Criticism of capitalism
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Criticism of capitalism ranges from expressing disagreement with the principles of capitalism in its entirety to expressing disagreement with particular outcomes of capitalism.
Criticism of capitalism comes from various political and philosophical approaches, including anarchist, socialist, religious and nationalist viewpoints. Some believe that capitalism can only be overcome through revolution, and some believe that structural change can come slowly through political reforms. Some critics believe there are merits in capitalism and wish to balance it with some form of social control, typically through government regulation (e.g. the social market movement).
Prominent among critiques of capitalism are accusations that capitalism is inherently exploitative, that it is unsustainable, that it creates economic inequality, that it is anti-democratic and leads to an erosion of human rights and that it incentivizes imperialist expansion and war.
- 1 Issues
- 2 History
- 3 Criticisms of capitalism
- 4 See also
- 5 References
- 6 External links
Democracy and freedoms
Economist Branko Horvat stated that "[I]t is now well known that capitalist development leads to the concentration of capital, employment and power. It is somewhat less known that it leads to the almost complete destruction of economic freedom".
Critics argue that capitalism leads to a significant loss of political, democratic and economic power for the vast majority of the global human population. The reason for this is they believe capitalism creates very large concentrations of money and property in the hands of a relatively small minority of the global human population (the elite or the power elite), leading, they say, to very large and increasing, wealth and income inequalities between the elite and the majority of the population. "Corporate capitalism" and "inverted totalitarianism" are terms used by the aforementioned activists and critics of capitalism to describe a capitalist marketplace—and society—characterized by the dominance of hierarchical, bureaucratic, large corporations, which are legally required to pursue profit without concern for social welfare. Corporate capitalism has been criticized for the amount of power and influence corporations and large business interest groups have over government policy, including the policies of regulatory agencies and influencing political campaigns. Many social scientists have criticized corporations for failing to act in the interests of the people; they claim the existence of large corporations seems to circumvent the principles of democracy, which assumes equal power relations between all individuals in a society. As part of the political left, activists against corporate power and influence work towards a decreased income gap and improved economical equity.
The rise of giant multinational corporations has been a topic of concern among the aforementioned scholars, intellectuals and activists, who see the large corporation as leading to deep, structural erosion of such basic human rights and civil rights as equitable wealth and income distribution, equitable democratic political and socio-economic power representation and many other human rights and needs. They have pointed out that in their view large corporations create false needs in consumers and—they contend—have had a long history of interference in and distortion of the policies of sovereign nation states through high-priced legal lobbying and other almost always legal, powerful forms of influence peddling. In their view, evidence supporting this belief includes invasive advertising (such as billboards, television ads, adware, spam, telemarketing, child-targeted advertising and guerrilla marketing), massive open or secret corporate political campaign contributions in so-called "democratic" elections, corporatocracy, the revolving door between government and corporations, regulatory capture, "too big to fail" (also known as "too big to jail"), massive taxpayer-provided corporate bailouts, socialism/communism for the very rich and brutal, vicious, Darwinian capitalism for everyone else, and—they claim—seemingly endless global news stories about corporate corruption (Martha Stewart and Enron, among many other examples). Anti-corporate-activists express the view that large corporations answer only to large shareholders, giving human rights issues, social justice issues, environmental issues and other issues of high significance to the bottom 99% of the global human population virtually no consideration. American political philosopher Jodi Dean says that contemporary economic and financial calamities have dispelled the notion that capitalism is a viable economic system, adding that "the fantasy that democracy exerts a force for economic justice has dissolved as the US government funnels trillions of dollars to banks and European central banks rig national governments and cut social programs to keep themselves afloat."
David Schweickart wrote that in capitalist societies:
Ordinary people are deemed competent enough to select their political leaders-but not their bosses. Contemporary capitalism celebrates democracy, yet denies us our democratic rights at precisely the point where they might be utilized most immediately and concretely: at the place where we spend most of the active and alert hours of our adult lives.
