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capitalism

Capitalism is the economic system which is now in place throughout the world, having superseded feudalism. The crux of the system is that there is a capitalist class (a.k.a. ruling class or bourgeoisie) which owns nearly all wealth and resources in the world. They leverage these resources (a.k.a. capital) in order to generate profit. They are in conflict with the working class, whose labour is required to generate profits for the capitalists. Workers under capitalism are exploited: they are not remunerated for all of the value they produce (otherwise it wouldn’t be profitable to hire them); instead, they are paid only a small fraction of that value.

Marx distinguished between capitalism and the mere markets which had existed before. In pre-capitalist markets, the process went C–M–C: you have a commodity (like, say, furniture), you exchange it for money, then exchange the money for other commodities (like food). In capitalism, however, the process goes M–C–M’: you start with money, use it to buy commodities, then sell them for more money. The driving motivation of capitalism is profit, and ever-escalating accumulation of wealth. This categorically different from the simple trading which has occurred throughout human civilisation.

Because capitalism is predicated on the premise of never-ending growth, a fundamental need of capitalism is always expansion: more resources, more markets. This is the driving force behind imperialism and colonialism: powerful states (representing powerful national bourgeoisies) force those regions who lack the power to resist to bend to their will, ceding their own resources and opening up local markets to the capitalists of the powerful countries. It’s important to note that this process does not benefit the working class of the powerful countries, who are also exploited (sometimes ruthlessly so) by the exact same capitalists. This is not to say that the capitalist class hasn’t created a consumer economy for the purpose of attempting to buy us off (arguably successfully so – for now),1 but this isn’t the correct comparison. Workers in developed countries may have a higher standard of living than workers in developing countries, but we are not as well-off as we would be if none of us were exploited. This is why internationalism is so important: we ordinary people throughout the world are oppressed and exploited by the exact same ruling class, and it will take solidarity and unity in struggle if we’re to have any hope of defeating them. Because the global economy is so interconnected, an anti-capitalist uprising (or revolution) that doesn’t spread beyond its borders is ultimately doomed to fail.

One explanation for why capitalism became entrenched in Europe before European colonisation and Western imperialism forced it on the rest of the world is that for centuries, Europe was beset by constant war. Before that – like in the Islamic world, South Asia, and Confucian China – any tendency towards profiteering by the mercantile classes was kept in check by rulers and religious authorities, with periodic confiscations and prosecutions for corruption, who feared the “destabilising” effect traders’ activities might have. However, European rulers fought so many wars that they started having difficulty paying for them; their eventual solution was to sell bonds, but this required that there be a class of people willing to buy bonds, and so European rulers came to an accommodation with the nascent bourgeoisie. Winning their wars became more important to them than internal social stability. Eventually, of course, the bourgeoisie became so powerful as to be able to dictate terms to the European monarchies, as in the 17th century English Rev­o­lu­tion, or to outright overthrow them as in the French Rev­o­lu­tion. Part of the process by which capitalists established a monopoly over capital at the beginning of the capitalist era was, in Britain, enclosure: basically the state agreed to force the vast peasantry off the vast majority of land, so early capitalists could divide it up into parcels and own it, in the capitalist sense. Of course this kind of coercive seizure of capital still goes on today, like in the form of foreclosures.

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  1. But also, a lot of the good shit we have as workers in developed countries – liveable wages, the 40-hour week, public education, public healthcare, pensions, unemployment benefits, etc., not to mention all our democratic rights, were all won by the labour movement through struggles that the ruling class bitterly resisted – they were not just handed to us on a silver platter as a thank-you for abiding by colonialism or whatever. ↩︎

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