Wednesday, August 02, 2017

This is what capitalism really is

 “The difference between the white slave, and the black slave, is this: the latter belongs to ONE slave-holder, and the former belongs to ALL the slave-holders, collectively. The white slave has taken from his, by indirection, what the black slave had taken from him, directly, and without ceremony. Both are plundered, and by the same plunderers.”  Frederick Douglas, former slave, 1855

Capitalism’s problems are often isolated as single issues to obscure the flaws of the entire system. Capitalism is an economic system where, under pressure from the market, profits are accumulated as further capital, i.e. as money invested in production with a view to making further profits. This is not a matter of the individual choice of those in control of capitalist production – it’s not due to their personal greed or inhumanity – it’s something forced on them by the operation of the system. And which operates irrespective of whether a particular economic unit is the property of an individual, a limited company, the state or even of a workers’ cooperative. Capitalism breeds inequality. Capitalism is wage slavery. Capitalist exploitation occurs as a result of the normal operation of market forces. 

Let’s clarify what is meant by markets. It was with the emergence of the capitalist system that society lost its direct control of its productive resources. In previous societies, it was often the case that production was at near maximum capacity given the technology and resources available and this determined what could be distributed. In times of good harvests, the whole community could benefit in some shape or form. But with the development of the capitalist system, this was eroded as what is produced depends crucially on what can be sold. This means that distribution through sale in the markets determines production and this is always less than what could be produced.

Capitalism is a market economy, but not a simple market economy. A key difference, of course, is that under capitalism production is not carried out by self-employed producers but wage and salary workers employed by business enterprises. In other words, by profits, we mean income that flows to the owner of a workplace or land who hires others to do the work. In other words, under capitalism, the producers have become separated from the means of production. This makes all the difference.

Marx explained the difference when he said that what happens in a simple market economy is that the producers brought to market a product of a certain value which they sell for money in order to buy another product or products of equal value. The economic circuit is commodity-money-commodity (C-M-C), the aim being to end up with a basket of useful things. Under capitalism the economic circuit is different. A capitalist sets out with a sum of money which they use to buy commodities (factory buildings, raw materials, working skills) that can be used to produce other commodities with the aim of ending up, after these other commodities have been sold, with more money than they started off with. So the circuit is now money-commodities-more money (M-C-M+).

Capitalism is an economic system of capital accumulation out of profits. This is its dynamic. Profits are made by competing firms which, in order to remain competitive, have to re-invest most of them in new, more productive machinery and equipment. The result is the accumulation of a greater and greater stock of productive equipment used to make profits or capital. Capitalism is the system of capital accumulation and is derived from the surplus value produced by the class of wage workers. It is the workers who produce the wealth, and the capitalists who make their profits from our unpaid labour.

Market capacity is inherently unpredictable. If too many goods are produced for a market and they remain unsold, a crisis and recession may occur with reduced production, increased unemployment, bankruptcies, and large scale writing-off of capital values. Despite the many attempts that have been made, no theory of economic management has ever been able to predict or control the anarchic conditions of the market system. This is rule by market forces which serve minority interests and which generate the insecurities, crises, and conflicts that shape the way we live. The fact that we have great powers of production that cannot be organised and fully used for the benefit of all people has devastating consequences and is at the root of most social problems. In this way, the capitalist system places the production of goods and services, on which the quality of all our lives depends, outside the direct control of society. Capitalism cannot produce primarily 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 the profit system acts as a fetter on production and a barrier to a society of abundance. Wherever wealth is produced for sale on a market—wherever, that is, there is commodity-production—economic forces are unleashed which come to dominate production and orient it away from satisfying people’s needs. The operation of these laws means that production is not subject to human control, with the result that it is not human values that are paramount in society, but market values, commercial values, the cash nexus.

But the picture of capitalism is still not complete.

Capitalist investors want to end up with more money than they started out with, but why? Is it just to live in luxury and consume? It is possible to envisage such an economy on paper. Marx did, and called it “simple reproduction”, but only as a stage in the development of his argument. By “simple reproduction” he meant that the stock of means of production was simply reproduced from year to year at its previously existing level; all of the profits (all of M+ less M) would be used to maintain a privileged, exploiting class in luxury . As a result, the M in M-C-M+ would always remain the same and the circuit keeps on repeating itself unchanged. This, of course, is not how capitalism operates. Profits are capitalised, i.e. reinvested in production, so that production, the stock of means of production, and the amount of capital, all tend to increase over time. The economic circuit is thus money-commodities-more money-more commodities, even more money (M-C-M+-C+-M++). In order to make more money, money must be transformed into capital.

This is not the conscious choice of the capitalists. It is something that is imposed on them as a condition for not losing their original investment. Competition with other capitalists forces them to reinvest as much of their profits as they can afford to in keeping their means and methods of production up to date. They cannot act contrary to the inner nature of capitalism which requires the constant accumulation of capital and the opening of new markets throughout the world. And it cannot avoid that increasing productivity of labor which means more production for less expenditure of labour.

The modern slave-owner has no such interest in his slaves. He neither purchases nor owns them. He merely buys so much labor-power – physical energy – just as he buys electric power for his plant. The worker represents to him merely a machine capable of developing a given quantity of labor-power. When he does not need labor-power he simply refrains from buying any. Wage slavery is the most satisfactory form of slavery that has ever come into existence, from the point of view of the masters. It gives them all the slaves they require and relieves them of all responsibility in the matter of their housing, feeding, and clothing.

