(photo courtesy of think-left.org)
One argument put forward by bourgeois apologists and
harmonizers is that capitalism, as a system, is very adaptable and this is one of
the reasons it has not collapsed. This is what makes the system appear eternal
or as if it will last forever. In this
brief piece I will demonstrate that in the long run all of these variants of
capitalism always arrive at the pure model of capitalism through different
paths. The pure model is as we see it now in America: the 1% vs. the 99%. The
1% controls the means of production and the 99% slave away in the fields, the
factories and in the state or corporate bureaucratic office structure. This
pure model that has been developed in the US will spread throughout the world
eventually. Crises will become larger
and more destructive when more capital is at stake. The more capital at stake
implies that growth on the basis of profit will continue as capital spreads and
takes hold in the four corners of the earth. The 1% however is not represented only by individuals but corporations. This pure model then becomes the 20% vs. the
80% if you consider the international
context but it still applies that the 20% fulfill the functions of the 1%
whereas the 99% still act like the 80%. The 1% becomes 20 because individuals
within the corporations are driven to improve capital and it becomes their
mantra that the more they increase capital the better off they will be. These
corporations and government bureaucratic centres are therefore the nestling
area of the petty bourgeois class whose
main objective is to serve the capitalist class. (see my post on the
petty bourgeois class) These include the managers and their many assistants
along the line of the division of labour, politicians, the lawyers, the
doctors, the soldiers, the police, the celebrities, other professional groups,
and those aspiring to become a part of the dominant capitalist class. This class must be factored in the equation
although it is the 1% that benefits whereas the petty bourgeois class still
form a part of the 99% because they do not control the means of production.
Because they do not control the means of production they are just as
susceptible to destruction as the average paid working class groups. Their
occupations can be devalued as well because they merely represent more complex
labour as opposed to the simple labour
carried out by the majority. For the purposes of this post therefore the 1% vs.
the 99% will be considered as the pure model of capitalism.
The Traditional
variants of Capitalism
There are traditionally/ historically a few variants of
capitalism that have emerged in response to various socio-political factors:
The original mercantile based form where Balance of payment
surpluses were essential in promoting the accumulation of capital in the form
of specie or gold and silver. This was
why there would be prohibitive tariffs by a particular country on produce
coming from other national territories
if they were also produced in
that nation. Preference would be given to its own producers in order for them
to accumulate capital although the consumer would suffer because of high
prices. Expansion in production was done by way of acquiring new settlements or
colonies who were also brought into the national umbrella known as empire. They were only allowed to trade with the
motherland. This allowed producers of various products to benefit from high
prices and to erode the productive forces because of their monopolistic sway.
This mercantile based philosophy originated in the 15th and 16th
centuries when Spain and Portugal ventured out
to conquer and settle the Americas in the West and territories in the
East. They were then followed by the British, French, the Dutch and the Danish.
This then reached the stage where a small nation like Britain could control a
nation like India whose population was 6 or 7 times larger. It also reached the
stage, towards the end of the 19th century, where the entire
continent of Africa was divided up into special spheres catering to the
interests of the various western European nations. The Middle East was also
colonized to a large degree and China was reduced to a subservient position or
a semi colonial status. The military complex is essential in this endeavour
because it promotes national interests. This mode of accumulation has
continued, following World War 2 when most colonies gained independence,
through institutions such as the IMF and the World Bank that promote the
national interests of the main contributors and so aid them to resolve their
balance of payments crises which is a government/national issue. This
encourages the member countries to take steps to accumulate capital locally and
hopefully encourage the rise or improvement of the status of their national
capitalist class. A lot of countries also still encourage the production of
their own producers by raising the tariffs on particular products so that they
can encourage their national bourgeoisie, that produces the same products, to
thrive. It is not at all primitive particular if you consider the issue of
national sovereignty that is still a main issue for many countries,
particularly those in the emerging markets. The wealth of a nation is the
amount of commodities produced within its borders and so the more that the
government can encourage its own citizens to produce they will be assured that
the profits will be retained in the country itself. It is this mercantile based
capitalism that gave rise to Imperialism. It is also why I disagree with lenin
that imperialism forms the highest stage of capitalism. More on this later
The immediate successor to this protectionist form of
capitalism is the free trade form of capitalism or what we know as
globalization. With this form of capitalism barriers to trade between nations
are more or less nullified or the barriers are nominal and guarantee some level
of respect on a bilateral or multi lateral basis. There are not many
protectionist measures adopted and market forces take hold of the international
