Socialist Studies Socialist Studies

Capitalism: A Force for Good or for Evil?

Unpopular capitalism

Up until 2008 economists, politicians and capitalists would meet in the alpine resort of Davos to celebrate capitalism and its supposed magnificence. However, since the economic crises and subsequent trade depression in August of that year there have been many long faces and acrimonious squabbles between sections of the capitalist class meeting there; notably between industrialists and bankers and their respective politicians. Questions have been asked of capitalism and what went wrong. Fingers have been pointed at the once smug economists who had told politicians that economic crises were a thing of the past.

Outside the plush conference halls and expensive restaurants – it costs £25,000 per delegate to attend the Davos jolly - the anti-capitalist protestors appear to have a case against the profit system with its greed and anti-social purpose. Austerity is affecting the lives of the working class everywhere; the unemployment rate in Spain alone is 26% and in Greece the striking metro train drivers struggling against cuts to their pay and conditions were forced back to work on pain of imprisonment. The depression in the US with its high levels of unemployment continues unabated while in Britain the economic chill matches the weather. Yet the wealth of the capitalist class is almost unimaginable –and growing. Acording to Oxfam, the top 100 billionaires received $240 billion in 2012, about 40% of the world’s entire wealth.

David Cameron has noticed that capitalism is having a bad press. There are no signs of a popular capitalism. So he took the opportunity on his visit to Davos this January to give what the journalist Patience Wheatcroft called “A robust defence of capitalism” (EVENING STANDARD 29th January 2013). In fact Cameron’s defence of capitalism was limp and withering. Robust it was not.

In his speech, Cameron referred only once to “authoritarian capitalism”; a warning of the threat posed by China’s economic and political model being adopted by developing capitalist countries at the expense of “Western liberal capitalism”. China’s growth rate and ability to move capital fast has excited many European capitalists who see their own economies weighed down by debt, overarching reliance on the finance sector, an unaffordable welfare state, too much tax and red-tape bureaucracy.

Not once in his speech did Cameron show any understanding of the basis of capitalism with its contradictions and conflicts, nor did he grasp the economic laws acting upon commodity production and exchange for profit and nor could he explain why capitalism had passed into an economic crisis and subsequent trade depression in the US and Western Europe. His own ignorance of capitalism only mirrored those of the “anti-capitalist” protestors outside the conference hall in the cold alpine winter snow. The protestors wanted “fairness”, “increased government regulation” and “retribution against greedy bankers”. However, capitalism cannot be reformed to work in the interest of all society neither by regulation nor punishment of the bankers.

In fact there is nothing “wrong” with capitalism. As Marx showed, unemployment and its rise to peak levels in periodical phases of trade depression arise out of the structure of capitalism itself, and these events are therefore inevitable while capitalism lasts. An understanding of the economic laws acting on capital in motion escapes the arid wasteland of moral outrage and the politics of reform.

Are there good capitalists?

Defenders of capitalism do not want the profit system to be depicted in a bad light and moral sentiment against greed and selfishness is in fact no argument against capitalism. Competition and amassing capital is at the very heart of the profit system. Moral outrage changes nothing.

In her own article Ms Wheatcroft gives examples of “good capitalists” – Henry Wellcome, for example, who left his fortune to charity and the work of contemporary philanthropists like Bill and Melinda Gates and Warren Buffet who have recently all set up charitable foundations.

However, Ms Wheatcroft does not ask where the profit to fund all these charitable works comes from in the first place. Like David Cameron, her understanding of capitalism and how it works is based on ignorance. She cannot explain why “we are continuing to endure economic misery that has left the majority feeling significantly worse off”. As for her “answer” to this economic misery of spreading the pain “evenly” across the entire population, it is nothing more than wishful thinking. When Cameron tells “us” we have to live austere lives for the next ten years he does not mean the capitalist class. Bernie Ecclestone’s daughter blew over £30,000 on champagne at a night club more than the average British salary of £26,500 (DAILY MAIL 30th Jan 2013).

