This is from a pamphlet by a group called Revolutionary Praxis, a Maoist group out of the UK that I really like. Their argument is that capitalism sucks so much that we need to get rid of it altogether. I’m not willing to go that far, but I do that that the capitalist mode of production sucks balls to the high heavens.
Can capitalism be reformed? I suppose it can. That was the whole idea behind social democracy. We now have folks in the 3rd World who are explicitly trying to use a sort of a “Left capitalism” try to modify capitalism via the state in order to better serve the masses, raise standards of living, reduce poverty and inequality and redistribute income. All the power to them. I’ll support any kind of Left Capitalism anyone can come up with.
But here we have a problem. Left capitalism will always be opposed by almost all of the capitalist class. In capitalist societies, the capitalist class has all the power, and worse, owns the media. Worse than that, they control the police and even uglier, the military. If push comes to shove, the capitalists always, always, always use a military coup to overthrow any state that is hostile to their interests. Such coups have always been supported if not funded and masterminded by the United Snakes, the world’s leader in “promoting democracy.”
The discussion of John Lewis Partnership below is interesting. It appears that this firm does not operate under the capitalist mode of production. Instead, it is using a different mode. The cooperative mode of production?
It is obvious that the current mode of US capitalism has been ripping off workers for their pension plans for a long time now. So why support it? The pension plans of the workers are being dissolved and stolen by the corporations in order to increase profits and the salaries of executives. What in this pension plan model for the average worker? Why do you guys support this?
Revolutionary Praxis ends this piece by calling for the overthrow of capitalism. I’m not sure if that is the answer, but capitalism sure sucks. You won’t even find me cheerleading for capitalism. Another dilemma is that the alternatives to capitalism don’t seem to work very well either and have a ton of their own problems.
Can Capitalism Be Fair?
The economic problems of capitalism are deepening with living standards
falling and mass unemployment rising,This system is failing to satisfy
the needs of the majority of people while the bankers go on taking their
multi-million pound bonuses.Yet political leaders David Cameron, Nick
Clegg and Ed Miliband claim that they can make capitalism”responsible”
and “fair” so that it works well for everyone.
Capitalism Exploits
In Britain today a small minority of capitalists – one percent or less
of the population – own and control most of industry and commerce. This
enables them to employ workers to produce goods and services to be
sold. However the wages received by workers are less than the value their
work has created. The part workers are not paid is the source of the
profits received by capitalist shareholders. Thus by its very nature
capitalism is exploitative and unfair.
Cameron and Clegg misleadingly hold up the John Lewis Partnership as an example of “fair” capitalism. This firm is a highly successful chain of
department stores whose employees receive much better pay, working
conditions and pensions than those employed by competitors such as
Debenhams. The reason is that all of the employees collectively own the
firm so there are no capitalist shareholders receiving profits. John
Lewis employees are not exploited because they receive the full value
they create. It shows that we don’t need capitalists.
Cameron and Clegg come from families of rich capitalists. When Cameron
refused to agree to the financial transactions tax proposed by EU
governments he was not serving the interests of the British people. He
was protecting the profits of his friends and relations in British
banking and finance, an important section of the capitalist ruling class.
Pensions and Profits
With private company pension schemes, such as at Unilever, employees and employers pay contributions into a fund which is invested in company
shares and government stocks. When employees retire they receive pensions from the money accumulated, which includes profits, except that increasingly this system is not working.
Ever since the 1990′s many firms have been closing their old pension
schemes to new employees and only offering inferior schemes which will
pay lower pensions. One reason for this is that for many years a lot of
employers did not make contributions to pension funds thus reducing
their value. Also the fall in share prices in recent years has reduced
the value of pension funds. Meanwhile the top executives of capitalist
firms go on awarding themselves enormous salaries and pensions.Is this
“fair” capitalism?
Employees of companies without pension schemes and self-employed people need to invest in personal pension schemes. They pay money to a bank or insurance company to invest in stocks and shares. Then at retirement the accumulated fund is used to buy an annuity pension. Meanwhile high management charges have been taken from the fund. Thus people often find their retirement pot is worth no more than the money they paid in and they receive only a small pension. For them, investment in capitalist firms has not worked.
It is clear that capitalism works for the capitalists but is no good for
the workers.
Some spot on clear thinking on this blog lately.
This firm is a highly successful chain of
department stores whose employees receive much better pay, working
conditions and pensions than those employed by competitors such as
Debenhams. The reason is that all of the employees collectively own the
firm so there are no capitalist shareholders receiving profits. John
Lewis employees are not exploited because they receive the full value
they create. It shows that we don’t need capitalists.
I’m not sure I agree with this. I generally like the idea of employee ownership very much, however how is this still not capitalism? The factors of production (land, labour, Capital, Entrepreneurship) are still geared towards the accumulation of profit, which is then in turn re-invested as Capital. If anything, the above example shows you that capitalism CAN be fair if the system is democratized. That is essentially the key issue as the operation of the modern corporation resembles an aristocratic society with a clearly defined class structure with each tier having their own rights and limitations (shareholders, workers, boards ect). This is the curious paradox of western societies, the sharing of power is democratic, however the generation and sharing of wealth is anything but. Employee ownership might be a small step in the right direction.
I believe that if the employees actually DO own the firm, then that’s not capitalism, because capitalism is based on exploitation of labor. I don’t think family owned or single person owned firms are capitalist either. There’s no exploitation of labor. Remember the labor theory of value is the essence of what is wrong with capitalism.
Last time I checked, worker owned collectives were not considered to be a capitalist mode of production.
