Capitalism
2024-07-25
1 Capitalism
Capitalism, it turns out, is good at economic growth but does a lousy job at serving people’s needs.
The current market-economic model, capitalism, is not win-win.
Capitalism can be understood as society driven by accumulation.
Capitalism is an inherently irrational system because the pursuit of profit to the exclusion of all other considerations leads to disaster.
Capitalism is a class society based on infinite expansion, through the exploitation of labor and the ransacking of nature.
Capitalism has been a deadly detour for humanity.
The current world capitalist system is unsustainable and unreformable.
Capitalism is like a ship where the whole crew has gone under deck to oil the machinery for the greatest speed and efficicency while none stays at the bridge navigating and steering.
Nothing can be done under capitalism to improve the world - we just have to wait for it to collapse.
We must do away with a system whose drive to accumulate capital puts it at war with the mass of humanity and with nature. If we do not imagine the end of capitalism — and act on that imagination — we may well be facing the end of the world.
Capitalism: fr. capita or ‘head’ of cattle etc. = ‘counting-ism’, whose essential tool is the ac-counting statement, and which propels the urge to quantify everything (‘human capital’, ‘social capital’, ‘knowledge capital’, etc., little of which is convincingly quantifiable).
Capitalism is not [only] an ‘economic system’, but a whole social order
“Capitalism” means “an economy controlled by whoever already has capital”
Capitalism is an economic system which in today’s world can be better described as the dominance of the economic system over the political system and society.
Capitalism is a system of ownership NOT a system of production. Capital is a mechanism of ownership NOT a mechanism of production.
In practical, real-world terms, capitalism is the most inefficient system ever invented. Although it produces riches for some, it leaves billions of people at its margins, many fighting to survive, many surviving in precarious positions, environmental destruction built into it, and climate catastrophe almost upon us.
Joseph Schumpeter har lært oss at kapitalismen i bunn og grunn er et resultat av utilsiktede bivirkninger.
Capital is “the characteristic the means of production acquire when they are used to hire labor and generate surplus value”. Milanovic
capital: command-system whose mode of functioning is accumulation-oriented (Mészáros)
capitalist “growth”: a specific bourgeois-imperial project to sustain the accumulation of capital through the exploitation and robbery of humans and the rest of life. (Jason W. Moore)
Capitalism is a human invention. Rulers invented capitalism* basically to extract more from the peasant communities by compeling farmers to extract more from the land and expelling surplus land labour into new industries.
Capital = Value in Motion
Natural Capital - the word “capital” in its original non-monetary sense means “a stock or fund that yields a flow of useful goods or services into the future.” The word “capital” derives from “capita” meaning “heads,” referring to heads of cattle in a herd. The herd is the capital stock; the sustainable annual increase in the herd is the flow of useful goods or “income” yielded by the capital stock—all in physical, not monetary, terms. Money is fungible, natural stocks are not; money has no physical dimension, natural populations do. Exchanges of matter and energy among parts of the ecosystem have an objective ecological basis. They are not governed by prices based on subjective human preferences in the market. Like cattle, capital transforms resource flows into products and wastes, obeying the laws of thermodynamics. Capital is not a magic substance that grows by creating something out of nothing. Daly (2014) Use and abuse of the ‘Natural Capital’ concept
Capital is God. Capital is a real god, the demiurge of the world, which controls us. It demands we sacrifice of our own humanity and nature to it. The ruling class is possessed. We need to band together to overthrow it, and thereby initiate a new epoch of democracy and human flourishing.
Capital is in control, and so everything is out of control.
Capitalism is incompatible with ecology
Jason Hickel: People assume that capitalism is a system defined by markets and trade. But these pre-existed capitalism by thousands of years. What distinguishes capitalism is that it is organized around perpetual expansion and accumulation, which is euphemistically referred to as “growth”. This requires: -enclosure to generate proletarianization -artificial scarcity to generate competitive productivity -an extractive relationship with nature and labour to enable surplus accumulation -“frontiers” where nature and labour can be cheapened and costs externalized Such a system is incompatible with ecology, and incompatible with any vision for a world that’s free of poverty, exploitation and structural inequality. We need to have an open conversation about whether such a system is actually worth clinging to in the 21st century.