economy. Those nations whose capitalists
cannot compete will suffer in the increased competitive global market. In the
national sphere however competition is a good thing because the monopolistic
accumulation of capital by some firms are shattered when competition from other
firms outside of the national borders are introduced. Monopolies or cartels are characteristic of
the mercantile based capitalist system or nations that do not have a developed
capitalist framework to encourage investment. The free trade form of capitalism
is normally unrestricted as market forces are the determining factor. The state
not only encourages the national bourgeoisie to flourish but also international
capitalist groups to set up shop within a particular national territory. It
also encourages workers from various nationalities to migrate to wherever
capital has nestled once they have the necessary skill set. They also allow
these workers, that are considered cheaper, to be thoroughly exploited by
international firms seeking a higher rate of profit by extracting a high rate
of surplus value /unpaid labour time from the workers. This is the capitalism that most capitalists
tend to prefer because they become the driving force in an economy which is the
case in the United States. This framework gives capitalism its distinctive
international character. A capitalist from the Philippines or Jamaica or Honduras can be as successful
as one from the US as long as the product offering has a use value and will be exchanged in the
international market and so allows for the rapid accumulation of capital which
is measured by the rate of profit. In this sphere of competition however
someone must come out on top and seek to increase market share which means
driving its competitors out of business or absorbing them into its own
framework. It will eventually reach the point where smaller capitalist firms
cannot compete in the drive to increase the rate of profit. It inevitably leads
to a concentration of capital and firms become larger and larger to the point
where they assume monopolistic status or cartel like status. This
means that certain industries will be controlled, internationally , by
about 5-10 firms. The capitalists from gutter nations cannot compete and are
driven out. It also becomes a political issue because capital comes to assert
its right over various national territories and comes to dominate the political
landscape. Citizens of poorer countries
believe that they will lose their distinctive national character and that everything
they own will be taken away simply because they cannot accumulate sufficient
capital to compete on a global scale. Institutions such as the IMF also encourage
poorer nations to remove barriers to free trade and so cater to the interests
of the dominant international capitalist classes. I disagree with lenin that Imperialism in its
political form is the highest stage of capitalism because we are passed that stage. We are in a
stage where Capitalism has used its original mantra of free trade to tear down
trade barriers and so cement the bourgeois class as world leaders. Lenin saw
Imperialism as the highest stage of capital when it is in fact only one stage.
No industry lasts forever in the same form under capital. This free trade form
of capitalism is the means by which capital can control the world and fully
exploit the international working class by having them generate surplus
value/unpaid labour time. It loses its political/national character to some
degree and the world market becomes fully developed. It is then that the world
becomes divided into the 1% and the 99% as national industries, peasant economies, independent producers in various
fields become absorbed or destroyed by the dominant capitalist firms and are
forced to join the ranks of the working class. The only way to survive in such
an environment is to compete effectively. The imperialist stage Lenin refers to
is the concentration of capital but we have seen in the history of capitalism
that independent producers (see my post) have upset the traditional framework
and have been able to assume a grand stature in various fields of business.
This is based on their product offering and there are clear examples with the
rise of Microsoft and Apple that have introduced products that have encouraged
a massive increase in the rate of profit. The market capitalization of Apple is
the highest in world or in the top 2. The company is now larger than the
economy of Saudi Arabia. Once independent producers are allowed to grow then it
cannot be said that Imperialism is the highest stage because one must consider
the human or creative element that makes it unwise for pundits to predict the
outcome although the system remains in tact. There will always be some products
on the rise that people wont see coming but they will work once they arrive
because it has a use value for society. This could only come about as a result
of Free trade and free enterprise where the competitive framework is at a high
level. It works both ways. Free trade inevitably leads to the concentration of
capital. The concentration of capital leads to monopolistic tendencies however
this is inevitably shattered when one considers that the productive forces of
society dominated by the monopolies or cartels cannot see the next big project
coming from underneath. Google began as a search engine and is now branching
out into other fields of technology. Robotics will obviously be the next major
field for capitalist enterprise. Monopolies only apply to certain products and
not to every product. When you dominate the market with one particular product
then you become the world leader or standard bearer in the field and the
investors are happy. It is not necessarily the case that the monopoly will last
forever if the company cannot produce the next great product that will then
reinvigorate the competitive drive that comes with the mantra of free
enterprise. The human element of capitalism is very important. More later.
Another stated version of capitalism is state capitalism.
