“The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class which is the ruling material force of society, is at the same time its ruling intellectual force.” –Karl Marx and Friedrich Engels, The German Ideology
“If you stick a knife in my back nine inches and pull it out six inches, there’s no progress. If you pull it all the way out that’s not progress. Progress is healing the wound that the blow made. And they haven’t pulled the knife out, much less healed the wound. They won’t even admit the knife is there.” –Malcolm X, in a March 1964 interview
How does our capitalist economic system work? Upon what structural elements does it depend, and how does money function in a modern economy? These are some questions nearly everyone has pondered at some point in their lives. As pretty much everyone knows, the system we call capitalism has built the modern world and is the basis for mainstream economic theory. According to most establishment pro-capitalist economists, capitalism can provide for a decent life for all of humanity, conserve wildlife and ecosystems, and maintain prosperity for nearly everyone if we only listen and apply their theories.
According to capitalists and their political, academic, and corporate advocates, all the failures, assumptions, loopholes, and lack of pricing in externalities can be fixed if we reform politics to properly account for a pristine capitalistic theory shorn of all the “ideological” laws and measures which get in its way. Is this really true, or are capitalists and pro-capitalist ideologues merely attempting to justify a system which benefits themselves at the expense of the world’s poor and working classes, as well as other species and the web of life which sustains us?
According to Merriam Webster, capitalism can be defined as: “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision; and by prices, production, and the distribution of goods that are determined mainly by competition in a free market”.
The obvious question to ask, then, is: does capitalism “deliver the goods?” Does our system properly price, produce, and distribute goods in a rational manner to account for human, non-human, and ecosystem needs? Is capitalism responsible for the technological and social progress we see around us? The answers, I believe, are most definitely no. Assembled below are a few of the main reasons why not.
1) Capitalism Is Unsustainable
Our economy runs on infinite growth and an assumption that the Earth’s resources are bottomless. Our pricing system cannot account for the “externalities” of capitalism, that is to say, it cannot properly price in all the waste, non-renewable fossil fuels, and resource extraction from the planet’s ecosystems. Capitalists sell products on the market without a thought as to how the planet can regenerate habitats, grow more trees, produce clean water, and properly regulate the climate.
Since capitalism relies on ever-increasing consumption, its logic dictates that it will destroy the entire world to make more money, since destruction and ecocide cannot be priced into its calculations. Further, since the capitalist “engine” of wanton consumption is internalized in each of us in Western society for it to function, we all are coerced into becoming idle consumers where greedy and narcissistic impulses are rewarded. Selflessness and sharing must be relegated to the ever-shrinking public or civic sphere, while private businesses and property relations dominate more and more of human existence, regardless of human needs.
While there are many more “middle class” people than ever before on our planet, the costs based on a capitalist-based growth model are too much to bear for the rest of the populace and the Earth’s ecosystems. Climate catastrophe threatens all of us, and the twin threat of habitat destruction and degradation likewise will lead to cascading waves of suffering for generations.
Environmental health impacts do not bode well for humanity either. For instance, by 2050 one third of all women and ½ of all men are predicted to have cancer at some point in their lives, and this is directly connected to industrial practices and resource extraction which pollutes the Earth with carcinogens. If the climate breaches a 1.5 Celsius increase from pre-industrial levels, we many reach a tipping point towards a “hothouse Earth” scenario where positive feedback loops push the increase to 4-6 degrees above the norm, which would wreak global devastation and an apocalyptic, dystopian future.
2) Capitalism Creates Unjustifiable Hierarchies
Today, it is obvious to the poor and the majority of the working classes that capitalism has spun out of control and is responsible for mass immiseration, imperialist wars, and ecological destruction. Yet to even tacitly acknowledge that this is happening in middle class and bourgeois society marks one as a “radical leftist”, a heretic, basically.
The religious fervor becomes obvious at this point- and arguments become emotional and infantile- when pro-capitalists insist that every positive of our current system is due to capitalism (and not labor re-producing life, products and services) while every negative gets rationalized away as due to the minor flaws of a system that just needs a little tinkering and reform around the edges. Within this mindset, conservatives frame the problem as too much regulation, or “crony capitalism”, while liberals insist that simply more regulation will solve all the ailments our system produces. From a leftist anti-capitalist perspective, however, we acknowledge that while more regulation would in fact alleviate many problems, they will not be enough to solve the conundrum of capital accumulation, overproduction and waste generation, and resource hoarding that lies at the heart of our economic engine.
Besides, the capitalist sycophants say and write, you’re writing this from your iPhone, so aren’t you being a hypocrite? Yet it is the labor of the working classes, not capitalism, which actually physically produces goods and services. The underlying subtext of their statement is obvious: you’re benefiting from the system too, so don’t rock the boat and screw up our gravy train of sweet treats, gadgets, entertainment, and the “comfort and security” that living in a globe-spanning military and economic empire provides. It’s quite sad, really, because there is simply no justification for the slave labor and habitat destruction that goes into making our technology, clothing, and various consumer items that we’ve been imprinted into believing that we “need”.
