The comforting fairy tale
In the book Candide there is a character called Doctor Pangloss. No matter what happens to the characters in the book, and some pretty bad things happen to them, he always says that they live in the best of all possible worlds. There is a word panglossian that is based on this character. Capitalism is the most panglossian of systems, but it is far from the best. We have been sold a number of comforting ideas, which seem convincing and comforting enough, but the reality is far darker and more disturbing.
The system has its origins about 400 years ago. On a technical level some people realised that they could organise the creation of commodities in such a way that far more could be produced in a given amount of time if the tasks to create them were broken up so that the steps could be performed quickly and simply by workers who weren't particularly skilled (and therefore cheaper to employ). So we had paying less for labour combined with creating more things.
In and of itself, so what? But this of course ignores the relationships between people. The society at the time was ruled by royalty and the idea of the group somehow owing things to a leader was still the only way people thought. Also the leaders were the ones with weapons and armies to use them, so it wasn't odd to at least pretend to let them have their way. So the new factories had owners, and the owners kept the profit made from this reorganisation of the way things are done. The revolution only went halfway, production was simplified and turned into a socialised thing, but the profit from the socialisation was held by the capitalist.
We then sell these products on the market, where we get a fair price, and everyone is happy. The best of all possible worlds, indeed.
The new class of capitalists came to an accommodation with the royalty eventually, and people were no longer subject to the imperial whim, but were free to sell their labour power and we have the wonderful system we live under today.
This story misses out a lot of things, including several kings losing their heads, but it gives a flavour of what happened.
The Reality
In general, in medieval times, the people who lived in the countryside in places like England had a bit of land they could use to feed themselves. They had obligations to work on the feudal owner's or church's land some of the time, but they had a little autonomy and would only starve if there was something like a drought. The idea of working for a wage was very unusual, some people would have found it insulting to be offered one.
Some people worked out that you could split the manufacture of commodities into simple steps and make far more of them with less effort. This is what is called the socialisation of production. This revolution in how things are done only went half way, however. The feudal style of ownership was kept, so the people who owned the factories kept the benefits of the socialisation. In essence we became either people who rented other's time so they would work for us, or those whose time was rented, the time itself becoming a commodity that can be bought and sold. Marx's key insight was that profit is the difference between the value human labour adds and what it costs to buy. These social relations set up the class conflict that powers our society today, owner class constantly trying to increase the rate of exploitation and maximise profits, worker class struggling not to be worked to death.
Eventually we ended up with capitalism as a process of accumulation, ultimately the goal is to use your capital to make more, this is where the wealth comes from. In order to first fund accumulation some initial resources need to be gathered, the free gifts of nature and some initial capital. Marx called this primitive accumulation. This is where the first piece of capitalism's story is covered over by omission. The peasants were driven off the land and it was enclosed so that its feudal owners could make money in other ways. This created a penniless class of people who were going to starve, they eventually became the worker class forced into the factories. Stealing the peasant's livelihoods with land enclosure and then turning them into wage slaves was very violent, many of the leaders of the resistance were women, this is why there was a lot of witch burning. Women were transformed from relatively autonomous people into walking wombs and unpaid social labourers, a crop like any other.
The conditions in these factories were appalling. People worked 12-14 hour days, average life expectancy was early twenties, you generally started working at the age of 6-8. The worker class in the capitalist heartlands eventually unionised and managed to stop a lot of this, but it took hundreds of years. Again, this mayhem and violence, which spread across the whole world in search of raw materials and cheap labour, is never spoken of. Instead we are supposed to be grateful. To this day these conditions still exist at the capitalist periphery, but invisible to the consumers of those products in the global North. In fact the conditions of primitive accumulation were imposed on the global south so the north could continue to live the good life.
The drive to accumulate and control the free gifts of nature, such as raw materials, creates intense competition that ofter spills over into wars. It also results in forced unequal exchange, where militarily weak people who live on or near natural resources are forced to give them away in exchange for not starving or being invaded and murdered by rapacious gangs. This is happening now, all over the world, the rare minerals in your phone come from this process, but it is never discussed in the media or by the political class.
The other thing constant accumulation does is eventually destroy competition. Eventually only one or very few companies exist making something because of the way the market has winners and losers and the losers are absorbed by the winners. Then we reach a kind of zombie walking death, where everything is poor quality and expensive because the competition and innovation capitalism's defenders claim helps us all has come to an end. This always happens, when you hear apologists talking about crony capitalism it's just capitalism in its later stages. The innovation switches to finding new ways of screwing every penny out of your former customers turned victims instead of serving those customers better.
