 In this last section of the course, we'll consider economic alternatives to address the problems of contemporary capitalism that we have been considering in this class. It must be stated that capitalism has brought significant benefits. A high average living standard in the U.S. and other developed capitalist countries, significant freedom of choice, individual political rights, and the democratic form of government that historically arose along with capitalism. And that's not an accident. At the same time, capitalism has brought a whole list of problems. Unemployment, sometimes very high and persistent. Declining pay for long periods of time, at least in some periods, such as today. Periodic recessions of the business cycle. The problem of imperialism and the militarism that goes along with it. The high degree of inequality where severe poverty exists alongside great wealth. Environmental destruction, which today threatens the survival of our civilization due to global climate change. Pervasive economic insecurity. People never know whether, even if they're okay today, they'll be okay tomorrow. And limits on democracy due to capitalist control of the media and government. The difficulty is that the very mechanisms of capitalism that have brought the economic advances also bring us the problems. The profit motive and accumulation drive resulting from competition lie behind both the benefits and the costs. Markets as the coordinating mechanism, the same. The predominant power in the economy and government held by owners of large corporations and banks. So what alternatives are there that might continue to bring economic benefits while avoiding the problems that we have seen? I'll consider two possible types of solutions. First, a reform of capitalism that is typically called social democratic reform. And second, I'll consider the possible replacement of capitalism by an alternative system of socialism. What do I mean by social democratic reform of capitalism? Here are some policies and institutions. First, the government would act as employer of last resort, meaning any worker who could not find employment in the private sector would be hired by the government on some socially necessary job. Aimed at eliminating unemployment. Second, raising the minimum wage to a living wage where a living wage means enough to support people at a decent living standard. Third, changes in the labor laws to guarantee workers' right to form a union. Surveys show that a sizable majority of American workers would like to belong to a union, but less than 10% are able to. Fourth, make the banks public institutions based on the argument that the profit motive does not work well in banking. If they're free to follow their profit motive, they do counterproductive and destabilizing activities. Fifth, give up the attempt by the United States government to run the world and instead aim for a cooperative world in which states large and small cooperate with each other. Six, free, that is publicly financed higher education. Seventh, publicly financed healthcare for all. Eighth, the social security pension should be raised to do more than prevent extreme poverty in retirement, instead to assure everyone a dignified retirement. Ninth, progressive income taxes on both labor and property income to pay for these programs. Tenth, transition to an environmentally sustainable economy by a big policy of public investment in green technologies, green energy. Eleventh, a new system of international trade and capital movements to regulate them in ways that will prevent driving down of wages from the pressure of competition among workers around the world. Seventh, public financing of mass media and elections to make the system more democratic. There are obstacles to such reforms. Can capitalism function at full employment in the long run given the bargaining power that workers have at full employment? Can environmental sustainability be achieved with the capitalist economy and its profit and accumulation drive? Could such reforms be enacted despite the opposition of the capitalist class who are wealthy and powerful? The other possible alternative is that of not the reform of capitalism, but its replacement by an alternative system of democratic socialism. The basic features of a democratic social system would be first, the enterprises would be owned not by private owners, but in various social forms by the federal government, state and local governments, worker ownership, consumer cooperatives. Second, production would be aimed not for profit, but to produce things that people want and need, called production for use. Third, resource allocation, that is the decisions about what to produce, how to produce it and who gets what, would be made through economic planning rather than market forces. And fourth, a democratic state that guarantees individual rights and liberties. The previously existing socialist systems in the USSR, China, Cuba, which I've dubbed state socialism, had some economic achievements, but they also had major flaws. Political and economic power were not held by the people in those systems, but by a small, self-perpetuating elite. There was an absence of individual rights and liberties. Economic planning was highly centralized and top-down with all the key decisions made by a small number of people. Democratic socialism would be based on what is called participatory planning. Economic planning would be done not by a few top political figures, but by public boards that represented workers, consumers and members of the community. Resource allocation decisions would be made through negotiation and compromise among the affected parties. This could be made relatively efficient by the advances in data processing and communications technologies. Supporters of this kind of change cite a number of advantages of a democratic socialist system. Full employment, a low degree of income inequality, not complete equality, but relatively low degree of income inequality, just enough to make sure people are willing to do the less desirable jobs. Material needs of everyone would be met. Such a system would not require endless economic growth. It could be environmentally sustainable. Such a system would not have capitalism's profit-driven drive to dominate other countries. It would make more genuinely democratic society possible without a wealthy class, without size political power. Supporters argue it could achieve fuller democracy in the government and a democratic economy. On the other hand, there are strong critics of socialism, even the democratic form, that argue that economic planning cannot be done efficiently. They argue that a socialist economy would lack effective work incentives. That a socialist economy would lack the innovation drive of capitalist competition and profit seeking. That it would concentrate too much power in the government, restricting individual freedom. And critics often argue that private property is the only way to guarantee individual independence. Two very different views. What kind of future will we actually see? I believe there are four possibilities. A continuing neoliberal form of capitalism, which will bring endless and growing stagnation and disorder. Second, we may see an authoritarian right-wing nationalist form of capitalism that could represent a new social structure of accumulation. But it would have big problems for ordinary people and would be likely to produce growing global conflicts. Third, a social democratic reform of capitalism, which I believe is possible in this period. And fourth, a shift to democratic socialism, not likely in the short run, but a possibility in the future. The farther away future. What direction will actually result will depend on the actions of groups and classes in the coming years. Thank you.