There are many myths about capitalism. Some see capitalism as the greatest economic system ever conceived, while others see at as the anarchy of the marketplace and a huge burden on nature. Some argue that communism is not conducive to creating peace, but it is capitalism that profits from war. This work is written to clarify what these myths are and what the reality of capitalism is; thus the title; Capitalism as it is. Capitalism is an evolved invention of the bourgeoisie and bankers that developed over the centuries, particularly with trade, money changing, and the industrial and bourgeois revolutions. Today, capitalism penetrates every aspect of life from science, finance, education, media, work, invention, conflict, politics, religion and the life of individuals. Karl Marx defined labor value and abstracted labor value and the later is crucial for the understanding of and the development of capitalism from its healthy laissez-faire stage to the degenerate form of economic fascism of international imperialist capitalism.
The Nature of the Beast.
"The history of all hitherto existing society is the history of class struggles."
(Karl Marx; the Communist Manifesto, Chapter 1)
The opening line of the Communist Manifesto thus declares that class struggle is the source of war and this is why we have no peace. This statement is still true today, thus the ideas of Karl Marx are as relevant now as they were over 150 years ago. In "Das Kapital" Marx argued that this alienation of human work and resulting commodity fetishism is precisely the defining feature of capitalism. Prior to capitalism, markets existed in Europe where producers and merchants bought and sold commodities. According to Marx, a capitalist mode of production developed in Europe when labor itself became a commodity; when peasants became free to sell their own labor power, and needed to do so because they no longer possessed their own land. People sell their labor power when they accept compensation in return for whatever work they do in a given period of time. In other words, they are not selling the product of their labor, but their capacity to work. In return for selling their labor power they receive money, which allows them to survive. Those who must sell their labor power are "proletarians". The person, who buys the labor power, is generally someone who "owns" the land, the means of production - technology to produce, is a "capitalist" or "bourgeois". The proletarians inevitably outnumber the capitalists and the bourgeois.
Marx distinguished industrial capitalists from merchant capitalists. Merchants buy goods in one market and sell them in another. Since the laws of supply and demand operate within given markets, there is often a difference between the price of a commodity in one market and another (part of the anarchy of capitalism). Merchants, then, practice arbitrage, and hope to capture the difference between these two markets. According to Marx, capitalists, on the other hand, take advantage of the difference between the labor market and the market for whatever commodity is produced by the capitalist. Marx observed that in practically every successful industry input unit costs are lower than output unit prices. Marx called the difference "surplus value" and argued that this surplus value had its source in surplus labor, the difference between what it costs to keep workers alive and what they can produce.
Capitalism is capable of tremendous growth because the capitalist can, and has an incentive to; reinvest profits in new technologies and capital equipment. The laborer figures in this equation, only as an appendage to the technology to run machines for a maintenance wage. Marx considered the capitalist class to be the most revolutionary in history, because it constantly improved the means of production. But Marx argued that capitalism was prone to periodic crises. He suggested that over time, capitalists would invest more and more in new technologies, and less and less in labor. Since Marx believed that surplus value appropriated from labor is the source of profits, he concluded that the rate of profit would fall even as the economy grew. When the rate of profit falls below a certain point, the result would be a recession or depression in which certain sectors of the economy would collapse. Marx thought that during such a crisis the price of labor would also fall, and eventually make possible the investment in new technologies and the growth of new sectors of the economy.
Marx believed that this cycle of growth, collapse, and growth would be punctuated by increasingly severe crises. Moreover, he believed that the long term consequence of this process was necessarily the enrichment and empowerment of the capitalist class and the impoverishment of the proletariat. He believed that if the proletariat were to seize the means of production, they would encourage social relations that would benefit everyone equally and a system of production less vulnerable to periodic crises such as the crises of overproduction that haunts capitalism. In general, Marx thought that peaceful negotiation of this problem was not practical, and that a massive well organized violent revolution would be required, because the ruling class would not give up power without struggle. Marxist thinkers see a period of dual power as necessary in order to affect the dictatorship of the proletariat. This is why peace cannot exist under class division between the bourgeois and the proletariat. In addition, capitalists profit highly from warfare and this usually pits workers from one nation state against workers in another nation state. He theorized that to establish the socialist system, a dictatorship of the proletariat, a period where the needs of the working class, not of capital, will be the common deciding factor.
Today, we hear much about the campaign to end poverty in the world by 2015 within the context of the existing bourgeois order. But as surely as past efforts have totally failed, so too will this venture, especially considering the economic collapse of 2008-09 now rapidly unfolding and threatening 1.4 billion with starvation. The march to end poverty is in full and rapid retreat. The capitalist economy has caused 100 million newly unemployed around the world to snatch defeat from the jaws of victory. If we continue to depend on the poverty making system of capitalism to end poverty, we will wait forever while sinking ever deeper in the morass of despair and unparallel terror. We have seen Farm Aid, AIDS aid, Africa Aid, End Child Poverty all come and go, but none of these situations has been corrected permanently. We have seen the Malaysian tsunami relief effort and the hurricane Katrina relief effort founder in seas of corruption, theft and inaction. The Malaysian tsunami struck on Dec. 26th, 2004 and many years later as of this writing, two thirds of the victims are still waiting for basic help with shelter, food, clothing and medical aid. Help to New Orleans after Katrina that struck in the summer of 2005 was also slow or non-existent. Upon reviewing this writing, many Katrina victims are still also waiting many years later. Many tens of thousands of the poorer residents were simply barred from returning. We have been sold on super foods of high breeding and genetically modified organisms ostensibly created to end hunger, but there is more hunger than ever. There is something definitely wrong!
