Criticisms of capitalism
Encyclopedia
Capitalism has been the subject of criticism from many perspectives during its history. Criticisms range from people who disagree with the principles of capitalism
in its entirety, to those who disagree with particular outcomes of capitalism. Among those wishing to replace capitalism with a different method of production and social organization, a distinction can be made between those believing that capitalism can only be overcome with revolution
(e.g., revolutionary socialism
) and those believing that structural change can come slowly through political reforms
to capitalism (e.g., classic social democracy
). Some critics recognize merits in capitalism and wish to balance capitalism with some form of social control, typically through government regulation (e.g., social market movement and British Labour Party
).
in Europe created working conditions viewed as unfair, including: 14-hour work days, child labor
, and shanty towns. Some modern economists argue that average living standards did not improve, or only very slowly improved, before 1840.
Early socialist
thinkers rejected capitalism altogether, attempting to create socialist communities free of the perceived injustices of early capitalism. Among these utopian socialists
were Charles Fourier
and Robert Owen
. In 1848, Karl Marx
and Frederick Engels released the Communist Manifesto, which outlined a political and economic critique of capitalism based on the philosophy of historical materialism
. Pierre-Joseph Proudhon
a contemporary of Marx was another notable critic of capitalism, and was one of the first to call himself an anarchist
.
By the early 20th century, a myriad of socialist tendencies (e.g., anarcho-syndicalism
, social democracy and Bolshevism) had arisen based on different interpretations of current events. Governments also began placing restrictions on market operations and created interventionist programs
, attempting to ameliorate perceived market shortcomings (e.g., Keynesian economics
and the New Deal
). Starting with the 1917 Russian revolution, Communist state
s increased in numbers, and a Cold War
started with the developed capitalist nations. Following the Revolutions of 1989
, many of these Communist states adopted market economies
. The notable exceptions to this trend have been North Korea, Cuba, and Venezuela, the latter instituting a philosophy referred to as "Socialism of the 21st century
".
Economist Branko Horvat
stated: "... it is now well known that capitalist development leads to the concentration of capital, employment and power. It is somewhat less known that it leads to the almost complete destruction of economic freedom."
Critics of capitalism view the system as inherently exploitative. In an economic sense, exploitation is often related to the expropriation
of labor for profit
and based on Marx's version of the labor theory of value
. The labor theory of value was supported by classical economists like David Ricardo
and Adam Smith
who believed that "the value of a commodity depends on the relative quantity of labor which is necessary for its production."
In Das Kapital
, Karl Marx identified the commodity as the basic unit of capitalist organization. Marx noted a "common denominator" between commodities, in particular that commodities are the product of labor and are related to each other by an exchange value
(i.e., price
). By using the labor theory of value, Marxists see a connection between labor and exchange value, in that commodities are exchanged depending on the socially necessary labor time needed to produce them. However, due to the productive forces of industrial organization, laborers are seen as creating more exchange value during the course of the working day than the cost of their survival (food, shelter, clothing, etc.). Marxists argue that capitalists are thus able to pay for this cost of survival, while expropriating the excess labor (i.e., surplus value
).
Marxists
further claim that due to economic inequality
, the purchase of labor cannot occur under "free" conditions. Since capitalists control the means of production
(e.g., factories, businesses, machinery) and workers control only their labor, the worker is naturally coerced into allowing their labor to be exploited. Critics argue that exploitation occurs even if the exploited consents, since the definition of exploitation is independent of consent. In essence, workers must allow their labor to be exploited or face starvation. Since some degree of unemployment
is typical in modern economies, Marxists argue that wages are naturally driven down in free market systems. Hence, even if a worker contests their wages, capitalists are able to find someone from the reserve army of labor who is more desperate.
Unions are the "traditional method" for workers to have more bargaining power
in the marketplace. The act (or threat) of striking
has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation. Some critics of capitalism, while acknowledging the necessity of trade unionism, believe that trade unions simply reform an already exploitative system, leaving the system of exploitation intact. Lysander Spooner
argued that "almost all fortunes are made out of the capital and labour of other men than those who realize them. Indeed, large fortunes could rarely be made at all by one individual, except by his sponging capital and labour from others."
Labor historian
Immanuel Wallerstein
has argued that unfree labor
—by slaves
, indentured servant
s, prisoners, and other coerced persons—is compatible with capitalist relations.
Modern skeptics of free market capitalism observe that while in major capitalist economies the minimum wage
is legislatively imposed by the state, there is no maximum wage
limit, which is supposedly determined by the forces of the free market. They further assert that the minimum wage measure does not serve to set a lower limit in a worker's earnings; it actually functions as an upper limit on the earnings of a person that just enters the workforce. The existence of minimum wage, coupled with the absence of maximum, permits rapid wealth accumulation
and leads to a phenomenon termed "plutonomy
" by Citigroup
. In effect, wages are kept low for almost all of the population while the remaining minute percentage is allowed to meet overwhelming profits.
Academics such as Howard Gardner
have proposed the adoption of upper limits in individual wealth as "a solution that would make the world a better place".
and oppression
. They point systematic violence against political opponents, participation in coups that have placed dictators in power (for example Augusto Pinochet
in Chile
, Argentina with its "Dirty War
"); and large scale democide
(like in the Congo Free State
). Although some of these violations occurred during a time period and in states sometimes considered being more capitalist than today since the government share of the economy was much smaller, U.S and European support of multinational-friendly capitalist dictatorships in Latin America and Africa lasted until the mid 1980s.
Near the start of the 20th century, Vladimir Lenin claimed that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism. Critics of capitalism allege the system is responsible for not only economic exploitation, but imperialist, colonialist and counter-revolutionary wars, repressions of workers and trade unionists, genocide
s and massacres.
Marxists, importantly Vladimir Lenin
, argue that capitalism needs imperialism in order to survive. The unplanned nature of capitalism, they say, inevitably overproduces commodities and overuses resources, which leads it to expand its markets into and drain the resources out of other, less-developed nations. The wealthy nations, they say, must maintain cheap access to third world natural resources and unfree labor, by force if necessary. They argue that the capitalist countries like England initially were helped by the primitive accumulation of capital through the "theft" of natural resources and exploitation of slave labor from large parts of Asia, Africa and the Americas, which spurred the industrial revolution. They see what they characterize as unjust exploitation, militarily (such as India in 19th century) or economically (e.g., through International Monetary Fund
structural adjustment
programs during the 1980s), as part of the nature of capitalism. The constant, capitalist drive to expand markets is viewed by many as the primary cause of globalization
.
In his essay, Imperialism: The Highest Stage of Capitalism, Vladimir Lenin advanced the now widespread thesis that the ‘New Imperialism
’ of the late 19th and early 20th centuries was an inevitable corollary of monopoly capitalism. According to Lenin, the export of financial capital superseded the export of commodities; banking and industrial capital merged to form large financial cartels and trusts in which production distribution are highly centralized; and monopoly capitalists influenced state policy to carve up the world into spheres of interest (Burnham). These trends led states to defend their capitalist interests abroad through military power.
. They note a shift from pre-industrial reuse
and thriftiness before capitalism to a consumer-based economy that pushes "ready-made" materials. It is argued that a sanitation
industry arose under capitalism that deemed trash valueless; a significant break from the past when much "waste" was used and reused almost indefinitely. In the process, critics say, capitalism has created a profit driven system based on selling as many products as possible. Critics relate the "ready-made" trend to a growing garbage problem in which the average American throws out 4.5 pounds of trash per day (compared to 2.7 pounds in 1960). Anti-capitalist groups with an emphasis on conservation include eco-socialists and social ecologists
.
Planned obsolescence
has also been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated. This would benefit corporations by increasing sales, while at the same time generating excessive waste. A well-known example is the charge that Apple designed its iPod
to fail after 18 months. Critics view planned obsolescence as wasteful and an inefficient use of resources. Other authors such as Naomi Klein
have criticized brand-based marketing for putting more emphasis on the company's name-brand than on manufacturing products.
and power; a tendency toward market monopoly
or oligopoly
(and government by oligarchy
); imperialism, counter-revolutionary wars and various forms of economic and cultural exploitation; repression
of workers and trade union
ists, and phenomena such as social alienation
, economic inequality, unemployment
, and economic instability. Critics have argued that there is an inherent tendency toward oligolopolistic structures when laissez-faire is combined with capitalist private property. Capitalism is regarded by many socialists to be irrational in that production and the direction of the economy are unplanned, creating many inconsistencies and internal contradictions and thus should be controlled through public policy
.
In the early 20th century, Vladimir Lenin
argued that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism.
Che Guevara
wrote:
A modern critic capitalism is Ravi Batra
, who focuses on inequality as a source of immiserization but also of system failure. Batra popularised the concept "share of wealth held by richest 1%" as an indicator of inequality and an important determinant of depressions, in his best-selling books in the 1980s. His approach is based on the ideas of his mentor, Indian philosopher P.R. Sarkar, founder of the Ananda Marga
movement, who developed the Law of Social Cycle
to identify the problems of capitalism
and proposed the Progressive Utilization Theory (PROUT) as a solution to its ills.