Thomas Jefferson, one of the founders of the United States, said "I hope we shall crush [...] in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country". In an April 29, 1938 message to Congress, Franklin D. Roosevelt warned that the growth of private power could lead to fascism:
[T]he liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism—ownership of government by an individual, by a group, or by any other controlling private power. [...] Statistics of the Bureau of Internal Revenue reveal the following amazing figures for 1935: "Ownership of corporate assets: Of all corporations reporting from every part of the Nation, one-tenth of 1 percent of them owned 52 percent of the assets of all of them".
United States President Dwight D. Eisenhower criticized the notion of the confluence of corporate power and de facto fascism and in his 1961 Farewell Address to the Nation brought attention to the "conjunction of an immense military establishment and a large arms industry" in the United States and stressed "the need to maintain balance in and among national programs—balance between the private and the public economy, balance between cost and hoped for advantage".
Exploitation of workers
Critics of capitalism view the system as inherently exploitative. In an economic sense, exploitation is often related to the expropriation of labor for profit and based on Karl Marx's version of the labor theory of value. The labor theory of value was supported by classical economists like David Ricardo and Adam Smith who believed that "the value of a commodity depends on the relative quantity of labor which is necessary for its production".
In Das Kapital, Marx identified the commodity as the basic unit of capitalist organization. Marx described a "common denominator" between commodities, in particular that commodities are the product of labor and are related to each other by an exchange value (i.e. price). By using the labor theory of value, Marxists see a connection between labor and exchange value, in that commodities are exchanged depending on the socially necessary labor time needed to produce them. However, due to the productive forces of industrial organization, laborers are seen as creating more exchange value during the course of the working day than the cost of their survival (food, shelter, clothing and so on). Marxists argue that capitalists are thus able to pay for this cost of survival while expropriating the excess labor (i.e. surplus value).
Marxists further argue that due to economic inequality, the purchase of labor cannot occur under "free" conditions. Since capitalists control the means of production (e.g. factories, businesses, machinery and so on) and workers control only their labor, the worker is naturally coerced into allowing their labor to be exploited. Critics argue that exploitation occurs even if the exploited consents, since the definition of exploitation is independent of consent. In essence, workers must allow their labor to be exploited or face starvation. Since some degree of unemployment is typical in modern economies, Marxists argue that wages are naturally driven down in free market systems. Hence, even if a worker contests their wages, capitalists are able to find someone from the reserve army of labor who is more desperate.
Unions are the "traditional method" for workers to have more bargaining power in the marketplace. The act (or threat) of striking has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation. Some critics of capitalism, while acknowledging the necessity of trade unionism, believe that trade unions simply reform an already exploitative system, leaving the system of exploitation intact. Lysander Spooner argued that "almost all fortunes are made out of the capital and labour of other men than those who realize them. Indeed, large fortunes could rarely be made at all by one individual, except by his sponging capital and labour from others".
Imperialism and political oppression
Critics of capitalism (e.g. John Bellamy Foster and Robert W. McChesney) argue that the system is responsible for not only economic exploitation, but also imperialist, colonial and counter-revolutionary wars and repression of workers and trade unionists.
Near the start of the 20th century, Vladimir Lenin claimed that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism. He argued that capitalism needs imperialism in order to survive. According to Lenin, the export of financial capital superseded the export of commodities; banking and industrial capital merged to form large financial cartels and trusts in which production and distribution are highly centralized; and monopoly capitalists influenced state policy to carve up the world into spheres of interest. These trends led states to defend their capitalist interests abroad through military power.
The military–industrial complex, mentioned in Dwight D. Eisenhower's presidential farewell address, appears to play a significant role in the American capitalist system. It may be one of the driving forces of American militarism and intervention abroad.
Inefficiency, irrationality and unpredictability
Some opponents criticize capitalism's inefficiency. They note a shift from pre-industrial reuse and thriftiness before capitalism to a consumer-based economy that pushes "ready-made" materials. It is argued that a sanitation industry arose under capitalism that deemed trash valueless—a significant break from the past when much "waste" was used and reused almost indefinitely. In the process, critics say, capitalism has created a profit driven system based on selling as many products as possible. Critics relate the "ready-made" trend to a growing garbage problem in which 4.5 pounds of trash are generated per person each day (compared to 2.7 pounds in 1960). Anti-capitalist groups with an emphasis on conservation include eco-socialists and social ecologists.