This form of state capitalism is sometimes borne out of necessity because the
state is the dominant accumulator. I am not speaking about institutions funded
by the state such as welfare etc I am speaking about the government being in
control of enterprises that produce commodities to make a profit. It is normally associated with poorer
countries but is featured significantly in the industrialized world. In the
industrialized world it takes on a more nationalist character so as to protect
citizens from the ravages of international capitalists where the right price is
paramount. In this case the state subsidizes some of the costs thereby
protecting its citizens. It is sometimes a response to the free trade. In
poorer countries where the state is paramount then the state has the controlling
interest in the firm because there are no local players that have sufficient
capital to invest in such an enterprise. In some cases the poorer nations tends
to invite investors outside to invest in the enterprise because their wealth
dwarfs that of local investors and the government normally runs into the red
trying to keep the enterprise afloat. International corporate firms can take
over the state run enterprise and so the consumers have to deal with a
privately owned capitalist firm as opposed to the state. It has nothing to do
with national character in such a case. In some cases the state owned firm
paves the way for international investment by breaking down barriers within the
local economy by improving infrastructure and so on. These public capital
investments are made in the means of transport and communication and in infrastructural projects such as the
road network, utilities and so on. This eases the burden on those seeking to
invest. This is a function carried on by
a lot of governments today but it is normal to hear of divestment of a
state enterprise because the corporate
firms can manage a particular industry better. When it does take on a national character through the state (which is the case in China) then it is clearly a means of protecting
its citizens from a cultural perspective and in such a case the state plays an
active role in the market in order to stabilize it and so make sure its
citizens are protected. In some cases
this gave rise to the welfare states of Britain, after World War 2 until the
rise of Thatcher in the 1980s and Sweden. The state ensured that the citizens
were taken care of by giving them hand outs or unemployment benefits if they
were out of work and ensuring higher wages particularly when the state
controlled the means of production or by legislating the amount of wages to be
paid, determining a minimum wage, the length of the work day or week etc. It also increases taxes on the dominant
corporate firms and puts a hold on excess. It increases the debt burden etc but
it does ensure some measure of social unity. It cannot be a good thing once you
still promote capitalist virtues however and in some cases countries are run
into the ground by such values. The system of capitalism does not promote that
kind of social unity it promotes economic growth through profit generation.
Some of these governments, however, do make the workers buy into the precepts
of the system and have them believe that everyone is in this together. It only
comes crashing down when the politicians that represent primarily the interests
of capital come to the fore and only then does capitalism rear its ugly head
and the reality of social unity disappears because in the end the politicians,
serving the capitalist class, make it clear that growth can only come about
through profit generation.
The state and the private sector interests do co exist in what is called a mixed economy. The state acts as a facilitator of capital
because a nation grows to the extent that it can accumulate capital. When the
private sector holds some sway in the economy this means that state is
incapable or unwilling to take over some industries and this is why the private
sector becomes an engine of growth in a capitalist economy because of the
creative human element of capitalism and branding element that goes along with
it. It is this creative, competitive element that the state is unwilling to
suppress because it is the engine of growth in a free trading capitalist
environment i.e. people are encouraged to produce the latest products that
would do well in the markets, because it has some use, when it is exchanged for
a cash/credit payment. The state must assume some responsibility in the
production and circulation of commodities however and this is why many of state
finances are capitalized i.e. interest or profit becomes a motive for the state
as well. State finances include taxes, public debt, various fees from state
agencies and most importantly the formation of central banks to control the
money supply. Some Central Banks were originally private (Bank of England)
however most are now expected to facilitate government policy and to keep the
economy functioning even when there is a crisis and it becomes clear that they
function as the main stimulants in the economy by artificially setting interest
rates at low levels and printing money
in order to ensure the system remains liquidated. They seem to be created to
maintain an illusion of prosperity but they do highlight the development of
capital at its highest level particularly the Federal Reserve in America. The
accumulation of state finances helps to fill a void where the private sector
cannot cope. Public investments in infrastructure, Military technology and
national security, investments in industries of national interests such as
precious commodities such as oil and various raw materials and allow for
private capitalists to produce goods efficiently or to circulate goods with
quick turnover times in the various markets. They use the public debt and taxes
to subsidize products produced by
capitalists not only to protect consumers from high prices but to
encourage production on a large scale. The state can bail out private enterprise when
it believes that these institutions are vital in the public/national sphere.
This is what occurred during the recession in America where banks were bailed
out and the auto companies GM and Chrysler. There was also various stimulus
packages in the form of tax breaks etc to encourage investors to invest and the
citizenry, particularly the petty bourgeois/middle class, to spend. It was also
a significant feature of the European economies in the Euro. In China the
government embarked on a massive stimulus to the economy by investing heavily in
the economy, 2008-2009, in order to spur growth. They are now trying to allow
private capital some lee way to invest in the economy because those stimulus
packages have inflated the economy in the form of some ghost cities. When times
are good some states decide to increase taxes in order to have money accumulate in the Treasury and to
pay off debts and to build reserves or by encouraging investments they can
increase the tax base and so increase the rate of accumulation which will be
used as a form of public/national investment to enhance the production and
circulation of commodities. The state and the private sector co- exist in most
states and they both have the same goal of growing the economy by encouraging
profit generation in some form or the other. The government might talk tough in
some form or the other when they see the capitalists getting out of
control but they will never do away with the system itself because they need
the private sector to generate profit which is seen as the only means for it to
accumulate taxes and public debt.