The competition built in to capitalism makes it very disorganised, whether it's constant booms and slumps because of under- and over- production, or shortages because of wars or the deliberate price manipulation by monopoly power that comes later in its development. One of the confusions people often have is they see a relatively stable period of time and assume it's always like that, they see companies competing and this giving rise to innovation and the lowering of prices, but accumulation is a process and eventually a small number of players fall out of the competition and you have monopolies and wars over resources. The writer Nicolas Taleb wrote a series of books starting with The Black Swan explaining how sudden crashes are often hiding just around the corner. Taleb has a strategy that involves betting against the complacency and it has made him pretty wealthy.
Despite its peaceful surface appearance if you live in the global North capitalism is an incredibly violent system. Poverty is violence, scarcity is violence, neither is inevitable or justified. You also have the violence of expropriation. Mao said that politics are controlled out of the barrel of a gun, and his critics claim how evil this makes him, but he was only pointing out a truth that's all too apparent if you look at the endless wars our ruling class have waged over the last 100 years or so.
You also probably think that you live under some kind of rule of law. You don't. The only rights you really have are the right to be exploited, to sell your labour to another, or be the exploiter. The rest is window dressing, and depends on who is winning the class war. Of course, if you a rich enough to afford a lawyer, you can probably use the law to shut people up and get your way. The rest of us are not so lucky.
Marx pointed out that the exploiter class is far outnumbered by the people it exploits, in fact they exploit the rest of us with our permission, but as long as they can keep us thinking as isolated individuals we won't be able to do much about them. This is why he called for us to unite.
The truth about markets
One of the big bits of nonsense we've had to put up with since the Thatcher period is the obsession with the so-called free market. The original thinkers behind neoliberalism had the unproven and false idea that letting markets rule over everything will result in the best prices and all needs being met. Well, capitalists are just as lazy as anyone else, whenever possible they rig markets so they can make profits more easily, either by fixing prices or being monopolists. Markets are not free, to make a market work it needs to have rules, what these idiots meant by free market was a market where they could make the rules serve them first or they were just so naive they never realised it. In the 1980s their goal was in fact to dismantle the rules that had come out of the post-war period that prevented stupidity and excess hurting ordinary people, and they succeeded.
The rich bought everything and turned it into money streams. This is why privately owned natural monopolies like utilities are so expensive, this is why everywhere you look you're paying fees to some entitled clown who owns something that used to be public property, and why there has been no significant investment in infrastructure in a lot of places in the global north, for example in the US lots of bridges are starting to decay and the railways are a mess. The wealthy railway companies aren't forced to do anything about the constant derailments and danger because they've bought the people who would regulate them. They don't have any incentive to invest in anything, for example in England it's cheaper to pay fines than to stop pumping sewage into rivers. This profit seeking behaviour has ruined many once useful things and made them extremely dangerous. There is no accountability, and the wider human needs for clean water and air don't figure in the short term profit seeking behaviour.
The free market means the powerful who set the rules are free to rob the weak, it means they can play games that bump up prices and syphon money away from the smaller players and build up monopoly power. The markets are always regulated, but if you can buy the regulator's good will then you can do what you like. It's also why it's very hard to hold people accountable, if they have to pay fines and are making far more breaking the rules than the fines it's just the cost of doing business. If you want to see how an unregulated free market works just look to all the crypto frauds that have happened over the last 10 years or so.
The other free market our political class get worked up about is the one that hides under the guise of free trade between countries. Once again we have a power imbalance. The relatively poor countries stay poor and end up practically giving their resources and labour away because the trade system is structured to make it happen that way. If countries object they get sanctioned, leaders murdered, or invaded and puppet governments put in place. This will be covered more in an article on imperialism. A good introduction to this is the video Why Do Poor Countries Stay Poor? (Unequal Exchange and Imperialism). There are still people being paid a few cents an hour in the world, you just can't see them from your comfortable perch in the global north.
The anarchy of production
Marx and Engels coined the term anarchy of production - in essence, capitalist enterprises make goods to be sold, if they make a good profit other capitalists will follow them into that market, then there will be overproduction and the price of goods will fall, so people get out of making those commodities (even if people need them), production falls right off and some enterprises fold. So you have a constant cycle of boom and bust, feast and famine, which accelerates as the methods use to make things improve. These cycles have nothing to do with human need, they are part of the reality of the underlying mechanisms of the capitalist system.
