Socialism for Today (eBook)

Escaping the Cruelties of Capitalism

David M. Kotz (Autor)

eBook Download: EPUB

2025
229 Seiten
Polity (Verlag)
978-1-5095-6148-3 (ISBN)

Infos

Capitalism is failing us. Instead of bringing a decent life for the majority, it generates an outrageous gap between the rich and the rest, unaffordable housing, a profit-driven healthcare system, skyrocketing educational debt, racial and gender inequality, and the threat of climate disaster. Economist David Kotz argues that it's time we built a new socialism for the unique challenges of the twenty-first century.
The problems of capitalism are too profound for reform, Kotz writes. Reform can help, but only temporarily, and not for all. Nor can we turn back to the socialist experiments of the twentieth century. But we can learn from those experiments, both their successes and failures, to build a democratic and participatory economic and political system. The result would be a sustainable future of economic justice, equality, material comfort, human development, and meaningful freedom. The journey towards a new socialism may be difficult. But Kotz combines a clear and rigorous account of how socialism can be made to work with a realistic strategy for how to get there. This is the book we need to help us escape the cruelties of our capitalist present.

David M. Kotz is Professor Emeritus in the Department of Economics at the University of Massachusetts Amherst and Senior Research Fellow at the Political Economy Research Institute.

Textauszug

2
Capitalism

The aim of analyzing capitalism immediately runs into a problem. In every country where capitalism prevails, it has distinctive features not shared with all the others. US capitalism, British capitalism, Japanese capitalism, South African capitalism, and Brazilian capitalism differ from one another in various ways. Nevertheless, we can identify the defining features of capitalism that are common to all cases. Capitalism generates the patterns of economic, political, and cultural life of a society that emerge, in more or less fully developed form, in every capitalist system, particularly for the contemporary versions of capitalism that are the focus of this book.

The role of the government has a major effect on capitalism. A capitalist economy requires a government to perform certain essential functions, such as establishing a currency, guaranteeing and protecting the right to own economic assets, specifying what can be treated as private property (inanimate objects and living things but not people), enforcing contracts, and maintaining public order. In some countries the government intervenes actively in the economy with the aim of modifying the economic decision making that is at the core of capitalism.

Labor unions can also have a significant impact on economic outcomes in a capitalist system. In chapter 3, we will consider the operation of capitalism when it is significantly modified by active government intervention in the economy and by strong labor unions.

The “free-market,” or “neoliberal,” form of capitalism that has prevailed since 1980 is a relatively unmodified, or “raw,” form of capitalism. However, the government intervened actively when the giant New York City banks, General Motors, and other large enterprises faced bankruptcy in 2008. The US government came to the rescue of the rich and their properties, while ordinary homeowners were left on their own in the face of a wave of home mortgage foreclosures.

When the COVID-19 pandemic struck in 2020, governments around the world intervened actively to contain the pandemic and insulate the economy from its disastrous effects. Even US President Donald Trump and Republicans in Congress were pressured into an active response, financing the very rapid development of new vaccines at public expense. As usual under neoliberal capitalism, the effort was funded by the taxpayers, but the profits came to privately owned companies that were tasked with carrying out the project. Despite the rip-off of the taxpayer, the effort did produce effective new vaccines in the United States. China also rapidly developed new vaccines that were effective against COVID.

The stage of economic development significantly affects the character of capitalism. This book focuses on the capitalism of the Global North. The “Global North” refers to the United States, Canada, Western and Southern Europe, Japan, Australia, and New Zealand. The analysis in this book has some relevance for developing countries in the “Global South,” which refers to South and Central America, Mexico, the Caribbean, Africa, South Asia, and Southeast Asia. This book does not look into the important differences between that form of capitalism and that of the Global North.

Some parts of the world do not fit neatly into the binary classification of Global South and Global North. Until 1776, what is now called the “United States of America” was part of Britain’s North American colonies. Britain used its imperialist domination to obstruct the development of capitalism in its North American colonies, which was one factor that drove the American Revolution of 1776. That revolution was supported by a broad coalition of groups and classes, including Southern slave-owners such as George Washington and Thomas Jefferson, Boston bankers, shipowners, and merchants who became rich from the slave trade, along with small farmers and “mechanics,” the name for the incipient working class of that era.