Time and time again, we here calls to eliminate poverty and each attempt ends in failure. Calls for donations for people stricken by drought, war, disease and disaster all end in similar ways. The targeted people of the donations see only a trickle of the flood of support and this is distributed unequally. Food aid, medical aid, financial aid all wind up never reaching those who need it the most. Charity as run by capitalist interests is just another profit making scheme. By law; at least in the US and Canada, the organizers of charity are only required to hand over 10 percent of their proceeds to the ones it was collected for. The other 90 percent is kept “for expenses”, like administration, advertising and the fancy lifestyle of the top charity bureaucrats. Most of the donations of the 10 percent for the people targeted disappear en route. Many scandals have erupted over how food aid is confiscated and resold, never reaching the victims. The same is true for monetary donations. It winds up in the hands of the criminal element or of the warlords. Locally, politicians squabble over who is responsible for taking care of the homeless when their policies guarantee people will become homeless, such as the elimination of the social safety net in favor of increased war spending and bailouts for banks and the top companies. Further, as they are supporters of capitalist norms and developers, they will favor building homes for profit rather than genuine need. Even bone cracking chill is not enough to cause definitive action beyond squabbling. Solutions come late if at all. As for a hurricane situation, no shelter is offered as it’s not cold enough, so the homeless person is left to be carried away by the winds, crushed by wind toppled trees or shredded by falling blown out glass. That situation was made plain by the hurricane Katrina disaster. This news is suppressed or kept quite. On Christmas we are told to exercise good will toward all including the poor. At any other time of the year we can spit on the poor and treat them horribly. In the face of this anti-poor activity, the shrill promise to end poverty rings hollow. In the latest campaign to pressure politicians to end poverty by 2015 will also end in failure like all previous campaigns to end poverty, unless a great revolutionary social transformation occurs first. Under the current regime of capital, the end of poverty will never occur. To the antithesis, it will increase as this current collapsing economy now demonstrates!
There are many reasons why poverty will remain the offspring of capitalism. The main reason is built into the nature of capitalist acquisition itself. Then there is the necessity of poverty to drive up profits under capitalism. Surplus production is both a boon and a bane to capitalism and it is this conflict that guarantees the existence of poverty. Capitalism has built into it, the anarchy of market production. Due to competition, information can only pass around via trade spies. Each sector of capitalist production has its own boom and bust cycle that seldom matches the timing of other independent sectors. In resource industries there may be a bust due to low prices, discouraging production, even though finished products are in a boom cycle. Without raw resources, the finished product cannot be fully manufactured. The result is vast quantities of unfinished production and high prices on the few that are available despite the surplus, uncompleted as it is, waiting to flood the market. The opposite is also true; i.e., lots of raw resources but few completed products due to low demand. The result is a glut of raw materials and what should be, but not necessarily so, collapsing prices. As there is no centralized planning, each particular capitalist manufacturing interest operates on its own independent cycle, seldom aligning with the highs and lows of other economic sectors. Each sector employs workers who are hired and fired due solely on the popularity and availability of materials and the capital that can be accrued there from. The capitalist wants to have the highest profit possible and that is difficult when there is low demand or availability. The worker suffers on both sides of the equation from unemployment to high prices and sometimes both together. The end result is a constant substandard level of living. The existence of the poor and keeping the employees ignorant of the real causes, guarantees low wages paid out by capitalist bosses. Unionization is discouraged and fought against tooth and nail by every legal trick there is and by tactics of prejudicing the case for unionization by red baiting. The top union brass has long sold out to the capitalist and established an aristocracy of labor, but it is now being gutted and destroyed, leaving little left by way of a union. Fundamentalist religion plays a part by telling us “that there will always be poor among us.”
Capitalism must continually expand in order to generate profit, which is the "holy grail" of the bourgeoisie. In order to grow, something else must give way to make room. When "free" growing space runs out, then someone else’s space must be taken. This is what the purpose of war is. It is two fold. To grow into someone else's space by brutality and imperialist means to rob the invaded and to destroy old markets in an act to create new ones. The result of this expansionism is robbery on a grand scale, where huge numbers of people are left destitute. Capitalism is thus a poverty making system for almost everyone, especially the peasant, the farmer and the worker. The rulers of the capitalist system view anyone subordinate to them as expendable. Marx defined this as variable capital as opposed to the tools of the means of production as fixed capital. Thus, the war against poverty is translated into a war against the poor. Since bourgeois capitalism is a poverty making system, it cannot be relied to cure or end poverty. It can be relied on to continually cause war for profit.
Next Chapter (below) is: Poverty: The Best & Most Effective Form of Censorship