In these cycles the bust periods destroy the weaker enterprises leading to the eventual creation of monopolies or oligopolies. This concentrates the power in fewer and fewer hands, hands that don't have to take much notice of customers' needs any more because customers no longer have a choice. The arch billionaire Peter Thiel claims monopolies are good. The argument is monopolies don't have to worry about competition and can concentrate on innovation - but he doesn't say whether or not it's the kind of innovation that exploits the monopoly's stranglehold or serves customers better. I leave it as an exercise for the reader who has been further impoverished by rocketing inflation and corporate price gouging to see whether this is a real benefit to them.
Crony capitalism
Capitalist apologists claim that the fairy tale outlined at the beginning of this article is the sole truth. The longer term view, the rise of monopolies taking over everything and then going to war with each other over resources by buying up their local states' governments isn't the pure capitalism they love (for some reason), but a distorted one that they call crony capitalism. In reality the monopolies and the wars come straight out of the system, they are part of it and claiming otherwise is just wishing. They only way you might prevent this is by legislating against it and being able to enforce those laws, but the apologists claim they don't believe in taxation or government, so how is that going to work? They never have a coherent answer that isn't just wishing.
Capitalist Realism and consent
The capitalist class own everything, including the mass media, they control how politics is done, they control how education is funded, they control what subjects are considered mainstream, they control the terms of the debate, they say what the status quo is, they ignore and silence inconvenient wars and the suffering caused by unequal exchange. The dominant class shapes the how and what of mainstream thinking. There is no conspiracy to point to. When Herman and Chomsky wrote Manufacturing Consent all the way back in 1988, the point about the status quo, establishment line being the only one that can be discussed and channelling dissent so that only approved, relatively safe topics can be disagreed over doesn't need a conspiracy, the media are owned by the same people who own everything else. You won't get a job working for them if you don't toe the line. Journalists write from the establishment's viewpoint because they are the establishment. Many get on their high horse and say nobody tells me what to write. Well, nobody has to, they know what to write or they wouldn't have their job in the first place.
The late Mark Fisher described the phenomenon he called Capitalist Realism, where the only reality we are allowed to think of is capitalist, and the only solution offered is more capitalism, more markets, more commoditisation of the human heart. Our owners conned us with the Thatcher slogan there is no alternative, but there most definitely is. This will be covered more in an article called The TINA Disease.
As evidence for this see how the drums are being thrashed over the war in Ukraine and various deluded lunatics are claiming that China is a threat while there is almost absolute silence for the other wars that have been raging for years, particularly the ones against Palestinians, the Yemen, and Somalia. There are US bases all over Africa, but what the forces based there get up to is not talked about anywhere.
Capitalist Decay
If you try for infinite expansion on a finite world you will run out of resources. This is so obvious it shouldn't need to be said. If you have managed to control all the resources you need and other people want them then they will probably go to war with you. When our owners talk about economic growth this is what they are talking about. When they start banging the drums of war and waving flags that can be described as butcher's aprons, this is why. There is no moral high ground here, just greed and venality dressed up as faux concern for human rights, or some other thing they've made up that only applies in the place they want to go to war.
We live in an odd time. The threat of environmental catastrophe and supply chain collapse hovers over billions of people. It's obvious that things can't go on as they are, but because most of us are so hypnotised by capitalist realism we can't see any solution but more of the things we know won't work in the long term. This is why there has been so much emphasis on dystopian futures in our culture, when in fact technically and in every other way humans have achieved so much in the last century or so that we stand on the edge of creating a cornucopia that could finally unleash our full potential. As the evolutionary scientist Stephen Jay Gould said:
I am, somehow, less interested in the weight and convolutions of Einstein’s brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops.
The world has been divided up and there are always tensions between the various factions of the capitalist class that masquerade as tensions between countries. Despite this, when they talk of exploitation and profit they are united, they are brothers in arms. We need to distinguish between inter-capitalist spats and things that actually matter.
The nonsense of endless accumulation and concentration of resources and power in fewer and fewer hands has to end, but it doesn't mean humanity must as well. We need to disconnect our perception of the world from that of our owners, and think about how to build institutions and approaches that meet our needs instead of their drive for profit. Then we need to defend those institutions or they will be co-opted.
