On Growth

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21. Ernest Mandel

Born in Belgium in 1923, Ernest Mandel is one of Europe's outstanding Marxist economists. In his recently published book Decline of the Dollar, a Marxist View of the Monetary Crisis, Monad Press (New York, 1972), he analyzes the deepening crisis of the international monetary system.
Mandel studied in Brussels, Paris and Berlin. He obtained a Ph.D. in philosophy at the Free University of Berlin. He teaches at the Free University of Brussels. He is also a member of the United Secretariat of the Troskyist Fourth International.

What is your impression of Limits to Growth?

An impression of satisfaction and an impression of irritation. Satisfaction because these gentlemen, who have nothing to do with Marxism¹ and come from a bourgeois background, have now discovered with a hundred and twenty-five years' delay - compared to Marx² - that anarchic, unplanned, unconscious, runaway growth can threaten not only the foundation of material wealth but the very physical conditions for the survival of human civilization. It can threaten not only the conditions for the survival of human civilization but even the physical conditions for the survival of the human race. Marx understood this from practically the beginning of his theoretical analysis; as a young man he already wrote that capitalism threatened to transform forces of production into forces of destruction. One of the most striking passages in Volume I of Capital, his main book, is that the development of capitalism constantly undermines and threatens to destroy the two springs of wealth: human labor and nature. We now see that capitalist economists and academic scientists end up by understanding this, too. That is a reason for satisfaction.

The reason for irritation is that they still have not understood the basic mechanism which leads to these results. Therefore, the conclusions which they draw from their analysis, the solutions which they propose, are partially inadequate and partially worse than the ills they try to cure. What is the fundamental reason for this destructive potential of capitalist

1 The doctrine that the state throughout history has been a device for the exploitation of the masses by a dominant class, that class struggle has been the main agency of historical change, and that the capitalist state contained from the beginning the seeds of its own destruction and will inevitably, after a transitional period known as the dictatorship of the proletariat, be superseded by a socialist order and a classless society.

2 Karl Marx (1818-83), German founder of modern socialism and communism.

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economic growth? It is the contradiction between partial economic rationality and global socioeconomic irrationality, embedded in the generalized market economy, which is the basis of the capitalist system.

What is rational from a capitalist point of view? Everything which increases profit of independent firms. There is of course an element of rationality in this mechanism. It would be foolish to deny that it enables firms to combine economic resources in a way which makes possible to measure costs and global results, but global only from the point of view of the firm in question. Why is this only partial economic rationality? Because any firm which wants to reduce costs or maximize profit or maximize growth can do so only by combining and comparing inputs and outputs with the measuring rod of money. Anything which has no money-price or which does not produce a monetary reward is therefore, by definition, eliminated from the analysis.

This eliminates ‘free goods’ and human values, air, water, beauty, landscapes, solidarity, realization or mutilation of individual talent, etc., from any ‘cost-benefit’ comparison because all of them have no price. Therefore, they can not be measured in terms of costs. On the other hand, an increasing number of costs under modern capitalism become socialized. Firms do not pay for them because the community pays for them. Sickness, consequences of certain working or living conditions, education, preconditions for certain types of work, unemployment created by layoffs - society pays most of all of these costs, not the employer.

Therefore, from the employer's point of view, it is perfectly rational to take decisions which lead to increased waste of free goods and human values to an increase in social costs. From a global social point of view, it is of course irrational ‘to save,’ for instance, one million dollars by laying off workers, if this layoff costs society two million dollars without counting human misery. But from the point of view of the individual firm, it is perfectly rational.

At the basis of this contradiction between partial economic rationality and global social-economic irrationality lies the question of human goals: What is the ultimate goal of economic activity? Marxists feel the answer to be obvious: The goal of economic activity should be to increase human happiness, to bring the maximum amount of happiness to the maximum amount of people, to enable as harmonious as possible a development of human capacities in all individuals.

But capitalist economists and all the institutions of Western society immediately put up a real stop signal and shout: No, no, no. Happiness, human development, personality, this is not measurable, this you cannot quantify. On the contrary we are able to spell out a lot of abstractions

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and arbitrary abstractions as income in figures. That income you can quantify. Profit you can quantify. Resources measurable in money-prices you can quantify. So you have to say: The goal of economic activity is to maximize income, irrespective and independent of consequences on happiness or unhappiness, on development or mutilation of human talents.