Planned obsolescence has been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated. This would benefit corporations by increasing sales while at the same time generating excessive waste. A well-known example is the charge that Apple designed its iPod to fail after 18 months. Critics view planned obsolescence as wasteful and an inefficient use of resources. Other authors such as Naomi Klein have criticized brand-based marketing for putting more emphasis on the company's name-brand than on manufacturing products.
Some economists, most notably Marxian economists, argue that the system of perpetual capital accumulation leads to irrational outcomes and a mis-allocation of resources as industries and jobs are created for the sake of making money as opposed to satisfying actual demands and needs.
Market failure is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficient. Keynesian economist Paul Krugman views this scenario in which individuals' pursuit of self-interest leads to bad results for society as a whole. John Maynard Keynes preferred economic intervention by government to free markets. Some believe that the lack of perfect information and perfect competition in a free market is grounds for government intervention. Others perceive certain unique problems with a free market including: monopolies, monopsonies, insider trading and price gouging.
Critics argue that capitalism is associated with the unfair distribution of wealth and power; a tendency toward market monopoly or oligopoly (and government by oligarchy); imperialism, counter-revolutionary wars and various forms of economic and cultural exploitation; repression of workers and trade unionists and phenomena such as social alienation, economic inequality, unemployment and economic instability. Critics have argued that there is an inherent tendency toward oligopolistic structures when laissez-faire is combined with capitalist private property. Capitalism is regarded by many socialists to be irrational in that production and the direction of the economy are unplanned, creating many inconsistencies and internal contradictions and thus should be controlled through public policy.
Che Guevara wrote:
The laws of capitalism, which are blind and are invisible to ordinary people, act upon the individual without he or she being aware of it. One sees only the vastness of a seemingly infinite horizon ahead. That is how it is painted by capitalist propagandists who purport to draw a lesson from the example of Rockefeller—whether or not it is true—about the possibilities of individual success. The amount of poverty and suffering required for a Rockefeller to emerge, and the amount of depravity entailed in the accumulation of a fortune of such magnitude, are left out of the picture, and it is not always possible for the popular forces to expose this clearly.... It is a contest among wolves. One can win only at the cost of the failure of others.
A modern critic of capitalism is Ravi Batra, who focuses on inequality as a source of immiserization but also of system failure. Batra popularised the concept "share of wealth held by richest 1%" as an indicator of inequality and an important determinant of depressions in his best-selling books in the 1980s.
In the United States, the shares of earnings and wealth of the households in the top 1 percent of the corresponding distributions are 21 percent (in 2006) and 37 percent (in 2009), respectively. Critics, such as Ravi Batra, argue that the capitalist system has inherent biases favoring those who already possess greater resources. The inequality may be propagated through inheritance and economic policy. Rich people are in a position to give their children a better education and inherited wealth and that this can create or increase large differences in wealth between people who do not differ in ability or effort. One study shows that in the United States 43.35% of the people in the Forbes magazine "400 richest individuals" list were already rich enough at birth to qualify. Another study indicated that in the United States wealth, race and schooling are important to the inheritance of economic status, but that IQ is not a major contributor and the genetic transmission of IQ is even less important. Batra has argued that the tax and benefit legislation in the United States since the Reagan presidency has contributed greatly to the inequalities and economic problems and should be repealed.
Critics of capitalism, particularly Marxists, identify market instability as a permanent feature of capitalist economy. Marx believed that the unplanned and explosive growth of capitalism does not occur in a smooth manner, but is interrupted by periods of overproduction in which stagnation or decline occur (i.e. recessions). In the view of Marxists, several contradictions in the capitalist mode of production are present, particularly the internal contradiction between anarchy in the sphere of capital (i.e. free market) and socialised production in the sphere of labor (i.e. industrialism). In The Communist Manifesto, Marx and Engels highlighted what they saw as a uniquely capitalist juxtaposition of overabundance and poverty: "Society suddenly finds itself put back into a state of momentary barbarism. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce".
