Imagine there is no Capitalism
At a recent philosophy discussion group gathering the departing question from one member was ‘Can you imagine life without Capitalism?’
The question has stayed with me, churned over in my brain time and again.
To begin we need to determine what Capitalism really is and how it has come to dominate just about every aspect of Western life.
Capitalism is defined as ‘an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.’
That definition is broad, covering the term property as meaning land and the means of production. Capital can also be interpreted and the ownership of shares in an enterprise and with compulsory superannuation, that means that anyone who has a superannuation account is part of the ownership of capital.
Living today in a western culture, Capitalism surrounds us, we are part of it. It seems we cannot escape it. I am retired, living of pensions, both government and a superannuation pension. These pensions require that our economy keeps working, things keep getting made and consumers keep consuming them. The superannuation pension is dependent of the fund owning shares in the system, owning shares in the means of production, so even in retirement I am dependent on capitalism for my continued survival.
As an employee, continued employment is dependent on the employer to trade profitably, whether that be in production such as farming or manufacturing, retailing or in the multitude of service industries. Profit means survival.
Profit is a dividend to the owners of capital, whether it is the farmer selling his produce to market or the local cafe owner able to pay their bills for rent, consumables and wages and have a bit left for themselves. The employee becomes a major cost to the employer and yet, the employee is also a consumer of the products and services provided by capitalism.
During feudal times and in the early days of colonisation, workers were not paid but either lived a subsistence life, growing their own food and raising limited livestock. Slaves were owned by the capitalist but needed to be clothed, fed and housed.
During the Industrial Revolution wages were set at a subsistence level just enough to pay a bit of rent and buy a morsel of food so the employee had enough energy to look over the spinning and weaving tasks. If they didn’t show up at work, there were enough unemployed to fill the position. Workers costs were minimised to ensure greatest profits.
I guess for employees, there were some halcyon days, but over the passage of time, for but a very short time. The post war industrial boom after WWII saw economies grow, workers’ wages grow and workers enter the Middle Class, where home ownership became a norm, where labour saving devices became essentials, washing machines, refrigerators, furniture and furnishings, home entertainment such as HiFi, TV, and the need for two incomes to keep consumption growing, not just one car for the family but two, and as the children grew up, one for each driver in the family.
Increasingly since the mid 1980’s the owners of capital have demanded increased profits. The Thatcher and Reagan governments in the UK and USA led the charge with a trickle-down economic theory, that if the people at the top of the income pyramid, those who had invested their capital in various businesses and enterprises made lots of money, the money would somehow trickle down so that everyone benefitted from their wellbeing. Since that time, we have seen the number of billionaires grow exponentially.
Australia, under the Hawke/Keating governments fell in line and the Howard government followed suit.
The means of redistributing that wealth was compromised with taxation systems which favoured the wealthiest but since the demand for taxation revenue continued to rise, the burden was placed on those with the least, the introduction of Value Added Tax (VAT) and in Australia the Goods and Services Tax (GST) meant that consumption was taxed. Those on the lowest incomes spend most of their wages almost immediately on essential goods such as food, clothing, and so proportionately pay the most in that tax system.
In many respects, the halcyon days of yore are gone, finished. The wealthiest have built protections to secure and insure their wealth with favourable taxation regimes and with the willingness to pay (tax deductible) accountant fees are able to minimise their tax burdens while influencing governments to assist in various programmes to aid business, tax concessions on trade and work vehicles, salary sacrificing plans for new and other benefits not usually available to minimum wage earners, over funding of private schools while under funding government schools and so the list grows. Those with the most are favoured through various forms of government largess through taxpayer funds from the ones the wealth should be trickling down to are forced to pay through the PAYE taxation system and GST collection.
Was it ever otherwise?
I guess the most obvious answer is to look at pre–Colonial Australia where indigenous peoples lived communal lives sourcing the needs for survival from the environment they lived in, sharing the bounty as it occurred, collectively seeking out the next bounty to satisfy upcoming needs. There was no profit motive, there was just the cycle of life to continue.
But we cannot wind back the clock, and I don’t really think we would want to live without Capitalism, but we could, or should that be should find a way to spread the wealth of this nation so that poverty can be seriously addressed, that the housing crisis with he ensuing high rents and almost impossible hurdle for first home buyers to enter that market, and the flow on effects of poverty, drug and alcohol problems, gambling addiction and the sense of valueless which leads to the violence which is so apparent today.
We see people who are privileged suing for defamation, blocking up court time over miffed egos while the poor are criminalised for being poor but cannot afford the expense of proper representation for their legal struggles.
There are very good reasons that Capitalism works, the lives we live or aspire to live depends on that system designed to create and satisfy the demand for goods and services. But we have to make it work for all of us, not just those who allow the off penny to trickle down to those near the bottom.
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13 comments
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Steve Davis -
Andyfiftysix -
leefe -
Bert -
Terence Mills -
Tones -
Harry Lime -
Douglas Pritchard -
paul walter -
Steve Davis -
Clakka -
Andyfiftysix -
Liam
Return to home pageBert, thanks for a great article.
