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. Other elements central to capitalism include competitive markets, wage labor and capital accumulation. 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. There is general agreement that capitalism became dominant in the Western world following the demise of feudalism. 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. 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. 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. 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.