The Constitution, Vol. 7 , No.4, December 2007
THE SPECIFICITY OF THE CAPITALIST
ECONOMY
Eskor Toyo
ABSTRACT
This article rethinks capitalism in the context of capitalist glohalisation and the consequent schoolarly misrepresentation of the essential features of this economic category. By means of an indepth reflections on the specificity of capitalism, the article argiles that capitalism means more than the facile definition of it as market economy. It is a mode of production with contradictory dynamics which define its essentiality. The article concludes that heyond a prejudiced interpretation of economic reality hy neoliheral thinkers, science canfurther humanity's appreciation of reality in ways that are redemptive.
INTRODUCTION
An American associate professor of economics has observed that capitalism is a term very often used but seldom explained and even more rarely understood. This scholar was right. It turned out, however, that although, unlike others, he attempted to explain to students of economics what capitalism is, his own understanding was quite faulty. To define the crucial features of the capitalist economy as private enterprise, the market, competition and freedom of entry is a long way off the mark. A purported definition of the capitalist economy which presents these features as most essential cannot help anyone to distinguish between a capitalist economy and, say, the ancient
economy oflater republican or imperial Rome or the economy of Venice in the late Middle Ages. I read a text-book for secondary schools in which capitalism was fatuously described as an ideology. The author was a social science graduate. From now on I shall speak of capitalism, meaning capitalist society with a special focus on the economy of that society. My understanding of capitalism does not come from the study of economics alone. No one who is limited to Neoclassical and Keynesian economics as; presented in university text-books in Western Europe and United States of America will be able correctly to specify and thus lead the
Eskor Toyo, is a Professor Emeritus in Economics, University ofCa/abar, Cross River State, Nigeria.
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The Constitution, Vol. 7 , No.4, December 2007
understanding of capitalist society and economy.
An authentic economic science has to be primarily empirical rather than primarily praxiological i.e. concerned with managerial efficiency.
We shall discuss the question of existence, the defining features, other important features, the social ambience, capitalist dynamics (including history) and economic problems in capitalism.
QUE~TION OF EXISTENCE
Is there a specific society or a specific economy called 'capitalism'? There are social scientists and others who write as if a capitalist society does not exist.
They write about ancient, modem, tribal, literate, pre-industrial, and industrial, etc • society' but not capitalist society. There are also economists who write about modern, market, traditional, money, developed and underdeveloped, etc. economies but not capitalist economies. Some write English, Japanese, Venesuelan, etc. society or economy, but not a capitalist society or economy.
To bring some order out of chaos in speaking about societies, some dichotomies are sometimes used or implied: simple versus complex, premodern or traditional versus modem, pre-literate versus industrial,
tribal versus civilised, segmentary versus stratified, rural versus urban, small-scale versus large scale. Except in the case of pre-industrial versus industrial, it is not specified what kinds of economies are associated with these societal categories. Many sociologists simply say that society is a complex of relations or interactions among people and then proceed to describe so-called 'social institutions': the family, the state, religion, and then so-called social stratification and social change.
Among economists nothing is taught about society, although economics is supposed to be a 'social science'. In fact, among neoclassical economists, the society is supposed to be an 'external environment' from which any type of influence can spoil the 'perfection' of the market.
Among the economists, Marxian, Institutionist, Keynesian, Austrian, and even some Neoclassical economists do speak about capitalist activity and the first three definitely about a capitalist economic organisation. However, only the Marxists have a systematic way of identifying a specific society or economy, a method which they apply to capitalism.
Political scientists speak of authority; but what detennines why authority is
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The Constitution, Vol. 7 , No.4, December 2007
what it is and structured as it is in any specific society? For functionalist sociologists there are the big questions of the determinants of the specific functions and the specific contents of a class of functions in a specific society at a specific time.
Karl Marx hit on a powerful (so far the most powerful) way of identifying the organic specificity of a specific society and economy. He did it by identifying what he called its mode of production. Marxists use this approach. Marx noticed that in the history of Europe, specific forms of society, namely, slavery, rural serfdom, and urban mercantilist serfdom had developed and that a new society, namely, the capitalist wage-worker society, or bourgeois society, was developing in the nineteenth century. He identified each of slavery, rural serfdom, urban serfdom, and the rising capitalist wage-worker form of economic arrangement as a specific mode ofproduction._The ascendancy of a new social organisation, i.e. a new society. He laboured to show that these were not accidental coincidences. There were laws at work which Friedrich Engel's and he endeavored topointto
Later, the sociologist, Max Weber, appreciated the historical approach of Marx and Engels and the utility of their
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concept of a 'mode of production' in trying to figure out how one society differed from another. Max Weber held, however. that no society could be identified uniquely with a single mode of production. The best way, he held, was to identify ideal types of socio-economic relations and then see how these types manifested themselves in a given society. The ideal types were the slave type, the feudal type, the merchant type, the capitalist type, etc. in their most lmalloyed fom1s.
Marx Weber is right up to a point. Class societies hardly have one and only one mode of production. In my view, he is wrong in holding that for this reason we cannot speak of a slave society, a feudal society, a mercantilist city, or a capitalist society. Marx himself said that because society has been in transition since the earliest times we often have more than one mode of production in a society.
