Socialist Worker

Capitalism-how it works

Issue No. 1698

What do socialists say?

Capitalism-how it works

By Sam Ashman

ANTI-capitalist protests seem to be talked about all the time these days. I was down at Trafalgar Square recently for the May Day demonstration and heard a hot dog seller explaining, in a serious tone, to some confused tourists that it was "another one of those protests against the system-y'know, against capitalism".

The use amongst protesters, and in the media, of the word capitalism is a step forward. It reflects the development of a movement that wants to see the world that we live in as a totality. These protesters rightly do not just want to fight against one aspect of the system-they want to fight the whole lot.

But what is capitalism? To change the system, we need to understand what it is and how it ticks. There are commonplace ideas about what capitalism is that are confused and not very helpful. Some people say anyone who wants to make a bit of money is a capitalist or has a capitalist mentality.

Lots of ordinary people do want to make more money-because they have not got enough to start with. But what methods are open to them? They cannot afford to buy a business empire and run it on the side.

The most usual way is to do more overtime-which means working for someone else. It is increasingly common for people to do more than one job. But that does not make you a capitalist. It just shows that the people who really are capitalists do not pay enough wages! What about if you sell your bike or your car for a profit? Does that make you a capitalist?

But if you sell your bike, it is a one-off thing. It just gives you a bit of extra cash which you might need to do up the kitchen or put towards your holiday. Selling your bike does not give you a factory and control over lots of workers. It does not give you a means to carry on making lots more money. That is what capitalists do. They start with money and use it to make more money.

Capitalists do not sell stuff just so they can buy food, or so they can do up their kitchen. Capitalists have bigger aims. They use their money (or capital) to produce commodities which they then sell in order to make more money.

Most of them do not care what it is that they make. The whole point of the exercise is to use money to make more money. So capital is used to buy plant, machinery and equipment, and hire the workers who will make the goods to be sold.

Capitalists by definition, then, are bosses, not workers, and everything they do is geared towards making a profit. They take some of that profit for themselves in big pay packets and bonuses, which buy them their big houses and fancy cars. But bosses, capitalists, are in competition with one another. They are always out to make their goods more cheaply so they can outsell their rivals.

That means they must always try to increase productivity by putting the squeeze on their workers. The pressure of competition means the capitalist should never relax. If they relax and consume all their profits, and never put any pressure on their workers, then some other capitalist will start making the same goods more cheaply, and they will eventually go bust.

The pressures of competition mean that the capitalist must always drive to accumulate more capital in order to invest in the latest techniques of production so that they can beat their rivals. Capitalism is therefore a whole system driven by this competitive drive to accumulate.

Marx, who first really scientifically analysed how capitalism works, wrote that capitalists are governed by the slogan, "Accumulate, accumulate! That is Moses and the prophets. Accumulation for the sake of accumulation, production for the sake of production."

This accumulation increasingly takes place on a world scale. Multinationals produce all over the world. They always claim that business benefits the poor and workers. But in reality it spreads exploitation and injustice.

As Marx said, "Accumulation of wealth at one pole is therefore at the same time accumulation of misery, the torment of labour, slavery, brutalisation and moral degradation at the opposite pole." In the coming weeks we will take up more of the questions about how capitalism works and how we can defeat it.

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Sat 27 May 2000, 00:00 BST
Issue No. 1698
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