What is capitalism?
Capitalism is the political and economic system that is controlled by private ownership – dictating shipping, manufacturing and distribution – to gain profits and divorce control from the state. The main principles of capitalism include capital accumulation, private control of operations, competition, voluntary exchange, wage labour and property rights recognition. The race for larger distribution of goods has led companies to flatten the global environment by extracting natural resources at completely unsustainable rates and exploiting the workforce. Over the past decade it has become clear to leading scientists, journalists and economists, that in order to halt climate change, we must change our relationship to work, capital and ownership.
Left Voice claims that capitalism has destroyed the quality of our air and water, caused soil degradation and the loss of biodiversity and natural landscapes. One study reveals that due to capitalism, the global population of animals has “decreased by an average of 60 percent between 1970 and 2014”. Moreover, Phil McDuff believes that “Ending climate change requires the end of capitalism.”
The history of capitalism:
The century that ignited the capitalist economic system is still very much debated. From the 16th century, all the way back to the European Medieval period. According to Britannica, the rise of capitalism began in the 1600s and escalated in growth throughout the 17th and 18th centuries due to the English cloth industry. What distinguished capitalism from other economic systems was the desire to allocate capital toward increasing infrastructure and the production of goods. Previous systems assigned wealth to building “economically unproductive enterprises, such as pyramids and cathedrals.” Historic events including the rise in Europe’s rare metal supply resulted in price inflation, that during the time period, salaries couldn’t support. The early capitalists, however, flourished in such an economic situation.
The early capitalists (1500 – 1750) also rigged the benefits of the uprising in national states and the mercantilist era. Following the rise of national states, the development of legal codes and a uniform monetary system helped structure the desired economy. Due to the Industrial Revolution, the large flow of European and British capital – from the wealth generated by the slave trade – was allocated towards “practical application”. The depletion of feudalism due to the eruption between peasants and the upper class after the Black Death and the French Revolution led to the self-regulating market of capitalism. Karl Marx, a German philosopher, claimed that the economic structure of a capitalist society grew out of the remnants of feudalism. The self-regulated market soon took off in the 19th century with the political ideology of liberalism (which opposes political intervention in the free market, with limited intrusion only during economic hardship) which brought free trade, balanced budgets and most notably, minuscule levels of financial relief for the poor.
However, following World War 1, the global market plummeted with previously accepted ideas like the gold standard replaced with national currencies. The Great Depression of the 1930s then saw the near-collapse of ‘minimal political-economic intervention’ in most countries, as many people of the newest generation supported the new economic system of socialism. Ultimately, a socialist society never prevailed, as many countries after the 2nd World War began to regain forms of their near-extinct capitalist structure.
Subsequently after World War 2, in the 1970s, “income disparities began to widen, with income growing much faster at the top of the ladder than in the middle or bottom” which challenged many people’s views on the viability of a capitalist future. Succeeding the 1970s, the 2007 – 2009 financial crisis reignited many global views on a socialist system. As of 2022, the vast majority of the world still runs off capitalism.
How has capitalism exploited the workforce?
Capitalism, whilst exhausting the earth’s finite resources, has also exploited the labour of billions. The Stanford Encylopedia of Philosophy claims that “Workers under capitalism are compelled by their lack of ownership of the means of production to sell their labo[u]r power to capitalists for less than the full value of the goods they produce.” Under a capitalist economic system, it is unachievable for people to live without having to provide their labour. Only once they comply, will they receive the money to place a roof over their head and food on the table.
Instead of spending our days improving local community gardens and using such food to cook for your family, we allocate our time to the mass production of goods for large businesses. The way capitalism operates is by ensuring the product sold costs less than the labour that made such a commodity possible. This, itself, generates complications. As the incentives to make more wealth increase, many employers ensure they pay staff as little as possible, whilst working them twice as hard. According to The World Counts, many people across the globe are paid as little as 3 cents per hour, working over 100 hours a week and in facilities with poor air quality. Excluding sweatshops, some of the wealthiest countries in the world like the United States follow similar (but more discrete) practices. The Center for Public Integrity analysis found that “$287 million from workers” was taken by employers. Adding, “Some businesses pay less than the minimum wage, make employees work off the clock, or refuse to pay overtime rates.” In 2017, people in the United States worked 1,757 hours, 1,687 hours in Europe and 1,693 hours in Australia – slightly under half of their waking life.