I particularly like the image at the top. 🙂
i totally agree. But first we need to define what we want. There are parts of capitalism that work remarkably well and parts that quite frankly are criminal in intent. There are basic needs that need to be met that capitalism has blatantly failed at. Yet it has delivered wealth unimaginable. Yes it has delivered in that department. If it feels like we haven’t, its because we pissed it up a wall call real estate.
If that wasn’t enough, we then built another wall called super.
secondly, we need to redefine capitalism. “Capitalism is defined as ‘an economic system in which private actors own and control property in accord with their interests, and demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.’” Now obviously, its been twisted…. ” serve the best interests of society…”. No where is competition mentioned but its what the neoliberals are always raving about. Presumed behaviours and assumed responses are always trotted out.
if your going to be wishy washy about it , well your gonna get the extremes as we have witnessed over the decades.
My idea in simple form would be to separate the basics for society. Make sure thats tied down securely. Then capitalism is free to do its best. This also has the effect of taking out fear as a motivator. Are we capable of running a system based on carrots and not a stick?
If you want a system to self destruct, your living it.
So why not change?
demand and supply freely set prices in markets in a way that can serve the best interests of society. The essential feature of capitalism is the motive to make a profit.
Maximisation of profit is not in the best interests of society as a whole. It only serves the interests of those with wealth and power. Anyone who can’t keep up is trampled in the rush.
Also, Bert, you’ve left out the part where capitalism is destroying the natural systems necessary for the maintenance of life on this planet.
Commerce is fine; trade seems to be an integral part of social systems. But we need to move away from profit as a primary focus and move to truly sustainable systems of production. More more more, bigger bigger bigger, new new new is short-sighted and, in the end, counter-productive.
Thank you leefe for reminding that capitalism is destroying the natural systems needed to sustain life. Yes, I agree, I live in a state full of big holes dug to extract stuff to make other stuff, and we are experiencing a drought which is severely affecting the ability to grow crops in the south west or even grow enough grass to feed the cattle and sheep we need.
In the definition I posted, especially the bit you highlighted, I wonder if society refers to ‘high society’, not the ordinary folk, the plebs.
An opportune time to have this conversation.
This morning I heardthe Greens’, Max Chandler-Mather (on the ABC RN) once again promoting rental caps and freezes and the abolition of incentives (Negative Gearing and Capital Gains Tax concessions) to, in his view, re-balance the housing market.
The ownership of property is fundamental to the capitalist system with the landlord tenant relationship at the core. We currently see it as appropriate and perhaps essential that our available rental housing stock be owned by the wealthy and rented out to those who cannot, for one reason or another, afford to own their own homes. To encourage these investors to acquire housing stock we incentivise them by offering negative gearing and capital gains tax concessions. In so doing, it could be argued that we are favouring the ‘landed gentry’ at the expense of the first-home buyer. We then offer rental subsidies to allow people to rent these properties, these rental subsidies are seen by many landlords as rightfully theirs : i.e. the government gives you a rental subsidy and I the landlord should receive this subsidy as income.
We also provide first homebuyer subsidies which, according to economists, push housing prices up and end up in the pockets of developers and investors.
The Greens insist that we legislate to limit and cap rents whilst ‘capitalists’ say that this would be state interference in the operation of free markets : the Greens also want to curb investor incentives to, at a minimum, limit concessions only to new-builds rather than churning existing housing stock – this was also a Labor policy…. for a while.
How then do we provide affordable housing for all without fuelling inflation and enriching the ‘landed gentry’ and perpetuating the situation we have created ?
Ironic Terence isn’t it, the subsidized to the hilt ‘capitalists’, the ‘landed gentry’, claim that changing the tax system to make it more balanced is an example of state interference in the operation of free markets. They lack the self-awareness to notice that inflationary tax breaks & subsidies were baked into the system by both Labor & the LNP, ie, we got to this dsyfunctional point in time because of ‘State and or Federal interference’.
Labor & the LNP wanted a divided society, they got one.
The hypocrisy of some of the most priveleged and wealthiest is staggering.
The govts, banks & major corporations, and the mainstream media have ganged up on the public. The system does need a reset – capitalism and all of the freedoms that it provides, needs to be allowed to run its natural course without interference by predatory vested interest who want to keep the lion’s share of equity generated.
It’s obvious Albanese can’t imagine a world without capitalism: Albanese commits to gas to 2050 and beyond.Good to know we got rid of the Liar only to continue his policies.I clearly remember him(the Liar) saying “Gas chose itself”,on the advice of a former gas wallah.Looks like We’ve been stripped of free will, and common sense.Capitalism is going to guarantee we screw the planet and everyone on it.At least some people will wax rich on the road to hell.At this rate, minority government would be a stretch.It’ll be interesting to see how they sell this bullshit to the punters.Perhaps the government will set up industrial gas burners around the countryside to keep all the homeless warm.
There are few more exciting spectator sports matching both the climate, and the economic crisis competing with nuclear destruction.
Nice to watch but the rich have got all these events programmed for our entertainment.