Fascism
When capitalist regimes start to find it difficult to carry on they often drop the small L liberal facade and mobilise a petty nationalist sentiment in their home country. They stir up resentment against immigrants and tacitly condone violence against them. They use the divisions stirred up the population to justify the creation of anti trade-union laws and outright racist legislation. This is designed to keep the worker class divided and profits high, or to sharpen the divisions, or just to give the regime a platform to try to stay legitimate when they have run out of ideas as in Britain at the moment.
Fascism is capitalism that is no longer dynamic or capable of anything but trying to hold on to power by use of violence and division. Some people think capitalism and fascism are different things. As any Marxist worth their salt would point out, the underlying relationships of who owns what and who is being exploited have not changed, simply the way it is defended and extended.
In the global south regimes often never had a liberal facade to drop, they are often controlled by a comprador class, that is in essence the local face of the corporations and countries that are robbing them. Capital comes from investment by the global north's capitalists and starts with a supine worker class that is created, as before, by the processes of primitive accumulation, and kept down, as before, by violence with weapons supplied by the distant exploiters. In many ways these regimes are the pure capitalism that some naive people in the global north aspire to. If you look at the bloody reality you can see how foolish wanting this is.
Briefly about contradictions
The capitalist system is full of contradictions. The Marxist author David Harvey identifies 17 of them. The interplay of forces paradoxically can make the system flexible and adaptable, but it also means that it will eventually collapse. It could collapse into a disaster for humanity, or it could be transformed into something better. For the second option we need to understand how things work and then create a world where they work for us, instead of human needs at best being a side show while the real business of profit and accumulation wreck everything. This is why things often seem so irrational, for example making food for several billion more people than exist but people still starving, or far more empty housing than there are houseless people, the creation of a reserve pool of unemployed workers when there is more than enough work that needs to be done. A system that wants to maximise profit and accumulation can't be reasoned with about human need. There is an overriding contradiction there.
The fundamental contradiction under capitalism is that of the worker class and the owner class, proletariat and bourgeoisie. We have the class that makes the world, and the class that owns the results of their labour. We makers outnumber the owners and takers by thousands to one, but the ideology and violence we suffer under keeps us from seeing that things don't have to be this way. Nothing is fixed, and the static view that the world has always been this way is both false and dangerous.
One of the most obvious contradictions is the drive to maximise profit and exploitation in the creation of commodities. If the worker class are kept poor and hungry who is going to buy the commodities they make? It doesn't make sense even on the most basic of levels.
In the Communist Manifesto Marx and Engels said The history of all hitherto existing society is the history of class struggles. This view comes from the dialectical analysis of how society is constructed and maintains itself. Dialectics is the philosophy of acknowledging and studying changing contradictions and how they work. It's also the part of the Marxist view of the world that its detractors always attack, as well as the labour theory of value which was touched on earlier.
The contradictions of capitalism, and indeed the ones that are inherent in the physical world itself, are more like a complicated web of cause and effect where many things interact. They drive change and movement. One muscle unfolds the wing, another returns it ready to flap again. Capitalism is much more complicated than the shallow surfaces painted by its defenders, and once you begin to see how certain views support it, it becomes easy to unpick the things we are supposed to care about from the things we should care about.
Conclusions
This short essay has only scratched the surface of what is a complex subject that is deliberately obscured by our owners. I tried to use relatively simple language and avoid technical terms as much as possible because I want it to be understood by the widest audience possible.
There is no need to fall into cynicism or despair. The capitalist systems described here are in fact a technology that came into being when material conditions supported it. We can change how things are done by creating a different technology that meets everybody's needs and using the bones of the newer material conditions that exist now.
The first thing we need to do is shed the illusions we have been fed.
The next is to work together for a world where no-one is left behind.
When none are left behind all are safe and truly free.
Things to read or watch
Marx / Engels
Intro
Communist Manifesto
Value, Price and Profit
Socialism: Utopian and Scientific
Deeper
Lenin
Imperialism, the Highest Stage of Capitalism
Selected Works
David Harvey
Seventeen Contradictions and the End of Capitalism
A Companion to Marx’s Capital
A Companion to Marx's Grundrisse
Note: You can find Harvey's lectures on Capital on YouTube if you find it easier to watch than read.
Immanuel Ness
Southern Insurgency - The Coming of the Global Working Class
Herman and Chomsky
Nicholas Taleb
Mark Fisher
Silvia Federici
Comrade Hakim
Why Do Poor Countries Stay Poor? (Unequal Exchange and Imperialism)
Explaining stuff about Socialism that confuses you (WATCH THIS, L I B E R A L) - Socialism 101
Note: All of Hakim's videos are well worth watching.