.’ If the fundamental social relations of capitalism remain intact, the new high-tech state capitalism will still be crisis-prone. Indeed, with such a high level of constant capital, when the Crash comes, it will be incredibly severe, making 2008 look like a tea party. What’s worse is that, if the employer is the state, all hell could break loose. No matter how much representative democracy you have, you will find the state qua capitalist-in-recession is going to be quite vicious in attacking variable capital when the crisis breaks. Note that Mullan is recommending his model for all the Western economies. So, you have North American, European, Japanese and Australasian state capitalisms all crashing down. I’m sorry, but this is just a recipe for war. Mullan, who argues that the Manhattan project to develop the atom bomb pushed science forward (p. 273), will surely come to regret the recommendations he has made here.
Rather than using the evidence he has gathered as part of a revolutionary critique, Mullan is fixated on making capitalism more efficient. His explanation of this fixation is rather confusing. He says:
There are still some on the radical left who argue for the revolutionary overthrow of capitalism. This had meaning when the working class existed as a political force. But the working class’s demise brought that era of possibilities to an end. The question remains of how the existing system of production can be organised, or transformed, or transcended in such a way as to advance the best interests of humanity. Once we have escaped the Long Depression, the resulting phase of economic expansion would not be forever. Economic growth would at some time hit limits, just as the post-war boom did. Working out how to overcome the limitations of a profit-driven economy is not today’s priority. [pp. 265–66]
But some of us don’t want to live in either zombie capitalism or the 1950s. Mullan’s view of the working class as a finished force is highly misleading. He is reading too much into the data that show declining levels of strike activity. That never was the most important thing. Given that trade unions are highly intertwined with Labourite politics in Britain, and similar outfits elsewhere, declining strike activity can be seen as a positive thing. It shows that workers, in their rejection of both trade unions and the Labour Party, no longer want to go down the route of ‘capitalism with a smiley face.’ Opinion polls show workers’ views are less racist and less sexist than ever before, suggesting humanist advances lurk behind the scenes. This is largely attributable to the hard-fought and increasing role of ethnic minorities and women in the workforce. The long-term trend of capitalism drawing more people into the workforce is a positive universalising aspect. And the more it develops, the closer capitalism nears its end, which never was purely reliant on Labourite forms of class struggle.
Marx’s intentions in the writing of Capital, far from leading to the ossified Soviet Union or growth-obsessed capitalism in the West, are laid bare in the Grundrisse. Because the ideas are complicated, I will quote at length. Bear in mind that Marx is contrasting the character of the general social interconnections in capitalism with those in the future society.
It has been said and may be said that this is precisely the beauty and the greatness of it: this spontaneous interconnection, this material and mental metabolism which is independent of the knowing and willing of individuals, and which presupposes their reciprocal independence and indifference. And, certainly, this objective connection is preferable to the lack of any connection, or to a merely local connection resting on blood ties, or on primeval, natural or master-servant relations. Equally certain is it that individuals cannot gain mastery over their own social interconnections before they have created them. But it is an insipid notion to conceive of this merely objective bond as a spontaneous, natural attribute inherent in individuals and inseparable from their nature (in antithesis to their conscious knowing and willing). This bond is their product. It is a historic product. It belongs to a specific phase of their development. The alien and independent character in which it presently exists vis-à-vis individuals proves only that the latter are still engaged in the creation of the conditions of their social life, and that they have not yet begun, on the basis of these conditions, to live it. It is the bond natural to individuals within specific and limited relations of production. Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself. It is as ridiculous to yearn for a return to that original fullness as it is to believe that with this complete emptiness history has come to a standstill. The bourgeois viewpoint has never advanced beyond this antithesis between itself and this romantic viewpoint, and therefore the latter will accompany it as legitimate antithesis up to its blessed end.
The goal is clear: to have human mastery over our social relations. Rather than conditions of servitude, servility should be transcended, putting everything up for debate. Rather than drowning in the sea of a coercive society, we are to surf the waves over society instead of ‘under’ this or that.