I would not put my money on humanity realizing that there is an option since after all we are free, and its a democracy, and we could elect the unmentionables, or the deplorables to set an agenda for the future.
But our education tells us to avoid pain, and suffering which would certainly follow if we departed from the 2 party line.
So its the poor old infantry that gets butchered, while the generals sup the wine.
Good, GOOD article.
Douglas, your penultimate sentence covers so much.
Excellent article Bert,
Very timely, and the comments well worth the read.
I’ll be a tad lazy here. I’ve been otherwise disposed, so I’m lagging behind the AIMN blog somewhat. For what it’s worth, I’ll drop in my tuppence worth, this arvo added to the “forces of impunity …” article by Binoy 7 May.
“But how to deconstruct growth capitalism and consumerism as imposed from the top down?
A view of the progression in Oz since WWII seems to reveal that as the top-down hair-brained neo-fascist impositions of Thatcher and Reagan took hold in the ‘west’, the power of the ordinary citizens was eroded and supplanted by merchants, banks and money manipulators who, pulling the strings of politics, created the insatiable beast that on first principles served no-one but itself. It harnessed the technocrats to its ever-expanding monopolistic rolling ball. It completely commodified everything seeking supremacy, such that its critical mass subsumed politics, executives, democracy and governments of all kinds.
After the WWII devastation, much of the world’s economic resource was exhausted and skilled and any labour was in extreme short supply. So unprecedented co-operation by the countries of Europe brought about the reconstruction. Whilst Russia, eastern Europe and the East were ill-equiped and the remaining citizens either migrated west or took many decades to slowly reconstruct, with the ‘help’ of the west’s great beastly rolling ball.
The world’s population skyrocketed from 2 billion to 8 billion, based on some notion of a utopian furture driven by the apparent success of reconstruction, after all, such burgeoning of population is affected by a sense of confidence. A confidence that would feed the insatiable beast, as long as ecology was ignored and the process of toxifcation concealed. A fraught system premised on arcane notions of supremacy, divide and conquer, exploitation, obscurantism and lies.
It would seem that the processes of top-down impositions are the natural bedfellows of the corruptions that cement in fraught systems. A nonsense that ‘might is right.’
Clearly, post WWII reconstruction reveals that cooperation can affect renewal after devastation, and that confidence will be generated upon progress towards renewal.”
But what of anthropomorphic climate change and the pressing affect of ecology and toxification ignored? Firstly, the obscurantism and lies must stop. The populace is already aware of the dangers, and its anxieties are building, as they are top-down cajoled into a continued dependency, there is a distinct loss of confidence, and fear of imminent collapse. Contraction is already happening, but as an inevitability of the top-down crash. The top-down impositions must give way to a bottom-up, needs-based countenance of contraction. The technology likely already exists to facilitate it.
The insatiable beast must be supplanted by networks of community serving co-operatives, who can guide the actions of bodies providing the more broad needs of essential global services, coupled with a community enriching sharing economy, where one is happily interdependent, and doesn’t need one of everything by which to build a pointless bastion.
It seems the networks already exist, and to some degree are already in Europe, starting to shift the focus to need and sustainability rather than aspiration to castles in the air, and supremacy. I do like the m.o. of the Mondragons – proof-positive that change can be affected.”
what everyone here has missed is the disruptions we are witnessing and the ones to come. Tony Seba is now saying we are the horse and carriage of the next century. Capitalism as we know it is dead and buried, we just dont know it yet.
The future shock is here now. Yet we go about our business as if nothing has changed.
Harry, its not what Albo. can or cant imagine. He and others at the top will have no choice in the very near future.
My concern is that either we define our future or it defines us. I rather we not leave it till the last moment.
I don’t know whether capitalist or kakistocratic is a better name for the situation we are in, as billionaire and bureaucrat alike allocate resources in the least effective, most self-serving way.
From social media, to hospitals to the ~centrelink~ Services Australia call centres, wherever managers or persons in power can make a descision that passes a cost on to other people, and generally makes things worse, that is the choice they keep making. This so-called ecomony is failing to provide health, education, housing, or social cohesion. Increasingly, it is failing to provide time for even the basic maintaining of a household.
If I might find a source for the rot, it is Milton Freedman’s doctrine of the 70’s https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html whereby business became accountable to nodody who mattered, neither customer, supplier, nor employee.
A problem is the shareholders of public companies are largely the same people. Indeed, new investors are advised to buy into index funds, giving them a slice of every large company on the market.
It does not take much imagination to see, competition between such firms does not serve shareholder interests. As wealth increasingly concentrates in the hands of a few, so does ownership and power over public corporations. This is capitalism.
Freedman’s theory came from another 1970’s economics doozy, and favourite of management consultants, which has spread well beyond the boardroom. The Agent Principal theory and its use of incentives.
Carrots and Sticks have been shown time and again to distract from cognetive work and lead to poor descision making, while attracting the least suitable people into positions of power.
This is how everything from public service to unemployment, to even charaties starts to fall apart. This is kakistocraticy.