There are other variants that more less fit into the
traditional mould. For instance the neo liberalism stance of privatization, de- regulation would fit neatly into the free trade features of capitalism. Crony
capitalism would fit neatly into most moulds because governments and various
groups or the petty bourgeois class tend to aspire to ensure the growth of
capital by any means. The corrupt element is necessary here and people can be bought off with a cash payment
but the people that are corrupted are geared towards serving capital because
they realize it as the dominant force in society in the form of the exorbitant
cash payment for services. These corrupt practices merely further the interest
of a particular group of capitalists and this can give capitalists an edge in a
competitive environment or reinforce monopolistic tendencies in the market. It
is a double edged sword.
Corporate capitalism is merely a manifestation of the
concentration of capitalism. The primary distinctive feature of corporate
capitalism is its bureaucratic structure which makes these companies resembles
small nations. This is why in most developed capitalist nation states the
cities highlight the concentration of capital in the form of high rise
buildings which are testament to corporate dominance. The Burj khalifa in Dubai
is one manifestation of corporate capitalism in its most aesthetic pleasing
manner. In fact the corporate structure of the largest companies in the world are larger
than most national economies. The corporate form of capitalism is capitalism’s
claim to the domination of the political and economic sphere of national/international life.
Welfare capitalism is merely a manifestation of philanthropic tendencies
and tends to be featured in a mixed economy especially as government’s
financial assets are also capitalized while providing welfare services. The
philanthropic motives of capital are honorable for the system but still rests
on exploitation and would have first required capitalism to reach its highest
stage of development for the moment; from a back room shop to a multinational
firm. Only then can capitalism engage in welfare. It would have had to pass
through a very competitive environment before capital can engage in such
welfare. Financial capitalism represents the highest stage of capitalism but
it is a manifestation of the growing accumulation and concentration of
political power in the form of the capitalist financial elite and the state
that serves its interests. It is
reflected now in the growth of companies, not by actual numbers related to
revenues generated via production of a particular commodity but according to
market or stock capitalization which inflates the value of the company based on
its current success.
My own Variants
I have created my own variants of capitalism which do also
fit in the traditional mould and what others have already said generally
although I am here emphasizing the human element i.e. the influence of capital
on how people act or react towards the system. Capital is not merely an
economic force but a social force. How people interact with the system will
determine whether or not it’s successful. The system does not function primarily by numbers or the profit
gain because it is a human/social force. Some of these variants are similar to other variants put forward out there
My first variant is triumphal capitalism or capitalism
triumphant. In this form of capitalism the people are gung ho about capitalist
virtues. It corresponds with the boom period where there is rising wages and
hot commodities on the market. Credit is available at a cheap cost and so it
seems as if the boom will last forever. I won’t compare this euphoria to the
years immediately preceding the sub prime crash because the house prices were
soaring and the access to credit via mortgages was also growing significantly
even though wages were stagnant. Capitalism was not triumphant in such an
episode it was existing on borrowed time. It was an illusion and was
not reflective of the traditional booms that are like the coming of age of a
new industry. When a new industry emerges from the ashes or decline of a former
industry that went bust( or overproduced in the market to the point where the
commodities became commonplace and less intriguing and mystifying) then that is
where the boom begins. The workers still generate surplus value/unpaid labour
time for the capitalist, which forms the basis for his/her profit, but this new
boom in a particular industry does not necessarily apply generally to all
spheres of the system at once. This boom in the production of a new type of
commodity represents a social shift in how people in the market place consume that commodity in
the social sphere. It also represents a new shift in production because the
means of production would have to be enhanced or revolutionized to allow for
the creation of a new industry. It has to be a social phenomenon and not one
merely tied to the financial circles. Examples of triumphant capitalism since
2004 are the rise of smart phones,
tablets, I pod, the smart watch etc pioneered by Apple on its IOS platform
and Samsung on the android platforms .
