Capitalism

Capitalism is the predominant economic system in the world at present. It is a mode of production in which most of the materials and equipment necessary for economic activity are owned and controlled by private companies and wealthy individuals, while the majority of people own little of such means of production, and must therefore work for the few who do, in order to make a living. These and several other distinguishing features of the system are listed below:

There must be a meeting between:

• "owners of money, means of production, means of subsistence"; and
• "free workers," ie., without property but not property themselves.

1. Most of the means of production are owned by a minority of the population, called capitalists (or bourgeoisie).
2. The majority of people are legally free but must of necessity work for a wage or salary (because they do not have enough means of production to enable them to make an adequate living independently).
3. Pervasiveness of markets: Many, perhaps the majority, of the products of people's labour are sold, and many or most of the things a person consumes, she obtains by buying them. This contrasts with earlier forms of economy, where most of the products of the individual or family were consumed within the same family; or where the product was distributed according to rules of custom, eg. feudal dues, or the tithe. In capitalism, besides the basic fact that products are now so often exchanged, there is also the feature that the exchange is usually for money: barter is now rare.
4. Advantage of capitalists: Because of her greater wealth and social position, the capitalist has a degree of power over the worker which enables her to,
   • control the production process, including
     • what is produced
     • how it is produced;
   • take part of the product for herself although she does not necessarily work (she appropriates surplus-value).
5. Pervasiveness of competition: Individual capitals operate in an environment of competition with other capitals producing the same commodity or a substitute, and fighting for markets or loans. This forces the capital to, among other things, adopt new techniques and practices which will cut costs, and to attempt to increase its size so that it can dominate its competitors as well as achieve economies of scale.

`The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.' — Marx & Engels, Communist Manifeso, Chapter 1

A IWW poster critiquing Capitalism by showing the class system

Differences of definition

The definition of capitalism in scientific socialism is different from the one used by its adherents themselves. Liberals and pro-capitalist ideologues define capitalism as a combination of free market systems, private property, free competition and voluntary exchange. This and similar definitions carry limitations that prevent capitalism's adherents from analyzing it in a holistic manner. The lengths taken by the bourgeoisie to justify the system and their profits include the denial of atrocities like the Bengal Famine or the Pinochet regime as 'not real capitalism'.

History

In the context of Marxist historical materialism, as serfdom and the small commodity production of artisans and craftsmen in feudal times was increasingly superseded by the emerging merchant class, increasing productive forces allowed for a change in property relations that led to the displacement of the feudal aristocracy as the dominant economic class in favor of the bourgeoisie. This occurred by means of several bourgeois revolutions. In this context, historical materialism considers capitalism to be a progressive development compared to feudalism;

The progressive historical role of capitalism may be summed up in two brief propositions: increase in the productive forces of social labour, and the socialisation of that labour.

— Lenin, The Development of Capitalism in Russia

Contradictions

The fundamental contradiction of capitalism is that between the social character of production and the private capitalist form of appropriating the product of labor. This contradiction expresses the profound antagonism between wage labor and capital, between the developing productive forces and the capitalist relations of production which shackle them. As the modern productive forces, based on large mechanized industry, develop, production becomes more and more concentrated, the social division of labor progresses, leading to a widening and intensification of the economic links between the various enterprises and branches of the economy.

During the production of each commodity, there is, directly or indirectly, participation of enterprises of different branches of production and hundreds of thousands to millions of workers, grouped in the capitalist enterprises. The process of production and work, through the development of productive forces is increasingly socialized. However, both production and its results do not belong to those who are really its creators — the workers — but to private persons, to the capitalists, who use the social wealth for profit, and not in the interest of society as a whole.

Governments under capitalism

Under capitalism, the law is placed firmly "in the service of capital." As Professor of Comparative Law at Columbia Law School Katharina Pistor further elucidates: "Through its courts, bailiffs, and police forces, states enforce not only their own commands, but also private property rights and the binding commitments private parties make to one another. This does not mean that state power is omnipresent. As long as the threat of coercive law enforcement is sufficiently credible, voluntary compliance can be achieved without mobilizing it in every case."

References

Bibliography

Print sources

• Pistor, Katharina (2019). The Code of Capital: How the Law Creates Wealth and Inequality. Princeton University Press. ISBN 0691189439.