What’s wrong with capitalism?

Whats wrong with capitalismJosh O’Sullivan gave this talk to the Tamaki Makaurau branch of the ISO in March.

Capitalism is a uniquely dynamic system, the basis for its dynamism is the complete revolution of production – how we make the world we live in. As time has marched on, our lives have changed dramatically, the creation of all our modern conveniences have improved the quality of life the world over. Over the last few centuries, the spread of capitalism has generated a phenomenal leap in human progress, leading to both previously unimaginable increases in material living standards and the unprecedented cultivation of all kinds of human potential. We have gone from barely making inroads into vast tracks of wilderness, whereas now there is no place on earth that is untouched by human activity.

Capitalism’s intrinsic dynamism, however, produces serious insecurity along with these benefits, and as such its advance has always met resistance. Much of the political and institutional history of capitalist societies, in fact, have been the record of attempts to ease or cushion that insecurity of the market, and in some cases outright overthrowing it. In a system beholden to the whims of the market, in the lens of profit and loss, we cannot plan for the future or even foresee the consequences of our own actions.

Exploitation and competition

Capitalists like all previous ruling classes, grows through seizing the surplus of production created by society. However, unlike previous class societies whose rulers simply seized the surplus and then spent it on themselves or their wars, capitalists buy people’s ability to work, what Marx called labour power, this surplus that is appropriated by the owners is taken through exploitation. Capitalism is defined by two main features, the exploitation of workers by capitalists and the competition between capitalists.

Exploitation has a technical definition for Marxists, it is not as some would see, being underpaid, working overtime or working in a sweatshop. Exploitation is when a worker is paid less than the value that they have created. If workers were paid the full amount of the value they created in a day – there would be no profit for the bosses.

Production under modern capitalism is carried out by the working class, the majority of the world’s population. What defines them as a class is their lack of ownership or control of the means of production. There are haves and have nots, owners and employees. Because the machinery, the land, the buildings, are in the hands of a small number of wealthy capitalists, workers are compelled to sell their labour to the capitalist. Workers are “free” to sell their ability to labour to whatever employer will give them the best deal. Of course, this kind of freedom is limited at best. Unless they are independently wealthy, workers aren’t free to decide not to work. They’re free to work or starve. The exploitation of labour, by paying workers only a fraction of what they produce gives capitalists their profit. Every worker in the entire world is exploited because we all make the wealth which ends up in the pockets of CEOs to fund their millionaire lifestyles, or reinvested into corporate empires for the next round of production and accumulation.

The material interests, then, of the working class and the capitalists are fundamentally opposed. This is why we never get anything without a fight. Wages and working conditions, indeed any reforms, can only be won at the expense of the bosses profits.

Capitalists are driven by economic competition within and between themselves to plough a sizeable portion of this surplus back into expansion of the means of production. This contest means that capital can never afford to stand still, it must be constantly expanding, making more and more profits, or else risk being taken over or driven out of business. If one business can successfully increase the rate of exploitation of its workers – by introducing some new technology or by forcing them to work harder, longer or for less money – this then puts increased pressure on other bosses to follow suit. Capitalism is not a planned or rational system, it is made up of different blocks of capital, whether small businesses or giant corporations, all trying to outdo each other. This is not just economic growth but compulsive accumulation.

Competition for profit causes economic crises. The capitalist market is racked by instability, driven by the profit motive of each individual capitalist. Contrary to the utopian economics models in university textbooks, this does not result in a benevolent “equilibrium”, it results in periodic crisis. The last decade alone shows this to be true, as capital rushed to invest in speculative bubble after bubble, from the dotcom debacle in 2001 to the sub-prime lending crisis of 2008.

This competition also drives the imperialist wars across the world. Capitalists compete for natural resources, for access to markets, for trading routes and for more workers to exploit. During the 19th Century, the European capitalist powers raced to colonise the world, carve it up between them, and reshape colonial production to suit the needs of the capitalists back home – especially the need for raw materials and slaves.

Even now with the US and its coalition reinvading Iraq for the third time, most people understand it’s a battle over the control of the oil. Not necessarily for its own use, the US is now a net exporter of oil over the last 5 years, but more to control other countries access to oil. To ensure that oil does not lubricate the economies of its major rivals and competitors, in Russia and China. Control of the Middle East and its oil is central to US plans to stay on top of the imperialist pecking order, to give US businesses the edge they need to succeed.

Oppression

Capitalist society reinforces its control over others through Oppression. Oppression comes in a myriad of forms, some of the most salient I will list here.

Racism is a particular form of oppression under capitalism. Yet the concepts of “race” and “racism” are modern inventions. They arose and became part of the dominant ideology of society in the context of the African slave trade at the dawn of capitalism in the 1500s and 1600s.