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Kate Raworth: It’s just an ultimate absurdity that in the 21st century, when we know we are witnessing the death of the living world unless we utterly transform the way we live, that death of the living world is called ‘an environmental externality.’
Capitalists argues that whoever owns the means of production owns whatever the means of production produces even if they are not the ones who produces it.
Capitalism is an economic system which emerged around five centuries ago and introduced a series of incentives, through competition, to discipline companies and force them to grow in each period, as well as to reinvest profits in order to raise their production capacity to a higher level, in addition to awarding a growing share of those profits to the people who supplied the capital. In this way, under capitalism the whole entrepreneurial fabric is pushed towards boosting its production capacity. This is what, under particular institutional arrangements, has driven the spectacular increase in economic activity, infrastructure and, finally, the living standards of people over the past two hundred years. (Garzon)
Capitalism is just a machine to turn our life support systems into un-spendable wealth.
Capitalism is a system of ownership not a system of production. Owners strategically sabotage production.
Capitalism is run by capitalists and not consumers.
Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.
“We need capitalism,” Senator Marco Rubio of Florida said last year. But “in those instances in which the market’s most efficient outcome is one that’s bad for our people, for our national security, for our national interest, bad for America—in those instances what we need is targeted industrial policy to further the common good and to protect our people, our country, and our future.”
Capitalism is fundamentally a debt based economic system run by the iron (and sometimes not so iron – see Enron’s debacle) law of balance sheets, double-entry bookkeeping and accounting identities.
Capitalism: economic system in which credit finances … mainly the acquisition of companies by leveraged private equity funds and the subsequent keeping afloat of the whole mess after rates have gone up. Trust me it’s all super efficient.
1.1 Definition
Wikipedia
Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Central characteristics of capitalism include capital accumulation, competitive markets, a price system, private property and the recognition of property rights, voluntary exchange and wage labor. In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in capital and financial markets whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.
Milanovic
In the neo-classical world, capital is the sum of values of productive and financial assets. Because capital is extremely heterogeneous, we cannot express it in physical, but only in value terms. This has led to the Cambridge Controversy which petered out but was never resolved. In our usual work on wealth inequality, we also add the value of non-productive assets like jewelry, paintings etc. And for some assets that do not yield cash return, but are used by their owners (like housing) we add them too at their estimated value.
Marx’s concept of capital is very different. Consider for example a shoe-maker who works in his own shop. In our usual work as neoclassical economists, we would estimate the value (price) of all the tools that he owns and include this in our national capital. For Marx though this is not capital. Capital is “the characteristic the means of production acquire when they are used to hire labor and generate surplus value”. Our shoe-maker does hire anyone. His machines are simply the means of production, the physical tools. They are not capital until he expands his store, takes over its management, and hires workers to work with the tools he owns. At that point, the tools become capital. For the national accounting, Marx’s concept of capital will therefore exclude the value of all machines and tools owned by either worker-owners (like our shoemaker) or cooperative firms and most of non-incorporated businesses. In countries where owner-worker sector is relatively large like in Latin America, lots of what is today considered “capital” would cease to be so. From household surveys we know that about a third of total income in Latin American countries comes from the owner-worker sector. We can then venture a guess than perhaps (a bit less than) one-third of what is today considered capital will be “lost”. Since that part of capital is less unequally distributed than the “capitalistic” capital, it is very likely that we would empirically find that the concentration of capital à la Marx is significantly greater than currently estimated.
There is yet another, more difficult, issue. Marx, like all classical authors (Quesnay, Smith, Ricardo), takes wages to be advanced before the process of production begins. It means that if our shoemaker decides to become a capitalist, he not only would have to own the tools (which we already assumed he does), but enough cash on hand to hire workers. This assumption seems much more reasonable than the neoclassical (tacit) assumption that wages are paid at the end of the process of production. Why? Because if wages are paid at the end, then workers are co-entrepreneurs, since their (promised) wage depends on whether our shoemaker-capitalist is able to sell his shoes at the expected price or not. This is clearly unrealistic, or even absurd. Workers do not bear the risk of the enterprise; in fact, the crucial difference between labor and capital owners is that the risk is entirely borne by the latter. If workers’ wages have to be paid before the process of production begins, somebody has to have the wherewithal to do so. That somebody is a capitalist. This is his “variable capital”. Thus, in terms of national accounts and calculations of wealth inequality, we would have to allocate all wage income accrued in capitalist enterprises to their owners. This means that the wages fund of, say Tesla or Google has to be imputed as capital, in its aliquot proportion, to all owners of shares in Tesla or Google. Marx’s concept of capital would therefore include a significant chunk of what goes under the name of labor income today. If I am the owner of 1 percent of Google shares, my capital will not be only the current value of these shares (equal, in principle, to the expected discounted amount of profit), but also 1% of the wage-bill paid by Google. The problem here is the time period: should Google’s future wage bill be cumulated as the value of shares is?
