Fabianism, Syndicalism, and the Guild Movement: Economic Democracy and Labor Rights

AbstractThis article presents the economic dogma that underlies the reform legislation-Blass-Steagell Act-that was meant to regulate and control the American financial system to prevent another Great Depression or serious recession.AcronymsGDP Gross Domestic ProductIntroductionThe Glass-Steagell Act of 1933 regulated Wall Street investment and finance for sixty-nine years. At the time it corrected the excesses of financial institutions which brought on the Great Depression. But the momentum for the current economic disaster started three decades ago when wage earners' incomes in the United States started to flatten out, while costs in housing, transportation, health care, food, and education have risen precipitously in that same time period. Warnings from regulators and politicians such as Brooksley Born, Elizabeth Warren, Russell Feingold and Bernie Sanders were unheeded, specifically when this led to the speculation on "derivatives" and "credit default swaps" which Warren Buffett describes as "financial weapons of mass destruction."1 The devastation was quickly felt by American society and calls for greater economic accountability were heard, but little was done by way of salvaging the middle class and poor. The focus of this research will be to reexamine possible remedies to the dysfunction of the economy by drawing attention to the tradition of radical political economy and the movements of Fabianism, Syndicalism, and Guild Socialism as a check against neoliberalism which was the theoretical basis for the elimination of the Glass-Steagell Act. The rescinding of this law and policy in essence stripped the American economy of regulatory safeguards and ruined the lives of people (Sherman & Sherman, 2012). What is being presented here is a defense of labor rights and the ownership of surplus value created by workers, both industrial and intellectual, along with the common grounding of Marx's "labor theory of value" and Locke's "labor theory of property."Political-Economic ContextThe economic dogma underlying the rescinding of the Glass-Steagell Act has been based on the concept of "neoliberalism," which argues that the maximization of economic growth must be based on "free trade" and "lassiez faire" theory. The indisputable proof of the success of neoliberalism can be identified in total economic output in terms of the Gross Domestic Product (GDP). Thus economic growth, understood in terms of GDP, is the fundamental criterion for assessing the effectiveness and success of markets. Moreover, they argue that economic growth provides a progressive force for the rest of the world in terms of liberation from poverty, sickness, starvation, etc. Furthermore, if recovery from the recent economic disaster is to take place, then the deregulation of markets must be maintained in order for financial institutions to remain competitive and profitable (Schultz, 2010).In contrast, the radical traditions argue that neoliberalism, as it has manifested itself in free and relatively unregulated financial markets, has served the economic wants of elites in the United States and world community. Basic human needs are left to the whims of the market. The result of this strategy has become abundantly clear, the "rich are getting richer and the poor are getting poorer." Thus radical economists argue that market strategies should serve the basic and fundamental needs of people as its first priority focusing on three key issues: (1) the moral and economic limitations on a modern capitalist market economy; (2) the context and rationale for government action in promoting economic justice; and (3) the importance of a democratic economy and social welfare policy as economic security.This does not in any way imply that classical, neoclassical, or conservative critiques of capitalism are not relevant. Nor does this exclude Schumpeter's theory of "capitalist breakdown" as this relates to capitalism's propensity for continuous economic growth and expansion, or as Schumpeter describes "creative destruction. …