For much of the first century of colonization in what became the Americas, the majority of slaves and other indentured servants were white. Blacks lived in the colonies in a variety of statuses—some were free, some were slaves, some were servants. One of the historic gains of capitalism for workers is that workers are “free” to sell their ability to labor to whatever employer will give them the best deal. Once they do work, they can quit one employer and go to work for another. But the hallmark of systems like slavery and indentured servitude was that slaves or servants were “bound over” to a particular employer for a period of time or for life in the case of slaves. It was a cheap and easy way to maintain labour to make profit in the new world plantations.

As the 17th century wore on, colonial leaders became increasingly frustrated with white servant labor. For one thing, they faced the problem of constantly having to recruit labor as servants’ terms expired. Second, after servants finished their contracts and decided to set up their farms, they could become competitors to their former masters. Until the end of the 1600s, it cost planters more to buy slaves than to buy white servants, though this subsequently changed as the slave system became more entrenched and black slaves became cheaper. Blacks lived in the colonies in a variety of statuses—some were free, some were slaves, some were servants.

“Here, then, is the origin of Negro slavery. The reason was economic, not racial; it had to do not with the color of the laborer, but the cheapness of the labor. Ö[The planter] would have gone to the moon, if necessary, for labor. Africa was nearer than the moon, nearer too than the more populous countries of India and China. But their turn would soon come.” – Eric Williams

Planters’ fear of a multiracial uprising also pushed them towards racial slavery. Because a rigid racial division of labor didn’t exist in the 17th century colonies, many conspiracies involving Black slaves, servants, and white indentured servants were hatched and foiled. We know about them today because of court proceedings that punished the runaways after their capture.

As C.L.R. James put it, “[T]he conception of dividing people by race begins with the slave trade. This thing was so shocking, so opposed to all the conceptions of society which religion and philosophers had, that the only justification by which humanity could face it was to divide people into races and decide that the Africans were an inferior race.”

Sexuality

Sexual and women’s oppression is intimately linked with the history of family structures in society. In all class societies, the family has been the principal institution by which sexual conformity has been enforced. But the form of the family and its relationship to production have changed quite radically from one mode of production to another. The coming of industrial capitalist society brought a whole complex of changes – the separation of home from work, the polarisation of gender roles for women and men in these ‘separate spheres’, and a new stress on individuality and personal life – opened up a new era in attitudes to sexuality. Over history there have been many ways of constructing such relations socially and ideologically, just as there have been many different forms of marriage and other sexual relations between men and women and same sex relations.

Even though It is no myth that men (and occasionally women) were burned to death for same-sex relations in the Middle Ages, the outbreaks of persecution were very irregular, they were often due to religious or political tensions which were the occasions for attacks on sexual practices normally ignored.

From the 18th century people of all classes in England were conscious of the disruption of working-class family life brought by the spread of factories, the technical innovations which repeatedly transformed the age and sex structure of the workforce, and the cycle of boom and slump which periodically threw large numbers into destitution. Some feared that the workforce might fail to reproduce itself, due to the large numbers of women working in the factories and mines. Many more feared the disorder, the ungovernability of a working class no longer controlled by parental power or tied by family responsibilities, unconfined by traditional roles.

The capitalist form of family is based upon the separation of work from home: commodities are produced and wages earned in a workplace belonging to the capitalist, and ‘home life’ becomes a separate sphere. This results in the reproduction of the labour force, reinforcing discipline and hierarchy in the factory, the taming of rebellious workers through family responsibility, even to the perpetuation of the capitalist ideas of self-sufficiency and individualism. Capitalists also benefitted from the wage gap between men and women as they do to this day.

The idea that work was an ‘outside world’ to which men were particularly suited, while the home was a haven for women and children, had developed first amongst the ruling classes of the 18th century. The wealth of these classes was no longer created in their own family households, and they had the resources to create a private world of domestic comfort where work was done by servants and the consumption of stylish luxuries became a way of life. Much of the ideology around gender, such as the notion that women were more ‘natural’ and men more ‘civilised’ were common amongst the gentry of this time. This was a trend that became a more general transformation only when industrialisation brought the separation of the home and work to the masses as well as the elite.

The Evangelicals of the industrial period consciously campaigned for the reform of family life along these lines, in order to stave off social anarchy and rebellion. Their efforts were not confined to preaching to the aristocracy, through charity visiting and their role as employers of servants, they sought to influence the family lives of workers. Many firms and businesses published pamphlets that explained to workers the benefits of cleanliness, sobriety and family life. Many extended shop rules to prohibit indecent dress, talk and habits. Some fired workers who married too early or had illegitimate children.

Medical ideas of sex began to dominate in the 19th century, including the differences between male and female, the dangers of masturbation and ‘waste’ of sexual energy; a whole cluster of previously unknown complaints such as nymphomania, hysteria, satyriasis and so on appeared. These along with homosexuality (a term invented that century) were demonised as sexual degeneracy and regarded as a pathology, i.e. something to be cured. Under this new discourse new laws were passed that redefined working class women’s sexuality by labelling any individual women as prostitutes and subjecting them to mandatory examination and treatment. The same campaigners then passed legislation criminalising homosexuality in 1885 in England. Despite the reforms that have happened particularly over the last 50 years, LGBTI people is still oppressed in modern society, which is still based upon the societal requirements of the nuclear family and institutionalised ideas of sexuality in modern capitalism.