Pierre-Joseph Proudhon and Friedrich Engels argue that the free market is not necessarily free, but weighted towards those who already own private property. They view capitalist regulations, including the enforcement of private property on land and exclusive rights to natural resources, as unjustly enclosing upon what should be owned by all, forcing those without private property to sell their labor to capitalists and landlords in a market favorable to the latter, thus forcing workers to accept low wages in order to survive. In his criticism of capitalism, Proudhon believed that the emphasis on private property is the problem. He argued that property is theft, arguing that private property leads to despotism: "Now, property necessarily engenders despotism—the government of caprice, the reign of libidinous pleasure. That is so clearly the essence of property that, to be convinced of it, one need but remember what it is, and observe what happens around him. Property is the right to use and abuse". Many left-wing anarchists, such as anarchist communists, believe in replacing capitalist private property with a system where people can lay claim to things based on personal use and claim that "[private] property is the domination of an individual, or a coalition of individuals, over things; it is not the claim of any person or persons to the use of things" and "this is, usufruct, a very different matter. Property means the monopoly of wealth, the right to prevent others using it, whether the owner needs it or not".
Mutualists and some anarchists support markets and private property, but not in their present form. They argue that particular aspects of modern capitalism violate the ability of individuals to trade in the absence of coercion. Mutualists support markets and private property in the product of labor, but only when these markets guarantee that workers will realize for themselves the value of their labor.
In recent times, most economies have extended private property rights to include such things as patents and copyrights. Critics see this as coercive against those with few prior resources. They argue that such regulations discourage the sharing of ideas and encourage nonproductive rent seeking behavior, both of which enact a deadweight loss on the economy, erecting a prohibitive barrier to entry into the market. Not all pro-capitalists support the concept of copyrights, but those who do argue that compensation to the creator is necessary as an incentive.
One of the main modern criticisms to the sustainability of capitalism is related to the so-called commodity chains, or production/consumption chains. These terms refer to the network of transfers of materials and commodities that is currently part of the functioning of the global capitalist system. Examples include high tech commodities produced in countries with low average wages by multinational firms and then being sold in distant high income countries; materials and resources being extracted in some countries, turned into finished products in some others and sold as commodities in further ones; and countries exchanging with each other the same kind of commodities for the sake of consumers' choice (e.g. Europe both exporting and importing cars to and from the United States). According to critics, such processes, all of which produce pollution and waste of resources, are an integral part of the functioning of capitalism (i.e. its "metabolism").
Critics note that the statistical methods used in calculating ecological footprint have been criticized and some find the whole concept of counting how much land is used to be flawed, arguing that there is nothing intrinsically negative about using more land to improve living standards (rejection of the intrinsic value of nature).
Many environmentalists[who?] have long argued that the real dangers are due to the world's current social institutions that claim to promote environmentally irresponsible consumption and production. Under what they call the "grow or die" imperative of capitalism, they say there is little reason to expect hazardous consumption and production practices to change in a timely manner. They also claim that markets and states invariably drag their feet on substantive environmental reform and are notoriously slow to adopt viable sustainable technologies. Immanuel Wallerstein, referring to the externalization of costs as the "dirty secret" of capitalism, claims that there are built-in limits to ecological reform and that the costs of doing business in the world capitalist economy are ratcheting upward because of deruralization and democratization.
A team of Finnish scientists hired by the UN Secretary-General to aid the 2019 Global Sustainable Development Report assert that capitalism as we know it is moribund, primarily because it focuses on short term profits and fails to look after the long term needs of people and the environment which is being subjected to unsustainable exploitation. Their report goes on to link many seemingly disparate contemporary crises to this system, including environmental factors such as global warming and accelerated species extinctions and also societal factors such as rising economic inequality, unemployment, sluggish economic growth, rising debt levels, and impuissant governments unable to deal with these problems. The scientists say a new economic model, one which focuses on sustainability and efficiency and not profit and growth, will be needed as decades of robust economic growth driven by abundant resources and cheap energy is rapidly coming to a close.
According to contemporary critics[quantify] of capitalism, rapid industrialization in Europe created working conditions viewed as unfair, including 14-hour work days, child labor and shanty towns. Some modern economists argue that average living standards did not improve, or only very slowly improved, before 1840.
