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. Among those wishing to replace capitalism with a different method of production and social organization, a distinction can be made between those believing that capitalism can only be overcome through revolution (e.g., revolutionary socialism) and those believing that structural change can come slowly through political reforms (e.g., democratic socialism). 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).
- 1 Issues
- 2 History
- 3 Criticisms of capitalism
- 4 Criticism of criticisms of capitalism
- 5 See also
- 6 References
- 7 External links
Democracy and freedoms
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Economist Branko Horvat stated: "... it 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."
Activists argue that capitalism leads to a significant loss of political, democratic and economic power for the vast majority of the global human population, because, they believe, capitalism creates very large concentrations of money and property at 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 support 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. Evidence supporting this belief includes, in their view, invasive advertising (such as billboards, television ads, adware, spam, telemarketing, child-targeted advertising, 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, corporate welfare, 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.
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". Franklin D. Roosevelt, in an April 29, 1938, message to Congress, 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 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, Karl 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, etc.). 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 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.
Inefficiency, irrationality and unpredictability
Some opponents criticize capitalism's perceived 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 also 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. [weasel words]
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 U.S., 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 US, 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 USA 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). Marx and Engels, in The Communist Manifesto, 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."
In discussions of the sensitive issue of property, it is critical to make a clear distinction between private property and public property: while the critics of capitalism listed/discussed below are calling for the abolition of private property and its transformation into the commons or public property, they nonetheless retain respect for personal property rights.
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, Pierre-Joseph 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 "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; countries exchanging with each other the same kind of commodities for the sake of consumer's choice (e.g., Europe both exporting and importing cars to and from the U.S.). 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 they claim 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.
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 that "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." So this is why "Capitalism, 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. Capitalism was born under such states and as well as backing fascist movements, they made high profits in Nazi Germany and Fascist Italy. Today many corporations "regularly do business with totalitarian and authoritarian regimes -- again, because it is profitable to do so." Indeed, there is a "trend by US corporations to invest in" such countries...Perhaps unsurprisingly, as such regimes are best able to enforce the necessary conditions to commodify labour fully. B.1.2 Is capitalism hierarchical? by An Anarchist FAQ
For the influential German individualist anarchist philosopher Max Stirner "private property is a spook which "lives by the grace of law" and it "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 Gimenez 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 “Capitalism, 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]."
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, even if the commodity cannot be sold at a profit to individuals in need; 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 don't produce use-value and only exist to keep the accumulation process afloat (otherwise the system goes into crisis), such as the spread of the financial industry, contributing 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 in 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, which incurs heavy administrative costs while weakening the incentive to work, inviting dishonesty and increasing the likelihood of tax evasion while (the corrective measures) reduce the overall efficiency of the market economy. These corrective policies limit the incentive system of the market 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 the capitalism and its 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 in their favor 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. and does not utilise 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. Karl 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 workerforce. In Karl 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 USSR, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Tse-Tung 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 Chinese Cultural Revolution, when he was placed under house arrest.
The Catholic Church forbids usury. Catholic social teaching, according to Rerum Novarum and Quadragesimo Anno, 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 attacked capitalism as a "tyranny" that judged human beings purely by their ability to consume goods. The Pope said that 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.
Conservative and traditionalist criticisms
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There are strands of conservatism that have been uncomfortable with liberal capitalism. Particularly in continental Europe, many conservatives have been uncomfortable with the impact of capitalism upon culture and traditions. The conservative opposition to the Renaissance, the Enlightenment, the American Revolution, the French Revolution, and especially the development of individualistic liberalism as a political theory and as institutionalized social practices sought to retain traditional social hierarchies, practices and institutions. There is also a conservative protectionist opposition to certain types of international capitalism.
Paleoconservatism and other traditionalist ideologies are often in opposition to capitalist ethics and the effects they have on society as a whole, which they see as infringing upon or decaying social traditions or hierarchies that are essential for social order. Some of these ideas are intertwined with religious communism. More nationalist-oriented groups believe that aspects of capitalism, such as free trade infringe upon national sovereignty, that domestic industries and national traditions must be safeguarded, and that preserving this is of greater importance than profit for business.
Criticism of criticisms of capitalism
In constantly observing the negative side(s) of capitalism, anti-capitalists remain focused on capitalism, thus co-performing and further sustaining the unsustainable capitalist system. Thus, the impression of capitalism as hyper-adaptive "system without an outside". One way out of the trap is to understand that the observation of capitalism, a system strongly biased by and to the economy, implies a reference to functional differentiation. As the economy is only one out of 10 function systems, however, both pro- and anti-capitalist visions of society imply this economy-bias and, in return, a neglect of other function systems. Effective strategies for alternatives to capitalism therefore require a stronger focus on the non-economic function systems. A corresponding re-coding of capitalist organisations has recently been proposed.
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