Although politicians like David Cameron and journalists like Patience Wheatcroft have been forced to begrudgingly acknowledge the existence of capitalism, even though they do not have the foggiest ideas of how the economy works, they are extremely reticent in discussing why capitalists exist as a distinct class. Capitalists are individuals but it is as a class that they have economic and political significance. They are not a discrete group of individuals any more than workers but instead they form a diametrically opposite class to the interests of the working class based on the ownership or non-ownership of the means of production and distribution.

In owning the means of production and distribution – the raw resources, factories, communication and transport system and distribution points - the capitalist class force the working class onto to the labour market to sell their ability to work or labour power for a wage or salary. The function of the capitalist class is to ensure the exploitation of the working class; the generation of surplus value and the expansion of value from one circuit of production to the next. Marx refers to the capitalist class as the “personification of capital” because what drives this class forward is the accumulation of capital as an anti-social objective under pain of competition.

Marx’s own understanding of Capitalism

Marx gave an understanding of capitalism in his three volume work Capital. Marx did not discover the working class but he did reveal the way the working class is exploited by the capitalist class in the productive process and why the working class was also a revolutionary class in resolving the contradictions thrown up by generalised commodity production and exchange for profit.

Marx showed that the labour power sold by the working class as a commodity in exchange for a wage has a value through being determined by the socially necessary time required to produce this commodity. The value of labour power depends on the amount of socially necessary labour to produce the essential necessities of social existence for the worker and their family under capitalism – food, clothes, housing and so on.

However, during the working week the working class works a necessary labour time. During this time the working class produce the value of their wages. But if this takes 25 hours of a 37 hour week the working class still have to continue working a surplus labour time of 12 hours. During the period of surplus labour time the working class produce a surplus value congealed in the commodities they produce for their employers. And when these commodities are sold on the market they realise a profit which is shared out among the capitalist class in the form of unearned income of rent, Interest and profit.

The exploitation of the working class by the capitalist class takes place in “authoritarian countries” and “liberal countries” alike. The capitalist class in China exploits the working class just as the capitalist class do elsewhere throughout the world.

Exploitation takes place whether the capitalists are good, bad or indifferent towards the workers they employ; whether they evade tax or give to charitable causes; pay themselves huge bonuses or give money to capitalist political parties like the Tories, Labour and the Liberal Democratic.

The exploitation generates not only a class struggle over the intensity and extent of exploitation but also a political struggle by a revolutionary working class to free the forces of production including social labour from the impediment imposed by capitalist class relations.

Who won the class war?

For Bill gates and Warren Buffet to give away a sizeable proportion of their wealth is only to say that they are giving away a portion of their unearned income which has been derived from the exploitation of the working class in the first place. If Socialism existed and there was free and direct access to what people needed to live creative and worthwhile lives there would be no need for charity.

Although Cameron and other politicians shy away from using the terms “capitalist class” and “class struggle”, lest we forget, it was Warren Buffet who said of the class struggle: “My class has won: and it has been a rout”. Of course, it is too premature for Mr Buffet to say his class has won but it does give a lie to the claims made by defenders of the capitalist class that it does not exist.

Capitalism is neither good nor bad because the Socialist case against capitalism is not a moral one. Capitalism deliberately underproduces to the requirements of the market not in meeting human need. Capitalism can never work for “the greater good” as Ms Wheatcroft misleadingly believes because the profit system exists only to serve the privilege and comfort of the minority capitalist class.

When capitalism passes through an economic depression the pain can never be spread evenly but only onto the lives of workers and their families. And this is why Mr Buffet is wrong to believe the capitalist class has won. Capitalists could only win by demonstrating that capitalism can be run in the interest of all society; that it produces for people rather than for profit; and it no longer causes social problems like war, poverty and unemployment. They can’t. Everywhere in the world the experience of capitalism by the working class shows Buffet’s claim to be moonshine.

Wheatcroft’s worry is that people will look “for different answers”. Quite right; they should, but not from the failed politics of state nationalisation of the 1930’s which was only a different form of exploitative capitalism to the one found at the time in the US and Britain. Instead the working class should look to a Socialist answer to their problems and take conscious and political action to replace capitalist production for profit by the common ownership and democratic control of the means of production and distribution by all of society.

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