In the United States, the shares of earnings and wealth of the households in the top 1 percent of the corresponding distributions are 21 percent (in 2006) and 37 percent (in 2009), respectively. Critics, like Ravi Batra, claim that the capitalist system has inherent biases favoring those who already possess greater resources. The inequality may be propagagted through inheritance and economic policy. Rich people are in a position to give their children a better education and inherited wealth, and that this can create or increase large differences in wealth between people who do not differ in ability or effort. One study shows that in the U.S., 43.35% of the people in the Forbes
magazine "400 richest individuals" list were already rich enough at birth to qualify. Another study indicated that in the US, wealth, race, and schooling are important to the inheritance of economic status, but that IQ is not a major contributor, and the genetic transmission of IQ is even less important. Batra has argued that the tax and benefit legislation in the USA since the Reagan Presidency has contributed greatly to the inequalities and economic problems and should be repealed.
is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficient
. Keynesian economist Orson Krugman views this scenario in which individuals' pursuit of self-interest leads to bad results for society as a whole. From this, some critics of capitalism prefer economic intervention by government into free markets. Some believe that the lack of perfect information
and perfect competition
in a free market is grounds for government intervention. Others perceive certain unique problems with a free market including: monopolies, monopsonies
, insider trading
, and price gouging
.
Legislation has been introduced to deal with these concerns (e.g., anti-trust legislation or financial regulation
). Also, governments overseeing capitalist economies have been known to set mandatory price floor
s or price ceiling
s at times, thereby interfering with the free market mechanism. This usually occurs in times of crisis, or relating to goods and services viewed as strategically important. Electricity, for example, is a good that has typically been subject to price ceilings in many countries.
Wages determined by a free market mechanism are also commonly seen as a problem by those who claim that some wages are unjustifiably low or unjustifiably high. Another perceived failure is that free markets usually fail to deal with the problem of externalities
, where an action by an outside agent positively or negatively affects another agent without any compensation. An example of an externality is pollution
. More generally, free market allocation of resources in areas such as health care
, unemployment, wealth inequality, and education are considered market failures by some.
Poor distribution of goods has also been identified as a market failure. One critic noted that 200 million Indians went hungry in 1995, while the Indian economy was exporting $625 million worth of wheat and $1.3 billion worth of rice that same year.
are present, particularly the internal contradiction between anarchy in the sphere of capital (i.e., free market
) and socialised production in the sphere of labor (i.e., industrialism). Due to the unplanned nature of the system, capitalists produce without knowing in advance what they can sell, while at the same time unleashing huge productive capabilities through industrial organization. The result is that crises are not caused by shortages, like a crop failure, but rather from a production of too many goods. Marx and Engels, in the Communist Manifesto, highlighted what they saw as a uniquely capitalist juxtaposition of overabundance and poverty: "Society suddenly finds itself put back into a state of momentary barbarism. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce."
Mutualists
and some anarchists support markets and private property, but not in their present form. They argue that particular aspects of modern capitalism violate the ability of individuals to trade in the absence of coercion. Mutualists support markets and private property in the product of labor, but only when these markets guarantee that workers will realize for themselves
the value of their labor.
In recent times, most economies have extended property rights to include such things as patents and copyrights. Critics see this as coercive against those with few prior resources. They argue that such regulations discourage the sharing of ideas, and encourage nonproductive rent seeking
behavior, both of which enact a deadweight loss
on the economy, erecting a prohibitive barrier to entry into the market. Not all pro-capitalists support the concept of copyrights, but those who do argue that compensation to the creator is necessary as an incentive.
One of the main modern criticisms to the sustainability of capitalism is related to the so called commodity chains, or production/consumption chains. These terms refer to the network of transfers of materials and commodities that is currently part of the functioning of the global capitalist system. Examples include high tech commodities produced in countries with low average wages by multinational firms, and then being sold in distant high income countries; materials and resources being extracted in some countries, turned into finished products in some others and sold as commodities in further ones; countries exchanging with each other the same kind of commodities for the sake of consumer's choice (e.g., Europe both exporting and importing cars to and from the U.S.). According to critics such processes, all of which produce pollution and waste of resources, are an integral part of the functioning of capitalism (i.e., its metabolism
).
Some leading conservation
organizations such as the World Wide Fund for Nature
and the United Nations Environment Programme
argue that the impact of humanity on Earth is continually increasing. In 2004 they jointly reported that "humanity's Ecological Footprint grew by 150% between 1961 and 2000" and that most of this growth occurred in the 27 wealthiest countries of the world, in other words, the leading capitalist countries. Critics note that the statistical methods used in calculating Ecological Footprint
have been criticized and some find the whole concept of counting how much land is used to be flawed, arguing that there is nothing intrinsically negative about using more land to improve living standards (rejection of the intrinsic value of nature).
Many environmentalists have long argued that the real dangers are due to the world's current social institutions that they claim promote environmentally irresponsible consumption and production. Under what they call the "grow or die" imperative of capitalism, they say, there is little reason to expect hazardous consumption and production practices to change in a timely manner. They also claim that markets and states invariably drag their feet on substantive environmental reform, and are notoriously slow to adopt viable sustainable technologies. Immanuel Wallerstein, referring to the externalization of costs as the "dirty secret" of capitalism, claims that there are built-in limits to ecological reform, and that the costs of doing business in the world capitalist economy are ratcheting upward because of deruralization and democratization.
Beyond environmental sustainability, there is the question of labor market and consumer market sustainability. In a constant-growth model, new individuals have to be constantly added to the free market economy (as labourers and/or consumers). With birth rates in decline, where will these new consumers and (cheap) labourers come from?
textbooks implies that by mandating a price floor above the equilibrium wage, minimum wage laws should cause unemployment. This is because a greater number of workers are willing to work at the higher wage while a smaller numbers of jobs will be available at the higher wage. Companies can be more selective in those whom they employ thus the least skilled and least experienced will typically be excluded.
According to the model shown in nearly all introductory textbooks on economics, increasing the minimum wage decreases the employment of minimum-wage workers. One textbook says:
Another textbook says:
One of the focal points of the 1914 novel, The Ragged Trousered Philanthropists
, was the issue of employment. The novel is widely regarded as a classic of working-class literature and continues to be in publication today.
Noam Chomsky
writes: "The idea of 'free contract' between the potentate and his starving subject is a sick joke, perhaps worth some moments in an academic seminar exploring the consequences of (in my view, absurd) ideas, but nowhere else." Other critics regard private property to either be an aggressive institution or a potentially aggressive one, rather than a defensive one, and thus reject claims that relationships based on unequal private property relations could be voluntary. Anarchists generally regard capitalism as hierarchical and exploitative.
Other Anarchists, like Anarcho-capitalists
are supporters of private property, markets, and capitalism in general. There is, however, a dispute over whether Anarcho-capitalism can be properly called "Anarchist."
saw capitalism as a historical stage, once progressive but would eventually stagnate due to internal contradictions and would eventually be followed by socialism. Marxists define capital
as "a social, economic relation" between people (rather than between people and things). In this sense they seek to abolish capital. They believe that private ownership of the means of production enriches capitalists (owners of capital) at the expense of workers ("the rich get richer, and the poor get poorer"). In brief, they argue that the owners of the means of production do not work and therefore exploit the workerforce. In Karl Marx's view, the capitalists would eventually accumulate more and more capital impoverishing the working class, creating the social conditions for a revolution that would overthrow the institutions of capitalism. Private ownership over the means of production and distribution is seen as a dependency of non-owning classes on the ruling class, and ultimately a source of restriction of human freedom.
Marxists have offered various related lines of argument suggesting that capitalism is a contradiction-laden system characterized by recurring crises having a tendency towards increasing severity. They have claimed that this tendency of the system to unravel combined with a socialization process that links workers in a worldwide market are two major factors that create the objective conditions for revolutionary change. Capitalism is seen as just one stage in the evolution of the economic system. Immanuel Wallerstein, approaching matters from a world-systems perspective, cites the intransigence of rising real wages, rising costs of material inputs, and steadily rising tax rates, along with the rise of popular antisystemic movements as the most important global secular trends creating unprecedented limiting pressures on the accumulation of capital. According to Wallerstein
, "the capitalist world-economy has now entered its terminal crisis, a crisis that may last up to fifty years. The real question before us is what will happen during this crisis, this transition from the present world-system to some other kind of historical system or systems."
Normative Marxism advocates for a revolutionary overthrow of capitalism that would lead to socialism, before eventually transforming into communism
after class antagonisms and the state ceased to exist. Marxism influenced social democratic and labour parties as well as some moderate democratic socialists, who seek change through existing democratic channels instead of revolution, and believe that capitalism should be regulated rather than abolished, supplementing the market economy with a mixed economy.
Marxist and feminist geographers critique capitalism primarily on the basis of social and environmental justice. Marxian development geographers analyse the "contractions" of capitalism, class struggle, uneven development and imperialism in the global South by employing historical-material analysis (‘little d’ development). This work investigates patterns of accumulation, class formation and politics in rural and urban areas, the role of the state, struggles over resources and the articulation of peasant production with agrarian capitalism. Feminist political-economy researchers are interested in the ways that these processes are gendered and also take into account a serious consideration of social reproduction in concern with capitalist production processes.