There you are at the bottom of what is wrong with capitalism, and of the reasons why capitalist economic growth threatens human survival. With the present scientific and technological potential of mankind, it just becomes absurd and irrational to continue to measure the resources of mankind only with the goal of maximizing income, especially maximizing income of those who control the economic system, i.e., maximizing profits.

That's what Heinrich Böll³ recently said when he asked himself the question, What kind and how many kinds of violence are hidden in and behind a profit society? Here you are. Violence, which profit society encourages - that's exactly what you discuss here.

The word violence would be too limited. It is the sum total of all injustice, compulsion, frustration, inequality, waste of all the bad, unsocial, inhuman, immoral results of a society based on competition, on the individual's struggle for life - which are the basic ills which cause in the last analysis the tremendous waste of resources, human and material resources, revealed today by the ecological crisis.

Mr. Mansholt⁴ asked at a meeting of Dutch union for young workers (twenty to twenty-six years) whether they were prepared to share the wealth of this part of the world with the Third World. They replied, ‘We are, but not as long as this capitalist system prevails.’ Mansholt then was asked why he was still working at the top of the system. He replied, ‘That's the only way I can do something, from within.’

I don't agree. I don't agree because I think that the irrationality of this system is so big, so monstrous and so all-encompassing that you cannot change it from within. When you try to reform that system from inside, the only thing in which you will succeed is substituting new contradictions, new forms of waste, new forms of injustice for others. I'll just give you just one example: The big ecological crisis has created much discussion among economists. One suggestion made by apologists of the capitalist system is the following one: As many of these wrong decisions,

3 German novelist and writer, Nobel Prize winner in 1972.

4 See conversation no. 20.

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on technology and on investments, which have led to the ecological crisis, are caused by free goods, well, let us eliminate free goods. If air will have a price, if water will have a price, well then, the waste of these resources will be eliminated.

You see the monstrous consequences. We will have to pay a price even to be able to breathe, while the expectation that this will solve the pollution problem is not even true. Because under the present economic conditions, the power of the big monopolies is such that they can transfer any of the additional costs which would be imposed on them for air pollution onto the consumers. It would be the mass of the people who would finally pay for their wrong decisions. This would not eliminate these wrong decisions.

You recently debated with Mansholt. What do you think of him?

He does the best he can, as a social-democrat, a liberal reformer. He is a nice person. I prefer him, of course, to conservatives, to reactionaries or to fascists. It's a ‘lesser evil’ for society and for the working class movement to be administered by such persons than by reactionaries, but they cannot solve anything.

The balance-sheet of his agricultural policy in the Common Market is a strong confirmation to what I said. The global irrationality of the economic system in which we live can be clearly expressed by this terrible thing which happened in agriculture in the last seven, eight years - because we were forced to continue to act within a market economy, to calculate in monetary prices, monetary incomes and monetary investments.

First, we had a campaign to destroy butter, because there was allegedly too much butter - two hundred and fifty thousand tons unsalable butter in the Common Market. Then came a campaign to kill a quarter of a million cows, because there were allegedly too many cows, which produced too much butter. This was already an obscenity in a world where there is so much hunger that you destroy food in the Northern hemisphere on the pretext that there is locally too much to be sold with a profit. But after a few years these wise administrators made a shocking and unforeseen discovery: If you have less cows, you'll have less calves; and if you have less calves, you will have less meat. Now they have discovered that there is a deficit of one million tons of meat (beef and veal) in Western Europe and beef prices jump up and up. Wouldn't it have been a thousand times more rational just to measure in physical terms the need for meat and butter consumption of the people in Europe,

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to ensure to the peasants a permanent income independently of price fluctuations; to give away to the ‘Third World’ any part of the production which could not be consumed by people here? Even from a purely economic point of view, this solution would have implied less waste than the cyclical repetition of overproduction and underproduction, collapsing prices and skyrocketing prices, which Mr. Mansholt introduced into the Common Market over the past years. Not because he wanted it, but because he was forced to do so as an administrator of this capitalist market economy.

Herbert Marcuse⁵ cites you in regard to the question of workers and the permanent revolution.⁶ In what way can workers in this part of the world influence a more rational social engineering of our society?