Early socialist thinkers rejected capitalism altogether, attempting to create socialist communities free of the perceived injustices of early capitalism. Among these utopian socialists were Charles Fourier and Robert Owen. In 1848, Karl Marx and Frederich Engels released The Communist Manifesto, which outlined a political and economic critique of capitalism based on the philosophy of historical materialism. Pierre-Joseph Proudhon, a contemporary of Marx, was another notable critic of capitalism and was one of the first to call himself an anarchist.
By the early 20th century, myriad socialist tendencies (e.g. anarcho-syndicalism, social democracy and Bolshevism) had arisen based on different interpretations of current events. Governments also began placing restrictions on market operations and created interventionist programs, attempting to ameliorate perceived market shortcomings (e.g. Keynesian economics and the New Deal). Starting with the 1917 Russian Revolution, Communist states increased in numbers and a Cold War started with the developed capitalist nations. Following the Revolutions of 1989, many of these Communist states adopted market economies. The notable exceptions to this trend have been North Korea, Cuba and Venezuela, the latter instituting a philosophy referred to as "socialism of the 21st century".
Criticisms of capitalism
Anarchist criticisms of capitalism
The authors of An Anarchist FAQ state that anarchists have long recognised that capitalism is by its very nature hierarchical. The worker is subjected to the authority of the boss during working hours (sometimes outside work too). They state: "This hierarchical control of wage labour has the effect of alienating workers from their own work, and so from themselves. Workers no longer govern themselves during work hours and so are no longer free". According to them, this is why "[c]apitalism, by treating labour as analogous to all other commodities denies the key distinction between labour and other "resources"—that is to say its inseparability from its bearer—labour, unlike other "property," is endowed with will and agency. Thus when one speaks of selling labour there is a necessary subjugation of will (hierarchy)... Creative, self-managed work is a source of pride and joy and part of what it means to be fully human. Wrenching control of work from the hands of the worker profoundly harms his or her mental and physical health. Capitalism itself was created by state violence and the destruction of traditional ways of life and social interaction was part of that task. From the start, bosses spent considerable time and energy combating attempts of working people to join together to resist the hierarchy they were subjected to and reassert human values. Such forms of free association between equals (such as trade unions) were combated, just as attempts to regulate the worse excesses of the system by democratic governments. Indeed, capitalists prefer centralized, elitist and/or authoritarian regimes precisely because they are sure to be outside of popular control (see section B.2.5). They are the only way that contractual relations based on market power could be enforced on an unwilling population".
For the influential German individualist anarchist philosopher Max Stirner, private property is a "spook" which "lives by the grace of law" and "becomes 'mine' only by effect of the law". In other words, private property exists purely "through the protection of the State, through the State's grace". Recognising its need for state protection, Stirner is also aware that "[i]t need not make any difference to the 'good citizens' who protects them and their principles, whether an absolute King or a constitutional one, a republic, if only they are protected. And what is their principle, whose protector they always 'love'? Not that of labour", rather it is "interest-bearing possession [...] labouring capital, therefore [...] labour certainly, yet little or none at all of one's own, but labour of capital and of the—subject labourers". French anarchist Pierre-Joseph Proudhon opposed government privilege that protects capitalist, banking and land interests and the accumulation or acquisition of property (and any form of coercion that led to it) which he believed hampers competition and keeps wealth in the hands of the few. The Spanish individualist anarchist Miguel Giménez Igualada sees "capitalism is an effect of government; the disappearance of government means capitalism falls from its pedestal vertiginously...That which we call capitalism is not something else but a product of the State, within which the only thing that is being pushed forward is profit, good or badly acquired. And so to fight against capitalism is a pointless task, since be it State capitalism or Enterprise capitalism, as long as Government exists, exploiting capital will exist. The fight, but of consciousness, is against the State".