In mainland China
differences in terminology sometimes confuse and complicate discussions of Chinese economic reform
. Under Marxist ideology, capitalism refers to a stage of history in which there is a class system in which the proletariat is exploited by the bourgeoisie. Officially, according to the Chinese governments State ideology, China is currently in the primary stage of socialism with Chinese characteristics. However, because of Deng Xiaoping
's and subsequent leaders Chinese economic reforms, instituting pragmatism
within policy, China has undertaken policies that are commonly considered capitalistic, including employing wage labor, increasing unemployment to motivate those who are still working, transforming state owned enterprises into joint stock companies, and encouraging the growth of the joint venture and private capitalist sectors. A contrary Marxist view would describe China as just another variant of capitalism (state capitalism
), much like the former USSR, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Tse-Tung termed "capitalist roader
s" who he argued existed within the ruling Party structures and would try to restore the bourgeoisie and thus their class interests to power reflected in new policies, while only keeping the outer appearance of socialism for legitimacy purposes. Deng Xiaoping was identified as one of these "capitalist roaders" during the Chinese Cultural Revolution, when he was placed under house arrest.
Socialists argue that capitalism consists of irrational activity, such as the purchasing of commodities only to sell at a later time when their price appreciates, rather than for consumption, even if the commodity cannot be sold at a profit to individuals in need; therefore, a crucial criticism often made by socialists is that making money, or accumulation of capital, does not correspond to the satisfaction of demand (the production of use-values). The fundamental criterion for economic activity in capitalism is the accumulation of capital for reinvestment in production; this spurs the development of new, non-productive industries that don't produce use-value and only exist to keep the accumulation process afloat (otherwise the system goes into crisis), such as the spread of the financial industry
, contributing to the formation of economic bubbles.
Socialists view private property
relations as limiting the potential of productive forces in the economy. According to socialists, private property becomes obsolete when it concentrates into centralized, socialized institutions based on private appropriation of revenue (but based on cooperative work and internal planning in allocation of inputs) until the role of the capitalist becomes redundant. With no need for capital accumulation
and a class of owners, private property in the means of production is perceived as being an outdated form of economic organization that should be replaced by a free association
of individuals based on public or common ownership
of these socialized assets. Private ownership imposes constraints on planning, leading to uncoordinated economic decisions that result in business fluctuations, unemployment and a tremendous waste of material resources during crisis of overproduction
.
Excessive disparities in income distribution lead to social instability and require costly corrective measures in the form of redistributive taxation, which incurs heavy administrative costs while weakening the incentive to work, inviting dishonesty and increasing the likelihood of tax evasion while (the corrective measures) reduce the overall efficiency of the market economy. These corrective policies limit the incentive system of the market by providing things such as minimum wages, unemployment insurance, taxing profits and reducing the reserve army of labor, resulting in reduced incentives for capitalists to invest in more production. In essence, social welfare policies cripple the capitalism and its incentive system and are thus unsustainable in the long-run. Marxists argue that the establishment of a socialist mode of production
is the only way to overcome these deficiencies. Socialists and specifically Marxian socialists, argue that the inherent conflict of interests between the working class and capital prevent optimal use of available human resources and leads to contradictory interest groups (labor and business) striving to influence the state to intervene in the economy in their favor at the expense of overall economic efficiency.
Early socialists (Utopian socialists and Ricardian socialists
) criticized capitalism for concentrating power and wealth
within a small segment of society that controls the means of production and derives its wealth through a system of exploitation. This creates a stratified society based on unequal
social relations that fails to provide equal opportunities for every individual to maximize their potential, and does not utilise available technology
and resources to their maximum potential in the interests of the public.
Many religions have criticized or opposed specific elements of capitalism; traditional Judaism
, Christianity
, and Islam
forbid lending money at interest
. Christianity has been a source of both praise and criticism for capitalism, particularly its materialist
aspects. The first socialists drew many of their principles from Christian values, against "bourgeois
" values of profiteering, greed, selfishness, and hoarding.
Some Christian critics of capitalism may not oppose capitalism entirely, but support a mixed economy in order to ensure adequate labor standards and relations, as well as economic justice.
Pope Benedict XVI
issued an encyclical
Caritas in veritate
(Charity in Truth) in 2009; he stated: "The dignity of the individual and the demands of justice require, particularly today, that economic choices do not cause disparities in wealth to increase in an excessive and morally unacceptable manner." and "Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution."
Islamic law recognizes the right to private property but regulates economic activities. A 2.5% alms tax (Zakat
) is levied on all gold, crops, and cattle. Shia Twelver Muslims pay an additional 20% on all savings (defined as income minus expenses on necessities like food and shelter.) Usury or riba
is forbidden, and religious law encourages the use of capital to spur economic activity while placing the burden of risk along with the benefit of profit with the owner of the capital. Methods of Islamic banking
have been developed. The Islamic constitution of Iran, which was drafted mostly by Islamic clerics, criticizes "materialist schools of thought" that encourage "concentration and accumulation of wealth and maximization of profit." Sayyid Qutb
, an Islamist
writer, criticized capitalism in his 1951 book The Battle Between Islam and Capitalism.
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
in its entirety, to those who disagree with particular outcomes of capitalism. Among those wishing to replace capitalism with a different method of production and social organization, a distinction can be made between those believing that capitalism can only be overcome with revolution
Revolution
A revolution is a fundamental change in power or organizational structures that takes place in a relatively short period of time.Aristotle described two types of political revolution:...
(e.g., revolutionary socialism
Revolutionary socialism
The term revolutionary socialism refers to Socialist tendencies that advocate the need for fundamental social change through revolution by mass movements of the working class, as a strategy to achieve a socialist society...
) and those believing that structural change can come slowly through political reforms
Reformism
Reformism is the belief that gradual democratic changes in a society can ultimately change a society's fundamental economic relations and political structures...
to capitalism (e.g., classic social democracy
Social democracy
Social democracy is a political ideology of the center-left on the political spectrum. Social democracy is officially a form of evolutionary reformist socialism. It supports class collaboration as the course to achieve socialism...
). Some critics recognize merits in capitalism and wish to balance capitalism with some form of social control, typically through government regulation (e.g., social market movement and British Labour Party
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
).
History
According to contemporary critics of capitalism, rapid industrializationIndustrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
in Europe created working conditions viewed as unfair, including: 14-hour work days, child labor
Child labor
Child labour refers to the employment of children at regular and sustained labour. This practice is considered exploitative by many international organizations and is illegal in many countries...
, and shanty towns. Some modern economists argue that average living standards did not improve, or only very slowly improved, before 1840.
Early socialist
Socialism
Socialism is an economic system characterized by social ownership of the means of production and cooperative management of the economy; or a political philosophy advocating such a system. "Social ownership" may refer to any one of, or a combination of, the following: cooperative enterprises,...
thinkers rejected capitalism altogether, attempting to create socialist communities free of the perceived injustices of early capitalism. Among these utopian socialists
Utopian socialism
Utopian socialism is a term used to define the first currents of modern socialist thought as exemplified by the work of Saint-Simon, Charles Fourier, and Robert Owen which inspired Karl Marx and other early socialists and were looked on favorably...
were Charles Fourier
Charles Fourier
François Marie Charles Fourier was a French philosopher. An influential thinker, some of Fourier's social and moral views, held to be radical in his lifetime, have become main currents in modern society...
and Robert Owen
Robert Owen
Robert Owen was a Welsh social reformer and one of the founders of utopian socialism and the cooperative movement.Owen's philosophy was based on three intellectual pillars:...
. In 1848, Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
and Frederick Engels released the Communist Manifesto, which outlined a political and economic critique of capitalism based on the philosophy of historical materialism
Historical materialism
Historical materialism is a methodological approach to the study of society, economics, and history, first articulated by Karl Marx as "the materialist conception of history". Historical materialism looks for the causes of developments and changes in human society in the means by which humans...
. Pierre-Joseph Proudhon
Pierre-Joseph Proudhon
Pierre-Joseph Proudhon was a French politician, mutualist philosopher and socialist. He was a member of the French Parliament, and he was the first person to call himself an "anarchist". He is considered among the most influential theorists and organisers of anarchism...
a contemporary of Marx was another notable critic of capitalism, and was one of the first to call himself an anarchist
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...
.
By the early 20th century, a myriad of socialist tendencies (e.g., anarcho-syndicalism
Anarcho-syndicalism
Anarcho-syndicalism is a branch of anarchism which focuses on the labour movement. The word syndicalism comes from the French word syndicat which means trade union , from the Latin word syndicus which in turn comes from the Greek word σύνδικος which means caretaker of an issue...
, social democracy and Bolshevism) had arisen based on different interpretations of current events. Governments also began placing restrictions on market operations and created interventionist programs
Economic interventionism
Economic interventionism is an action taken by a government in a market economy or market-oriented mixed economy, beyond the basic regulation of fraud and enforcement of contracts, in an effort to affect its own economy...