Max Weber's observation is germane to the picture regularly painted by interpreters of Marx. They make it appear that to each society there is one and only one mode of production. It must be said that there are passages in Marx that do give this impression; but he was a pioneer who had to emphasise his main point of departure. This practice may give certain unrealism to the description of a society
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The Constitution, Vol. 7 , No.4, December 2007
not fully or entirely capitalist by the Marxian approach.
Some post-Keynesian economists have come to acknowledge the scientific (i.e. explanatory and predictive) power of the Marxian concept of a mode of production.
How may we use this concept with full empirical justification? In my writings I have done a number of things.
First, I have observed that a society not in a transitional crisis is not characterised by the sole presence of one mode of production; it is rather dominated by a mode of production. This is usually true of societies after primitive communalism, i.e. class society.
Secondly, I have defined
'dominance'. I mean by it that those who own the decisive means of production in the mode of production defined as 'dominant' are in such a decision making position that the economy reproduces itself, grows or develops primarily according to their production aims and certainly not contrary to those aims. I also mean by 'dominance' that these owners of decisive means of production and distribution constitute the ruling class or the hegemon in a ruling class alliance.
Thirdly, I have introduced the term 'decisive means of production'. What is decisive depends on the most influential economic activity.
Fourthly, I also observe that in the transition from society to society we may have a case of two powerful proprietary classes in a society, one associated with an old mode and the other with a change in the mode of production. The seventeenth and eighteenth centuries in England, and much of Latin America, China, Japan and Germany in the late nineteenth century are examples of such transitional cases.
Fifthly, we recognised that there can be colonial or client types of societies brought about by conquest, where a foreign dominant mode of production dominates a local economy or powerfully influences it through an enclave.
Sixthly, we recognise that the 'ideal type' of a mode of production exists in actual fact in various fonns, e.g. at different developmental stages; in symbiosis with this or that other mode of production; in this or that form of productive activity under the aegis of this or that polity; or in interaction with this or that element of inherited
culture.
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The Constitution, Vol. 7 , No.4, December 2007 Seventhly, we distinguish between the dominant modes of production and the economic system under its dominance. The economic system embraces the dominant mode of production and distribution, other modes of production and distribution with which it is in interaction for reproduction, and the economic mechanism plus the polity which hold them together into a single self-reproducing totality.
Eighthly, we note that a mode of production or an economic system which dominates or shapes the character of a society is only a part of it, although a very important part for long-term reckoning.
Finally, every society, economy or mode of production goes through historical time. What happens in it at any time is a response to events but the response is shaped by both its nature and its form of existence at the time.
We have used the term' stable society' to mean that we exclude a case where civil war or conquest is going on arising from an effort to supplant a set of dominant owners of production means by another.
SPECIFYING A SOCIETY
We may say that a society is a specific historically formed complex of relations
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and interactions among men in a community whose pattern is set by a dominant mode of production or an interaction of production modes. What is a mode of production?
We look at two sides of social production. The producers must enter into two kinds of interaction or relationship. On one side we have interactions between them as workers and nature, with tools and other means of production intervening. On this side we have the effects of knowledge of
nature, skills, tools, organisation, efforts or the use of work time. All these are forces which determine what can be produced in the society and how much of it. In other words, they determine the capacity of productivity oflabour. They are called forces of production. However, production in society involves another type of interactions, namely, interactions between men and men. These define two types of relations, namely, property relations and work-sharing relations. Property relations concern the rights of the actual worker in production to the means of production, to the output, and to the use of his labour power. These relations determine who can claim what. The work sharing relations are relations formed in the division oflabour.A third set of relations between man and man
in production is command relations, they
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The Constitution, Vol. 7 , No.4, December 2007
concern who gives order to whom, or
managerial authority. These three kinds
of relations of man to man we call relations o.f production.
However, the division of labour in a production unit and in the society as a whole has to be co-ordinated, and property and products have to be distributed among people according to the rights defined by the social constitution. The social apparatus for doing this is called the economic mechanism.
The forces of production, the relations of production, and the economic mechanism constitute a mode of production and distribution. This mode shares the economic mechanism with other modes that may be present, so that there is an economic system.
For a society the economic system performs the task of making available the means of want satisfaction by answering the following questions: what
can be or is produced? How much is produced? How, i.e. by what means or method, is it produced? By whom, i.e. by whose labour, is it produced? For whom as owner or claimant is it produced? For whom as user is it
produced? For what uses is it
produced?
How an economy answers the forgoing questions depends on the character of the dominant mode of production and distribution and its stage of development in tenus of the forces of production, the relations of production and the economic mechanism.
In trying to specify the forces of production of society, it is important to identify the extent of knowledge of nature, the main subsistence activity, the kind of principal tool used in this activity, the extent of the economic surplus, the organisation of division of labour, and the organisation and extent of exchange.
