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Capitalism
I have been trying to get my head around this for a while now. With a lot of writing here on FDL and elsewhere about how capitalism is the scourge of society and it’s droppings that are harming the planet. But what exactly do we mean by that. What exactly do we mean when we talk of capitalism ?
Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit.[1] Other elements central to capitalism include competitive markets, wage labor and capital accumulation.[2] There are multiple variants of capitalism, including laissez-faire, welfare capitalism and state capitalism. Capitalism is considered to have been applied in a variety of historical cases, varying in time, geography, politics, and culture.[3] There is general agreement that capitalism became dominant in the Western world following the demise of feudalism.[4] Competitive markets may also be found in market-based alternatives to capitalism such as market socialism and co-operative economics.
Economists, political economists and historians have taken different perspectives on the analysis of capitalism. Economists usually emphasize the degree to which government does not have control over markets (laissez faire), as well as the importance of property rights.[5][6] Most political economists emphasize private property as well, in addition to power relations, wage labor, class, and the uniqueness of capitalism as a historical formation.[7] The extent to which different markets are free, as well as the rules defining private property, is a matter of politics and policy. Many states have what are termed mixed economies, referring to the varying degree of planned and market-driven elements in a state’s economic system.[7] A number of political ideologies have emerged in support of various types of capitalism, the most prominent being economic liberalism.
Where as the World Socialist website calls capitalism a social system.
Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)
The working class are paid to produce goods and services which are then sold for a profit. The profit is gained by the capitalist class because they can make more money selling what we have produced than we cost to buy on the labour market. In this sense, the working class are exploited by the capitalist class. The capitalists live off the profits they obtain from exploiting the working class whilst reinvesting some of their profits for the further accumulation of wealth.
This is what we mean when we say there are two classes in society. It is a claim based upon simple facts about the society we live in today. This class division is the essential feature of capitalism. It may be popular to talk (usually vaguely) about various other ‘classes’ existing such as the ‘middle class’, but it is the two classes defined here that are the key to understanding capitalism.
And those that follow Ayn Rand love this definition.
When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.
The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve “the common good.” It is true that capitalism does—if that catch-phrase has any meaning—but this is merely a secondary consequence. The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is: justice.
Sounds kind of like what organized crime would like as well. Bet old scare face – Al Capone – would have loved this definition.
So who are capitalists ? Does it include the one and two man or small family businesses that sell over the internet ? The single person who does web design ? The one man TV shops that I used to work for ? The small farmer ? Sure these people do not accumulate much – if any - wealth and capital.
The small manufacturing firms ? Those that do freelance work in various fields like photography or writing or (like I did for a while) in electronics and computers ?
Or does it just apply to those large businesses with lots of employees. How about the person who plays “The Market” and gets very rich doing so ?
I do not see all of these as necessarily being bad or evil in some way. Maybe it has to do with the intentions of those involved. Whether or not the primary reason is to accumulate capital IE money, wealth etc. and the product or service is of tertiary importance like Wall Street.
I do believe we need to differentiate here since producing and exchanging products and services has been going on for thousands of years or more. And to not throw out the baby with the bath water.
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Capitalism is the most efficient system of domination yet devised. Don’t forget to include in your list of definitions that of Jason W. Moore: capitalism is a way of reorganizing nature in the image of capital, through the process of capital accumulation. Or something like that. Anyway, Moore’s stuff is compelling:
http://www.jasonwmoore.com/Essays.html
I have been saying the same, I have gone further to claim capitalism isn’t the problem it’s host of a malignancy, corporatism is the problem
from the time we traded the warmth of the skins from our labor for the shelter of a cave, traded food for the care of our young, even a pride of lions will practice capitalism
there has been and always will be capitalism, it is not the problem, corporatism is, when a person can claim immunity thanks to their corporate umbrella of protection, when a company uses profit to justify crime and then nobody can go to jail, THAT is the problem
if there were no capitalism but corporations were allowed to exist, the corporate malignancy would find a new host, they would corrupt socialism or communism or whatever economic system were in place
You may rather mean ‘Whither Capitalism’?
Looks interesting for later reading, C.