, attempting to ameliorate perceived market shortcomings (e.g., Keynesian economics
Keynesian economics
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the...
and the New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...
). Starting with the 1917 Russian revolution, Communist state
Communist state
A communist state is a state with a form of government characterized by single-party rule or dominant-party rule of a communist party and a professed allegiance to a Leninist or Marxist-Leninist communist ideology as the guiding principle of the state...
s increased in numbers, and a Cold War
Cold War
The Cold War was the continuing state from roughly 1946 to 1991 of political conflict, military tension, proxy wars, and economic competition between the Communist World—primarily the Soviet Union and its satellite states and allies—and the powers of the Western world, primarily the United States...
started with the developed capitalist nations. Following the Revolutions of 1989
Revolutions of 1989
The Revolutions of 1989 were the revolutions which overthrew the communist regimes in various Central and Eastern European countries.The events began in Poland in 1989, and continued in Hungary, East Germany, Bulgaria, Czechoslovakia and...
, many of these Communist states adopted market economies
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...
. The notable exceptions to this trend have been North Korea, Cuba, and Venezuela, the latter instituting a philosophy referred to as "Socialism of the 21st century
Socialism of the 21st century
Socialism of the 21st century is a political term and a slogan coined by Heinz Dieterich in 1996. It was used by Hugo Chávez during a speech at the World Social Forum of 2005 and it has been publicised actively by Dieterich worldwide since 2000, especially in Latin America.-Bolivarian...
".
Democracy and economic freedom
Capitalist systems have often functioned under unelected governments: the classic case is the United Kingdom, where less than 20% of adult males could vote prior to 1885, and women did not receive the vote until 1918.Economist Branko Horvat
Branko Horvat
Branko Horvat was a Croatian economist and politician. He worked a long time at the Institute of Economic Sciences, the former Planning Institute of the Socialist Federal Republic of Yugoslavia...
stated: "... it is now well known that capitalist development leads to the concentration of capital, employment and power. It is somewhat less known that it leads to the almost complete destruction of economic freedom."
Exploitation
Expropriation
Expropriation is the politically motivated and forceful confiscation and redistribution of private property outside the common law. Unlike eminent domain or laws regulating the foreign investment, expropriation takes place outside the common law and may be used to denote an armed robbery by...
of labor for profit
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
and based on Marx's version of the labor theory of value
Labor theory of value
The labor theories of value are heterodox economic theories of value which argue that the value of a commodity is related to the labor needed to produce or obtain that commodity. The concept is most often associated with Marxian economics...
. The labor theory of value was supported by classical economists like David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...
and Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
who believed that "the value of a commodity depends on the relative quantity of labor which is necessary for its production."
In Das Kapital
Das Kapital
Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...
, Karl Marx identified the commodity as the basic unit of capitalist organization. Marx noted a "common denominator" between commodities, in particular that commodities are the product of labor and are related to each other by an exchange value
Exchange value
In political economy and especially Marxian economics, exchange value refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market...
(i.e., price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
). By using the labor theory of value, Marxists see a connection between labor and exchange value, in that commodities are exchanged depending on the socially necessary labor time needed to produce them. However, due to the productive forces of industrial organization, laborers are seen as creating more exchange value during the course of the working day than the cost of their survival (food, shelter, clothing, etc.). Marxists argue that capitalists are thus able to pay for this cost of survival, while expropriating the excess labor (i.e., surplus value
Surplus value
Surplus value is a concept used famously by Karl Marx in his critique of political economy. Although Marx did not himself invent the term, he developed the concept...
).
Marxists
Marxism
Marxism is an economic and sociopolitical worldview and method of socioeconomic inquiry that centers upon a materialist interpretation of history, a dialectical view of social change, and an analysis and critique of the development of capitalism. Marxism was pioneered in the early to mid 19th...
further claim that due to economic inequality
Economic inequality
Economic inequality comprises all disparities in the distribution of economic assets and income. The term typically refers to inequality among individuals and groups within a society, but can also refer to inequality among countries. The issue of economic inequality is related to the ideas of...
, the purchase of labor cannot occur under "free" conditions. Since capitalists control the means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...
(e.g., factories, businesses, machinery) and workers control only their labor, the worker is naturally coerced into allowing their labor to be exploited. Critics argue that exploitation occurs even if the exploited consents, since the definition of exploitation is independent of consent. In essence, workers must allow their labor to be exploited or face starvation. Since some degree of unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
is typical in modern economies, Marxists argue that wages are naturally driven down in free market systems. Hence, even if a worker contests their wages, capitalists are able to find someone from the reserve army of labor who is more desperate.
Unions are the "traditional method" for workers to have more bargaining power
Inequality of bargaining power
Inequality of bargaining power is a concept used in social sciences and humanities, particularly law and economics to denote the situation where freedom of contract ceases to be real and markets fail....
in the marketplace. The act (or threat) of striking
Strike action
Strike action, also called labour strike, on strike, greve , or simply strike, is a work stoppage caused by the mass refusal of employees to work. A strike usually takes place in response to employee grievances. Strikes became important during the industrial revolution, when mass labour became...
has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation. Some critics of capitalism, while acknowledging the necessity of trade unionism, believe that trade unions simply reform an already exploitative system, leaving the system of exploitation intact. Lysander Spooner
Lysander Spooner
Lysander Spooner was an American individualist anarchist, political philosopher, Deist, abolitionist, supporter of the labor movement, legal theorist, and entrepreneur of the nineteenth century. He is also known for competing with the U.S...
argued that "almost all fortunes are made out of the capital and labour of other men than those who realize them. Indeed, large fortunes could rarely be made at all by one individual, except by his sponging capital and labour from others."
Labor historian
Labor history (discipline)
Labor history is a broad field of study concerned with the development of the labor movement and the working class. The central concerns of labor historians include the development of labor unions, strikes, lockouts and protest movements, industrial relations, and the progress of working class and...
Immanuel Wallerstein
Immanuel Wallerstein
Immanuel Maurice Wallerstein is a US sociologist, historical social scientist, and world-systems analyst...
has argued that unfree labor
Unfree labour
Unfree labour includes all forms of slavery as well as all other related institutions .-Payment for unfree labour:If payment occurs, it may be in one or more of the following forms:...
—by slaves
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
, indentured servant
Indentured servant
Indentured servitude refers to the historical practice of contracting to work for a fixed period of time, typically three to seven years, in exchange for transportation, food, clothing, lodging and other necessities during the term of indenture. Usually the father made the arrangements and signed...
s, prisoners, and other coerced persons—is compatible with capitalist relations.
Modern skeptics of free market capitalism observe that while in major capitalist economies the minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
is legislatively imposed by the state, there is no maximum wage
Maximum wage
A maximum wage, also often called a wage ceiling, is a legal limit on how much income an individual can earn. This is a related economic concept that is complementary to the minimum wage used currently by some states to enforce minimum earnings...
limit, which is supposedly determined by the forces of the free market. They further assert that the minimum wage measure does not serve to set a lower limit in a worker's earnings; it actually functions as an upper limit on the earnings of a person that just enters the workforce. The existence of minimum wage, coupled with the absence of maximum, permits rapid wealth accumulation
Distribution of wealth
The distribution of wealth is a comparison of the wealth of various members or groups in a society. It differs from the distribution of income in that it looks at the distribution of ownership of the assets in a society, rather than the current income of members of that society.-Definition of...
and leads to a phenomenon termed "plutonomy
Plutocracy
Plutocracy is rule by the wealthy, or power provided by wealth. The combination of both plutocracy and oligarchy is called plutarchy. The word plutocracy is derived from the Ancient Greek root ploutos, meaning wealth and kratos, meaning to rule or to govern.-Usage:The term plutocracy is generally...
" by Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
. In effect, wages are kept low for almost all of the population while the remaining minute percentage is allowed to meet overwhelming profits.
Academics such as Howard Gardner
Howard Gardner
Howard Earl Gardner is an American developmental psychologist who is a professor of Cognition and Education at Harvard Graduate School of Education at Harvard University, Senior Director of Harvard Project Zero and author of over twenty books translated into thirty languages. Since 1995, he has...
have proposed the adoption of upper limits in individual wealth as "a solution that would make the world a better place".
Imperialism and political oppression
Critics argue that the ills caused by capitalism include imperialismImperialism
Imperialism, as defined by Dictionary of Human Geography, is "the creation and/or maintenance of an unequal economic, cultural, and territorial relationships, usually between states and often in the form of an empire, based on domination and subordination." The imperialism of the last 500 years,...
and oppression
Oppression
Oppression is the exercise of authority or power in a burdensome, cruel, or unjust manner. It can also be defined as an act or instance of oppressing, the state of being oppressed, and the feeling of being heavily burdened, mentally or physically, by troubles, adverse conditions, and...