Within anarchism there emerged a critique of wage slavery which refers to a situation perceived as quasi-voluntary slavery, where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor by focusing on similarities between owning and renting a person. The term "wage slavery" has been used to criticize economic exploitation and social stratification, with the former seen primarily as unequal bargaining power between labor and capital (particularly when workers are paid comparatively low wages, e.g. in sweatshops) and the latter as a lack of workers' self-management, fulfilling job choices and leisure in an economy. Libertarian socialists believe if freedom is valued, then society must work towards a system in which individuals have the power to decide economic issues along with political issues. Libertarian socialists seek to replace unjustified authority with direct democracy, voluntary federation and popular autonomy in all aspects of life, including physical communities and economic enterprises. With the advent of the Industrial Revolution, thinkers such as Proudhon and Marx elaborated the comparison between wage labor and slavery in the context of a critique of societal property not intended for active personal use, Luddites emphasized the dehumanization brought about by machines while later Emma Goldman famously denounced wage slavery by saying: "The only difference is that you are hired slaves instead of block slaves". American anarchist Emma Goldman believed that the economic system of capitalism was incompatible with human liberty. "The only demand that property recognizes", she wrote in Anarchism and Other Essays, "is its own gluttonous appetite for greater wealth, because wealth means power; the power to subdue, to crush, to exploit, the power to enslave, to outrage, to degrade". She also argued that capitalism dehumanized workers, "turning the producer into a mere particle of a machine, with less will and decision than his master of steel and iron".
Noam Chomsky contends that there is little moral difference between chattel slavery and renting one's self to an owner or "wage slavery". He feels that it is an attack on personal integrity that undermines individual freedom. He holds that workers should own and control their workplace. Many libertarian socialists argue that large-scale voluntary associations should manage industrial manufacture while workers retain rights to the individual products of their labor. As such, they see a distinction between the concepts of "private property" and "personal possession". Whereas "private property" grants an individual exclusive control over a thing whether it is in use or not and regardless of its productive capacity, "possession" grants no rights to things that are not in use.
In addition to anarchist Benjamin Tucker's "big four" monopolies (land, money, tariffs and patents) that have emerged under capitalism, neo-mutualist economist Kevin Carson argues that the state has also transferred wealth to the wealthy by subsidizing organizational centralization in the form of transportation and communication subsidies. He believes that Tucker overlooked this issue due to Tucker's focus on individual market transactions, whereas Carson also focuses on organizational issues. The theoretical sections of Studies in Mutualist Political Economy are presented as an attempt to integrate marginalist critiques into the labor theory of value. Carson has also been highly critical of intellectual property. The primary focus of his most recent work has been decentralized manufacturing and the informal and household economies. Carson holds that "[c]apitalism, arising as a new class society directly from the old class society of the Middle Ages, was founded on an act of robbery as massive as the earlier feudal conquest of the land. It has been sustained to the present by continual state intervention to protect its system of privilege without which its survival is unimaginable". Carson coined the pejorative term "vulgar libertarianism", a phrase that describes the use of a free market rhetoric in defense of corporate capitalism and economic inequality. According to Carson, the term is derived from the phrase "vulgar political economy", which Karl Marx described as an economic order that "deliberately becomes increasingly apologetic and makes strenuous attempts to talk out of existence the ideas which contain the contradictions [existing in economic life]". Capitalism has been criticized for establishing power in the hands of a minority capitalist class that exists through the exploitation of a working class majority; for prioritizing profit over social good, natural resources and the environment; and for being an engine of inequality and economic instabilities.
Edmund Burke (1729–1797) accepted the liberal ideals of private property and the economics of Adam Smith (1723–1790), but thought that economics should remain subordinate to the conservative social ethic, that capitalism should be subordinate to the medieval social tradition and that the business class should be subordinate to aristocracy.
Distributism is an economic ideology asserting that the world's productive assets should be widely owned rather than concentrated. It was developed in Europe in the late 19th and early 20th centuries based upon the principles of Catholic social teaching, especially the teachings of Pope Leo XIII in his encyclical Rerum novarum (1891) and Pope Pius XI in Quadragesimo anno (1931). It views both capitalism and socialism as equally flawed and exploitative, and it favors economic mechanisms such as small-scale cooperatives and family businesses, and large-scale anti-trust regulations.
Political observers trying to orient themselves to what may be a shifting ideological landscape should read Peter Kolozi’s book, Conservatives Against Capitalism. Ditching the self-serving definitions of the political spectrum that most conservatives embrace, Kolozi relied on Norberto Bobbio’s expansive definition of right and left, dividing the two camps according to their preference for equality or hierarchy. Kolozi argued that capitalism has faced persistent criticism from the right since the beginning of the Industrial Revolution. Such critics, while heterogeneous, are united in the belief “that laissez-faire capitalism has undermined an established social hierarchy governed by the virtuous or excellent.”