To specify these categories very broadly, we observe that history has so far the subcategories that follow. Knowledge of nature may be prescientific or scientific. The principal subsistence activity may be extracting (fishing, mining, and gathering), cultivating (horticulture and animal husbandry), or manufacturing (making things). The principal tool used may be a hand tool or a machine; a non-metal or a non-metal tool. There mayor may not be an economic surplus and, if there is an economic surplus, questions arise of the activity in which and how it is produced, who claims it and how it is used. The division of labour, may be of the so-called natural or the so-called social type, and may
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The Constitution, Vol. 7 , No.4, December 2007 also be local, national, or international, where 'national' refers to a single polity. Exchange may be local, national or international; it may be barter or it may involve money; it may be regular commodity exchange or may be occasional exchange of surplus means of consumption; it may be non-seeking or profit-seeking.
The production of an economic surplus is very important. The category of 'economic surplus' is what the producers produce over and above what is needed for their upkeep and for replacing the used up means of production. The upkeep of producers is necessary to keep them alive to repeat the production process. The replacement of used up means of production is also necessary for repeating the production process. The surplus is not needed to repeat production. It can be taken from the producer by anyone who is able to do so and used for any purpose.
History shows that force is necessary to compel the actual producer to surrender a possible surplus to someone else. This force is organised politically by the armed terrorisation mounted on the producer by the chiefs of chiefdom or by the state.
Chiefdom is a society ruled by chiefs any of whom can raise a force to make
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war, but with a paramount chief that is powerful enough to be feared by others. A state is a social organisation which is conferred the sole right to use force to exact obedience to its orders. Historically, a state emerges out of chiefdom by war.
The armed chiefs can enforce the extraction of the surplus from producers. This is, in fact. why wars of conquest begin. The historical evidence is that class society begins with the chiefdom and that class society, chiefdom and state are possible only when a food surplus (fishing or agricultural surplus) is being produced or is possible.
The economic surplus can be alienated from the actual producers in various ways; through war booty, piracy, taxes, fines, rent, interest on loans, profits from unequal trade, seisure or other fonns of plunder.
With this plunder the population of the emerging class society gets split into two broad status groups: working people and kept-up groups. Then society becomes divided into master and servant, exploiter and exploi~ rich and poor, powerful and powerless, privileged and unprivileged as regards the ownership of the means of production and other valued things. We plunge into class society.
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The Constitution, Vol. 7 , No.4, December 2007 In fact, what armed force is used to do primarily is to seise the vital means of production from worker-owner or establish rights to the means of production which are superior to theirs so that they are compelled to work part ~time or
full
time for the privileged in order to survive. The victorious in the appropriation war use the chiefdom or the state to establish for themselves private property rights which leave the producers no option than to work for them. There now emerges a privileged lawmaker.Whether it is the history of
Africa,
Asia, Europe, North America or South America in the last six thousand years that we study, what we see is the same. A well-known professor of economics in the United States of America, Kenneth Boulding, Summarised the evidence: civilisation has been very predatory.What historians and anthropologists call 'civilisation' is the kind of society in which a chiefdom or state has emerged, particularly one with a state. A society inhabited by citisens of a state is contrasted with tribal society. The Latin word from which the word 'civilisation' originates is 'civis' , meaning 'citisen'.
The extraction and use of the economic surplus by kept-up groups gave rise to
various forms of master-servant, or class society according to the form of relation defined by the privileged owner of the means of production vis-a.-vis the deprived worker. Six forms of proprietary relationship were usually established: slave master and slave, overlord and serf, landlord and tenant, lender and borrower, patron and client, employer master and employee servant. Each of these forms of predatory relations existed in various legal or customary ways formulated by the rulers.
Each form of property-labour relationship formulated the right (rather rightlessness) of the worker to the means of production with which he labored to produce, to the output, and to the use of his labour power.
When a proprietor-labour relationship is taken along with the division oflabour into occupations, the organisational command system, and the forces of production that prevail, a mode of production is defined. Ifit is dominant, then it constitutes the core that defines the character of the given society and can be called its basis.
In various classes society's money was
used for trading, and a class of specialised traders emerged. The economic surplus could be transferred from the producer to the propertied or
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The Constitution, Vo!' 7 , No.4, December 2007
privileged claimant or to the government
in kind or in money. With technological discoveries, due originally to skilled workers, the surplus grew and specialised trading grew with it. The surplus could enrich merchants and its sise also promoted a larger volume of trade. The use of money in trade monetised the surplus.
In the late Middle Ages in Europe, i.e. from 1200 .A.D. To 1 500 A.D. trade vigorously revived in Western Europe. A powerful merchant class grew up. At first these merchants traded articles produced by craftsmen in their own homes who owned their tools and materials themselves, worked, and sold their produced goods to the merchant.
Later, the trnder would buy the material from the material seller and take it to the craftsman who had the tools and the skill and did the work. The trader not the craftsman, owned the finished product. He paid the craftsman for the work, including the use of his tool. He sold the product and made a profit. This happened especially in the cloth trade. This is how capitalism began. The actual producer was becoming only a worker owning neither the material to be worked nor the finished product.
