What the Hell is Capitalism Anyway?!

Sascha Grosser

As the anti-capitalist movement heats up, there are more and more newcomers to the scene. Unfortunately, there is no laminated tri-fold magically handed to you when you decide “capitalism is bad.” People are left to their own devices to try and figure out what the hell is going on.

You’ve decided capitalism is bad. Maybe you realized that having a boss sucks, or perhaps your curiosity got the better of you? Regardless, now you want to read up so you can better fight this global intangible evil.

What the hell is capitalism anyway? If you have ever visited the comment sections of YouTube or Facebook then you have likely discovered that most folks just argue semantics. Without systematized terminology, how can healthy discourse occur? Without a shared understanding, how can you express nuance?

Luckily, there is Marxism. Marxism provides an ideological framework to understand and analyze the socio-economic systems of the world. You have probably heard Marxism is this scary poster of Joseph Stalin plastered on the ceiling, watching you with cold paper eyes. You can rest easy, Marxism is just a toolkit to construct a clear ideological worldview. From anthropology to economics, the terminology and concepts of Marx are essential.

Marxism is also known as dialectical materialism. Put simply, dialectical materialism says that all politics in the world can be understood as the conflict between two fundamentally different groups or forces. If you break everything down and cut through all the B.S., in the center is a guy who wants something from a guy who doesn’t want to give it to him. That sounds easy enough, right?

For example, if you have a slave and a slave-master, their interests (or motives) are intrinsically in opposition. The slave wants to be free, and the slave-master wants to keep the slave, a slave. Both slave and master are willing to do anything in their power to achieve their respective goal. One cannot gain without the other losing. This is the principle behind class struggle.

If the slave obtains his freedom, then the slave is no longer a slave, and the slave-master is no longer a slave-master. They are both something new. One defining thing has changed, and suddenly the entire relationship has changed. Capitalism can be understood much in the same way.

Back to the big question: What the hell is capitalism?!

Capitalism is where the economy is controlled and organized through the private ownership of the means of production (MoP) as private property. The MoP are the land, materials, and technologies used in production. Basically, the MoP are everything at your work. The key defining feature of capitalism is the existence of private property. Keep in mind that private property is solely the private ownership of the MoP, not your car or whatnot. It is the ownership of the business (also called a privately owned enterprise or POE).

The legal framework of a capitalist country allows property to be privately owned and entitles the legally recognized owner to use it in any way they see fit (assuming it contradicts no laws). The private business owner is granted ultimate authority in their workplace with the backing of the full strength and authority of the State.

The designation of private property is so important because there are only two methods of making a living within capitalism, and they are defined by whether or not an individual privately owns the MoP (i.e. their relation to their labor). This results in two distinct social and economic groups (i.e. classes) of people. You are either in the group of those who own private property (i.e the capitalists or the bourgeois), or those who don’t (i.e. the working class or the proletariat).

This is where we get into the weeds. For the average working joe, they make a living by selling their labor to a business owner for a fraction of the value they create. The business owner, on the other hand, makes a living from the profit their business generates. The thing is that profit is actually the difference in the money generated by selling goods/services and wages paid to the hired workers (and also overhead like rent). A hired worker cannot be paid the full value that they create, otherwise, the business owner could not make a profit. It is fairly straightforward.

Let’s imagine a bakery. The bakery is owned by Susan, and Susan hires five bakers to bake cookies to be sold at Susan’s bakery. The cookies are pretty damn good, and they net 10 dollars a piece (after the cost of materials, rent, and etc.). Each baker is making a cookie that brings in 10 dollars, but they don’t get that 10 dollars. They get five dollars for every cookie sold. The other five goes to Susan as profit. If each baker makes and sells one cookie an hour, then Susan is making 25 bucks an hour to each worker’s 5. A worker cannot be paid the entirety of what they create or the business owner would make no money. This profit that Susan gets is called surplus labor value.

This is how all POEs work within capitalism. It is this economic relationship that defines capitalism and is a direct result of private property ownership. Without it, this could not happen. This is how wealth inequality occurs. Imagine if Susan was the head of a huge bakery corporation with stores across the world. That would be a crap ton of surplus labor value.

The legal designation of the MoP as private property is what allows Susan, or any business owner, to pay folks less than what they actually create. Frankly, there isn’t a lot of choice in the matter, as capitalism is the dominant economic system. This gives those who own capital a lot of power and influence.

The economy is not controlled by the community as a whole, but instead, it is controlled by those who hold the economic power in the form of having money for investment (i.e. capital). Capital is economic power because no new enterprise can exist without it. Capital is used to pay for the creation of new MoP and to obtain another’s private property by purchasing the exclusive economic rights.

The direction of economic development is wholly dependent on where capital is invested, and since capital almost solely comes from the excess profits of a POE, this economic power is monopolized by the capitalist class. Having the capitalist class direct economic development through the investment of capital has serious consequences as economic development will primarily benefit the capitalist investors. All economic decisions of the capitalist class, like investment, will always primarily benefit capitalists because, no matter how well-meaning, every economic decision must result in profit for several reasons. The first is that without profit, the capitalist does not have an income to survive on. Furthermore, competition in the market against other capitalists means that if a capitalist wants to even maintain their income they have to constantly develop using their own capital assets to avoid being put out of business. Capital assets are only developed by reinvesting profit into a profitable economic venture that results in a greater amount of profit than the initial investment. In the same way that the individual capitalist must have constant growth, a capitalist economy requires constant growth to remain healthy and functional as well.

A capitalist economy can be imagined as a floating balloon with capital as the wind. The direction of the economy will go anywhere the winds of capital blow. In the same vein, a balloon is easily blown by a strong gust into a sharp cliff. The winds of capital obey the air currents of profit motives and cannot be expected to direct the economy to meet community needs over profit. The function of capital to create more capital results in economic development that focuses on high-profit rewards for the capitalist class and not the general working class population’s interests. Capital serves the interests of capital alone.

That is the real kicker here. There needs to be a radical restructuring of the global economy to prevent a total environmental collapse. Fossils fuels have got to go, but they will not stop even as it kills us. In fact, people like CEOs are legally required to make the most profitable decisions. Not only is there fundamental economic pressure, but there is legal pressure too.

People like to talk about “green capitalism” or how corporations will just have to do the right thing of their own volition. That will not happen because it cannot happen. Once you learn how capitalism really works, you learn what really needs to happen.

Capitalism has got to go, y’all.

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