“”I believe that if the employees actually DO own the firm, then that’s not capitalism, because capitalism is based on exploitation of labor.”"
That’s a very hostile reading of Capitalism. Every ideology must be given a fair trial. There’s no doubt that Capitalism has caused many ills in society, but it cannot simply be done away with, it needs to be reformed and regulated.
“”Remember the labor theory of value is the essence of what is wrong with capitalism.”"
The LTV is quite irrelevant in our services and tertiary dominated economy. At best it applies to heavy manufacturing centered economies (like the one Marx lived in), but we don’t have many of those anymore, and it ignores the temporal nature of economic value. Even co-operatives need to put away some money so that it can be re-invested in the business in order to sustain it. It’s inescapable. I don’t deny the Marxist influence of worker owned firms, but this is merely a small island of Marxism in an essentially capitalist ocean. Capitalism can be regulated; the welfare state and worker owned firms are steps in the right direction. But labour cannot be the sole determinant of value and the accumulation of capital is still central to every economic activity. This how it’s going to be unless there’s a major economic paradigm shift.
“I believe that if the employees actually DO own the firm, then that’s not capitalism, because capitalism is based on exploitation of labor.”
Thats the key. The primary motive of a capitalist is max profits, a kind of ‘the ends justify the means’. When democracy and workers union comes it, it is not longer capitalism, but socialism.
Thanks for this, comrade. I have heard though that cooperatives are a third mode of development.
1. Capitalist mode of development
2. Socialist mode of development
3. Cooperative of development
Supposedly it’s a third way altogether, but if you wish to see it as a form of socialism, I would not object. Getting rid of the profit motive altogether causes all sorts of problems.
“Getting rid of the profit motive altogether causes all sorts of problems.”
Exactly, which is why I don’t agree with complete socialism. Hardcore socialism removes the incentive to work hard, while hardcore capitalism stops treating people as humans.
@Robert
I think there is also a problem with everything being centrally controlled and regulated as in state socialism. It seems antipathetic to freedom and creativity. And perhaps the government have too much power.
I came to this blog for Bigfoot, but I like the economic analysis here too!
Personally I believe that the next form our economy should take is to replace corporations with worker cooperatives. How to bring this about is another story, of course, but perhaps some sort of a foundation to provide start-up capital? In any case, capitalism can’t last forever–see Istvan Meszaros’ brilliant tome (all 1000+ pages), “Beyond Capital”. The gist is that, eventually, as global disparity increases and capitalism has colonized all of life that’s colonizable, growth will slow and the system will collapse. (It’s imperative is growth, after all–i.e. continuing profit.)
–Peter
So wouldn’t the ‘cooperative mode of development’ actually be a ‘hybrid’ of socialism & capitalism?
How would a ‘cooperative mode of development’ deal with sectors where ‘socialism’ has actually been proven to be most beneficial? (ie healthcare)
That would have to be left to the state, of course. Whether or not it’s a hybrid of capitalism and socialism is hard to say. I prefer to think of it as a 3rd mode of production.
Right now we have a mix of socialism and capitalism where the wealth is generated by the private (capitalist) sector and the public (socialist) sector is funded by tax money. In the society we are talking about, the public sector could continue business as usual or non-business as usual, run on tax money raised in the usual way. The difference is that private sector businesses would be owned and run by worker’s cooperatives, instead of capitalists who exploit the workers (by paying them less than the wealth they create and keeping the rest*). It would be a mix of state socialism and worker’s cooperatives. There is a market economy but capitalist relations of production and capitalist exploitation are eradicated. This also eradicates a capitalist class who control the media, manipulate political discourse and corrupt politics to constantly forward their selfish agenda. It would be up for discussion which industries or services are best run publicly but this discussion could take place honestly in the absence of right wing media.
* Exploitation takes place in a society where the workers do not own the means of production (land, factories, tools etc). The means of production are owned by an elite class. The workers have no choice but to sell their labour and they are paid less than they produce. The elite class, who produce nothing, keeps the rest, which they are entitled to simply by their ownership. Since there are few of them and many workers, and they are making money off every worker, they end up with most of the wealth, which they may use to protect and forward their interests. They can directly get more of the wealth either by paying the workers less or making them work more, which is why they may be opposed to unions and workers rights and minimum wage. The interests of the owner and worker class are opposed- if one gets more, the other gets less. It might seem like there was more class warfare back in the 70′s when the unions were strong but its just that the capitalists have been winning since the 80′s.
In a fair system, workers would be rewarded fairly and more or less equally for their indispensable contribution to the enterprise. There wouldn’t be a separate owner and worker class and therefore no class warfare. It may also do away with the worker’s feeling of alienation from their work since they would be creatively involved in their own project.
This is for Dota too, who thinks that capitalism isn’t necessarily exploitative or whatever he said. Even in service industries, the business takes in money in exchange for services and the workers who provide those services are paid less than the service is sold for, with the rest going to the owners to keep or reinvest. Exactly the same principle. Workers paid less than the value of their work and owners getting rich.
oh granted that in a cooperative system the workers would still get less than the value of their work because they would have to, as you pointed out, save some to reinvest. But they would do this voluntarily for the longer term collective good of the workers- to generate more profits for themselves. Plus they would probably be paid closer to the value of their work and there would be nobody exploiting them.
Capitalism is always purposed for individual interests and never for social welfare. Any one who reads the history of capitalism can understand it.
Pingback: Capitalism Must Go!! « Robin Hood Rules OK
Pingback: Why setting fire to capitalist pig dogs is the only answer « moreshortstuff