Few beliefs seem more fundamental to American conservatism than faith in the free market. Yet throughout American history, many of the major conservative intellectual and political figures have harbored deep misgivings about the unfettered market and its disruption of traditional values, hierarchies, and communities. In Conservatives Against Capitalism, Peter Kolozi traces the history of conservative skepticism about the influence of capitalism on politics, culture, and society.
Kolozi discusses conservative critiques of capitalism—from its threat to the Southern way of life to its emasculating effects on American society to the dangers of free trade—considering the positions of a wide-ranging set of individuals, including John Calhoun, Theodore Roosevelt, Russell Kirk, Irving Kristol, and Patrick J. Buchanan. He examines the ways in which conservative thought went from outright opposition to capitalism to more muted critiques, ultimately reconciling itself to the workings and ethos of the market. By analyzing the unaddressed historical and present-day tensions between capitalism and conservative values, Kolozi shows that figures regarded as iconoclasts belong to a coherent tradition, and he creates a vital new understanding of the American conservative pantheon.
For all their differences, there is one key aspect of the intellectual history charted in “Conservatives Against Capitalism” that deals with an issue of shared concern on both the left and the right: the need for community. One of the grim consequences of the Social Darwinian pressures unleashed by free-market capitalism has been the destruction of networks of community, family, and professional associations in developed societies.
These so-called intermediate institutions have historically played a vital role giving ordinary people a sense of meaning and protecting them from the structural violence of the state and the market. Their loss has led to the creation of a huge class of atomized and lonely people, cut adrift from traditional sources of support and left alone to contend with the power of impersonal economic forces.
For all their differences, there is one key aspect of the intellectual history charted in “Conservatives Against Capitalism” that deals with an issue of shared concern on both the left and the right: the need for community. One of the grim consequences of the Social Darwinian pressures unleashed by free-market capitalism has been the destruction of networks of community, family, and professional associations in developed societies.
Socialists argue that the accumulation of capital generates waste through externalities that require costly corrective regulatory measures. They also point out that this process generates wasteful industries and practices that exist only to generate sufficient demand for products to be sold at a profit (such as high-pressure advertisement), thereby creating rather than satisfying economic demand.
Socialists argue that capitalism consists of irrational activity, such as the purchasing of commodities only to sell at a later time when their price appreciates, rather than for consumption, therefore a crucial criticism often made by socialists is that making money, or accumulation of capital, does not correspond to the satisfaction of demand (the production of use-values). The fundamental criterion for economic activity in capitalism is the accumulation of capital for reinvestment in production. This spurs the development of new, non-productive industries that do not produce use-value and only exist to keep the accumulation process afloat. An example of a non-productive industry is the financial industry, which contributes to the formation of economic bubbles.
Socialists view private property relations as limiting the potential of productive forces in the economy. According to socialists, private property becomes obsolete when it concentrates into centralized, socialized institutions based on private appropriation of revenue (but based on cooperative work and internal planning in allocation of inputs) until the role of the capitalist becomes redundant. With no need for capital accumulation and a class of owners, private property of the means of production is perceived as being an outdated form of economic organization that should be replaced by a free association of individuals based on public or common ownership of these socialized assets. Private ownership imposes constraints on planning, leading to uncoordinated economic decisions that result in business fluctuations, unemployment and a tremendous waste of material resources during crisis of overproduction.
Excessive disparities in income distribution lead to social instability and require costly corrective measures in the form of redistributive taxation. This incurs heavy administrative costs while weakening the incentive to work, inviting dishonesty and increasing the likelihood of tax evasion (the corrective measures) while reducing the overall efficiency of the market economy. These corrective policies limit the market's incentive system by providing things such as minimum wages, unemployment insurance, taxing profits and reducing the reserve army of labor, resulting in reduced incentives for capitalists to invest in more production. In essence, social welfare policies cripple capitalism's incentive system and are thus unsustainable in the long-run. Marxists argue that the establishment of a socialist mode of production is the only way to overcome these deficiencies. Socialists and specifically Marxian socialists, argue that the inherent conflict of interests between the working class and capital prevent optimal use of available human resources and leads to contradictory interest groups (labor and business) striving to influence the state to intervene in the economy at the expense of overall economic efficiency.