See the list of all the companies in Australia that underpaid their staff in 2019 alone.
In 2021, the World Health Organisation claimed that “745 000 deaths from stroke and ischemic heart disease in 2016, a 29 per cent increase since 2000” were caused as a result of long working hours. According to the study, from 2000 to 2016 the number of deaths from heart disease rose by 42% and 19% for strokes.
As for enjoyment, according to Zippia, a global study found that 50% of people “hate” their job and can be expected to work 90,000 hours of their life.
Workers cannot expect to see improved hours, wages or overall life enjoyment for so long as capitalism reigns supreme.
Reinventing our economic system:
Among the latest generation, an increasing number of millennials are standing in support of a new economic system. NBC News headlines: “Millennials support socialism because they want to make America great — but for everyone.” The rise of a socialist society insists that everyone, not simply the richest, must be treated equally and that greater power is allocated to the people and government. In a socialist society, not everyone would be provided with identical wages, with some people still better off than others. The wealthy, however, would only be 5 to 10 times greater than the poorest – not 100 or 1000 times greater as seen today.
Socialism, according to Investopedia, proposes “shared ownership of resources and central planning offer[ing] a more equitable distribution of goods and services.” Under such a political and economic system, the means of production would be controlled by the public, greater political funding would go towards minimising class distinctions, increasing equality and security, and ensuring that economic arrangements suit everyone.
A country under a socialist economic system would see the government set the prices of goods. Currently, if demand escalates for a product, companies increase the price to drive further profits and vice versa when demand declines. Conversely, under socialism, the prices could be set by the government to increase accessibility for less financially fortunate people. Equally, however, it would be the government’s responsibility to alter prices during times to match consumer needs which would increase workloads for politicians. A Polish economist, Oskar R. Lange suggested by responding to inventory levels, planners could “avoid major production inefficiencies. So when stores experience a surplus of tea, it signals the need to cut prices.”
According to a YouGov poll in 2019 of 2,000 Americans aged 16 and above, 70% of millennials would vote in favour of a socialist politician.
Don’t sweat it:
Given the history and present, it’s only fair that many people panic about a socialist future because many of the most restricting and politically-dominated countries have/are those ruled by a socialist government e.g the People’s Republic of China, the Soviet Union (historically), the Republic of Cuba and the Democratic People’s Republic of Korea today.
It’s worth stressing, importantly, that these cases of socialist countries are governed by extreme totalitarian regimes that began years ago, and are extremely unlikely in a western political environment.
There can and would be many cases of positive socialism around the world, especially if our ultimate goal is to disable fossil fuel business power and implement greater working standards. Already in Europe countries are trialling mixtures of political ideologies, or filling in the capitalist gaps with socialist policies.
Predictably, Scandanavian countries are leading the way (as always) in modernising their economy by supporting a mixture of both the free market with so-called social safety nets. This means that companies have the ability to compete at normal standards and sell goods at their prices, so long as they comply with the government’s new labour laws. Moreover, the Scandanavian governments (along with others) have implemented free universal healthcare.
Case in point, according to Intereconomics: Review of Economic Policy, some of the reasons Nordic countries operate so well is due to “wage equality, [and] high public welfare spending”.
The possible benefits:
Like anything, socialism also has flaws that wouldn’t suit all. For example, socialism would likely be unpalatable for the wealthy. However, the benefits from an ecological and humanitarian perspective, seem worth the loss of billionaire yachts. A few of the many benefits include:
– equitable distribution of wealth;
– minimisation of unemployment;
– public ownership of the fossil fuel industry;
– absense of exploitation;
– prevention of private monopolies;
– assurance of supply;
– welfare state; and
– greater public power to vote on decisions.
Capitalism may have had the best of intentions initially. Today, however, the fossil fuel companies all over the world that, with little regulation, do as they please with the environment, have become commonplace. Equally, the technology giants have utilised both their name and status to overwork their staff whilst paying little in return. The motive to do so stems from the desire to make incredible amounts of money.
What would happen, however, in a society that equally distributed finances and dedicated more resources to renewing, not destroying the world?
A world where the public or government wouldn’t be influenced by the dollar signs, because they wouldn’t matter nearly as much, and instead focused on what would actually make the world a greater place. Not all would be perfect under socialism, but it wouldn’t need to be, only better – at least a step in the right direction.