. They point systematic violence against political opponents, participation in coups that have placed dictators in power (for example Augusto Pinochet
Augusto Pinochet
Augusto José Ramón Pinochet Ugarte, more commonly known as Augusto Pinochet , was a Chilean army general and dictator who assumed power in a coup d'état on 11 September 1973...
in Chile
Chile under Pinochet
Chile was ruled by a military dictatorship headed by Augusto Pinochet from 1973 when Salvador Allende was overthrown in a coup d'etat until 1990 when the Chilean transition to democracy began. The authoritarian military government was characterized by systematic suppression of political parties and...
, Argentina with its "Dirty War
Dirty War
The Dirty War was a period of state-sponsored violence in Argentina from 1976 until 1983. Victims of the violence included several thousand left-wing activists, including trade unionists, students, journalists, Marxists, Peronist guerrillas and alleged sympathizers, either proved or suspected...
"); and large scale democide
Democide
Democide is a term revived and redefined by the political scientist R. J. Rummel as "the murder of any person or people by a government, including genocide, politicide, and mass murder." Rummel created the term as an extended concept to include forms of government murder that are not covered by the...
(like in the Congo Free State
Congo Free State
The Congo Free State was a large area in Central Africa which was privately controlled by Leopold II, King of the Belgians. Its origins lay in Leopold's attracting scientific, and humanitarian backing for a non-governmental organization, the Association internationale africaine...
). Although some of these violations occurred during a time period and in states sometimes considered being more capitalist than today since the government share of the economy was much smaller, U.S and European support of multinational-friendly capitalist dictatorships in Latin America and Africa lasted until the mid 1980s.
Near the start of the 20th century, Vladimir Lenin claimed that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism. Critics of capitalism allege the system is responsible for not only economic exploitation, but imperialist, colonialist and counter-revolutionary wars, repressions of workers and trade unionists, genocide
Genocide
Genocide is defined as "the deliberate and systematic destruction, in whole or in part, of an ethnic, racial, religious, or national group", though what constitutes enough of a "part" to qualify as genocide has been subject to much debate by legal scholars...
s and massacres.
Marxists, importantly Vladimir Lenin
Vladimir Lenin
Vladimir Ilyich Lenin was a Russian Marxist revolutionary and communist politician who led the October Revolution of 1917. As leader of the Bolsheviks, he headed the Soviet state during its initial years , as it fought to establish control of Russia in the Russian Civil War and worked to create a...
, argue that capitalism needs imperialism in order to survive. The unplanned nature of capitalism, they say, inevitably overproduces commodities and overuses resources, which leads it to expand its markets into and drain the resources out of other, less-developed nations. The wealthy nations, they say, must maintain cheap access to third world natural resources and unfree labor, by force if necessary. They argue that the capitalist countries like England initially were helped by the primitive accumulation of capital through the "theft" of natural resources and exploitation of slave labor from large parts of Asia, Africa and the Americas, which spurred the industrial revolution. They see what they characterize as unjust exploitation, militarily (such as India in 19th century) or economically (e.g., through International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
structural adjustment
Structural adjustment
Structural adjustments are the policies implemented by the International Monetary Fund and the World Bank in developing countries. These policy changes are conditions for getting new loans from the International Monetary Fund or World Bank, or for obtaining lower interest rates on existing loans...
programs during the 1980s), as part of the nature of capitalism. The constant, capitalist drive to expand markets is viewed by many as the primary cause of globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
.
In his essay, Imperialism: The Highest Stage of Capitalism, Vladimir Lenin advanced the now widespread thesis that the ‘New Imperialism
New Imperialism
New Imperialism refers to the colonial expansion adopted by Europe's powers and, later, Japan and the United States, during the 19th and early 20th centuries; expansion took place from the French conquest of Algeria until World War I: approximately 1830 to 1914...
’ of the late 19th and early 20th centuries was an inevitable corollary of monopoly capitalism. According to Lenin, the export of financial capital superseded the export of commodities; banking and industrial capital merged to form large financial cartels and trusts in which production distribution are highly centralized; and monopoly capitalists influenced state policy to carve up the world into spheres of interest (Burnham). These trends led states to defend their capitalist interests abroad through military power.
Inefficiency and waste
Some opponents criticize capitalism's perceived inefficiencyInefficiency
The term inefficiency has several meanings depending on the context in which its used:*Algorithmic inefficiency - refers to less than optimum computer programs that might exhibit one of more of the symptoms of:** slow execution...
. They note a shift from pre-industrial reuse
Reuse
To reuse is to use an item more than once. This includes conventional reuse where the item is used again for the same function, and new-life reuse where it is used for a different function. In contrast, recycling is the breaking down of the used item into raw materials which are used to make new...
and thriftiness before capitalism to a consumer-based economy that pushes "ready-made" materials. It is argued that a sanitation
Sanitation
Sanitation is the hygienic means of promoting health through prevention of human contact with the hazards of wastes. Hazards can be either physical, microbiological, biological or chemical agents of disease. Wastes that can cause health problems are human and animal feces, solid wastes, domestic...
industry arose under capitalism that deemed trash valueless; a significant break from the past when much "waste" was used and reused almost indefinitely. In the process, critics say, capitalism has created a profit driven system based on selling as many products as possible. Critics relate the "ready-made" trend to a growing garbage problem in which the average American throws out 4.5 pounds of trash per day (compared to 2.7 pounds in 1960). Anti-capitalist groups with an emphasis on conservation include eco-socialists and social ecologists
Social ecology
Social ecology is a philosophy developed by Murray Bookchin in the 1960s.It holds that present ecological problems are rooted in deep-seated social problems, particularly in dominatory hierarchical political and social systems. These have resulted in an uncritical acceptance of an overly...
.
Planned obsolescence
Planned obsolescence
Planned obsolescence or built-in obsolescence in industrial design is a policy of deliberately planning or designing a product with a limited useful life, so it will become obsolete or nonfunctional after a certain period of time...
has also been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated. This would benefit corporations by increasing sales, while at the same time generating excessive waste. A well-known example is the charge that Apple designed its iPod
IPod
iPod is a line of portable media players created and marketed by Apple Inc. The product line-up currently consists of the hard drive-based iPod Classic, the touchscreen iPod Touch, the compact iPod Nano, and the ultra-compact iPod Shuffle...
to fail after 18 months. Critics view planned obsolescence as wasteful and an inefficient use of resources. Other authors such as Naomi Klein
Naomi Klein
Naomi Klein is a Canadian author and social activist known for her political analyses and criticism of corporate globalization.-Family:...
have criticized brand-based marketing for putting more emphasis on the company's name-brand than on manufacturing products.
Inequality
Critics argue that capitalism is associated with the unfair distribution of wealthDistribution of wealth
The distribution of wealth is a comparison of the wealth of various members or groups in a society. It differs from the distribution of income in that it looks at the distribution of ownership of the assets in a society, rather than the current income of members of that society.-Definition of...
and power; a tendency toward market monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
or oligopoly
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
(and government by oligarchy
Oligarchy
Oligarchy is a form of power structure in which power effectively rests with an elite class distinguished by royalty, wealth, family ties, commercial, and/or military legitimacy...
); imperialism, counter-revolutionary wars and various forms of economic and cultural exploitation; repression
Political repression
Political repression is the persecution of an individual or group for political reasons, particularly for the purpose of restricting or preventing their ability to take political life of society....
of workers and trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
ists, and phenomena such as social alienation
Social alienation
The term social alienation has many discipline-specific uses; Roberts notes how even within the social sciences, it “is used to refer both to a personal psychological state and to a type of social relationship”...
, economic inequality, unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
, and economic instability. Critics have argued that there is an inherent tendency toward oligolopolistic structures when laissez-faire is combined with capitalist private property. Capitalism is regarded by many socialists to be irrational in that production and the direction of the economy are unplanned, creating many inconsistencies and internal contradictions and thus should be controlled through public policy
Competition law
Competition law, known in the United States as antitrust law, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies....
.
In the early 20th century, Vladimir Lenin
Vladimir Lenin
Vladimir Ilyich Lenin was a Russian Marxist revolutionary and communist politician who led the October Revolution of 1917. As leader of the Bolsheviks, he headed the Soviet state during its initial years , as it fought to establish control of Russia in the Russian Civil War and worked to create a...
argued that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism.
Che Guevara
Che Guevara
Ernesto "Che" Guevara , commonly known as el Che or simply Che, was an Argentine Marxist revolutionary, physician, author, intellectual, guerrilla leader, diplomat and military theorist...
wrote:
The laws of capitalism, which are blind and are invisible to ordinary people, act upon the individual without he or she being aware of it. One sees only the vastness of a seemingly infinite horizon ahead. That is how it is painted by capitalist propagandists who purport to draw a lesson from the example of RockefellerJohn D. RockefellerJohn Davison Rockefeller was an American oil industrialist, investor, and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of...
— whether or not it is true — about the possibilities of individual success. The amount of poverty and suffering required for a RockefellerRockefeller familyThe Rockefeller family , the Cleveland family of John D. Rockefeller and his brother William Rockefeller , is an American industrial, banking, and political family of German origin that made one of the world's largest private fortunes in the oil business during the late 19th and early 20th...
to emerge, and the amount of depravity entailed in the accumulation of a fortune of such magnitude, are left out of the picture, and it is not always possible for the popular forces to expose this clearly.... It is a contest among wolves. One can win only at the cost of the failure of others.