Later, the inflation consequent on the increased use of money ruined craftsmen. To facilitate production for
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ordinary consumers, simple spinning and weaving machines imitating the handicraft processes were invented in the cloth trade. Merchants or master craftsmen bought these machines and employed craftsmen (former journey men and apprentices) to work for them for wages. This was now capitalism in manufacturing.
In farming, land owners, in disregard of their serfs, hired the land out for money rent to the merchants who had made money from trade. These businessmen-tenants turned the land into large animal or crop farms. The former serfs roamed about in misery without property or work. The new tenant hired such fonner serfs for very low wages as farm labourers. He sold the products for profit. This was the beginning of capitalism in agriculture. Misery in agriculture and the unemployment of peasants and
craftsmen depressed wages
everywhere, making the worker cheap and making it easy for men with money to become capitalists.
There is a very important social fact.
Money is not a mere means of exchange or store of value as 'western' economists see it. It is
a
form of property. As property in the form of purchasing power, it is a general means of command over other property, other things and
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The Constitution, Vol. 7 , No.4, December 2007
people and their services. It is like a
weapon of war; its possession gives the capacity to force, command or own. To the extent, therefore, that an economy is monetised, an immense power of command comes into existence through
the ownership and use of money. In a commercialised and monetised economy the more money one has the more powerful one is by way of command over men and things.
The principle of capitalist production organisation is that of acquiring money as business capital and using it to acquire means of production and the labour ability of other men so that these acquired men use the acquired means of production to produce goods that belong to the capitalist. The goods are commodities because they are produced to be sold, not used by the worker or capitalist. The goods are sold for money profit. The aim of capitalist business is not service; it is money profit.
Students of the economic and social history of mankind and of Western Europe and North America will learn that in history commerce, monetisation, and banking grow together. This happened vigorously in Western Europe between 1200A.D. and 1500 A.D. and in the English and French colonies established in North America from 1600.
Once the capitalist method of getting rich made capitalists in cloth manufacture and farming prosperous it quickly spread to other manufacturing activities and other activities outside agriculture: manufacturing of equipment, mining, transport, construction, trading and banking. Sooner or later the non-capitalist operator in these trades becomes a mean, struggling, operator or vanishes.
This process of capitalisation was aided by the growth of the dependence of the whole society on trade and money and by the existence of cheap labour to be employed. The cheap labour came from three main sources; the ruination of peasants, artisans and petty traders by monetisation; the loss of work by serfs turned out of the land and by apprentices and youths who could have become apprentices; and ex -slaves after the abolition of slavery in the course of the nineteenth century.
Where did the capitalists get their initial capital? It was not from their own saving as 'Westem'text-books make believe. They got it from the banks that had fimds from the income oflandlords, merchants and governments deposited in them. They got it also from speculation (i.e. fraud on the government), from piracy, from the slave trade and latifundism, from government contracts, and from money created by government and the
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The Constitution, Vol. 7 , No. ( December 2007 banks in the way commonly known to monetary economists. All these sources from would-be capitalists acquire the capital to set up a capitalist enterprise are called sources of primitive capitalist accumulation.
A capitalist enterprise is one that employs wage workers and makes profits out oftheir work. When these profits are then accumulated, this is accumulation of capitalist profit. Thus we have two forms of accumulation of capital for a capitalist enterprise, namely, primitive aro.nnulationand occumuIation out of profits. Primitive accumulation rnay not end once a capitalist enterprise is set up. It may continue by way of finding capital other than from profits to help strengthen the enterprise.
DEFINITIVE FEATURES
A capitalist economy has the following 'ideal type' defining features. All fonDS ofit have these features at the core.
t.
It is a modem mode of production or economy. That it is modem means that it makes use in production of the results of experimental science, is based on machine industry, and is based of reasoned more than a traditional mode of decision making. The impact of scientific discoveries and the use of machines define some of the forces of production which capitalism typically exploits.53
2. It is a master-and -servant system
just like old slavery and serfdom In fact, capitalism is a modem slave system; the type of slavery here is a wage slavery. As a mode of production it is very much like pIarl:1ation slavery, i.e.latifundism. Under capitalism as under the old form of production slavery, the means of production belong to the master, the slave works mainly for the master, and the slave is merely an instrument of wealth creation, like a horse, a camel or a machine kept going by some sustaining expenditure. In the case of a pre-capitalism, the means of sustenance is a wage~ the most important economic difference between pre-capitalist slavery and capitalism is that in the former the master owns the person as his property to possess his labour for full time use through a work and wage contract. Only this separates capitalism from latifundism.
3. The means of production assume the form of private preperty in the fonn of profit seeking business capital owned by
a business proprietor and master called a capitalist (or a group of proprietors).
4. This proprietor uses a part of his capitai to employ a number of less fortunate persons full time to work to make profits at least at a competiti ve rate for him. Thatthey will make such profits is the only condition of their employment.
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The Constitution, Vol. 7 , No.4, December 2007
5. The employees are paid wages and are employed full time. This full time character of the wage employment is important, because it means that the workers lives all his working life to work for and enrich a master. This makes him a slave.