The oppression of women, similarly still continues to this day in a myriad of forms, despite the gains of the suffragettes and the feminist movement. Today women are presented in all types of media as passive sexual objects – these stereotypes, of man as the protector and provider, and woman as the caring, loving wife and mother, dependent on the man and devoted to her children, are to an extent based in the oppressive reality of everyday life. Women who are public figures face daily attacks on their dress sense and appearance as opposed to their political views and ideas. Violence against women is still incredibly common particularly in New Zealand, and in fact domestic violence research shows that the family is one of the most violent places for a women to be.

Inequality

While all these forms of oppression are deeply felt, the most pervasive of all oppressions is the one most intimately linked to capitalism; Class oppression. Marxists use class analysis to look at societies through history to analyse power structures and production in the economy. A class is merely a group of people with a similar background and aims, however, these groups only become aware of their activities as class when they come into conflict with another group with opposing aims, this is what Karl Marx called a contradiction. In modern capitalism, Marxists divide the world into two classes, those who own the means of production, and those who do not, whose aims and goals are fundamentally opposed because of their relationship in production. Class oppression can be represented by inequality in society (although that is only some of the story). In New Zealand we have had the highest increase in income inequality in the developed world, where the top 1% of people own 3 times more than the bottom 50%. This is the worst since records began in the early 80’s, and it is only getting more and more severe.

The richest 10% in the country own over half of New Zealand’s total wealth, on the other side of the scale the picture is not of wealth but of debt, the bottom 50% own less than 5% of the country’s wealth, with the lowest 200,000 actually owing more than $4.7 billion dollars.

Typically we measure the average wage in New Zealand to show the effects of the economy on everyday people, today it is measured as $57,148.70 per year. However this is skewed because of the paychecks of CEOs and other business leaders. 50% earn less than $24,000 a year, Over 70% of people in New Zealand earn less than $43,000 a year, and if you’re lucky enough to be in the top 10% of the country that means that you earn more than just $72,000 a year. These are just some examples of what happens in a capitalist society, wealth accumulates to the wealthy leaving only debt for the working class, as they try to maintain the same standard of living, while wages stagnate and prices continue to rise.

Class oppression often hits unequally, and also forms a major part of the other oppressions under capitalism. Because capitalism links all these oppressions, inequality is where we can see the ravages of institutional racism and sexism on a mass scale. Examples of this include the shocking disproportionate rate of Maori and pasifka peoples in poverty – 1 in 5, twice the rate of pakeha, this is repeated in many different areas such as home-ownership access to healthcare, imprisonment rates – and central to this story is the appropriation and alienation of maori land and the extremely common abuse of low-paid migrant labour. It is similar for women in our society that although all gains made over the last 100 years have reduced some of the discrimination women feel on a daily basis, the gender pay gap still exists and for the first time, actually increased between 2012 and 2014. Even this statistic completely ignores that female dominated professions are paid much less than comparable work (such as early childhood, teaching, nursing, care work) and are often not recognised for the massive amount of unpaid work done in the home (an estimated 40% of NZs GDP in 2002).

Inequality in society is an inevitable byproduct of the race to accumulate between capitalists, and if you look at capitalism from this viewpoint, of capitalists competing to accumulate capital, some of the problems that develop over time in a capitalist system become more obvious. Even these statistics that I have presented in this talk are not entirely accurate, the rate of inequality is likely to be much higher, as the wealthy one percent hide their wealth through a myriad of trusts and accountancy loopholes to avoid the tax department.

Expanding equality of opportunity only increases inequality in our society – because some individuals and communities are simply better able than others to exploit the opportunities for development and advancement that capitalism affords. Growing the economy, as a method of reducing poverty also falls in to the same pitfalls; that capital is easier to accumulate once you have accumulated capital, and as such preferentially benefits the already rich.

Conclusion

At its heart capitalism is an exploitative and oppressive system driven by competition for profit. These features cannot be reformed away, because these reforms can only be temporary and are removed as soon as they become barriers to the drive of profit.

I’m not saying we can predict what will happen in the future in our society. I will however say this, that due to these internal contradictions, Capitalism as it is now cannot continue forever, infinite growth on a finite planet is not possible – these contradictions will be resolved – usually violently.

But what kind of society will emerge? Will it be a tyranny of business, with more homelessness, drought, starvation, unemployment, and an overarching security state that records every action you take?

Or will this system be overthrown by the working class collectively taking control of the means of production and wielding them to make a society where profit and competition are no longer our masters. We as Socialists argue and organise for this possibility instead of the barbarism and insecurity of the market, so come meet with us every week so we can start the discussion about how we go about changing our world.

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