Capitalism Without Capitalists

March 23rd, 2011  |  Published in Political Economy, Politics, Socialism, Work  |  7 Comments

One thing that has long bothered me about many socialist and Marxist critiques of capitalism is that they presume that a system based on the accumulation of *capital* presupposes the existence of *capitalists*–that is, a specific group of people who earn their income from investment, rather than by working for wages. It is totally possible to imagine a system in which profit-making private enterprise still exists, the economy is based on profit-seeking and constant growth, and in which the entire population works as wage-laborers for most of their lives. I always figured the most likely candidate for such an arrangement was some kind of [pension fund socialism]( But today, Matt Yglesias gives [another similar path]( He’s discussing something from Felix Salmon about how the rich increasingly have access to lots of investment opportunities that are closed off to ordinary investors, and he says:

> [T]he right thing to do is to just directly think about the issue of how best to ensure that everyone obtains the financial benefits of equity investments. And the answer, I think, is sovereign wealth funds. That’s how they do it in Singapore and conceptually it’s the right way to do it. An American version of Singapore’s Central Provident Fund would be much too large for any market to absorb, but the US share of world GDP should shrink over time and it’s conceivable that there would be some way to work this out on the state level to create smaller units. A fund like that would render the public listing issue irrelevant, since it would clearly have the scale to get in on the private equity game. This would, needless to say, entail injecting a hefty element of socialism into American public policy but I’m always hearing from smart conservatives how much they admire Singapore.

This points in the direction of an ideal type of society in which all businesses are owned by sovereign wealth funds of this type, which are used to pay for public services. So everyone works at a job for a wage or salary, and contributes some of their paycheck to one of these funds, just as they now contribute to pension funds. The returns from the funds are then used to pay for things like retirement, health care, education, and so on. Yglesias jokingly refers to this as “socialism”. And by certain classic definitions, it is: the capitalist class has been abolished, and the workers now own the means of production (through their sovereign wealth funds).

But in many other ways, of course, this is not how socialism was traditionally conceived. In particular, you would still have profit-seeking companies competing with each other, and they would still be subject to the same kind of discipline they are now–the shareholders, which is to say the sovereign wealth funds, would demand the highest possible return on their investment. So at best, this is a kind of [market socialism]( But while there are people who take on the task of the capitalist–the employees of the sovereign wealth funds–they don’t make up a *capitalist class*, because they aren’t investing for their own personal profit. Indeed, we’ve already moved a long way in this direction, which is why Peter Drucker was [talking about pension fund socialism](–american_style/) in 1972.

Of course, we do still have actual capitalists, and getting rid of them would be a long and difficult process. But the important point about capitalism without capitalists is that in many ways it isn’t any better than capitalism *with* capitalists. You still have to sell your labor power and submit to a boss in order to survive, so alienation persists. Since firms are still competing to deliver the highest returns to their shareholders, there will still be pressure to exploit employees more intensely and to prevent them from organizing for their rights. Exploitation goes on as before, and it will be all the more robust insofar as it is now a kind of collective self-exploitation. And on top of all of this, the system will still be prone to the booms and busts and problems of overaccumulation that occur in today’s capitalism. It was, after all, public and union pension funds that [bought many of the toxic mortgage-backed securities]( during the housing bubble.

All of this is why it is analytically important to separate the conceptual framework of *capital and wage labor* from the concept of *capitalists and workers*. In the system I’ve just described, capital and wage labor still exist, and still define how the economy works. But now each person is simultaneously a capitalist and a worker, in some degree or for some part of their life. Thinking through the inadequacy of such an arrangement is, for me, a more accessible way of thinking through the arguments of people like [André Gorz]( and [Moishe Postone]( They argued that the point isn’t to get rid of the capitalist class and have the workers take over: the point is to get rid of capital and wage labor.