It is our capitalist-based jobs which compel us under the force of a gun to earn money to live, the implication being of course that if you don’t like it here, you’re welcome to leave and toil away in the mines and factories of developing nations. No serious thought is given to structurally revolutionize the system, because our capitalist masters would become angry, and we know what their wrath can be like, with centuries of massacres and oppression to show for it. In such a system, there is no such thing as a free contract between employees and employers. Corporations and employers have all the leverage and can effectively force employees to work or starve.
Capital today remains just as it always has, a rentier economy where the ownership class squeezes those who work with every conceivable form of rent, for housing, health care, transportation, various insurances, food, internet access, etc., until one’s earnings are whittled down to nil.
There are over one billion people in extreme poverty and by any reasonable metric more than half the globe lives in impoverished conditions of one form or another. The economic system that we know as capitalism has had over 200 years in control, and I’ve yet to hear any serious pronouncement from a capitalist economist on when poverty can be eliminated, and although some may even admit that other forms of social organization are superior in eliminating poverty, such as in indigenous cultures, the refrain is there is no going back, because of all the “progress” we’ve made. In other words, capitalists and their sycophants wholeheartedly believe “there is no alternative”, and what’s more, pro-capitalist ideologues generally have a cynical, dismal, social Darwinist, Hobbesian view of humanity and the masses.
3) Capitalism Is Inherently Exploitative and Alienating
Our system has managed to accumulate so much concentrated wealth because capitalism separates the worker from the means of production. In doing so, employees do not reap the full benefits at their jobs, as wages and salaries are determined by the contract signed with their employers. Rather than free and fair contracts between equals, workers do not have the leverage, or bargaining position, to ask for their proper payment because our system keeps people desperate and living from paycheck to paycheck, and even with solid unions, profit sharing, stock options, and collective bargaining agreements, workers are still stiffed and do not accrue the surplus value from what they have created.
Business owners thus extract the surplus value that is produced from workers. Employers give employees the bare minimum to keep on at their jobs. Profit sharing, unionizing, pensions, and other benefits have been on a steady decline for decades now as capital consolidates wealth. As prices for resources rise, corporations have found that the strategy to keep late capitalism going is to cut labor costs.
When the majority of the population is forced to choose between always working a job that barely allows one to make ends meet, or not even make ends meet; and homelessness, lack of health care, and/or starvation, to even call this situation “a job market” or “society” is a stretch. What we have is a system of severe coercion – an abusive relationship with capitalists that we rationalize as necessary- that we may deem necessary for “Western civilization” or “the economy” to function; but what we are facing is wage slavery, and systems of propaganda that, from birth, inure us to exploitative conditions and program us to accept jobs that do not allow for full economic freedom (due to exploitation) and do not allow us to reach our potentials for intellectual spiritual enjoyment and growth (due to alienation, as we shall see).
Capitalism alienates the worker because not only are we not valued economically, by not taking part in the ownership of the goods and/or services that a corporation produces, employees realize that the products they make/distribute/sell/etc are not actually useful to society, in fact much of what capital creates is in fact useless and harmful if not downright toxic and deadly to people and wildlife. Workers become disillusioned, and carry that resentment and frustration into all aspects of their lives. These dark clouds of energy created by the “satanic mills” in which we toil provide the tragic backdrop to our lives, sapping energy and robbing us of free will similar to how vampires and zombies are depicted in science fiction.
In this fraught environment, nearly everyone is competing, consciously or not, for a slice of that “American dream”, even if it means your friends across town will be evicted by rising real estate prices in your neighborhood, or if the town next to you is despoiled by coal mining while your town is protected by affluence or regulations against such industry. This can create resentment for those who do not realize, or cannot come to terms with the fact that, at least for now in the Western world, it is set up as a “dog eat dog”, “kill or be killed” economy.
However many people have been lifted out of poverty by capitalism, the surplus population of what are euphemistically called “unskilled workers” multiplies because there are simply not enough jobs available. Capital relies on the reserve army of labor to put downward pressure on wages. Also, inflation due to fiat currencies, financial and real estate speculation, the monopolization of industries, and price-gouging practices create the conditions whereby the rich get richer, and the poor get poorer.
4) Capitalism Is Extremely Volatile
Historically, nearly every seven to eight years Western economies experience recessions or depressions due to inherent flaws in their makeup, and what these crashes share in common are financial speculation. When profit seems inevitable for investors in specific sectors of the economy, bubbles are formed where vast influxes of capital flow towards sectors that seem “too good to be true” in terms of returns on investment. As the old saying goes, when something seems too good to be true it usually is.
Whether in 2020 with the response to Covid-19 creating a lockdown-induced crash, in 2008 with the real estate crash, in the 2001 dot-com bubble, during the 1990-1991 recession caused by the Gulf War and restrictive monetary policy, the Savings and loan crisis of the 1980s as well as the 1987 stock crash, nearly the entire 1970s dealing with stagflation, to the Great Depression, and all the way back to the panics of 1873 and 1893, capitalism has shown it is fundamentally unstable.