A modern critic capitalism is Ravi Batra
Ravi Batra
Raveendra Nath "Ravi" Batra is an Indian-American economist, author, and professor at Southern Methodist University. Batra is the author of six international bestsellers, two of which appeared on The New York Times Best Seller list...
, who focuses on inequality as a source of immiserization but also of system failure. Batra popularised the concept "share of wealth held by richest 1%" as an indicator of inequality and an important determinant of depressions, in his best-selling books in the 1980s. His approach is based on the ideas of his mentor, Indian philosopher P.R. Sarkar, founder of the Ananda Marga
Ananda Marga
Ananda Marga, organizationally known as Ananda Marga Pracaraka Samgha , meaning the samgha for the propagation of the marga of ananda , is a social and spiritual movement founded in Jamalpur, Bihar, India in 1955 by Shrii Prabhat Ranjan Sarkar .Ánanda Márga followers describe Ánanda Márga as a...
movement, who developed the Law of Social Cycle
Law of Social Cycle
Law of Social Cycle, also known as the Social Cycle Theory, is a theory of human historical motivity based on "the ancient spiritual ideas of the Vedas"...
to identify the problems of capitalism
Economic collapse
There is no precise definition of an economic collapse. While some might consider a a severe, prolonged depression with high bankruptcy rates and high unemployment an economic collapse, others would additionally look for a breakdown in normal commerce, such as hyperinfalation, or even a sharp...
and proposed the Progressive Utilization Theory (PROUT) as a solution to its ills.
In the United States, the shares of earnings and wealth of the households in the top 1 percent of the corresponding distributions are 21 percent (in 2006) and 37 percent (in 2009), respectively. Critics, like Ravi Batra, claim that the capitalist system has inherent biases favoring those who already possess greater resources. The inequality may be propagagted through inheritance and economic policy. Rich people are in a position to give their children a better education and inherited wealth, and that this can create or increase large differences in wealth between people who do not differ in ability or effort. One study shows that in the U.S., 43.35% of the people in the Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
magazine "400 richest individuals" list were already rich enough at birth to qualify. Another study indicated that in the US, wealth, race, and schooling are important to the inheritance of economic status, but that IQ is not a major contributor, and the genetic transmission of IQ is even less important. Batra has argued that the tax and benefit legislation in the USA since the Reagan Presidency has contributed greatly to the inequalities and economic problems and should be repealed.
Market failure
Market failureMarket failure
Market failure is a concept within economic theory wherein the allocation of goods and services by a free market is not efficient. That is, there exists another conceivable outcome where a market participant may be made better-off without making someone else worse-off...
is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficient
Efficiency (economics)
In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another if it can provide more goods and services for society without using more resources...
. Keynesian economist Orson Krugman views this scenario in which individuals' pursuit of self-interest leads to bad results for society as a whole. From this, some critics of capitalism prefer economic intervention by government into free markets. Some believe that the lack of perfect information
Perfect information
In game theory, perfect information describes the situation when a player has available the same information to determine all of the possible games as would be available at the end of the game....
and perfect competition
Perfect competition
In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets...
in a free market is grounds for government intervention. Others perceive certain unique problems with a free market including: monopolies, monopsonies
Monopsony
In economics, a monopsony is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers...
, insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
, and price gouging
Price gouging
Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies...
.
Legislation has been introduced to deal with these concerns (e.g., anti-trust legislation or financial regulation
Financial regulation
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the integrity of the financial system...
). Also, governments overseeing capitalist economies have been known to set mandatory price floor
Price floor
A price floor is a government- or group-imposed limit on how low a price can be charged for a product. For a price floor to be effective, it must be greater than the equilibrium price.-Effectiveness of price floors:...
s or price ceiling
Price ceiling
A price ceiling is a government-imposed limit on the price charged for a product. Governments intend price ceilings to protect consumers from conditions that could make necessary commodities unattainable. However, a price ceiling can cause problems if imposed for a long period without controlled...
s at times, thereby interfering with the free market mechanism. This usually occurs in times of crisis, or relating to goods and services viewed as strategically important. Electricity, for example, is a good that has typically been subject to price ceilings in many countries.
Wages determined by a free market mechanism are also commonly seen as a problem by those who claim that some wages are unjustifiably low or unjustifiably high. Another perceived failure is that free markets usually fail to deal with the problem of externalities
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
, where an action by an outside agent positively or negatively affects another agent without any compensation. An example of an externality is pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
. More generally, free market allocation of resources in areas such as health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
, unemployment, wealth inequality, and education are considered market failures by some.
Poor distribution of goods has also been identified as a market failure. One critic noted that 200 million Indians went hungry in 1995, while the Indian economy was exporting $625 million worth of wheat and $1.3 billion worth of rice that same year.
Market instability
Critics of capitalism, particularly Marxists, identify market instability as a permanent feature of capitalist economy. Marx believed that the unplanned and explosive growth of capitalism does not occur in a smooth manner, but is interrupted by periods of overproduction in which stagnation or decline occur (i.e., recessions). In the view of Marxists, several contradictions in the capitalist mode of productionMode of production
In the writings of Karl Marx and the Marxist theory of historical materialism, a mode of production is a specific combination of:...
are present, particularly the internal contradiction between anarchy in the sphere of capital (i.e., free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
) and socialised production in the sphere of labor (i.e., industrialism). Due to the unplanned nature of the system, capitalists produce without knowing in advance what they can sell, while at the same time unleashing huge productive capabilities through industrial organization. The result is that crises are not caused by shortages, like a crop failure, but rather from a production of too many goods. Marx and Engels, in the Communist Manifesto, highlighted what they saw as a uniquely capitalist juxtaposition of overabundance and poverty: "Society suddenly finds itself put back into a state of momentary barbarism. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce."
Property
Pierre-Joseph Proudhon and Friedrich Engels argue that the free market is not necessarily free, but weighted towards those who already own property. They view capitalist regulations, including the enforcement of private property on land and exclusive rights to natural resources, as unjustly enclosing upon what should be owned by all, forcing those without property to sell their labor to capitalists and landlords in a market favorable to the latter, thus forcing workers to accept low wages in order to survive. In his criticism of capitalism, Pierre-Joseph Proudhon believed that the emphasis on property is the problem. He claimed that property is theft, arguing that property leads to despotism: "Now, property necessarily engenders despotism—the government of caprice, the reign of libidinous pleasure. That is so clearly the essence of property that, to be convinced of it, one need but remember what it is, and observe what happens around him. Property is the right to use and abuse." Many left-wing anarchists, such as anarchist communists, believe in replacing capitalist private property with a system where people can lay claim to things based on personal use and claim that "Property is the domination of an individual, or a coalition of individuals, over things; it is not the claim of any person or persons to the use of things" and "this is, usufruct, a very different matter. Property means the monopoly of wealth, the right to prevent others using it, whether the owner needs it or not."Mutualists
Mutualism (economic theory)
Mutualism is an anarchist school of thought that originates in the writings of Pierre-Joseph Proudhon, who envisioned a society where each person might possess a means of production, either individually or collectively, with trade representing equivalent amounts of labor in the free market...
and some anarchists support markets and private property, but not in their present form. They argue that particular aspects of modern capitalism violate the ability of individuals to trade in the absence of coercion. Mutualists support markets and private property in the product of labor, but only when these markets guarantee that workers will realize for themselves
Worker cooperative
A worker cooperative is a cooperative owned and democratically managed by its worker-owners. This control may be exercised in a number of ways. A cooperative enterprise may mean a firm where every worker-owner participates in decision making in a democratic fashion, or it may refer to one in which...
the value of their labor.
In recent times, most economies have extended property rights to include such things as patents and copyrights. Critics see this as coercive against those with few prior resources. They argue that such regulations discourage the sharing of ideas, and encourage nonproductive rent seeking
Rent seeking
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value...
behavior, both of which enact a deadweight loss
Deadweight loss
In economics, a deadweight loss is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal...
on the economy, erecting a prohibitive barrier to entry into the market. Not all pro-capitalists support the concept of copyrights, but those who do argue that compensation to the creator is necessary as an incentive.
Sustainability
An economic system that produces strong economic growth and requires essentially free trade may have a large effect on the environment.One of the main modern criticisms to the sustainability of capitalism is related to the so called commodity chains, or production/consumption chains. These terms refer to the network of transfers of materials and commodities that is currently part of the functioning of the global capitalist system. Examples include high tech commodities produced in countries with low average wages by multinational firms, and then being sold in distant high income countries; materials and resources being extracted in some countries, turned into finished products in some others and sold as commodities in further ones; countries exchanging with each other the same kind of commodities for the sake of consumer's choice (e.g., Europe both exporting and importing cars to and from the U.S.). According to critics such processes, all of which produce pollution and waste of resources, are an integral part of the functioning of capitalism (i.e., its metabolism
Metabolism
Metabolism is the set of chemical reactions that happen in the cells of living organisms to sustain life. These processes allow organisms to grow and reproduce, maintain their structures, and respond to their environments. Metabolism is usually divided into two categories...