The objective connections between people in capitalism is formed through their interactions in the market, which is an historical, social creation. But rather than society acknowledging that it alone is responsible for the way things are, an aura develops wherein everything appears as natural and therefore unchangeable. This aura occurs because social relations exist in and through things (commodities, etc.), rather than being fluid and subject to human conscious control. Rather than being the topic of ongoing debate and contestation with the possibility of change, our social relations appear ossified and fixed. Thus, the aim of Capital is to lay bare the fundamentally social character of all relations and the economic forms they give rise to, in order that humanity may make a conscious, informed choice whether to continue living within this particular mode of production. If the new society is not the result of a collective informed choice, it wouldn’t be worth having.
Also in this passage, Marx is saying that even social relations mediated by things are preferable to no social relations at all (the life of a hermit). Moreover, capitalistic social relations are developing an increasingly universalising character in an underlying sense, at the same time as they increase alienation, because the mediating role played by commodities interconnects the world more and more at precisely the same time as it estranges the individual from the world. Because of the increasing interconnectedness that flows from the development of the world market, capitalism alone provides the basis for an all-round human liberation if we choose to make the break from it. In previous societies, the world was not interconnected, and so the choice of how we are to live had no material bedrock. Hence, it could only be imagined in ‘ethics,’ whereas now it becomes practically possible to achieve whatever kind of society we want.
One example of the contradiction between the universalising tendency of capitalism and the increasing tendency for the individual to experience acute alienation, which coexist at the same time, is embodied in the controversial topic of workplace ‘codes of conduct’ and in so-called ‘political correctness’ in general. On the one hand, a code of conduct that says you are not allowed to be racist, sexist, homophobic, etc., expresses the fact that a workplace is evolving into a more universalistic place. But on the other hand, workers often resent the code of conduct as an imposition from outside. So, stemming from the alienated form of a mandatory code of conduct to supposedly achieve things that were already underway, people might deliberately take a stance against the values they themselves were developing! The fact that the universalising development is mediated by a totem––the code of conduct––entails that it is simultaneously alienating. If only those involved were conscious of their evolving friendlier workplace by way of such activities as openly discussing it, the code of conduct would not need to exist, and consequently the dissolution of the totemic form would not lead to an alienated response. That would be real social progress.
To return to where we started, Marx’s discovery of why the rate of profit falls was described by him as ‘the most important law,’ because when capitalism breaks down, it means the universalising aspect falls and the alienated side rises, as if these two opposed-yet-united aspects were different sides on a pair of scales. If the interconnectedness of social relations, as mediated by trade, is faltering, then so too alienation comes to the foreground. Thus, it is no accident that, following the most severe Depression in the 1930s, racism grew to such a point that civilization literally collapsed with the Second World War, the gassing of six million Jews, and the dropping of two nuclear bombs on Japan, amid many other terrible crimes committed by all powers in that horrible conflict. The return of xenophobia today, as expressed in post-Brexit anti-migrant sentiment, the rise of far-right parties in Europe, and the election of Donald Trump as U.S. president, follows from system-failure that has undermined the universalising tendencies that emanate when the world market is expanding. With the rising of the alienated side, it should therefore not be surprising that today’s period is partly characterised by a reaction against political correctness. We erected this totem pole, now we smash it down, only to erect a new one with hideous gargoyle features called ‘Make America Great Again.’
Mullan’s vision of a reformed capitalism is essentially a romantic notion, but whereas at least romantics in history were attracted by non-capitalist sentiments, Mullan’s outlook is just the flip-side of the so-called zombies’ perspective. It will accompany the zombies’ notions right up to the blessed end of capitalism. The opportunity for a genuine politics of liberation is stronger now than before, and to truly expand the boundaries of debate, it is necessary to critique both the zombies and Mullanites. Creative Destruction ends with a call to ‘Let the people decide’ (p. 287). But if the book is only presenting us with the choice between zombie capitalism or high-tech state capitalism, that is no choice at all.
Barry Curtis is a philosopher based in the UK.