There was the rise of facebook, twitter, whatsapp messaging platform etc. There
was the boom in the oil production process known as hydraulic shale fracturing
which unearths new sources for oil and natural gas. Remember that these various
commodities created a boom even though the world seemed to be grappling with
recession. They were marketed in such a way to signal that capitalism was still
triumphant. We see how the billionaires are celebrated. They represent a source
of inspiration to others because the amount of Asian billionaires, particularly
from China, is a sign that capital is truly triumphant in some areas of the
world. Millionaires are now old fashioned. These new processes or commodities
never catches on everywhere at once but it represents something intangible for
capital because these products seem to revolutionize the social sphere and so
enhance the expectations of the international market. People become motivated
to aspire and so maintain the status quo whereby the system of capital
dominates. Whenever a new industry is in the process of expansion the variable
element or that spent on wages tends to grow because it is labour intensive,
initially, until technological processes tend to usurp the right of the worker
and become a behemoth that dictates the pace of his/her work ethic driving down
his wages as these commodities are turned out in massive droves for sale in the
market. This becomes the source of the boom in a industrial/real economy. The 2008
recession was a massive credit bubble that did not reflect a boom in the
industrial economy or the activity of individuals in the social sphere creating
products of social significance.
This carries on to my other form of capitalism which
emphasizes the creative aspect or creative capitalism. People now refer to this
as the creative economy and so it is not exactly my variant but is a preferred
one which emphasizes the human element. It is a crucial aspect of capitalism
and never separate. This form of
capitalism recognizes human ingenuity and exalts and deifies it because it
emphasizes that this is not just a system of numbers but one that recognizes
that human beings provide the spark to generate those numbers or to push
progress. It is not just the profit motive. In the older forms of capitalism,
or when capitalism was taking shape in the 19th century, production
centred primarily on basic items that were produced in huge numbers such as the
growth of the textile industry, agricultural production, various mining
activities, the steam engines, steel, oil and electricity production. Important
consumer items were produced in the 19th century that last till this
day but these products came to dominate the scene later on; however when
speaking of the industrial revolution emphasis is normally placed on the
traditional industries during this period. It too produced its own creative
heroes that are acknowledged for getting the industrial revolution underway. The
automobile industry was originally born out of necessity hence the assembly
line at the Ford plant but it was still revolutionary and made cars even more
profitable and accessible to all as the means of production became enhanced and
people came to value these products as part of their daily lives or were
offered various forms of the same product. Today there are Hybrid cars, cars
powered by hydrogen and electricity, increased acceleration over previous
models. All sort of accessories are included to satisfy the creative element
which is based on increasing consumer demand. One cannot deny the utility of these products
but they were given an edge by creation. The consumerist element is crucial in
such an instance. In the 1920s there was also the production of commodities
that seemed to be infused with a brand such as the general electric products or
those from RCA in America etc. Who could forget the birth of the movies,
recorded music, television, comic books, video games, soda, different forms of
clothing etc. Great celebrities were born such as athletes, actors, musicians,
writers, directors, producers, tv stars etc.
These celebrities have infused their own brand into products and so
emphasize the creative element. Look at
how capital has now inflated the price of various artworks through the ages. I think
a particular work by Picasso is worth over US$100 million. These products gave
a sense of almost divine inspiration and became the source of various folktales
and moral fables with a price attached because profit must still be made.
Growing up I always heard of Thomas Edison and the electric light bulb and the creation of the telephone by Alexander
Bell. There was also the mighty Albert Einstein who is one of the great
capitalist symbols of creativity and genius even though not many people
understand his core relativity theory in physics. Some of these famous
scientists never became dominant capitalists but were esteemed petty bourgeois
professionals. After World War 2 there was the growth in aggressive marketing
campaigns through television and radio jingles which gave these products an
edge or distinctive feel in the social sphere. It then reached the point with
the growth of the internet platform, the pc revolution spearheaded by Bill
gates and Steve Jobs and then the social media platforms like facebook founded
by Zuckerberg, the twitter and the now famous story of the whatsapp founder.
There is now the bitcoin craze. When it comes to movies you watch annual
broadcasts of particular films that were considered milestones in the cinema. I
never heard of the old idealistic philosophers until you had to hit the books
in high school and in the university or if they had a fancy quote. When you’re
young you are more interested in the creative aspects of capitalism. Even when
one acknowledges that the process of creation is a historical one certain
individuals seemed to arrive at a particular point in the telling because of
how their products enhanced the means of production for capitalism. The brands
which are now powered by petty bourgeois celebrities are testament to this. It
is this creative element that points to the next stage of human development.
