What is Capitalism?

Before we talk about the problems of Capitalism, we have to first define Capitalism itself.  I’ve found this misunderstanding of what we are referring to when we say “Capitalism” to be the biggest hurdle when speaking to people about why we must abolish it.  Often people think we are advocating against “the free exchange of goods and services,” or even advocating against you owning any property at all.  Anger at anyone advocating for a system that abolishes those things is perfectly understandable, and we do not want to abolish them.  In fact , we want to expand them both because Capitalism is neither of those things, and actually hinders them both

The primary component of Capitalism, its major defining aspect, is the private ownership of what’s called the “means-of-production.”  The means-of-production is the tools, workplaces, and resources, used to make the things we all rely on for survival and a modern comfortable life.  Like a car factory, or a forest of timber, or the machines used to pave roads, etc.  The means-of-production is not your house, your car, or your other personal possessions.  These things are called “personal property,” and they are yours, no Communist wants to take them away from you, because we want to have our own personal property as well; Communists don’t want their personal property to be owned by the Government either.  Often Communists will refer to the means of production as “private property.”  We use this term because the means of production is privately owned under Capitalism.  We never refer to your personal property as private property, only Capitalists do that.

Under Capitalism , the purpose of the means-of-production is not to supply the population with what it needs, but to be a source of wealth for the private owners.  These private owners employ people that do not own the means-of-production to work it for them.  They pay these workers a “wage” and sell the products that these wage-workers produce for more than what they spent to produce those products (including the cost of the wage.)  This extra income is called “profit,” and it must exceed both the cost of maintaining the means-of-production and the cost of the worker’s wages.  The owners of the means of production, called the Bourgeoisie, live off of these profits.  If they make no profit, then they must close the business, even if the business makes enough to pay for the upkeep of the business and the wages of the workers (called “Breaking even.”)  Because the purpose of Capitalist business is not to provide what the workers need to survive, but to provide an owner with profit.  What I have just described, as you can see for yourself, is a system where one person lives off of the work of others.  Profits are made by the workers, by all rights of reason and ethics, they should go to the workers evenly.  Instead, the profits all go to the owner, the Bourgeoisie.  

Keep in mind, I am speaking of profits, not the cost of maintaining the means-of-production.  It’s important to point this out because I have often heard the argument that “it costs money to maintain a business” as a retort when I argue that profits are unpaid wages of the workers.  Business expenses are not profits.  Profits are what is left after business expenses are paid for.

This is the class division created by Capitalism; Capitalism reduces society into two major groups: The owners of the means of production, the Bourgeoisie, and those who do not own the means of production, the Proletariat.  The Proletariat, having no source of income beyond what they can produce with their own work, are forced to sell their labor to the Bourgeoisie in order to survive.  They are further forced into this situation by other factors, such as the restrictions on purchasing and owning land, the laws against cultivating public land, taxes which must be paid in sanctioned currency, and simply the overpowering influence of the Bourgeoisie who have the most political clout due to their wealth and control over the means-of-production.  All of this creates a system which requires people to have currency.  And if you do not own the means of production, the only way you can get currency is to sell your labor.  And since the majority cannot own the means of production, since we cannot have a society composed of all business owners and no workers, or even a society that is mostly business owners, the majority must sell their labor to survive.

This system is not natural as many would insist.  There was a time when Capitalism did not exist, which was less than 200 years ago.  It’s easy to assume that Capitalism is older than this due to the system which preceded Capitalism: Mercantilism.  Mercantilism was a transitory system from Feudalism, and thus had similar aspects to both Capitalism and Feudalism.  It was an interesting system that certainly warrants a discussion, but for the sake of brevity I will keep the discussion focused on defining Capitalism.  So it is merely worth noting that there were systems before Capitalism, you can even go back to Feudalism if you need to in order to understand this, or to the Slave-based production systems before Feudalism if you still need convinced.  Since Capitalism was preceded by other systems, it is not natural.  That is: it is not an unavoidable state of society that we must be subjected to.  It was created by people, and we can create a different system.

I will revisit that last point later on and discuss several proposed systems for replacing Capitalism.  But first I think Capitalism needs to be fleshed out more, after all, as the old mechanic’s proverb says: “if it ain’t broke, don’t fix it.”  We wouldn’t even be having this conversation if Capitalism didn’t need to be replaced, but it’s likely that you may need more convincing on that point.  So, let’s begin by discussing the “fuel” of Capitalism: wage-labor, and a subject that we can both agree is bad: slavery.

3 Replies to “What is Capitalism?”

  1. Very concise and informative, being a Socialist already, I needed little convincing. I would make a few constructive criticisms though, if you do not mind. First, over use of the phrase “means of production,” define it once and move on.
    In the second to the last paragraph change “Feudalism if you still need convinced.” to “Feudalism if you still need convincing.”
    And finally, you need to mention a solution/alternative to the Capitalist’s means of production, e.g. the Workers Collective, and how to get there.
    Overall, I enjoyed this piece.

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