In this chapter, I will draw examples from the United States in the period since around 1980, when free-market, or “neoliberal,” capitalism emerged. However, systematic presentation of empirical evidence about the economic trends of neoliberal capitalism is postponed to chapter 3, where the differences between the “regulated capitalism” that arose around 1948 and the neoliberal capitalism that emerged after 1980 will be examined in detail. While the examples in this chapter are drawn from the US experience, the analysis also applies to other countries in the Global North.

Defining features of capitalism

Capitalism has three main defining features. First, it is a market economy. Second, “free” wage (and salary) workers produce the goods and services. Third, the pursuit of profit by enterprise owners drives economic decisions. Each feature deserves some discussion.1

A market economy is one in which goods and services are produced for sale in the market. However, that is not by itself enough to account for the way a capitalist system operates. People have engaged in market exchange for thousands of years in a wide variety of socioeconomic systems. However, capitalism became an established system only some five centuries ago.

Note that small local businesses must sell in markets and make greater revenue than their costs if they are to stay in business. However, many specialists regard such small local businesses, in which the owners and/or their family members do all or most of the labor, as somewhat different from large capitalist corporations that are typical of capitalism today. Such small local businesses are not the ones taking the lion’s share of the economy’s growing income.

The second feature of capitalism is that the production of goods and services is carried out by workers who are paid a wage (or salary) by an employer who owns the workplace. Wage earners are legally free to sell their labor to an employer.2 That distinguishes capitalist systems from earlier feudal and slave systems, in which the producing class was not free. However, while legally free, wage earners must find an employer who will hire them since workers do not have the means to produce and sell products on their own as a way to earn a living.

Thus one group of people, called capitalists, own the workplaces and have the financial means to hire wage workers and buy the non-human inputs required for production, while the other group of people can offer only their labor. The non-human inputs include produced goods called capital goods (machines, tools, materials, energy) and goods that come from nature such as land, water, air, and minerals in the ground. In a developed capitalist system, the majority of the population are wage workers while the enterprises are owned by a small class of wealthy capitalists.

The motivating force that causes production to take place under capitalism is the pursuit of profit by enterprise owners. They hire workers to produce products because they expect to obtain a profit from doing so. While a capitalist may be actively involved in managing the enterprise, just owning an enterprise entitles the capitalist to derive an income from the sale of products produced by the labor of the workers. Workers get part of the value they create through their labor in the form of the wage or salary payment, but the remainder is the property of the capitalist. The source of the profit that flows to the capitalist is the extraction of part of the value created by workers, a relationship that is called “exploitation of labor” in Marxist economics.

Capitalists are forced to compete with one another to sell their products in the market. If a capitalist can limit or eliminate competition, it increases profits, and at times the degree of monopoly power can rise significantly. However, the threat of competition can never be fully eliminated by the private actions of capitalists since the extra-high profits that can be gained from monopolizing a market will lure other companies into entering the market.

Thus capitalism is an economic system in which the wealthy owners of enterprises hire free wage workers to produce products and compete to sell them in the market, with the aim of gaining the maximum possible profit.

The pursuit of maximum profit by capitalists is not just a result of greed. Competition compels capitalists to maximize profit since profit is the ammunition needed to survive in the war of competition. Profit can be reinvested to enlarge the enterprise, and the larger company has many advantages over the smaller in the market. More importantly, profit can be reinvested in new and superior production processes and new and improved products.3 A capitalist who does not care much about profit, or who fails to reinvest the profits, is likely to become an ex-capitalist, as rivals drive that unconventional capitalist out of the market.

Consequences of the pursuit of profit

The single-minded aim of capitalists is to maximize profit, not to produce useful products. Capitalists have no inherent interest in introducing better technologies or new and better products. However, their pursuit of profit under conditions of competition can compel them to do just that. That outcome is the most important contribution of capitalism to human betterment. It was the most famous critics of capitalism, Karl Marx and Friedrich Engels, who wrote in 1848 that “The bourgeoisie, during its rule of scarce one hundred years, has created more massive and...

Produkt-Details

• Erscheint lt. Verlag: 27.1.2025
• Sprache: englisch
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre
• Schlagworte: Capitalism • David Kotz • David M Kotz • Economics • egalitarianism • escaping the cruelties of capitalism • Kotz • Political Science • Politics • Socialism • socialism for today • Socialist • socialist economics
• ISBN-10: 1-5095-6148-X / 150956148X
• ISBN-13: 978-1-5095-6148-3 / 9781509561483