Crisis ridden Capitalism or Capitalism in crisis. Where
there is a boom there must be a bust lurking somewhere. It is inevitable in the
capitalist mode of production. No other mode of economic production endures
such crises of overproduction and so the crises before capitalism consisted
primarily of military conflicts. Crisis ridden capitalism produces a very
despondent or depressing mood among the populace. In the boom times people are too caught up with the rising wages and the high profits and rents to notice the
signs of doom. Anything that is too high must be subjected to scrutiny by the
laws of gravity. In capital crises takes many forms. High profits can be a sign
of high prices or that wages are beginning to be squeezed. This all depends on
the particular context and so if prices are high then high wages and high
profits are compatible because the product itself is in high demand. If it is
in high demand in the market then the capitalist can charge accordingly however
when the price is too high not everyone can buy (one has to look at the state
of other industries to understand the level of income generation or
whether they are at a high or low stage of development) the capitalist needs to
reach more people in the market and so he/she seeks the means to improve
productivity or by driving down the costs of production that normally equate to
the time taken to produce a particular product for a given period (an hour,
day, week, month, year, etc). This is the consequence of increased productivity
in any industry. When the industry is booming at the onset this highlights a
demand for labour because most
industries in their infancy are labour intensive. This means high labour costs
however when the intensity of labour increases then this affects productivity
and so a new social standard is set for the production of the commodity within
a particular industry. This new social standard is reflected in the growth of
technology which aids the worker to produce even more commodities in a given
space of time than previously. The consequence of this growth in productivity
is that there is no need for all the workers previously employed when the
industry was in a state of infancy. One man can now do the work of 100 with the
aid of technology. The growth in technology, however, represents an industry at
a high stage of development. The efficiency afforded by technology makes
commodities easier to produce and allows for a vast quantity of these goods to
be available in the market (national or international). The sale and purchase mechanism becomes
eroded with this vast quantity of products available on the market. A boom in
one industry tends to offset boom in other industries. For instance when a
particular industry requires certain raw
materials or the development of infrastructure to support the production and
circulation of its goods. When the
concepts of sale and purchase come apart
then the product will languish in the market. What makes the concepts of sale
and purchase come apart forcibly is all explained by the growing accumulation
of capital (rate of profit) at the expense of the working class. Capital accumulation
is represented by the growth in the technological apparatus however this comes
at the expense of the workers who are thrown out of work and so the crisis
starts there especially if other industries are not there to absorb the
industrial reserve army or the relative surplus population created by displacement.
The workers that are employed must endure the bare minimum commensurate with
their training in order to live because there is such high competition for the
post. If capitalism stayed within its national borders then wages would
normally remain high because there are probably only a certain amount of
workers engaged in that particular industry. If it is a national problem then
the capitalist moves overseas to develop the industry in areas that are labour
intensive in order to drive the wage bill down even further in his/her own
national borders. When capital develops the world market through its free
trade/neo liberal policies then we come to understand the devastation wrought
by capitalism. It produces like a
behemoth in order to expand market share but always comes up short because the
mass market of labour available is devalued and most of the world subsists on
starvation wages even though the capitalists get richer as long as technology
is there to absorb the labour of the few that are employed. The workers produce
surplus value/unpaid labour time for the capitalist and with an increase in
productivity this surplus increases on behalf of capital. This is a primary
feature of capitalism and results in all sort of behaviors amongst the populace
such as depression, anarchy, criminal activity and the rise of the mob economy,
riots, strikes by trade unions and disillusionment with the capitalist system
and its governance structure. The petty bourgeois and the dominant bourgeois
class become concerned by these uprisings and use strong arm tactics to keep
protestors/rioters/critics in line or they seek to endlessly praise the virtues
of the system by fuelling it with artificial stimulus measures. The creative
aspects of capitalism are quite necessary here because the hope for the
politicians is that some new remarkable product will create investment
opportunities which will therefore create a demand for labour or those in the
industrial reserve army. People become conscious of gross inequalities in a the
crisis ridden variant of capitalism. For instance the figure that 1,645
people/billionaires are worth US$6.4 trillion, although they don’t partake in the
labour process, is not welcome in a crisis ridden capitalist economy. It is more
than likely welcome when capitalism is triumphant. It is a topsy turvy moment
and is certainly one type of capitalism no matter how humane you are or
barbaric you are as a capitalist because the profit motive is what drives
capital onwards not society as a whole. If the government intervenes and
creates a welfare state it wont encourage investment unless the capitalists are
assured of a profit and so they are not just going to randomly follow the
government into an industry and start producing when they know that they are
not guaranteed the right price to compensate for cost of production and the
profit calculated on the basis of surplus value. Only when capital has its own
way of producing does it invest accordingly. The crisis can only be resolved by
the growth of new industries and not in the mere maintenance of the old ones.
