The last twenty years have seen a boom of unprecedented size in the capitalist world. Never before has capitalism grown so fast for so long. This boom has been accompanied by far reaching institutional changes. Big business is becoming increasingly rational and calculating. It is beginning to plan far into the future—for five, ten or twenty years. State intervention by means of taxation, subsidies, or forecasting is now common throughout the advanced capitalist world. These changes have thrown the Left into intellectual, if not organizational, disarray. Many who had identified socialism with full employment and planning are confused. We have full employment. We have planning of a kind. Yet we do not seem to be any nearer to socialism. It is, therefore, important that the role of the State in the modern capitalist economy and the nature of capitalist prosperity should be understood. Yet apart from a small number of writers who inhabit a marxist underworld, comparatively few attempts have been made to do this.
The publication of Andrew Shonfield’s Modern Capitalism is, therefore, to be welcomedfootnote1. It is one of the few books by a ‘respectable’ writer which recognizes the interrelationship of political, economic, and social changes at the present time. Much of the book parallels, with rather less perception, the discussion which has been taking place among continental marxists. Whether or not the author has borrowed from their work on neocapitalism—probably not—or whether the two are independent responses to facts which are daily becoming more obvious is unimportant. The point is that Shonfield’s book makes it respectable to discuss political economy—a subject which has, for so long, existed only on the fringes of intellectual life in this country.
Although Modern Capitalism is more a collection of essays on political economy, with a common theme, than a coherent thesis Shonfield’s position is roughly as follows:
The postwar period has seen an unprecedented boom in Western Europe. Economic growth has been almost uninterrupted, especially in Europe, and has been as fast or even faster than ever before. This has not been achieved by depressing the living standards of the masses but has, on the contrary, been accompanied by a widespread diffusion of the benefits of growth throughout the population. Some of the causes of the boom are transient: postwar reconstruction, housing. Others are more permanent: the growth of international trade and specialization, the full employment policies of modern capitalist governments, the high rate of technological progress, and planning both at the firm and the national level. The boom can, therefore, be expected to last indefinitely.
Rapid growth, technological change, the increasing size and vulnerability of investment, make coherent planning by firms a necessity, and will make national planning inevitable. This planning has its dangers. If a corporatist solution is adopted, where trade unions and employers do a deal behind closed doors the ‘public’ interest may suffer. More to the point, corporatist solutions give weight to the backward firms and obstructive trade unions which may impede efficiency. Instead planning should be a cooperative venture between a ‘wheeling and dealing’ state and the more progressive employers and trade unionists. The state bureaucracy must inevitably play an important part in this. It will have to be more active than in the past. ‘Active’ government, however, represents a threat to the freedom of the individual. So some method of protection for the individual against arbitrary administrative decisions has to be devised. ‘Government in a goldfish bowl’ where all government decisions are to be subject to public scrutiny together with an ombudsman with the power to reverse a wide range of administrative decisions would go a long way towards preventing this abuse of public power. A second problem is the control of the planners. Unless the relationship between the state and private interest groups is open there is a danger of a secret deal