6. The goods produced are
commodities, i.e. they are meant for sale. There can be capitalism in service trades, like transport and catering. These services are sold and are thus commodities. The facts, that the means of production and the labour power are bought and that the products are sold, make capitalism a market economy.
7. Capitalist enterprise is profit-oriented. Any good, however socially useful, that does not promise profits to a capitalist will not be produced by any capitalist. This is not all. The profit must be high as circumstances permit and must be at least as high as that of a competing firm. The profits belong to the capitalist.
8. A part of the profits is normally accumulated by the capitalists to make their capital or financial power in society
still greater.
9. This accumulation has no upper limit
no matter how rich a capitalist has become, because the accumulation is not primarily a means of acquiring
convenience; it is a means of competing for grabbing power.
10. Capitalist enterprises compete for the surplus in the form of profits that can be got from an activity or from the economy. This competition explains many things in the conduct of capitalists, the mode of reproduction of capitalism, and the dynamics of a capitalist firm or economy.
The foregoing are the essential features that define capitalism. The core relationship is the employer-employee, master-servant, predator-prey relation between private profit seeking businessmen owners of capital on the one hand and wage workers on the other, who are not themselves the property of the capitalist but have to sell their labour ability in order to live.
Some caveats are necessary. First, we have to distinguish between a capitalist-oriented economy where there are capitalist enterprises and they are influential enough for the overall direction of the economy to be determined on a permanent basis by their decisions and interests. As a complement of this, it is necessary that the state favours the capitalist drive; i.e. the bourgeoisie should be in political power. A fully capitalist economy is one in which most of the
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The Constitution, Vol. 7 • No.4, December 2007
working population work in capitalist enterprises or in the state sector which in that case subserves capitalism.
The second caveat is that not everyone who owns capital, or is a private entrepreneur, money seeker, profit seeker, or employer of wage-labour is a capitalist. Who is a capitalist is clear from history and from the above definition, but let us illustrate. An independent artisan or petty trader working on his own without anyone else's wage labour owns capital. All those who set up business to gain somehow from it are entrepreneurs. In
a money economy, many seek money for various purposes. An artisan or trader normally seeks a profit. Owners of slaves in a mercantile slave economy often seek profits through slave labour; a latifundist does. Co-operatives seek profits. Socially-owned enterprises do. Governments, religious organisations, co-operatives, and professional organisations may employ wage-labour.
The third caveat concerns the state. A state promoting the development of capitalism is a part of capitalism.
Another caveat concerns colonial rule and a colonial economy of a colony of a capitalist state is a capitalistic appendage economy. It is a part of the
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economy of a metropolitan capitalist
state.
The fifth caveat concerns a capitalist company. A company is a form of business organisation that permits money to be raised from anywhere to run a capitalist firm. Not all the shareholders are capitalists, and those who lend money to the firm are not necessarily its capitalists. The capitalists in a company are its directors and other businessmen in it who are not directors. Workers may subscribe to the shares of a company who are not businessmen but workers, so that their shares have the economic significance of savings lent to a company.
The sixth caveat concerns professionals who employ wage labour. These are not capitalists. Their income, to the extent that it comes from their professional service, is not profit but professional income. Professional income is labour income. A capitalist is a business entrepreneur, not a professional worker.
The seventh caveat concerns money lending. In history money lending and money borrowing preceded capitalism .by thousands of years. If a capitalist business, the lender of that money which becomes the capitalist's capital is Dot the capitalist. He is a money
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The Constitution, Vol. 7 , No.4, December 2007 lender. Normally a trader in money (i.e. a commercial money lender) gains from it.
OTHER FEATURES AND THE SOCIALAMBIENCE
There are two other economic features of capitalism that are important for describing it but not for defining it. There is also the social ambience, i.e. the class nature, the polity, the culture, and the ideology of capitalist society. In this section we shall present these features. A student of the economics of a capitalist society should know that the economics he is talking about is that of capitalist society and he must see the other aspects of capitalist society that impinge on the economy influencing its operation in fact.
One of the two other features is that the capitalist economy is a monetary one. This means three things: that money is generally used in transactions; that stores of wealth have money values; and that the purpose of capitalist activity is not just to earn and accumulate profits but to earn profits in money form and accwnulate wealth in money form. It is Karl marx and John Maynard Keynes that really appreciated this last significance of money in capitalism.
The second important but not defining feature of capitalism is that it is a large
enterprise economy. Capitalist enterprise is not peasant, artisan or petty-trader enterprise. Since it involves the employment of other people, generally more than ten, to generate profits, first, it must be on a larger scale than petty enterprise. Secondly, the more workers a capitalist can engage and exploit, the wealthier he will be, given a normal efficiency in his activity. Exploitation as a source of wealth and the profit motive as the drive of enterprise lead to capitalist firms becoming larger and larger.
Let us turn to the other important social aspects of capitalism and how they relate to the capitalist economy. The first of these is capitalism as a societal type. It must be obvious that capitalism is a class rather than a classless society, it is the capitalists that are the owners of the decisive means of production, the exploiters, the rich, the privileged( or advantaged), and the powerful as compared with the working people. In the case of capitalism the definitive category of working people are the wage workers.