Credit driven capitalism. This is akin to the financialization
of the capitalism whereby the banks (public and private), stock exchanges,
insurance companies and so on control most of the money available for
investment in industrial production. The credit driven capitalist economy can
only survive in advanced nations that have a long history of diverse and
extensive commodity production. The US, the Eurozone and Japan are geographical
and cultural spaces with the best record by that measurement. They can call on
money like no other nation. The Federal reserve has pumped close to US$4
trillion, by buying long term debt securities, into the US economy in order to keep borrowing costs down, avoid
deflation and to keep prices artificially high and the dollar inflated which
can result in devaluation if investors begin to lose faith and choose to invest
in other securities that offer suitable returns. This has fuelled bubbles
across the world because investors take this money thrown into the system to
invest in the markets of developing nations. Now that the FED is cutting back
this becomes problematic for those dependent on the easy money such as poor,
developing nations.
The advanced nations
can afford to be leading debtors. The US debt (private, public and
international) is US$60 trillion and counting. It can afford to absorb this
debt because it has the world’s largest national economy with US$16 trillion + and
this means that investors expect that this country can afford safe returns in the form of profit. The taxable base of
the US is a little over US$2 trillion. No other nation pulls in that kind of
money and so investors will be hoping that it can continue to produce and,
especially, at higher levels. The
credit driven capitalist economy can be viewed as the highest stage of
capitalism whereby money capital reigns supreme. The derivative market, for
instance, is around US$650 trillion outstanding and this is around 9.3 times the
size of the world economy. The downside to this is that it is based on
prospective, and not actual, outcome. The increased use of financial assets
such as these can allow for companies to bypass the real fundamentals in the
industrial heartland. These financiers become driven more or less by making
more money solely from money without having to engage in the investment practices of going through the
acquisition of labour, raw materials, infrastructure etc in order to generate
profit. This leads to complex
calculations that only they can fathom. This is why the wealth of publicly
traded companies are measured by market capitalization or inflated stock prices where investors hope to cash in on a particular industry and its prospects for the future.
This puts a lot of pressure on the company to perform and to generate profit by
any means to satisfy shareholders. This would explain, to some extent, Apple’s
policy of buying back shares. The increased investment in financial assets does
not totally negate the industrial heartland and so the sub prime crisis of
2008-09 was on the basis of boom in house prices and the mortgages that went
along with it that were packaged accordingly as a basis of prospects for the
future. The recent crisis has taught the world that capital cannot be allowed
to stretch so far ahead of the actual fundamentals in the economy. It is a lesson the state will not heed as it
continues to pile on more debt and to allow the FED unlimited power in how much
money it pumps into the system. If the US economy does not grow at 10% annually
like Tanzania then this can be problematic for future generations. Developed
industrial nation economies tend to grow at a slower pace because most of the
accumulation goes towards maintaining the vast technological/infrastructural apparatus in the
developed industries. The debt burden on future generations becomes immense and
default will be inevitable if investors find other havens for their money. When
the credit driven capitalist variant reaches its peak people tend to question
whether or not we are dealing with old style of capital where you simply
produce a commodity for sale and everything is fine. In this case it appears that
Capital has become lord and master over all, even the Banks, because capital
becomes concentrated in the state apparatus which has the power to issue debt
based money in an unlimited fashion simply because of the vast history of capitalist development at its disposal.
Capitalism becomes a truly unifying force however everyone must now strive to
meet the requirements of this behemoth which comes in the form of the numerous
investors and designated funds such as social security and pensions. Anyone with
a surplus tends to invest in debt for that is the only way to ensure profit or money for money without going
through the traditional means. The US has perfected this model and it remains
to be seen how it will be resolved. This is the highest stage of capitalism and
not Imperialism as Lenin said way back in 1914. He saw how industry became
subservient to finance but it was not simply an imperial element because we see
now that the state has been called upon to bail out several companies beyond
the stage he was speaking of. If this
were more widespread then it would have been interesting to see if the state
would bail out all the top companies. The Chinese would then be able to invest
in hard assets by buying government securities. These companies are considered
too big to fail because of the amount of capital they have accumulated over
decades, for some it is over a century. You would not see the government bail
out facebook and twitter. The extensive accumulation of capital is a sign that
the products offered by these companies are socially relevant or intrinsic to
society. It boils down to the creative element for no one can foresee what
product will emerge. Creative individuals have created commodities that have
become socially acceptable and relevant and there is no guarantee that the
state can perform that unpredictable role unless it gives people the freedom to
do so and then takes them over. The leverage it will have, after years of
capital accumulation, is the capitalization of state assets that are supposed
to represent the collective.
