What is capitalism and why does it matter?

Workers can take down exploitative system (Pic: McStrike 2018 by garryknight on Flickr)

There is no alternative to capitalism—at least that is certainly what the establishment want us to think. As the theorist Fredric Jameson observed, it’s easier to imagine the end of the world than the end of capitalism.

Capitalism might be imperfect. We might not like the crises, the climate emergency, the rubbish working conditions—but it’s very hard to imagine anything fundamentally different.

One of Karl Marx’s most important achievements was to analyse how capitalism began, how it keeps going and how it can be overthrown. Capitalism emerged relatively recently in human history. It began to develop seriously in Europe in the late Middle Ages and began to spread across the globe in the 19th century.

Capitalism is based on two great divisions. The first is division between the capitalists themselves.

It’s easy to think of capitalism in terms of the greed of the elites who run the world—the obscene wealth of Elon Musk, Jeff Bezos and Warren Buffet. But capitalism is not just about the obscene greed of these individuals.

Capitalists are forced to compete with each other to grab more profits and dominate a bigger share of the market for their products. If they don’t compete successfully, they will be taken over or go bust.

The competition between capitalists compels them to develop production on a scale unthinkable in any previous society.

Marx wrote that the capitalist class cannot exist without “constantly revolutionising the instruments of production, and thereby the relations of production and with them the whole relations of society”. Capitalism is a dynamic system.

But this also means the bosses are always forced to make their workers work longer for less. And they must constantly invest in new technologies that give them a competitive edge.

The bosses are divided against each other. Their vicious, cut throat competition is the stuff of dramas such as Succession. But there is one thing that can push them together—the threat of resistance from those they exploit.

This is because the second great division at the heart of the capitalist system is that between the bosses, or the bourgeoisie, and the working class.

Capitalism is unique because it is a system of generalised commodity production. Commodities are goods that are produced for sale on the market. Workers’ ability to work, their labour power, becomes a commodity and wage labour becomes the main form of labour.

The capitalists like to think that their clever investments and innovative technology make their wealth. But it is the labour of workers which creates profits.
The bosses constantly try to make the workforce accept worse conditions. So workers have a collective interest in organising together to push back against the bosses’ demands. This antagonistic relationship between workers and capitalists is the fundamental social relation that defines capitalism.

Competition means that capitalism is an anarchic system. No-one knows if there is a market for commodities produced until they are offered for sale. This leads to mountains of goods that no-one wants to buy, and terrible shortages of things that are desperately needed but will not make enough profits.

Our capacity to plan production rationally to meet human need and support planetary health is erased by the process of accumulating profits.

Capitalism is more productive and dynamic than any previous system. But all that potential to satisfy human needs is wasted. Instead it is inevitably scarred by inhumanity, inequality, crises, wars and destruction.

There is only one way to abolish capitalism and achieve socialism. That is for workers themselves to take ownership and control of the process of production through democratic planning.