Greece’s proposed end run around capitalism looks pretty capitalist to me: MacDonald

Chris MacDonald 0

  BIG LOSER  Greek taxpayer                              They say virtue is its own reward. That may not be enough to console the unknown but presumably small number of Greeks who reliably pay all the taxes they owe. Over the past several years, their government raised the value-added tax and imposed numerous new fees in desperate attempts to address serious fiscal shortfalls that have brought the country to the brink of ruin. Meanwhile, the authorities slashed wages, pensions and benefits. Such is the lot of honest Greeks: to pay ever more while receiving ever less in return.   Fellow countrymen regard them as suckers. A culture of tax evasion (and, more broadly, corruption) has flourished since the fall of Greece’s military dictatorship in 1974. Successive pro-elite regimes consistently vowed to crack down on it, then consistently made no efforts to follow through. The underground (and thus untaxed) economy is widely believed to be far more extensive than in other European countries, accounting for as much as 30% of all economic activity. In addition, the OECD estimates about 10% of Greek GDP is lost to evasion—particularly rife in construction and tourism—much of it through aggressive use of offshore tax havens.   There are few reasons to pay: the tax code is replete with exceptions, collectors are easily bribed, and courts are choked with a huge tax-case backlog. Now, there are signs that previously compliant taxpayers are sufficiently fed up that they’re refusing to pay their share in protest. Add that to the long list of reasons why Greece is heading down the toilet.

A fascinating piece appeared recently in the New York Times about efforts in Greece to (re)vitalize the so-called “social” economy. The main feature of the movement, as described in the story, is an attempt to eliminate or at least minimize the role of middlemen by reconnecting producers and consumers. “The movement seeks to cut out wholesalers, shop managers, state bureaucrats or anyone else between producers and consumers who once took a share of profits and added to the costs of goods.” Oddly, the piece characterizes this movement as an “attack” on “modern profit-driven capitalism.” Odd, because as far as I can tell the Greek movement still involves private ownership of the means of production, freedom of contract and the determination of economic activity by the forces of supply and demand. It is innovation within a capitalist system, something that strikes me as not just capitalist, but an example of capitalism at its vibrant and innovative best.

The notion of casting this Greek movement as “anti-capitalist” is reminiscent of a big theme in the 2006 documentary The Take, which was directed by Avi Lewis and written by Naomi Klein. The Take is about a group of workers at an Argentinian auto-parts factory who, rather than accept unemployment when the factory’s owner shuts it down, instead decide to occupy the factory, re-start the machines, and run it themselves. Lewis and Klein—no friends of global capitalism—portray the workers as revolutionaries, sticking it to the Man by doing an end-run around the evils of modern business. But of course, when the machines are restarted by the workers’ co-operative, the inputs are still being bought on the open market, and the products that result are still being sold to the highest bidder and so on. All that’s really different after the workers’ little coup is the management structure. But even that is not all that innovative. Plenty of solid members of the modern business community are already worker co-operatives.

The problem in both cases lies in seeing capitalism as embodied in a particular narrow set of practices, or in the behaviour of a handful of monolithic multinational corporations. So thinking of a particular shift within the system as “anti-capitalist” makes about as much sense as thinking that the discrediting of a particular scientist or the fall of a particular scientific theory amounts to the downfall of science, as a whole.

Both the Greek anti-middleman movement and the Argentinian factory workers provide interesting examples of the ingenuity and passion with which people respond to hardship and injustice. But they are are off-target as examples of critiques of capitalism. To think that these are somehow examples of alternatives to capitalism just demonstrates a misunderstanding of what capitalism is. It’s like arguing against “corporate personhood” or claiming that Barack Obama is a “socialist”: all you’re doing is demonstrating to the world that you don’t know what the words you’re using really mean.

Chris MacDonald is director of the Jim Pattison Ethical Leadership Education and Research Program at the Ted Rogers School of Management.

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