Capitalism is not “trade.” There was “trade” in feudal France and in imperial Rome, yet we distinguish these systems by the primary mode of appropriation which they used to move wealth upward and concentrate it in the hands of a few. Imperial Rome concentrated wealth through conquest and domination, and by the direct creation of a social hierarchy. Feudal France concentrated wealth through the appropriation of the surplus produced by the peasants in what in plain English is called the “manorial system.”
http://en.wikipedia.org/wiki/Manorialism
Economic relations under feudalism were cemented through acts of homage and oaths of fealty.
http://en.wikipedia.org/wiki/Feudalism
Capitalism, strictly speaking, is a system in which capital accumulation is facilitated through appropriation of the surplus created by wage labor. Trade takes on a specific form under capitalism; that form is called “sales” and its function is the realization of profits (i.e. monetary claims to the social surplus as a whole, as opposed to specific surpluses produced by specific industries).
Capitalism, then, is characterized by a specific mode of accumulation, capital accumulation. What makes capitalism distinctive is that capitalist systems are dominated by the beneficiaries of capital accumulation, rather than by accumulation by other means.
Human beings have existed for 200,000 years, and capitalism has been institutionalized for at most 500 of those years. Capitalism is not “natural,” but is instead a construction of world-society from a specific historical period.
That is an excellent insight.
Here is my try:
Classes of individuals used to mean “workers”, but now can include all of the providers of factors of production–vendors, communities, even banks, as the fallout from most panics attests. Vendors would include all of the independent suppliers and professionals generally denoted the little townsfolk (petit bourgeoisie). That would include owners of small banks.
By totalitarian, I mean the values of the ideology permeate or are forced on every institution in society. “We can’t afford it.” is the capitalist mantra for all institutions–political, cultural, religious, and especially economic. And especially those that are most essential to the preservation and extension of the system–military, police, courts, prisons. And the totality goes beyond society, which is why I like Jason Moore’s formulation. And finally, totalitarian means that it seeks completion in every country, community, and enterprise in the world.
By ideology, I mean that it is a system of ideas. Those ideas assert that capital is a force of nature not a decision of specific men. It asserts its unchallengeability and its totality. The fact that it spends so much time in intellectual defense means that it is neither a force of nature nor unchallengeable.
As an ideology, it emerges from the self-interests of those it benefits and rationalizes and legitimizes their power over society. As a totalitarian ideology, it cannot allow competing sets of ideas into honest discourse. In practice, it only received formal articulation as a response to the socialist and communist movements of the past two centuries. And the label only achieved respectability when Malcolm Forbes decided to brand himself as a “Capitalist Tool”.
You will notice that there is nothing inherently private or public in my formulation. As an analytical tool, that might help in explanation of both the Soviet period in Russia and the current system in China.
The situation is that in no country has capitalism constructed the total system it seeks. There are lots of complex reasons for that. But that means that almost every nation is really a mixed system in which capital seeks to consolidate control but never has done it totally. The neoliberal project to implement global capitalism has come close. But there are still countervailing institutions large and small that resist the consolidation of power. And countervailing ideas that undermine the ideology, such as but not limited to those out of the Enlightenment movement (which includes Marx).
The emphasis is on distribution decisions in the economy because that is where capital can exert most direct control. The allocation of resources to produce (such as plant location, hiring additional workers) is also a tool of control, especially of institutions that might limit capital’s power.
The only difference between capitalism and organized crime is the law’s treatment of the goods and services it produces. One need only look at Wells Fargo’s laundering of drug money to understand this. Corporations that are not normally thought of as organized crime have been fully capable of murder to protect their interests. And they seem to do the hit jobs as well as criminal organizations.
trade is capitalism it’s just set in degrees, wealth (the excess fruits of labor)will move “upward” (if that’s the word we want to use) into the hands of the few, that’s what happens
the real problem is corporatism, it’s corrupted this trade you respect and turned it into a malignancy
we need to remove the corporate umbrella of protection, we need someone to go to jail when a business acts irresponsibly
we’d all be complaining about the problems of socialism and comunism if corporatism is allowed to flourish in those economic systems
Charters of incorporation are granted by governments and are legal privileges (primarily the privilege of limited personal liability). The ability to form corporations allowed the use of other people’s money with low risk in order to consolidate capital. The relationships within a corporation are feudal although the oaths of loyalty are not so formalized. Corporations have competitive advantage when the cost of internal coordination and communication are lowered as compared to external coordination and communication (Coase).