 Instead of the pressures that force people to sell their working skills to an employer, people in socialism will work as a voluntary expression of their relationship with others. Needs will replace the drive for profits and the dictates of the market in deciding what must be done. Instead of the authoritarian control imposed by boards of directors and their corporate managers, production units will be run democratically by the people working in them. Instead of the state and its government of people, in socialism, people will contribute to the decisions made democratically by the community. Wage slavery will be overthrown and labour power ceases to be a commodity. The workers, being the owners of the means of production, will also be the owners of the wealth produced, each individually enjoying what they have collectively produced.

Wage slavery has become the only option for the majority to sustain itself. The capitalist system was created through acts of theft and murder. This reality is continually defended by theories of the ideal capitalist model claiming as you do to be a return to “economic justice”, which actually only seeks to legitimise the capitalist’s source of wealth and power – the exploitation of labour for the extraction of profit.

It would be wrong to confuse exploitation with low wages. It does not matter if real wages do go up or not. The absolute level of those wages is irrelevant to the creation and appropriation of value and surplus-value. Labour is exploited because labour produces the whole of the value created in any process of production but gets only part of it back. On average workers sell their labour-power at a “fair” market price and still, exploitation occurs. As sellers of a commodity (labour-power) they do not receive its full worth i.e. what they actually produce. Nor do they have a say in how the surplus value produced by their labour gets used.

The worker goes into the labour market as an article of merchandise, and his wages, that is, his price, is determined like that of any other article of merchandise, by the cost of production (i.e. the social labour necessary), and this in the case of the worker is represented by the cost of subsistence. The price of labour power fluctuates by the operation of supply and demand. There are generally more workers in the market than are actually required by the employers, and this fact serves to keep wages from rising for any length of time above the cost of subsistence. Moreover, machinery and scientific applications are ever tending to render labourers superfluous, with a consequent overstocking of the labour market, a decrease of wages, and an increase in the number of the unemployed. Under these conditions, relative poverty is necessarily the lot of the working-class.

We have the worker entirely dispossessed of the means of getting a living except by selling himself as an article of merchandise to the owners of the means of living. This is wage-slavery. While capitalists are as a class against the workers as regards the ownership of the wealth produced by the working-class, they, the capitalists, are also antagonistic to one another in the endeavour to get the larger share of the markets. It wasn’t just Marx but also Fourier who pointed long ago that this competition could only end in monopoly, and we do see concentration going on in every branch of industry.

Many seek a capitalism with the rough corners smoothed out, the utopian aspiration of a tamed capitalism. What is really required is a fundamental change of the economic basis of society. Many seek an idealised world and call for governments not to interfere in the operation of the market, to let market forces operate unhindered – laissez faire – and that the detrimental effects of the capitalist system can be eliminated by taming global corporations. For as long as capitalism has existed state “interference” or state “intervention”, in the economy has always existed. A corporation-dominated government is really the logical outcome of a class-divided society where the state must serve the owning minority. Individualists attack socialism because they fear the whole of the wealth of society shall be owned by a number of persons incorporated into a State or a bureaucracy, instead of being, as at present, owned by private individuals. They maintain that the right of the individual is supreme, and condemn any action on the part of a State or collection of individuals, that interferes with their desires. But socialists are not statists, that if the working class was compelled to work for a State instead of for individual employers then wage-slavery is not abolished, but is intensified.The worker to-day, while compelled to work for an employer, still has some sort of a choice among those masters, but with the State as the only employer, he is compelled to work for that employer and under all of that employer’s conditions or take the only other alternative – starvation. State-capitalism (or as some like to call it State Socialism) would intensify slavery, but state-capitalism is not socialism.

People completely misunderstand Marx if you believe that his solution was to have GOVERNMENT-OWNERSHIP of the means of production and his object was to simply just to REDUCE the power of the capitalist because he wished a mere re-distribution of wealth between capitalists and the working class. He stood for the ABOLITION OF THE STATE and he stood for the ABOLITION OF CAPITALISM [not its replacement by capitalism in another form]. Marx was in favour of the abolition of the state and its replacement by an “association of associations”, i.e. by a co-ordinated network of neighbourhood councils and producer-controlled production units. Marx  made quite clear when he says “The existence of the state is inseparable from the existence of slavery…”

What is called for is a community where each contributes to the whole to the best of his or her ability and takes from the common fund of produce what he or she needs. The Earth can no longer be owned; it must be shared. Its fruits can no longer be expropriated by the few, they must be rendered available to all on the basis of need. Power must be freed from the control of the elites and be redistributed in a form that renders its use participatory. Capitalism allows the right of self-management only to the few, not to all. Bosses have the power, workers are paid to obey. Workers are subject to control from above which restricts the activities they are allowed to do and so they are not free to act, make decisions, participate in the plans of the organisation, to create the future and so forth. Thus we have “free” workers within a relationship lacking freedom. Until you support and work towards the society that is based on the principle ”from each according to their ability, to each according to their needs”, then you remain fixated upon the status quo of a society constrained by artificial rationing through the market and money system, a “can’t pay - can’t have” society that is inherently coercive, that has police and courts and jails to ensure its continued existence.

Educate yourself and learn more 

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