Everything depends in last analysis on the working class. The working class is the only class in a society which could organize society in a fundamentally different way from the way it is organized today. I say could. I don't say necessarily will. Otherwise I wouldn't be in the revolutionary movement which I am in: I believe that workers have to be educated, organized, helped along on that road. They are the sole force which has the material and social potential to reorganize production and consumption on a radically different basis from the one in which it is organized in the market economy - a basis which Marx called that of associated producers.

The mass of the producers and the consumers of society should decide in advance, consciously, deliberately, democratically and in a well-informed way, what are the priorities for which the economic resources should be used and the way in which they should be combined. This would eliminate ninety-five percent of all those processes which have led to the ecological crisis. Only through such an economy, a socialist planned economy on a democratic basis of self-management, one can basically do away with anarchistic, cancerous growth, and replace it by what I would call planned domesticated growth, a growth which has been put under the control of mankind, on the basis of a certain number of priority goals of mankind.

Is the expansion of technology the principal cause of the present crisis in environment or the dangerous situation on the planet?

No, I don't think so. Technology has been a tremendous help to man-

5 See conversation no. 48.

6 Ernest Mandel, ‘Workers and Permanent Revolution,’ Counterrevolution and Revolt, Beacon Press (Boston, 1972), p. 6.

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kind to make life easier and to make possible a socialist society, a society of equals, and of free human beings. What was wrong with technology was its diversion in an irrational way because of private-profit interests. I would say there has been an increase in the destructive consequences of technology essentially during the last thirty, forty years, and this has happened only as the result of a few - what now obviously appear to be irrational - developments in technology. It is wrong to say that all development of technology increases dangers to the environment.

You seem to reason along the line of Barry Commoner.⁷

Yes, I think Commoner and a few other ecologists have made a great contribution to a better understanding of this problem, and are getting away from what I would call mystical and irrational formulas. Everything started with the irresponsible uses of technology - uses of technology not linked to correct calculations or evaluations of human welfare, but irresponsibly subordinated only to a certain number of powerful private interests. I will give two examples:

One is the development of the automobile. There were many different forms of automobiles possible. The specific form which has been chosen could have been developed in such a way as not to create all the pollution which we have known. It was developed in an irresponsible way as the result of decisions taken by key monopolies in the USA, powerfully supported by the government.

A second example is the example, which Commoner gives, of the substitution of detergents for soap. This concerns the development of the chemical industry in the last thirty years. Here the Marxist economist joins hands with the biologists or ecologists. Commoner states that the chemical industry has created a real ecological nightmare, with its flow of ‘new products’ currently introduced before their long-term effects on the environment can be measured.

The Marxist economist explains why. The main form of monopolistic surplus profits which we have today is technological rents, technological surplus profits. One has to throw constantly new products on the market in order to enjoy such surplus profits. The time during which you enjoy them is limited. These profits generally do not last more than five or six years. Commoner explains that it takes more than six years to study the consequences of the new products for the environment. There you have in a nutshell the relationship between the nature of capitalism, the drive for profit, and the ecological crisis.

7 See conversation no. 26.

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How do you view the next twenty years for man?

I think the end of the twentieth century will be decisive for the history of mankind. We are now faced - for several decades already - with this big choice which the classical Marxists incorporated in the formula: socialism or barbarism. In the past this was supposed to be a propaganda formula. We have witnessed the Second World War. We have witnessed Auschwitz.⁸ We have witnessed Hiroshima.⁹ We live under the nuclear-cloud threat. We now live, too, under the threat of ecologic catastrophe, which the Meadows report brought correctly to the consciousness of people, irrespective of the fact whether the calculations are correct, whether they are too pessimistic. We thoroughly understand that this dilemma, socialism or barbarism, has become very concrete. The outcome will be decided probably before the end of this century.

Mankind can no longer afford the luxury of free enterprise on a worldwide scale, that's to say the free, irresponsible use of material resources. A worldwide planned socialist economy has to replace it. This must be introduced under conditions of increased democracy and increased freedom for the individual. That is my conviction. It has to be done under these circumstances, because there is no mastermind, no ‘organization team’ and no computer which can dictate to three billion human beings what they have to do. You can only solve this problem if you place them under such conditions that they discuss and decide among themselves on what rational things should be done. First, what are the key priorities and how hard you accept to work to realize them. Any decision imposed by compulsion will collapse.

8 Nazi concentration camp.

9 First use of nuclear bomb in history over Japan by the United States (August 15, 1945).