).
Some leading conservation
Conservation movement
The conservation movement, also known as nature conservation, is a political, environmental and a social movement that seeks to protect natural resources including animal, fungus and plant species as well as their habitat for the future....
organizations such as the World Wide Fund for Nature
World Wide Fund for Nature
The World Wide Fund for Nature is an international non-governmental organization working on issues regarding the conservation, research and restoration of the environment, formerly named the World Wildlife Fund, which remains its official name in Canada and the United States...
and the United Nations Environment Programme
United Nations Environment Programme
The United Nations Environment Programme coordinates United Nations environmental activities, assisting developing countries in implementing environmentally sound policies and practices. It was founded as a result of the United Nations Conference on the Human Environment in June 1972 and has its...
argue that the impact of humanity on Earth is continually increasing. In 2004 they jointly reported that "humanity's Ecological Footprint grew by 150% between 1961 and 2000" and that most of this growth occurred in the 27 wealthiest countries of the world, in other words, the leading capitalist countries. Critics note that the statistical methods used in calculating Ecological Footprint
Ecological footprint
The ecological footprint is a measure of human demand on the Earth's ecosystems. It is a standardized measure of demand for natural capital that may be contrasted with the planet's ecological capacity to regenerate. It represents the amount of biologically productive land and sea area necessary to...
have been criticized and some find the whole concept of counting how much land is used to be flawed, arguing that there is nothing intrinsically negative about using more land to improve living standards (rejection of the intrinsic value of nature).
Many environmentalists have long argued that the real dangers are due to the world's current social institutions that they claim promote environmentally irresponsible consumption and production. Under what they call the "grow or die" imperative of capitalism, they say, there is little reason to expect hazardous consumption and production practices to change in a timely manner. They also claim that markets and states invariably drag their feet on substantive environmental reform, and are notoriously slow to adopt viable sustainable technologies. Immanuel Wallerstein, referring to the externalization of costs as the "dirty secret" of capitalism, claims that there are built-in limits to ecological reform, and that the costs of doing business in the world capitalist economy are ratcheting upward because of deruralization and democratization.
Beyond environmental sustainability, there is the question of labor market and consumer market sustainability. In a constant-growth model, new individuals have to be constantly added to the free market economy (as labourers and/or consumers). With birth rates in decline, where will these new consumers and (cheap) labourers come from?
Unemployment
An analysis of supply and demand of the type shown in introductory mainstream economicsMainstream economics
Mainstream economics is a loose term used to refer to widely-accepted economics as taught in prominent universities and in contrast to heterodox economics...
textbooks implies that by mandating a price floor above the equilibrium wage, minimum wage laws should cause unemployment. This is because a greater number of workers are willing to work at the higher wage while a smaller numbers of jobs will be available at the higher wage. Companies can be more selective in those whom they employ thus the least skilled and least experienced will typically be excluded.
According to the model shown in nearly all introductory textbooks on economics, increasing the minimum wage decreases the employment of minimum-wage workers. One textbook says:
If a higher minimum wage increases the wage rates of unskilled workers above the level that would be established by market forces, the quantity of unskilled workers employed will fall. The minimum wage will price the services of the least productive (and therefore lowest-wage) workers out of the market. ... The direct results of minimum wage legislation are clearly mixed. Some workers, most likely those whose previous wages were closest to the minimum, will enjoy higher wages. Others, particularly those with the lowest prelegislation wage rates, will be unable to find work. They will be pushed into the ranks of the unemployed or out of the labor force.
Another textbook says:
It is assumed that workers are willing to labor for more hours if paid a higher wage. Economists graph this relationship with the wage on the vertical axis and the quantity (hours) of labor supplied on the horizontal axis. Since higher wages increase the quantity supplied, the supply of labor curve is upward sloping, and is shown as a line moving up and to the right.
One of the focal points of the 1914 novel, The Ragged Trousered Philanthropists
The Ragged Trousered Philanthropists
The Ragged-Trousered Philanthropists is a novel by Robert Tressell first published in 1914 after his death in 1911. An explicitly political work, it is widely regarded as a classic of working-class literature.-Background:...
, was the issue of employment. The novel is widely regarded as a classic of working-class literature and continues to be in publication today.
Anarchist criticisms
Anarchists argue that capitalist ethics do not entail any positive moral obligation to help others in need. Libertarian socialistLibertarian socialism
Libertarian socialism is a group of political philosophies that promote a non-hierarchical, non-bureaucratic, stateless society without private property in the means of production...
Noam Chomsky
Noam Chomsky
Avram Noam Chomsky is an American linguist, philosopher, cognitive scientist, and activist. He is an Institute Professor and Professor in the Department of Linguistics & Philosophy at MIT, where he has worked for over 50 years. Chomsky has been described as the "father of modern linguistics" and...
writes: "The idea of 'free contract' between the potentate and his starving subject is a sick joke, perhaps worth some moments in an academic seminar exploring the consequences of (in my view, absurd) ideas, but nowhere else." Other critics regard private property to either be an aggressive institution or a potentially aggressive one, rather than a defensive one, and thus reject claims that relationships based on unequal private property relations could be voluntary. Anarchists generally regard capitalism as hierarchical and exploitative.
Other Anarchists, like Anarcho-capitalists
Anarcho-capitalism
Anarcho-capitalism is a libertarian and individualist anarchist political philosophy that advocates the elimination of the state in favour of individual sovereignty in a free market...
are supporters of private property, markets, and capitalism in general. There is, however, a dispute over whether Anarcho-capitalism can be properly called "Anarchist."
Anarchism and anarcho-capitalism
This article discusses similarities and differences between anarcho-capitalism and other types of anarchism. Some social anarchists argue that anarcho-capitalism is not a form of anarchism due to their understanding of capitalism as inherently authoritarian...
Marxian criticisms
Karl MarxKarl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
saw capitalism as a historical stage, once progressive but would eventually stagnate due to internal contradictions and would eventually be followed by socialism. Marxists define capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
as "a social, economic relation" between people (rather than between people and things). In this sense they seek to abolish capital. They believe that private ownership of the means of production enriches capitalists (owners of capital) at the expense of workers ("the rich get richer, and the poor get poorer"). In brief, they argue that the owners of the means of production do not work and therefore exploit the workerforce. In Karl Marx's view, the capitalists would eventually accumulate more and more capital impoverishing the working class, creating the social conditions for a revolution that would overthrow the institutions of capitalism. Private ownership over the means of production and distribution is seen as a dependency of non-owning classes on the ruling class, and ultimately a source of restriction of human freedom.
Marxists have offered various related lines of argument suggesting that capitalism is a contradiction-laden system characterized by recurring crises having a tendency towards increasing severity. They have claimed that this tendency of the system to unravel combined with a socialization process that links workers in a worldwide market are two major factors that create the objective conditions for revolutionary change. Capitalism is seen as just one stage in the evolution of the economic system. Immanuel Wallerstein, approaching matters from a world-systems perspective, cites the intransigence of rising real wages, rising costs of material inputs, and steadily rising tax rates, along with the rise of popular antisystemic movements as the most important global secular trends creating unprecedented limiting pressures on the accumulation of capital. According to Wallerstein
Wallerstein
Wallerstein is a surname, which can refer to:* Immanuel Wallerstein , U.S. sociologist* Jim Wallerstein , guitarist and vocalist* Michael Wallerstein , political scientist* Robert S...
, "the capitalist world-economy has now entered its terminal crisis, a crisis that may last up to fifty years. The real question before us is what will happen during this crisis, this transition from the present world-system to some other kind of historical system or systems."
Normative Marxism advocates for a revolutionary overthrow of capitalism that would lead to socialism, before eventually transforming into communism
Communism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...
after class antagonisms and the state ceased to exist. Marxism influenced social democratic and labour parties as well as some moderate democratic socialists, who seek change through existing democratic channels instead of revolution, and believe that capitalism should be regulated rather than abolished, supplementing the market economy with a mixed economy.
Marxist and feminist geographers critique capitalism primarily on the basis of social and environmental justice. Marxian development geographers analyse the "contractions" of capitalism, class struggle, uneven development and imperialism in the global South by employing historical-material analysis (‘little d’ development). This work investigates patterns of accumulation, class formation and politics in rural and urban areas, the role of the state, struggles over resources and the articulation of peasant production with agrarian capitalism. Feminist political-economy researchers are interested in the ways that these processes are gendered and also take into account a serious consideration of social reproduction in concern with capitalist production processes.
In mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
differences in terminology sometimes confuse and complicate discussions of Chinese economic reform
Chinese economic reform
The Chinese economic reform refers to the program of economic reforms called "Socialism with Chinese characteristics" in the People's Republic of China that were started in December 1978 by reformists within the Communist Party of China led by Deng Xiaoping.China had one of the world's largest...
. Under Marxist ideology, capitalism refers to a stage of history in which there is a class system in which the proletariat is exploited by the bourgeoisie. Officially, according to the Chinese governments State ideology, China is currently in the primary stage of socialism with Chinese characteristics. However, because of Deng Xiaoping
Deng Xiaoping
Deng Xiaoping was a Chinese politician, statesman, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy...