Let us turn to the polity_ Capitalism evolved lately in the epoch of the state in history. The epoch of the state opened some five thousand years ago; the epoch of capitalism started only from about 1750. The
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The Constitution, Vol. 7 , No.4, December 2007
polity of a capitalist society is a state, a capitalist state.
That a state is capitalist does not mean that the people running the state apparatus from day to day are capitalists. The situation is like that of a capitalist company. The people running the enterprise from day to day are salaried and wage workers. However, they serve capitalists. It is the same with the state. From 5,000 years back till today the state is an organisation in the society which uses force (a) to exact obedience to master owners of the means of production and distribution and enforce their property rights, and (b) to raise taxes to sustain itself and the existing order of principal production relations. This defines the key relation between the state and the economy or the society. The capitalists themselves, who normally are too busy making the almighty money, but by political agents serving them.
Under capitalism there are three acute economic conflicts that are irreconcilable. One is between capitalists and those reduced to wage servants. The second is between rival groups of capitalists for profitable markets, available resources, supply sources, and political grabbing power. The third is between the capitalists and remnants of precapitalist classes like
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landlords, peasants, and artisans and petty traders in the same branch of activity as a capitalist firm. The state is an instrument of coercion in favour of capitalism to resolve these conflicts and avoid a civil war.
The state is not, as liberal free trade advocates see it, either an inexistent entity or a source of market
imperfection. The so~called
'imperfection', such as taxes, are acts of the state in support of capitalism such that the capitalists left to
themselves cannot perform
irrespecti ve of how the market is organised. For instance, it is nascent capitalist financial crises that forced the state to organise central banks as a means of market control. an 'imperfection' .
Let us tum to the culture of capitalism. Like every other specific social system the capitalist system has a cultural aspect peculiar to it. 'Culture' is the general way of doing things peculiar to a society. A keen student of the social history of mankind will observe ways of doing things peculiar to a primitive communal, a slave, a feudal and a capitalist society. The culture of a class society is different from that of a classless society. For instance, in a classless society, there are no masters to be served, no class rights, and no class deference or status symbols.
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The Constitution, VoL 7 , No.4, December 2007
Since societies hand down cultures, the cultures of societies other than the first,
Lower Paleolithic, communities always have inherited elements. However, major innovations in the forces of production and major changes in relations of production deeply bring about changes in the way of doing everything else: in economy, polity, religion, art, education, health care, language, etc. culture concerns behaviour; it is institutionalised behaviour.
Behind social behaviour there are drives stemming from interests and aims. The social interests and aims of a person in a society derive from his status in terms of social position, or his mode of existence ill terms of self reproduction.
In particular, in a class society, the interests or aims of the dominant owners of the dominant means of production govern all social reproduction. Their fundamental self-reproduction drives, i.e. the behavioural consequences of their self-reproduction aims, have a pervading causal influence over all of social behaviour.
Under capitalism, the competitive, mercantilist, individualistic, monetaIy, exploitative, profit acquisition and megalomaniacal orientations of the capitalists feed certain behavioural
propensities into the economy and the society at large. These are selfishness, greed, covetousness, individualism, egotism, opportunism, myopia, philistinism(love of material things, especially money), cupidity, commercialism(Le. the readiness to trade anything for gain including honour, one's country, other persons including children or sex), opportunism, an exploitative disposition (getting things by using others or at the expense of others or using things and men for selfish purposes), grabbing, antagonistic competition, a mentality suspicious of others, callousness (not caring for any harm to others provided one gains),kleptomania( tendency to steal), mendacity (an easy disposition to tell lies), deception and
dissimulation, and selfish
inventiveness- destructiveness.
The fundamental cultural traits in capitalism are selfishness and greed. Adam Smith said long ago that given division oflabour it was self interest that led to enterprise and growth. The bourgeoisie have since been praising bourgeois self interest, drumming up how without it there is no efficiency, no growth, and no freedom. The same Adam Smith, however, observer that businessmen seldom meet without the meeting turning into a conspiracy against society.
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The Constitution, Vol. 7 , No.4, December 2007 My criticism of Adam Smith is that he committed here a malobservation. Self interest is not the same thing as selfish interest. What makes capitalism what it is is not selfinterest
but selfish interest. It is the very nature
of a human being that he has self interest at least for survival. The tendency to conspiracy against society which Adam Smith observed is inherent in the capitalist mode of self reproduction. This conspiracy arises not from selfinterest but from selfish interest.
The same Adam Smith was not willing to leave everything in society, even from the point of view of efficiency, in the supremely 'efficient'hands of 'self interest'.
A keen student of capitalist society will see how all the basic propensities we have mentioned drive the capitalist metabolism and manifest themselves in all organs of the system and all aspects of culture in capitalist society. Science, art, religion, education, etc. all are affected by them.
There are cultural inheritances from past
society in capitalism, for instance, science, universities, commerce and Christian worship in Eur9pe. However, the institutions born of capitalism suit capitalism. Those that are inherited are modified to suit capitalism, to be used by it, or to be reconciled with it Urban,
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or master and servant culture, literacy or the scientification of culture started long before capitalism, but under capitalism they come under the anvil of the selfishness and greed that are the very d'etre of the capitalist fonn of social reproduction.