There are some other minor variants that I will include
here: There is parasitic capitalism, or
the parasites that thrive in capitalism, whereby people seek any means so they don’t have to engage in the labour
process yet should be able to benefit. At least the originators of a fancy, successful product had to do the work
initially and be able to provide their input when they are removed from the
labour process and become exploiters and oppressors. The parasites however don’t
control the means of production but live lifestyles that are akin to a petty
bourgeois status. They either rob, steal, plunder, extort, beg or benefit from
wealthy or well to do parents and family. Regardless of the means they have
access to money and when capitalism reaches a developed stage ( where a lot of
commodities are produced) money is all you need really. They rub shoulders with
the best in society although they have no claims to be in that mix apart from
the familial or friendly connections they establish. It is similar, in some
degree, to the rentier class that can invest their capital in some securities
and sit back and reap the rewards even if they don’t own the company or have no
controlling interest. They have no ambitions to make a contribution to the real
economy by creating a fancy, successful product with social benefits, they just
want to know that their money is bearing interest and so allows them to live
like hogs. This becomes one of the
features of wealth that characterize capitalism: the growth of the parasites
and leeches or the decadent class.
There is the barbaric form of capitalism or the savage based
capitalism where individuals ruthlessly exploit one another and the social cohesiveness
of society is removed. Individual interests supersede social interests at all
costs. People can be bought and sold like prostitutes. Everything can be bought
at the right price. This system breeds anarchy and separatist movements or even
revolutionary movements. This is tied into crisis ridden capitalism.
It’s not all negative you do have the philanthropic
capitalists or the humane forms of capitalism that seek to give back a large
proportion of their profits to charity and various projects. They still have to
be oppressors and so they still must make a profit but it is commendable to
some degree. The irony is that these mega billionaires are capable of sowing
the seeds of social progress even if it means their own destruction as a class.
Society will benefit from this process however.
Revolutionary capitalism. This boils back to when capitalism
is triumphant but more specifically it highlights the degree that capitalism
overhauls a society by removing the barriers associated with other modes of
production that are considered semi capitalist, slave based, peasant and independent
producer based. Capitalism is triumphant but there must be a significant break
with the more backward ways of production that foster low levels of
productivity and so do not socialize the means of production by creating a
developed working class society where the majority live to sell their labour
power to capital. It becomes a revolutionary force and not just an exercise in
the growth of a particular industry within the existing framework.
Petty bourgeois capitalism is a state where the middle
classes have a significant stake in the society. Their incomes bridge the gap
between the extremely wealthy and extremely poor. These petty bourgeois individuals
invest in stock and based on their earning they have certain benefits awaiting them
once they retire and they become the apologists for the system. When capitalism
is down it seeks to encourage the small business class to thrive because it is recognized
as the great employer because the highly developed firms cannot absorb anymore
workers. If a petty bourgeois firm becomes successful it eventually grows to
become a dominant capitalist firm. Small businesses cannot afford to remain in
the same position forever because a crisis will inevitably destroy them. When a
crisis comes however some fold or are bought out and so it goes back to the
pure model. When the product is good
they are also bought out by a dominant firm but they represent the genesis for
the expansion of the dominant capitalist firm based on their input of their own
creative element that is becoming socially acceptable.
Celebrity styled capitalism boils back to the creative
element however there is a conscious drive to promote celebrity among the
citizenry. Everyone wants to be a celebrity or a commodity that can be bought
and sold. They have to market themselves based on their skills in certain
professional fields or by their ability to attract attention. It is a
manifestation of the individualist mentality produced by capitalism. They
become a feature of political and social movements but they are now pressured to
market themselves in a desperate way in order to stay relevant. This petty
bourgeois class becomes so dominant that some can generate incomes akin to the
dominant bourgeoisie just on the basis of their image or what their image means
for society. This is a primary feature of American capitalism. Every brand has
a celebrity attached. It is no longer about the product because in a
competitive environment you can be sure you won’t be the only one producing
that product. You need the influence of
the celebrities to promote your product or give it an edge.
You have academic styled capitalism where the behavior of individuals is condensed in some
volume so that we can understand the system better and why it must thrive. The
university is the basis for this and can influence policy on how business is
conducted. Theories are formed to explain the world we live in etc. Some methods
benefit the dominant class, the middle or the oppressed groups. Reality either
sets these academic treatises straight or confirm what they were saying about
the system
These are some of my variants and my claim is that no matter
the variety and the diversity capitalism always devolves into the pure model
particularly when it reaches a developed state. The pure model involves the few (be it the 1%
or 20%) controlling the majority( be it the 99% or 80%) interest in the means
of production. This aspect of capitalism will never go away for all the
adaptive capabilities of capitalism. I am sure there are other variants but it
does not matter
