Socialist Studies Socialist Studies

What Is Capitalism?

Socialist Studies has always insisted on the necessity for the workers to gain control of the machinery of government before trying to set up Socialism.

Capitalism is a system of society based on the class ownership of the means of production and distribution in which wealth is produced by propertyless wage workers, to be sold on a market with a view to profit. Capitalism, therefore, is a class society with a privileged few living off the labour of the exploited many. It existed in Russia under Lenin and his successors; it exists today in Vietnam, Cuba and China just as it does in Britain and the US.

The basic contradiction of capitalism is between social production and class ownership. For, while the actual work of producing the wealth is done by the co-operative labour of millions, the means of production and the products belong to a section of society only, the capitalists. It is this contradiction that causes modern social problems since it means that production cannot be carried on to meet human needs. Consequently, where such needs conflict with the profit-making of the privileged few, the needs come second or not at all.

Human needs are only met under capitalism to the extent that they can be paid for. This is no problem to the rich but it is, as is well known, to the men and women who have to work for wages or salaries and who make up the working class.

The working class is defined by socialists in a precise and scientific way. The working class is composed of the men and women who, excluded from ownership of the means of production and distribution, are forced by economic necessity to sell their mental and physical energies in order to get a living.

For the purpose of this definition a worker is not distinguished by the way he dresses, talks, by where he lives or the job he does, but by how he gets his living. Anybody who has to work for wages is a worker. In Britain over 90 per cent of the adult population are workers, the rest being small businessmen and the wealthy.

Since under capitalism the worker depends on his wage or salary in order to live, it is clearly very important to understand what governs the rate of wages. Wages are in fact a price, the price of the mental and physical energies a man sells to his employer. They are not a reward for having worked nor a share in the product nor even the price of the work done. Receiving a pay packet or a salary cheque is a buying and selling transaction no different in principle from the sale of a pair of shoes or a motor car.

The price of a person's ability to work -or as Marx, who first saw this clearly, called it, his "labour power" -is fixed in much the same way as that of a pair of shoes or a motor car, very roughly, by the amount of labour used up in producing and maintaining it, by its value. It can thus be seen that a person's wage can never in the long run amount to much more than will cover the costs he must incur to keep himself fit to work, with additions for his or her family and training. An engineer with a university degree gets more than an unskilled labourer because it costs more to train and keep the engineer.

The wages system is a form of rationing. It restricts a worker's consumption to what he needs to keep himself in efficient working order. It means that he is deprived of the best that is available in food, clothing, housing, entertainment, travel and the like. This is made all the worse because there could, on the basis of modern technology, be plenty of the best for everyone. It is made worse still because it is the workers who produce all the wealth, the best that the rich enjoy as well as the utility items they themselves consume.

That the workers are exploited under capitalism is not hard to grasp. Exploitation does not mean that workers are shackled to the factory bench or the office desk and terrorised by bullying foreman or managers (who themselves are workers). It merely means that they get less as wages than what they produce is worth. There is no need to go into a complicated economic analysis to prove this. Suffice to say that, since the only way in which wealth can be produced is by human beings applying their mental and physical energies to materials found in nature, any society in which a few live well without having to work must, on the face of it, be based on the exploitation of those who do not work.

That this is so under capitalism is clear when the peculiar quality of labour power is known. Labour power can produce a value greater than its own so that whoever buys it and puts it to use can reap the benefit of this; which is precisely what the capitalist employer does. He buys the labour power for wages, puts the men and women who are selling it to work in his factory with his tools on his materials, and realises a surplus when he has sold the finished product. The source of this surplus, with its divisions profit, rent and interest, is the unpaid labour of the workers.

Because capitalism is based on the class ownership of the means of production and distribution and the accompanying exploitation of the workers, depriving them of the fruits of their labour, there is an irreconcilable conflict of interest between the working class and the capitalist class. This is the class struggle which goes on all the time over the ownership of the wealth of society. Its obvious features are strikes and lockouts, trade unions and employers' associations.

These are the main weapons and organisations of the two sides in the industrial field. In the political field the capitalists have the government on their side. Their ownership and control of industry rests on their control of political power through their political parties, and as long as this is so, the purpose of the government is to preserve the capitalists' monopoly of the means of wealth production. This is why in the end all governments must take the side of employers, by protecting their ownership of property, by declaring states of emergency, by using troops to break strikes, by imposing wage freezes, by passing anti-union laws. It is also why the workers must organise politically into a socialist party with a policy based on recognition of this class struggle and its irreconcilable nature.

Capitalism is the cause of the social problems that afflict the workers today. Under capitalism the workers are, in the strictest sense, poor, that is, they lack the means to afford the best that is available. People often talk of their being a housing problem, but there is no such problem. There is no reason why enough good houses for all should not be built. The materials exist; so do the building workers and the architects. What, then, stands in the way? The simple fact is that there is not a market for good houses since most people cannot afford to pay for them, and never will be because of the restrictions of the wages system.

So what is called the housing problem is really but an aspect of the poverty problem or, what is the same thing -since it is the other side of the coin -the class monopoly of the means of production.

A little thought will show how capitalism, besides ensuring that the workers stay poor, needs them to be poor. If they could get their living without having to sell their mental and physical energies to the capitalists then the system could not function for who would do the work? By "poor" we do not mean "destitute" though this is an extreme form of poverty. Certainly, as long as capitalism lasts there will be a considerable minority of people who cannot stand the pace and so fall into destitution and have to be kept out of the poor law (for that is what it is even if it is given some fancy name like "supplementary benefit"). The mass of the workers escape this, at least when they are working, because a man who does not get regular meals is a bad worker. That is why wages are generally enough to allow a man to keep himself fit to work.

Housing is just one aspect of the poverty problem. The same applies to the other necessities of life, clothing, shelter, education, travel and entertainment. Here again, in a world of potential plenty the consumption of the workers is restricted by the size of their wage packets and salary cheques.

Capitalism cannot produce to satisfy human needs as production is always geared to meeting market demand at a profit. This means that production is restricted to what people can pay for. But what people can pay for and what they want are two different things so that the profit system acts as a fetter on production and a barrier to a society of abundance. It is also responsible for the periodic ups and downs of production known as the business cycle.

One thing should now be clear about capitalism -it can never be made to work in the interests of workers. It is based on their poverty and exploitation and can only work in the interests of the privileged owning class. A recognition of this is one of the basic principles of Socialist Studies. It can be summed up in the sentence "capitalism cannot be reformed" (at least not so as to be run in the interests of workers). Grasp this and you can quickly see the futility of tinkering with capitalism and trying to tackle each problem on its own.

To solve their problems the workers must abolish capitalism and replace it with Socialism. This will involve a social revolution changing the basis of society from class to common ownership of the means of wealth production. When society owns and democratically controls the means of life then men and women can begin to organise production to satisfy their needs. Production solely for use can take the place of the anti-social principle of production for profit. Exploitation will be ended and a world of abundance made possible.

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