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Tuesday, July 20, 2021

Socialism isn't Capitalism

 


All human beings, just by virtue of being human, are entitled to certain basic conditions of freedom and dignity. Under the capitalist system, basic goods and services are produced for and obtained from the market. But above all, it’s a system in 
which the main economic actors, workers and employers, are dependent on the market. Market dependence is the essence of the system. This unique way of organising material life has had a relatively short history. Other societies have had markets, but only in capitalism is dependence on the market the fundamental condition of life. This means that a wide range of human activity is subject to the market and determined by its requirements in a way that was never true before. Workers who supply our goods and services are market-dependent because they generally live by selling their labour-power for a wage. In other words, labour-power has become a commodity. Capitalists depend on the market to purchase labour-power and capital goods and to sell what the workers produce. 

But do workers in capitalism really get paid for all the work that they do? What are they actually paid for? They’re paid for their labour-power for a certain period of time, not for what they actually produce during that time. Whatever the workers produce belongs to the capitalist, and the capitalist appropriates the difference between what the workers are paid and what their products or services will fetch on the market. So capitalists appropriate the surpluses produced by workers in the form of profit. Capitalists have to compete with other capitalists in the same market. Competition is, in fact, the driving force of capitalism — even if capitalists often do their best to avoid it, by means, for example, of monopolies. But the social conditions that, in any given market, determine success in price competition is beyond the control of individual capitalists.

Since their profits depend on a favourable cost/price ratio, the obvious strategy for capitalists is to cut their own costs. This means above all constant pressure to cut the costs of labour. This requires constant pressure on wages, which workers constantly have to resist. It also requires constant improvements in labour productivity. That means finding the organisational and technical means of extracting as much surplus as possible from workers within a fixed period of time, at the lowest possible cost. To keep this process going requires regular investment, the reinvestment of surpluses. Investment requires constant capital accumulation. So there’s a constant need to maximize profit. The point is that this requirement is imposed on capitalists, regardless of their own personal needs and wants. Even the most modest and socially responsible capitalist is subject to these pressures and is forced to accumulate by maximising profit, just to stay in business. CEOs like corporate social responsibility. But capitalism itself puts severe limits on that. The need to adopt maximising strategies is a basic feature of the system and not just a function of irresponsibility or greed — although it’s certainly true that a system based on market principles will inevitably place a premium on wealth and encourage a culture of greed.

The need constantly to improve the productivity of labour generates constant improvements in technology for what’s conventionally called economic growth. But it also has contradictory effects. Capitalism is prone to constant fluctuations, not only short-term “business cycles” but also constant crises of overcapacity and overproduction and a tendency to long-term downturn and stagnation - the capitalist crises.

There’s a huge disparity between the productive capacities created by capitalism and what it actually delivers. Production is determined not by what’s needed but by what makes the most profit. Everyone, for instance, needs decent housing, but good and affordable housing for everyone isn’t profitable for private capital. There may be a huge demand for such housing, but it’s not what the economists call “effective demand,” the kind of demand with real money behind it. If capital is invested in housing, it’s most likely to be high-cost homes for people with money. That’s the whole point of capitalism.

Where production is skewed to the maximisation of profit, a society can have massive productive capacities. It can have enough to feed, clothe, and house its whole population to a very high standard. But it can still have massive poverty, homelessness, and inadequate health care. You only have to look at the United States, where there are some of the highest rates of poverty in the developed world and where tens of millions have no access to affordable health care. With its emphasis on profit maximisation and capital accumulation, it’s necessarily a wasteful and destructive system of production. It consumes vast amounts of resources, and it acts on the short-term requirements of profit rather than the long-term needs of a sustainable environment. Capitalists answer not to the will of the people but to the demands of the market and profit. There’s no such thing as capitalism governed by popular power, no capitalism in which the will of the people takes precedence over the imperatives of profit and accumulation, no capitalism in which the requirements of profit maximisation doesn’t dictate the most basic conditions of life. The essential condition for the very existence of capitalism is that the most basic conditions of life have been commodified, turned into commodities subject to the dictates of profit and the “law”’ of the market.

Workers aren’t legally dependent on capitalists. They’re not slaves or serfs. They’re not in conditions of debt bondage or peonage. They’re obliged to work for capital not because they’re compelled by the capitalist’s superior force, but because they need to sell their labour-power for a wage just to get access to the means of subsistence. Marx called this exploitation. 

 


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