As China and Russia adopt their own variants, the reign of capitalism seems absolute. Yet there are many who wish for an alternative and some who claim a final crisis is in the making. Is there a radical alternative that we have not yet discovered? Or is the reality that capitalism is the only viable economic system?

Alex Callinicos is a Zimbabwean-born Marxist political theorist. He is Editor of International Socialism and Professor of European Studies at Kings College London, His books include Imperialism and the Global Economy. Here he speaks to the IAI about capitalism, the state of the left, and his proposals for a democratically planned economy.

Tobias Phibbs: Before we begin, how would you define capital and capitalism?

Marx said that the distinctive thing about capitalism is that it is self-expanding. In other words, capitalism represents a situation in which money its able to grow, to be more by the end of a cycle of investment than it was at the beginning. This seems like a mysterious process, but Marx argues that the solution to the problem of capital’s self-expanding quality is the way it is invested in employing workers who create more value than is represented by their wages. This is the key to exploitation under capitalism. Marx is therefore arguing that capitalism is necessarily an exploitative system.

From this perspective capitalism is a social and economic system where capital prevails. This involves exploitation of wage labour, the appropriation of what Marx calls surplus value in the form of profits by the owners of capital. The second feature is competitive accumulation. In other words, the capitalist class is not a unified homogenous collective; they compete with each other, each trying to maximise their share of the surplus value, and this competition puts constant pressure on individual firms to reduce their costs. It compels them to accumulate – in other words, to invest in improving their methods of production. This is the driving force behind both the expansion of human productive powers under capitalism, but also the crises that Marx sees as a necessary feature of capitalism.

TP: And the proposed solution is a democratically planned economy?

Well, that’s my theory. Many people think you can counter the excesses of capitalism through different forms of regulation to eliminate the more obnoxious and destabilising behaviour of capitalism. But the record suggests that this isn’t very realistic. Regulation doesn’t work partly because corporate lobbying limits its effectiveness and partly because the banks and hedge funds and so on have enormous incentives to bypass it. So the solution in my view is a systemic change which would involve replacing capitalism with democratic planning.

TP: It’s worth mentioning that capitalism isn’t quite the anarchic system of free markets that we sometimes imagine it to be. There is already a degree of economic planning: as Ha Joon Chang has shown, the state has always had a role in capitalist innovation. So what would a democratically planned economy look like and what would separate it from experiments in democratic capitalism that already take place?

You’re absolutely right that there are different forms of planning under capitalism, but they tend to be partial and practically organised. Corporations make plans, states make plans, but overall they do it in a hierarchical way that does not involve most people in the decisions that affect their lives.