Leftists tend to react against capitalism almost instinctively. There are no shortage of reasons for this reaction. The profit taking system is explotive and predatorial. It is a cause of war and oppression. We hesitate to write the sequel to The Black Book of Communism, which would naturally be The Black Book of Capitalism, not because we cannot find capitalist crimes. Rather, the job would be so overwhelming that we would need several lifetimes to complete it.
To its credit, we can say with certainty that capitalism has pulled us out of the muck of feudalism. It has altered the human world dramatically and it would be hard to argue against the assertion that it has made the human condition better overall. The effect it has had on human freedom, laws, and on our reliance on empirical knowledge is unmistakable. On top of that, it has made our material condition far better than it would be if capitalism had never developed.
On the other hand, it looks as if capitalism has gotten to the point where it has outlived its usefulness. If we could argue that its excesses and problems would eventually diminish; that it has within it a self repair mechanism, then we could argue to hold the course. But all the evidence points to the contrary. With increasing speed, the true nature of capitalism and the capitalist state, most obviously represented by the American state, is making itself known. It cannot hide itself behind Keynsian principles or riviting speechs any longer. The plight of the working classes is becoming more severe and the brutality of the state apparatus is becoming more pronounced.
From the capitalistic perspective, the workers themselves owe their wealth to the risks and the initiative of capitalists. If it were not for their investment of capital, the working classes wouldn't have jobs or any tax base to build social services on. The working classes would return to scrounging in the muck for subsistence or worse, they would build a Stalinesque fascistic state.
But those arguments assume that wealth starts from capital and, naturally, from capitalists and that the working classes are naturally tyrannical and the wealthy classes are naturally egalitarian and democratic.
However - consider this:
All over the world we find ourselves in the midst of a grand globalization experiment that has devastating consequences for the vast majority. The promise is, it will get much worse.
What we see unfolding before us is the economic experiment penned by Milton Freidman, Mises, and Hayek as well as the French economist Say. This is not a sinister plot drawn up by the Bushes or the Cheneys. Bill Clinton was as hard on social programs and easy on the ultra rich as any president before him. Tony Blair and other supposed moderates are indistinguishable from the extreme right. This globalization, so called, is not as much a project as it is a manifestation of the place we find ourseleves in the growth and development of capitalism. They don't have control of it any more than you do. Perhaps it isn't so much that the Bushites and pretty much all capitalist state politicians are following the teachings of the Freidman ilk gurus as it is they are responding to the whims of capitalism. The gurus were merely prophetic. Perhaps this is more the natural development of capitalism than an experiment.
If we examine the guts of economics, we must start by asking ourselves how wealth is created. From there, we may consider human needs and distribution.
Freidman, Mises, and Hayak have seperated themselves from the fundamentalist perspectives of Adam Smith and Ricardo who knew that it was central to scientific economic study to understand the answer to this question: What is it that that determines value? They saw an objective measure of value as a precondition for coming to terms with understanding questions about wealth distribution or market dynamics. Smith suggested that it is labour that determines value. Ricardo's ideas followed from Adam Smith's findings and developed a seperation between use vaue and exchange value. These ideas would be later elaborated on by Karl Marx. It isn't surprising that the marginalists focus more on supply and demand curves or marginal utility curves than they consider the more fundamental question. It could be argued that they have made up their minds prior to their inquiry and the more fundamental perspective does not bode well for the ethics around the claim that it is the capitalists that have the natural right to own and control the bulk of the wealth. When we examine the basis of neo liberalism, we can see, beyond a doubt, that it is shallow and that it is vulgar economics.
The notion that superficial marketing and profit grabbing will produce what is best for society is on very thin ice in these days. For example, a given society may need more cancer research or health care or housing. The market suggests however that more profit can be made by producing hoola hoops or handphones. The capitalists will naturally produce hoola hoops. Capitalism is very good at producing trinkets, shiny toys, and killer hamburgers but as we can see from the world we live in, basic human needs are considered a nusance if there isn't a profit in it.
We can see that advanced capitalism is not living up to the promise of stability or equilibrium. Capitalism is showing itself to be an anarchistic loose hose, flipping and whipping depending on the mood of speculators. Rather than stability, the economy is subject to the whims of a grand global casino game. We must go deeper to discover what it is that determines value. We must go to Ricardo, Smith and for more depth, Marx.
The theory of supply and demand helps explain the price of something in a given time or place but it does not explain why things have the exchange value they have. The labour theory of value packs a far greater punch if we are to understand the nature of wealth. According to this theory, the exchange value of commodities is determined by the amount of labour measured in working hours necessary to make them (given current levels of technology). Shirts sell for less than computers because it takes less time (human hours) to make shirts. In a given unit of time, a worker can produce many shirts but only one computer. Smith and other economists tested this theory by comparing prices of commodities with the necessary labour time needed to produce them. They found that while it does not explain the exact price of things, it does explain why they exchange for their approximate prices. This theory takes the mystery out of the concept of value by relating it, exchange value, to human labour. Consider the fact that the basis of capitalist economies is surplus value, that is, the hours of labour beyond what the worker is paid for and the value that is appropriated by the capitalist; that this is the basis of the wealth of capitalists. And when we consider what can be done with labour power in terms of developing priorities, goods and services, we may then consider possibilities beyond the poor and short sighted rationality of the marginalists, popularly known today as neo-liberals. We might abandon the superstitious nonsense that the theft of the value that is produced by labour as an indispensable ingredient to economic success. In other words, we can afford to abandon the notion that exploitation, war, and theft are necessary evils for societies to function well. At that point, we may go beyond the tyranny of psychopathic greed and develop a sane and humane world.
Everything around you that you own and use is the result of effort of a vast army of unseen workers. The great attribution error of history is the erroneous assumption that we need the owners of money to make it all possible. When we really examine the situation, the capitalist class don't even manage businesses. They simply play the grand casino and hire workers to manage it for them. Managers are not them; managers are us. And managers are as dispensible functionaries as any of us on an individual basis. But no class of functionaries are more dispensible than the owners because they serve only as parasites. We can do without them and their political lackys utterly.
We are all in this together and we are the ones that make this world work. We can afford to abandon the superstitious nonesense that we need wealthy masters to care for us. They can take their rightful seat in the history of societies development and we may salute them. But the time is also coming where we tell them to get a job and contribute to wealth creation and distribution.
Every dime that reaches a rich man's pocket is created by workers. Miners, manufacturers, truck drivers, writers, and managers work to create all that is around you. The chair you are sitting on, the PC you are using, and everything else that you have is wealth and it is the creation of work.
Capitalism has served us well to be sure. But it has become an abstract inhumane psychopath. It's face is no longer the family business. It's face has disappeared. It is sick and humans are suffering. Like all things, it has a birth, a process of development, and an ending. Where that death is placed in history is up to you and me.
(This article was previously published in MCW News)