Early socialists (utopian socialists and Ricardian socialists) criticized capitalism for concentrating power and wealth within a small segment of society who do not utilize available technology and resources to their maximum potential in the interests of the public.
Karl Marx saw capitalism as a historical stage, once progressive but which would eventually stagnate due to internal contradictions and would eventually be followed by socialism. Marx claimed that capitalism was nothing more than a necessary stepping stone for the progression of man, which would then face a political revolution before embracing the classless society. Marxists define capital as "a social, economic relation" between people (rather than between people and things). In this sense, they seek to abolish capital. They believe that private ownership of the means of production enriches capitalists (owners of capital) at the expense of workers ("the rich get richer and the poor get poorer"). In brief, they argue that the owners of the means of production do not work and therefore exploit the workforce. In Marx's view, the capitalists would eventually accumulate more and more capital impoverishing the working class, creating the social conditions for a revolution that would overthrow the institutions of capitalism. Private ownership over the means of production and distribution is seen as a dependency of non-owning classes on the ruling class and ultimately a source of restriction of human freedom.
Marxists have offered various related lines of argument claiming that capitalism is a contradiction-laden system characterized by recurring crises coming from the tendency of the rate of profit to fall and having a tendency towards increasing severity. Capitalism is seen as just one stage in the evolution of the economic system. Immanuel Wallerstein, approaching matters from a world-systems perspective, cites the intransigence of rising real wages, rising costs of material inputs and steadily rising tax rates, along with the rise of popular antisystemic movements as the most important global secular trends creating unprecedented limiting pressures on the accumulation of capital. According to Wallerstein, "the capitalist world-economy has now entered its terminal crisis, a crisis that may last up to fifty years. The real question before us is what will happen during this crisis, this transition from the present world-system to some other kind of historical system or systems".
In mainland China, differences in terminology sometimes confuse and complicate discussions of Chinese economic reform. Under Marxist ideology, capitalism refers to a stage of history in which there is a class system in which the proletariat is exploited by the bourgeoisie. Officially, according to the Chinese governments stateideology, China is currently in the primary stage of socialism. However, because of Deng Xiaoping and subsequent leaders' Chinese economic reforms, instituting pragmatism within policy, China has undertaken policies that are commonly considered capitalistic, including employing wage labor, increasing unemployment to motivate those who are still working, transforming state owned enterprises into joint stock companies and encouraging the growth of the joint venture and private capitalist sectors. A contrary Marxist view would describe China as just another variant of capitalism (state capitalism), much like the former Soviet Union, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Zedong termed "capitalist roaders", who he argued existed within the ruling party structures and would try to restore the bourgeoisie and thus their class interests to power reflected in new policies while only keeping the outer appearance of socialism for legitimacy purposes. Deng Xiaoping was identified as one of these "capitalist roaders" during the Cultural Revolution, when he was placed under house arrest.
The Catholic Church forbids usury. According to Rerum Novarum and Quadragesimo Anno, Catholic social teaching does not support "political capitalism",[clarification needed] primarily because it is considered part of liberalism and secondly by its nature, which goes against social justice. In 2013, Pope Francis said that more restrictions on the free market were required because the "dictatorship" of the global financial system and the "cult of money" were making people miserable.
Islam forbids lending money at interest, the mode of operation of capitalist finance, although Islamic banks have developed alternative methods of making profits in transactions that are traditionally arranged using interest.
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- Crisis of Capitalism by David Harvey. Royal Society of Arts. 28 June 2010.
- Richard Wolff on Curing Capitalism. Moyers & Company. 22 March 2013.
- Occupy was right: capitalism has failed the world. Andrew Hussey. The Guardian. 12 April 2014 (interview with Thomas Piketty).
- Unless It Changes, Capitalism Will Starve Humanity By 2050. Forbes. 9 February 2016.
- New Zealand's new prime minister calls capitalism a 'blatant failure'. The Independent. 22 October 2017.
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- Broken Capitalism series in The Guardian.