Ending the dictatorship of the private sector

LLB interviewed economist Harry Shutt. His recently published book The Trouble with Capitalism looks at the problems of privatisation and ownership. Oxford-trained Shutt acts as an adviser to overseas governments.

Your book concludes that "the maximisation of profit must cease to be the basis for allocating resources." Given that's the rationale of the entire system, that's a very fundamental transformation. How would you respond to charges of being utopian?

The piling up of useless profits at the cost of the dignity and lives of hundreds of millions round the world is as irrational as the human sacrifice once practised by the ancient Carthaginians. The question is, when should we expect reason to prevail and unreasoning destruction be stopped? Given probable financial collapse on an unprecedented scale, it is not fanciful to think the moment is at hand when people will say there must be a better way. There is already widespread questioning of the primacy of profit maximisation; advocates of 'stakeholding', for example, recognise it is not enough but refuse to grasp the nettle that other, conflicting interest groups -- consumers, employees, taxpayers -- can only be meaningfully balanced against shareholders if their rights are given legal status.

You suggest that recent governments are all too aware of the problems inherent in privatisation; so why is New Labour pressing ahead with it?

For the last 25 years the dilemma facing any mainstream party of the left in the western world has been whether to humour the voracious demands of capital or to challenge the whole basis of the system. While there was any hope that economic conditions might spontaneously improve there has never been any question of opting for the latter, especially as the 'old left' has never managed to advance beyond the failed prescriptions of the Keynesians. Given this basic stance in favour of the status quo, it was inevitable that Labour (new or old) should increasingly adopt the agenda of big business, especially given the corruption of the democratic process.

You call for collective ownership of key resources. How would you see this differing from post-war nationalisation? How can we make financial institutions more accountable, so that ordinary people can exert control over resource allocation priorities?

Meaningful performance targets and incentives are both essential and compatible with collective ownership. Quite how tight such targets should be will depend on what view is taken in future of the relationship between work and income -- ie. to what extent people need to be in 'employment'(and for how long) to qualify them for receiving an acceptable income. If it is accepted that there must be limits to growth and limits to competition, the whole question of the nature of work and the distribution of income must be seen in a different light. Since the debate on these issues cannot even begin under a regime dominated by laissez-faire capitalist ideology it is impossible to anticipate how it will ultimately evolve.

The question of enterprise accountability is inseparable from that of democratic accountability. It could function in a number of ways. I would favour maximum decentralisation of control over resource allocation and enterprise strategy that is compatible with stable national, regional and global markets.

In your chapter on the essential features of a sustainable world order, you advocate a 'new globalism'. Can you explain this idea?

Global interdependence is an unavoidable reality, and current distribution of wealth and income between nation states is intolerably skewed. Hence any attempt to stabilise output and incomes at sustainable levels based on the present pattern of international distribution would be unacceptable. Nor, given the limited scope for competition in future, would the more deprived countries or regions be allowed unrestricted access to the markets of the richer ones. So patterns of investment, trade flows and ultimately income levels must increasingly be determined on the basis of co-operation and inter-governmental agreement, with transfer payments from rich to poor areas being a permanent necessity (as now within most nation states and within regional groupings such as the EU). Yet if this is to be a tolerable relationship -- based on equality and dignity rather than paternalism and imperialism -- it must permit an increasing influence on the part of different nations over each other's policies, expressed through genuinely democratic channels. Ultimately this must imply progressively greater integration -- such as the EU has espoused but without advance limitation to any continent or region.

Is there anything you would add about the major upsets in the international economy since you wrote the book?

The most obvious development has been the Asian crisis, which validates the scepticism expressed in the book over the hyping of 'emerging' markets. Likewise, the absurd and self-contradictory attempts by the western establishment to suggest that the crisis resulted from 'crony capitalism' (which they've effectively encouraged), rather than from the destabilising effects of speculative capital flows from the west. The same applies to the deepening crisis in the former USSR. A new twist has emerged here in the scheme (reportedly devised by Goldman Sachs) to get Russia and Ukraine to issue local currency bonds -- or 'treasury bills' -- carrying very high interest rates to compensate for the supposed risk of devaluation. Western speculators and eastern Mafiosi will make huge profits at the expense of western taxpayers and of the increasingly destitute local population, while at the same time reducing still further the prospects of economic recovery. Since it must be obvious to all involved that this can only end in disaster it indicates truly terrifying irresponsibility at the highest level.

The Trouble with Capitalism, Zed Books, £14.95.

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