May 4, 2012 Capitalism

I meant to say yesterday that isms are like lake water. The fish that live in the lake don’t know they are in water. In human terms, they take water for granted.


We who live in capitalistic systems might or might not know what we’re in. If asked to define capitalism, we might say, “Oh, free enterprise” by which we are likely to mean that there is a degree of liberty to do business. Beyond that, we might reach for a dictionary.


Capitalistic systems appear throughout the world, but in forms so various one might doubt the appropriateness of the label “capitalism.” Some of the forms are more “free” than others. There is even such a thing as state capitalism.


There is little doubt in my mind concerning the continuation of capitalism. It isn’t going to go away in this century surely. No old system has effectively challenged it, including socialistic systems that seem to falter at two points — control mechanisms and motivation. No new system is receiving a wide hearing. Even when world capitalism took a hit in 2008, critics made lots of noise but capitalism itself remained intact.


Yes, capitalism has to do with enterprise guided more by supply and demand than by state mandates. My daughter may begin a catering business without getting permission to do so. She may decide what to pay her employees and what to charge for her catered meals.  She does, however, have to deal with limits to her freedom: permits and licenses, health rules, and an array of taxes.  She is a capitalist.


My own understanding of capitalism has grown from my contact with Marxism. That is to say, the critique by Karl Marx of what he called “bourgeois political economy” gives to me a vantage from which to view capitalism. In brief, Marx foresaw that production would be in the hands of the bourgeois class.  The proletariat class would provide labor, thus making a two-class system. The decades have shown that while Marx’ analysis contains some erroneous predictions, he was all in all prescient.


Marx: Capitalism must constantly redefine production for it to survive, with each innovation having social consequences.  We have illustrations galore to show that business can’t and won’t stand still. It’s a system of rapid change, going through revolution after revolution. In my own lifetime I have seen the following products eliminated: the mimeograph machine, the typewriter, the adding machine, the pocket calculator, victrolas, 78s, 45s, overhead projectors and tape recorders to name just a few.  Soon the desk computer and the land line phone will be gone.


Of far importance is the emergence of 3-D printing which will, according to The Economist, revolutionize production, reduce the number of people needed in production, and change the nature of what those workers do. Many semi-skilled employees today will not have a place in this new scene.


Marx: The inequality of wealth between the producer class and the worker class will lead to class revolt.  While skirmishes and even wars related to economics has been a continuing story since Marx, these conflicts do not fit the class conflict he predicted. There is one convincing reason why it has not happened: the worker class has been turned into a consumer class, having at its disposal a large array of bells and whistles, sporting events, electronic gadgetry, appliances, cars etc to keep it in its place.


Marx: In time, production will be in the hands of fewer and fewer people.  Indeed we have seen lots of evidence of the concentration of power, be it in newspapering, in computer building, in airline ownership, in book retail, and many other spheres of commerce.


Our sensibilities were shocked by the image of 1% of the population enjoying so large of portion of the nation’s wealth, but we will have to get used to a similar world statistic in which a very few people will control production and banking, a large “middle” class of consumers and an equally large class of impoverished have-nots.


To close this blog entry, I wish to refer to “Marx at 193,” an article by John Lanchester published in the London Review of Books. Lanchester, informed by Marx and in contradiction to Marx, offers these opinions.


1. The capitalistic financial system poses a threat to Western democracy, “far exceeding any terrorist threat.” Capitalists work internationally, sometimes outside the jurisdiction of any one country. They are a world unto themselves. Legislatures within countries haven’t been able to address financial crises that the system produces.

2. What money is (by definition and by experience) shall continue to be problematic. In a capitalist system money represents the difference between the lowest possible cost of labor and production and the highest possible price when selling the product. This difference is called surplus value.

3. We as consumers are constantly asked to provide surplus value: we check in for a air flight at home, eliminating the need for check-in clerks at the airport; we drop bags at the airplane door, eliminating the number of baggage employees. We negotiate our way through phone menus, eliminating phone operators. This we are called to do — free labor — for the benefit of the producer.

4. The finiteness of earth’s resources will surely have an influence upon the world’s economic systems. Capitalism exploits resources in order to make products. What shall happen to capitalism when resources are depleted.
I live in a capitalistic culture. I am part of it. And so are you. In my opinion we can benefit from constant and careful study of what that means not only economically but also socially, intellectually and morally.

2 Responses to “May 4, 2012 Capitalism”

  1. Leon Waninger says:

    Very well written. As we look at the revolution of manufacturing (I also read the article from the Economist) it’s clear that fewer and fewer workers are needed to make products. How then does a society based on the individual providing for themselves adjust when there are not jobs for those individuals? It is a problem that society should think about now because in the decades to come it will become more of an issue.

    I often wonder if that is why now governments are trying to measure happiness as opposed to wealth generation. Trying to shift our paradigm as a first step towards dealing with a new reality.


  2. jdanielhess says:

    We live close enough to each other to have occasional coffees. I like your take on so many topics.

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