In principle, acting irresponsibly (negligence) “pierces the corporate veil” and subjects the individual to prosecution or suit. In practice, it depends on the resources available to the state and defendent or plaintiff and defendent.
It is possible to use the corporate form to shield cooperative and collective enterprises, but the success of that protection is related to the ability to pay lawyers.
Furthermore, corporatism is fundamental to capitalism as the size and geographical scope of enterprise enlarges. Large scale businesses could never be run internally as markets as capitalists acknowledge. Thus ongoing capitalist accumulation requires the corporate form.
The accumulators would have it no other way, either. Perhaps perris would like to advise how a pre-corporate capitalist order could be maintained.
Sounds like socialism to me.
Sounds like robber barons to me. Didn’t advance much after the French revolution, did we.
jefferson hated corporations, I’m with him
TarheelDem, if you get around to looking at Jason W. Moore’s essays:
http://www.jasonwmoore.com/Essays.html
you can see the idea behind his definition. Most of the standard definitions leave untouched the Cartesian dichotomy between “humans” and “nature,” between “mind” and “matter.” This Cartesian dichotomy leaves the science of ecology partially inaccessible to the analysis of capitalism. Moore wants to argue that it’s ALL ecology.
Me too if you get to a personal opinion. Still have the issue of how to structure large enterprises and how the law should deal with them–something that Jefferson didn’t have to deal with that much.
That was the conclusion that Walter Isard came to after trying to operationally integrate economic and ecological mathematical models to conduct environmental impact statements. It created a methodological problem that hasn’t to my knowledge been solved.
Just took a look at some of Moore’s interviews. He is setting the correct frame, in my view, and asking some needed questions. Ecology, the science, has ways of talking about populations, food chains, geophysical cycles (and their cycle times), and so on. Conventional economics justs abstracts that whole area away as “resources”. And is only interested when a resource becomes a commodity. And the concept of “land” in economics is hopelessly confused and prevent one possible way of tying ecology forward to some economic insights.
And that’s also where Marx ties it, as a commodity.
The implicit moral imperative in the logic that flows out of that view is that all of nature is instrumental. And that implicit logic is as dangerous as the idea that all weapons are meant to be used (a logic that nuked Hioshima and Nagasaki).
Maybe the problem can never be solved until the human species evolves into something else. I’m a cynic. I hold this truth to be self-evident: Human beings are incapable of creating perfect societies.
Maybe that’s actually a good thing.
Meanwhile, we can at least do the best we can. We can do better than corporatism.
Like us. Always hated the term “Human Resources”. Like I’m a sheet of paper or a stapler.
I think a co-operative might do the trick, so long as the board or council is held responsible as people for what the co-operative does.
in addition, there absolutely must be restrictions on co-operatives contributing to politics or elections.
I always saw corporatism as feudalism on steroids.
I’m not sure that’s cynicism. Human beings are neither omniscient nor omnipotent individually or collectively. And we have really only a hint of an understanding of what motivates us and how and why we create societies. And societies, which are emergent instead of designed, have even less ability to be omniscient and omnipotent, but a large portion of our efforts go into overcoming one or both of those limitations. Being aware of that is not cynical.
Why a board or a council, if it’s a subset of everyone in the cooperative? Why shouldn’t everyone participate in the decisions and be at risk for the consequences?
What we really are labeled is “labor cost”.
http://www.youtube.com/watch?v=qOP2V_np2c0&feature=player_embedded
Thanks for the David Harvey video.
Heh! I always liked Robert A. Heinlein’s definition of cynicism:
“A cynic is one who sees the world the way it is, instead of how it should be. Hence the Scythians’ practice of cutting out a cynic’s eyes so he could see.”
Careful,
2. Selfishly or callously calculating.
and
4. Expressing jaded or scornful skepticism or negativity.
leads to the opposite of “Cynic”.