To complete our review of the social ambience, let us end with the ideological aspect of society. The ideology of a society consists of convictions and beliefs that seek to justify and sustain the mode of life of that society.
The principal ideological prop of capitalism is the belief that private capital and entrepreneurship, and all the products of capitalist individualism, selfishness and greed are indispensable for efficiency, freedom, growth and development.
Capitalist ideology turns a blind eye to many to the actual propensities of capitalism, such as myopia. Ifit cannot hide a cultural aspect that is opprobrious, it treats it either as natural to man or as accidental. Some propensities are distorted. For instance, opportunism is praised as innovation and myopia is often praised as pragmatism.
There is no economy that has ever operated or can operate without status groups shaped by the distribution of
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The Constitution, Vol. 7 , No.4, December 2007 rights and obligations, without a polity that defmes a disciplinary authority, without cultural drives that are related to the basic self-reproduction aims of the elite of that society, and without a promoting, cementing and preserving ideology.
CAPITALIST DYNAMICS
ECONOMIC
Dynamics concerns change; actually processes of change and their motivators, manners and consequences.
All societies somehow change. Besides, there have occurred in one million years of mankind's history on earth several major transformations of dominant modes of production.
Change is an inherent disposition in matter. It results in and from incompatibilities which are also always present in material existence.
Capitalism is a very dynamic social system because of the many oppositions basic to this system, The main opposit!ons
are
capitalist versus worker, capitalist versus capitalist as rivals, seller versus buyer, lender versus borrower, the city versus the country, money value versus real value, and saver versus investor. These oppositions often manifest as the interest of one nation in opposition to that of another.The ubiquitous contradictions and the efforts to resolve them lead to change. In human society, change results from the progressive character of men, i.e. their inclination to prefer a situation that is less burdensome to that which is more so, and to use their intelligence and work capacity to change the latter into the former. Because of the many contradictions in capitalism progress for one group tends to be at the expense of another, and therefore, occurs, if at all, through intergroup struggle.
There is in social science much talk of social change, but hardly are categories of change specified because of a static or a-historical approach to investigation. The following categories of change are found empirically: (a) cycles (b) growth, i.e. expansion, (c) adaptive quantitative or qualitative change, (d) development from one structural stage of the same basic system (i.e. with the same mode of production dominant) to another stage; (e) transformation (Le. change to another mode of production), (f) decline, (g) disintegration (h) sometimes collapse, which occurs through conquest.
Change may be internally or externally induced. It may be rapid in tempo or protracted. It may also be long-term or short-term in horison. Change may be more partial in scope or less partial.
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The Constitution, Vol, 7 , No, 4, December 2007 the mature, the monopolist, and the imperialist stages. In each country and in each period of the world's technological and political history, it
develops in forms compatible with de
facto situation. In describing
capitalism as it manifests concretely at any time or place, we must recognise that it bears the marks of its universal and local history.
PROBLEMS OF CAPITALIST ECONOMY
Whenever men meet obstacles or are dissatisfied, there are problems. There are, therefore, problems in all societies. Each society has economic problems specific to it. Capitalism has some economic problems common to class, or specific to capitalism like massive and continuous unemployment. Only the problems specific to capitalism are relevant here. I shall concentrate on those about which society and economists perennially complain and can be eliminated. The socialist movement in the world aims at eliminating them primarily by a revolutionary redefinition of production relations and by science-informed planning.
(a) exploitation;
(b) all the other unneighbourly cultmal traits we had mentioned as capitalistic propensities. (c) Insecurity
(d) Instability
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A change in the political sphere will have an influence on the economic sphere depending on the reason for the change. Some change. Some change in the cultural or the ideological sphere may affect institutions or behaviour in the economy through aims and policies.
In capitalism the progressive character of a man translates as more profits and more capital wealth for capitalists. Thus the leading factor in capitalist dynamics is capital accumulation- the drive to make and accumulate more profits.
Added to this drive is the dynamics of science-based production. The capacity of experiment-based science to make discoveries includes the ability to make machines for an increasing number of tasks. This science-based production culture is dynamic.
A third factor making for dynamism in capitalism is competition. One of capitalism's principal characteristics, as we have seen, is competition. This competition in capitalism is rivalry; it is antagonistic. It is a fight or a war where the opponent is treated as an antagonist and can be knocked out if possible. It
dovetails with the grabbing greed basic to this economy.
Capitalism develops in Western Europe, the United States and Japan, it developed from the embryonic to
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The Constitution, Vol. 7 , No.4, December 2007 (e) Inhuman or antisocial use or
restriction of science;
(f) Unjust inequality or
discrimination;
(g) Monopolism
(h) Imperialism
As these categories of problems may not be understood we need to spell them out without going into detail.
Exploitation is defined by Chamber's Twentieth Century Dictionary as making gain out of or at the expense of, or using for selfish purposes. Capitalists live or become wealthy and powerful by the exploitation of workers, consumers, weaker suppliers of inputs to them, weaker competitors, and society at large.