If we use the following notation, A = value of productive and financial assets used in the capitalist sector, B = value of productive and financial assets used in the owner-workers sector, C = non-productive wealth, D = wages paid in the capitalist sector, the current concept of capital is equal to A + B, the current concept of wealth adds to that C, while Marx’s concept of capital would be equal to A + D.
As capitalism becomes more “capitalistic” the very size of what is deemed to be capital expands. This seems to make sense. In an economy composed of small producers, say thousands of small land-holders, the overall capital will be small. There will be very few capitalist enterprises (hence A is small) and wages paid by them will be a small share of the overall labor income. Thus we come to the conclusion that what is capital is historically-determined.
When we compare capital in France and Cameroon, we are not just comparing how many tools exist in France and in Cameroon: we are really comparing how many tools are put to work to generate profit for their owners. There is, in conclusion, no capital as such, outside of the concrete reality and existing relations of production.
1.2 Capitalsim as Mode of Production
Smith
Fundamental principles and rules for reproduction that define any capitalism, and shape the dynamics of capitalist economic development:
Producers are dependent upon the market: Capitalism is a mode of production in which specialized producers (corporations, companies, manufacturers, individual producers) produce some commodity for market but do not produce their own means of subsistence. Workers own no means of production, or insufficient means to enter into production on their own, and so have no choice but to sell their labor to the capitalists. Capitalists as a class possess a monopoly ownership of most of society’s means of production but do not directly produce their own means of subsistence. So capitalists have to sell their commodities on the market to obtain money to buy their own means of subsistence and to purchase new means of production and hire more labor, to re-enter production and carry on from year to year. So in a capitalist economy, everyone is dependent upon the market, compelled to sell in order to buy, to buy in order to sell to re-enter production and carry on.
Competition is the motor of economic development: When producers come to market they’re not free to sell their particular commodity at whatever price they wish because they find other producers selling the same commodity. They therefore have to “meet or beat” the competition to sell their product and stay in business. Competition thus forces producers to reinvest much of their profit back into productivity-enhancing technologies and processes (instead of spending it on conspicuous consumption or warfare without developing the forces of production as ruling classes did, for example, under feudalism). Producers must constantly strive to increase the efficiency of their units of production by cutting the cost of inputs, seeking cheaper sources of raw materials and labor, by bringing in more advanced labor-saving machinery and technology to boost productivity, or by increasing their scale of production to take advantage of economies of scale, and in other ways, to develop the forces of production.
“Grow or die” is a law of survival in the marketplace: In the capitalist mode of production, most producers (there are some exceptions, which I will note below) have no choice but to live by the capitalist maxim “grow or die”. First, as Adam Smith noted, the ever-increasing division of labor raises productivity and output, compelling producers to find more markets for this growing output. Secondly, competition compels producers to seek to expand their market share, to defend their position against competitors. Bigger is safer because, ceteris paribus, bigger producers can take advantage of economies of scale and can use their greater resources to invest in technological development, so can more effectively dominate markets. Marginal competitors tend to be crushed or bought out by larger firms (Chrysler, Volvo, etc.). Thirdly, the modern corporate form of ownership adds irresistible and unrelenting pressures to grow from owners (shareholders). Corporate CEOs do not have the freedom to choose not to grow or to subordinate profit- making to ecological concerns because they don’t own their firms even if they own substantial shares. Corporations are owned by masses of shareholders. And the shareholders are not looking for “stasis”; they are looking to maximize portfolio gains, so they drive their CEOs forward.