When speculation, whether in real estate, stocks, corporations, cryptocurrencies, or any other investment becomes the primary driver of the economy, you’re cooked. It’s only a matter of time before the financial system resembles a house of cards, and just like a Ponzi scheme or a bank run, when the majority of banking customers, investors, or shareholders wants to pull out, the crash ensues.
This is simply because monetary systems around the globe are run by a scheme of incurring ever-greater debts, which means that the physical money supply is only a fraction of what “the economy” supposedly consists of. This is how all fiat currencies function today, as fractional reserve banking allows commercial and local banks to loan out far more than their actual assets. This means, in effect, that money is debt: only by printing, or today digitally creating new money through computing, banks loan out more than they have and increase their holdings through interest payments which borrowers pay back over time. Therefore, the entire economy relies on the money supply constantly expanding to repay what lenders are “owed”. Money, just like production of consumer goods, is a trap in which the entire economy and thus human life and labor becoming devoted to producing more and more, not for usefulness or human necessity, but simply to feed the bottomless pit of an ever-expanding appetite.
In Conclusion: Capitalism Can’t Deliver the Goods
As we’ve seen, capitalism produces many paradoxes and contradictions. To escape from feudalism, humanity developed “free markets” which have ended up enslaving most of the planet in some form or another. In order to start the engine of capitalism, genocide, slavery, imperialism, enclosure acts, and primitive accumulation were the fuels by which capital could be consolidated by the bourgeoisie and power centralized in the nation-state.
While the modern West has ensconced many of its citizens in affluence and privilege, much of the world has only known strife and poverty for the last 200 years as capitalist domination has accelerated. While the old model rested on territorial exploitation via imperial oversight, today’s empire is run from global metropoles of finance backed by threats of violence, via economic subordination, debt peonage via the World Bank and IMF, exploiting cheap labor, using WTO and intellectual property law which prevent developing nations from self-producing needed technology, infrastructure, and medicine. Having so brazenly exploited the periphery of empire for so long, with little pushback from a complaint citizenry, now the chickens are coming home to roost, as capitalism squeezes the middle class out of existence in the core of empire.
Today we find ourselves in a situation where capitalism has not just colonized most of the planet, but through ruling class control of the media also the minds of billions in the developed and developing worlds. The ruling class has put many into a false double-bind whereby the only solutions seem to be between a liberal order which promises more regulations, a more humane and less racist and sexist world, promises of a slightly more equitable social democratic framework, all the while failing on nearly all fronts due to the adherence to capitalist neoliberal economics and austerity politics; and a reactionary conservatism which promises to restore national greatness, yet stokes imperialist, racist, xenophobic, and atavistic impulses. Within this constrained and artificial binary choice, for most urbane people the liberal choice appears better, while for most rural citizens and those disconnected from the cultures of large cities, the conservative side seems more appealing.
Little to no thought is given to a post-capitalist, leftist politics which could emancipate the working classes of the world. Capitalism can no longer produce, allocate, and distribute resources effectively. While the media superstructure will continue to place blame on the pandemic for all of its woes, capitalist overproduction, systemic inflation, wage suppression, and the falling rate of profit are leading to another large economic crisis. Despite what mainstream news says, the supply chain problems we see today are not simply due to worker shortages or production bottlenecks; capital has misallocated labor towards jobs that produce little to no value to society, as well as systemically underpaying key labor sectors leading to massive job losses, while being unable to plan for key agricultural, logistical, and technological needs.
Progress which seems tied to capital in reality is due to the innate ingenuity and inventiveness of workers, i.e., the material and mental labor which produces essential commodities. Capital influxes which once seemed necessary to marshal large-scale organization and production are now superfluous in a post-scarcity world, where the seemingly rational invisible hand of the market and control of production through supply and demand gives way to ruthless monopolies and a planet-threatening military industrial complex. This was always the direction and logic capitalism would take, and while legal reforms could make impactful differences, the structural revolution which is necessary for human flourishing will inevitably need economic democracy in the workplace as a cornerstone of a sustainable, post-capitalist world.
Finally, climate change and habitat loss promise to erase the “gains” of capitalism, as global warming, scarcity of clean water, desertification, and degradation of farmlands threatens apocalyptic devastation for large swaths of the planet. Using non-renewable fossil fuels to guide expansion of the economy seemed great in the 19th century, but has proven to be a Faustian bargain. Conversion to renewable resources should be made according to popular will, not held back by the dictates of multinational corporations which sacrifice the environment, social (re)production, dignified lives for the masses, and future generations for short-term profit. New democratic structures will need to be built to rationally allocate resources and redistribute private property into communal holdings, as we can no longer rely on the capricious whims of capitalists or on the conspicuous consumption of the affluent nations to drive production and finance. In order for this to be achieved, many affluent Westerners will have to be reminded that the siren calls and pandering from capitalists who have molded a self-satisfied and compliant citizenry are a poison to us all, and that regardless of one’s level of comforts, capitalism, in fact, is not our friend.