We need not comment again on the cultural drives of capitalism. Some people discuss insecurity in capitalism as arising from poverty and unemployment, but it is much wider.
Poverty is not having enough to live conveniently in a given society. It has existed in all exploitative class systems. It arises from unequal rights to property, the division of society into master .and servant, and the various ways of alienating the surplus from the working people, so that they are poor and the kept up group are rich by the processes that rob Peter to pay Paul.
Under capitalism, as a result of individualism and the complete propertylessness of wage workers, who in this respect are like precapitalist slaves, the tendency to poverty among the workers is increased. Trade unionism arises from this tendency but has only ephemeral and marginal effects on the situation.
The exposure of every worker to unemployment is a part of insecurity in capitalism. Because of the very character of capitalism, unemployment features more seriously and more regularly than in the class systems preceding it. Unemployment in capitalism arises from four basic causes. The first is the divorce of workers from the ownership of their means of production. The second is the concentration of this ownership. The third is the fact that workers are only instruments for making profits, so that they will never be employed (whatever the social need) unless that will lead to good capitalist profits, and so that they are liable to be sacked whenever profit prospects tum dim from the capitalist's perspective. The fourth is the specific set of causes that give rise to specific forms of unemployment which take a heavy toll because capitalist dynamics as a whole cannot be planned.
There are many specific sources of unemployment. Economists list them as
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The Constitution, Vol. 7 , No.4, December 2007 frictional (i.e. change-induced), structural, technological, seasonal, school-leaver, urban drift, and cyclical. These exist all the time and become larger sometimes. In Britain, France, Germany, Italy, the U.S.A., and Japan, which are very rich capitalist countries, unemployment in each country is in millions of persons all the time. It increases greatly every few years because of depression.
Old age without care is a form of insecurity in capitalism. The individualism in capitalism and the fact that a worker is employed and paid by a capitalist only when he can make profits create the phenomenon of a worker coming to old age without property, savings or care. Giving a worker pension or gratuity on retirement or giving the jobless 'unemployment benefits' is not a congenital part of capitalism. It came as a result of generations of socialist agitation and the threat and actual occurrence of workers' revolts- in Paris in 1871, in Russia in 1917, in Eastern Europe from 1946, etc. They are palliatives for keeping slavery alive. There are other types of insecurity. One such is various forms of risks. Another is the absence of rights to education. A third is environmental ruination owing to a private accumulation drive which promotes social irresponsibility and even ubiquitous illegality. A fourth is the
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carefree plundering of resources which makes development not sustainable and exposes future generations to the risk of stagnation or even decline. A fifth is war arising from ubiquitous selfishness, greed, etc.
Another problem of capitalism is that progress, even ifit takes place, cannot be steady. Inflation and depression, bank failures, stock market booms and crashes, the rises and falls of foreign exchange, exchange deficits, strikes, political policy uncertainties and reversals, and business failures due to greed, individualism, opportunism and myopia render the economic weather in capitalism most unpredictable. This situation promotes still more greed, theft, opportunism and a resort to any method of satisfying one's own self-centred desire while the going is good. Risk is intensified in all directions.
Under capitalism even science generates a bundle of problems. Science is here used for selfish purposes. Besides, some scientific inventions lead to technological and structural unemployment. Other inventions lead to monopoly.
Some scientific enquiries, though useful, cannot be carried out because the capitalists are not interested in them.
Concerning inequality, social inequality
begins in class society. Every predatory society is bound to be most unequal.
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We have in class society owner of means of production and non-owner, big proprietor and small, rich and poor, powerful and powerless, privileged, and underprivileged. Besides these class inequalities, there are gross inequalities between town and country, region and region, and one country and another. Moreover, one generation hands over its inequalities to the next so that we have inherited inequalities. If there is literacy, inequality between the more literate and the less is added to all these. Further still, as class societies develop the inequalities tend to accentuate because the privileged use their advantage to gain greater advantage still.
All these observations on inequality are true of capitalism as well. In its case capital is at the centre of the inequalities. Under capitalism, there are further sources of inequality, like proximity or otherwise to markets, the greater or lesser possession of money or access to banks, the type of commodity one can market, the possibility and growth of monopoly, and the rise of capitalist imperialism.
Monopoly is the capacity of one or a few firms to control the market. Control of the market arises from the
sise of capital one can put into competition without innovation, or the capacity to finance innovation and eliminate rivals in the grabbing war.
Capitalist imperialism arises from the giant needs for raw materials and markets of giant capital. The quest for large raw material resources and market outlets leads to the greedy assertion of control over countries militarily and economically weak.
The problems we have reviewed are social problems because, although the different problematic features arise from and minister to capitalists, they are offensive to large sections of mankind who desire to be rid of them.
CONCLUSION
To call capitalism simply a market economy is a liberal bourgeois isolation.
It is scientifically a description that hides the core of the truth. Ideologically, the bourgeoisie are attached to any prejudice that serves them. Mankind, however, is much larger than a few capitalists. Science can serve humanity by helping people see reality beyond the bias of a small greedy minority.
This is the end that this factual essay can serve.
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