's and subsequent leaders Chinese economic reforms, instituting pragmatism
Pragmatism
Pragmatism is a philosophical tradition centered on the linking of practice and theory. It describes a process where theory is extracted from practice, and applied back to practice to form what is called intelligent practice...
within policy, China has undertaken policies that are commonly considered capitalistic, including employing wage labor, increasing unemployment to motivate those who are still working, transforming state owned enterprises into joint stock companies, and encouraging the growth of the joint venture and private capitalist sectors. A contrary Marxist view would describe China as just another variant of capitalism (state capitalism
State capitalism
The term State capitalism has various meanings, but is usually described as commercial economic activity undertaken by the state with management of the productive forces in a capitalist manner, even if the state is nominally socialist. State capitalism is usually characterized by the dominance or...
), much like the former USSR, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Tse-Tung termed "capitalist roader
Capitalist roader
In Maoist thought, a capitalist roader or is a person or group who demonstrates a marked tendency to bow to pressure from Bourgeois forces and subsequently attempts to pull the Revolution in a capitalist direction....
s" who he argued existed within the ruling Party structures and would try to restore the bourgeoisie and thus their class interests to power reflected in new policies, while only keeping the outer appearance of socialism for legitimacy purposes. Deng Xiaoping was identified as one of these "capitalist roaders" during the Chinese Cultural Revolution, when he was placed under house arrest.
Socialist criticisms
Socialists argue that the accumulation of capital generates waste through externalities that require costly corrective regulatory measures. They also point out that this process generates wasteful industries and practices that exist only to generate sufficient demand for products to be sold at a profit (such as high-pressure advertisement); thereby creating rather than satisfying economic demand.Socialists argue that capitalism consists of irrational activity, such as the purchasing of commodities only to sell at a later time when their price appreciates, rather than for consumption, even if the commodity cannot be sold at a profit to individuals in need; therefore, a crucial criticism often made by socialists is that making money, or accumulation of capital, does not correspond to the satisfaction of demand (the production of use-values). The fundamental criterion for economic activity in capitalism is the accumulation of capital for reinvestment in production; this spurs the development of new, non-productive industries that don't produce use-value and only exist to keep the accumulation process afloat (otherwise the system goes into crisis), such as the spread of the financial industry
Financialization
Financialization is a term sometimes used in discussions of financial capitalism which developed over several decades leading up to the 2007-2010 financial crisis, and in which financial leverage tended to override capital and financial markets tended to dominate over the traditional industrial...
, contributing to the formation of economic bubbles.
Socialists view private property
Private property
Private property is the right of persons and firms to obtain, own, control, employ, dispose of, and bequeath land, capital, and other forms of property. Private property is distinguishable from public property, which refers to assets owned by a state, community or government rather than by...
relations as limiting the potential of productive forces in the economy. According to socialists, private property becomes obsolete when it concentrates into centralized, socialized institutions based on private appropriation of revenue (but based on cooperative work and internal planning in allocation of inputs) until the role of the capitalist becomes redundant. With no need for capital accumulation
Capital accumulation
The accumulation of capital refers to the gathering or amassing of objects of value; the increase in wealth through concentration; or the creation of wealth. Capital is money or a financial asset invested for the purpose of making more money...
and a class of owners, private property in the means of production is perceived as being an outdated form of economic organization that should be replaced by a free association
Free association (communism and anarchism)
In the anarchist, Marxist and socialist sense, free association is a kind of relation between individuals where there is no state, social class or authority, in a society that had abolished the private property of means of production...
of individuals based on public or common ownership
Common ownership
Common ownership is a principle according to which the assets of an enterprise or other organization are held indivisibly rather than in the names of the individual members or by a public institution such as a governmental body. It is therefore in contrast to public ownership...
of these socialized assets. Private ownership imposes constraints on planning, leading to uncoordinated economic decisions that result in business fluctuations, unemployment and a tremendous waste of material resources during crisis of overproduction
Overproduction
In economics, overproduction, oversupply or excess of supply refers to excess of supply over demand of products being offered to the market...
.
Excessive disparities in income distribution lead to social instability and require costly corrective measures in the form of redistributive taxation, which incurs heavy administrative costs while weakening the incentive to work, inviting dishonesty and increasing the likelihood of tax evasion while (the corrective measures) reduce the overall efficiency of the market economy. These corrective policies limit the incentive system of the market by providing things such as minimum wages, unemployment insurance, taxing profits and reducing the reserve army of labor, resulting in reduced incentives for capitalists to invest in more production. In essence, social welfare policies cripple the capitalism and its incentive system and are thus unsustainable in the long-run. Marxists argue that the establishment of a socialist mode of production
Socialism (Marxism)
In Marxist theory, socialism, or the socialist mode of production, refers to a specific historical phase of economic development and its corresponding set of social relations that eventually supersede capitalism...
is the only way to overcome these deficiencies. Socialists and specifically Marxian socialists, argue that the inherent conflict of interests between the working class and capital prevent optimal use of available human resources and leads to contradictory interest groups (labor and business) striving to influence the state to intervene in the economy in their favor at the expense of overall economic efficiency.
Early socialists (Utopian socialists and Ricardian socialists
Ricardian socialism
Ricardian socialism refers to a branch of socialist economic thought based upon the work of economist David Ricardo. The Ricardian socialists reasoned that the free-market was the route to socialism, and that rent, profit and interest were not natural outgrowths of the free-market...
) criticized capitalism for concentrating power and wealth
Wealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...
within a small segment of society that controls the means of production and derives its wealth through a system of exploitation. This creates a stratified society based on unequal
Social equality
Social equality is a social state of affairs in which all people within a specific society or isolated group have the same status in a certain respect. At the very least, social equality includes equal rights under the law, such as security, voting rights, freedom of speech and assembly, and the...
social relations that fails to provide equal opportunities for every individual to maximize their potential, and does not utilise available technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
and resources to their maximum potential in the interests of the public.
Religious criticisms
Judaism
Judaism ) is the "religion, philosophy, and way of life" of the Jewish people...
, Christianity
Christianity
Christianity is a monotheistic religion based on the life and teachings of Jesus as presented in canonical gospels and other New Testament writings...
, and Islam
Islam
Islam . The most common are and . : Arabic pronunciation varies regionally. The first vowel ranges from ~~. The second vowel ranges from ~~~...
forbid lending money at interest
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
. Christianity has been a source of both praise and criticism for capitalism, particularly its materialist
Economic materialism
Materialism is a mindset that views the consumption and acquisition of material goods as positive and desirable. It is often bound up with a value system which regards social status as being intrinsically linked to affluence as well as the perception that happiness can be increased through...
aspects. The first socialists drew many of their principles from Christian values, against "bourgeois
Bourgeoisie
In sociology and political science, bourgeoisie describes a range of groups across history. In the Western world, between the late 18th century and the present day, the bourgeoisie is a social class "characterized by their ownership of capital and their related culture." A member of the...
" values of profiteering, greed, selfishness, and hoarding.
Some Christian critics of capitalism may not oppose capitalism entirely, but support a mixed economy in order to ensure adequate labor standards and relations, as well as economic justice.
Pope Benedict XVI
Pope Benedict XVI
Benedict XVI is the 265th and current Pope, by virtue of his office of Bishop of Rome, the Sovereign of the Vatican City State and the leader of the Catholic Church as well as the other 22 sui iuris Eastern Catholic Churches in full communion with the Holy See...
issued an encyclical
Encyclical
An encyclical was originally a circular letter sent to all the churches of a particular area in the ancient Catholic Church. At that time, the word could be used for a letter sent out by any bishop...
Caritas in veritate
Caritas in Veritate
Caritas in Veritate is the third encyclical of Pope Benedict XVI and his first social encyclical. It was signed on June 29, 2009, and was published on July 7, 2009...
(Charity in Truth) in 2009; he stated: "The dignity of the individual and the demands of justice require, particularly today, that economic choices do not cause disparities in wealth to increase in an excessive and morally unacceptable manner." and "Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution."
Islamic law recognizes the right to private property but regulates economic activities. A 2.5% alms tax (Zakat
Zakat
Zakāt , one of the Five Pillars of Islam, is the giving of a fixed portion of one's wealth to charity, generally to the poor and needy.-History:Zakat, a practice initiated by Muhammed himself, has played an important role throughout Islamic history...
) is levied on all gold, crops, and cattle. Shia Twelver Muslims pay an additional 20% on all savings (defined as income minus expenses on necessities like food and shelter.) Usury or riba
Riba
Riba means one of the senses of "usury" . Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin...
is forbidden, and religious law encourages the use of capital to spur economic activity while placing the burden of risk along with the benefit of profit with the owner of the capital. Methods of Islamic banking
Islamic banking
Islamic banking is banking or banking activity that is consistent with the principles of Islamic law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for loans of money...
have been developed. The Islamic constitution of Iran, which was drafted mostly by Islamic clerics, criticizes "materialist schools of thought" that encourage "concentration and accumulation of wealth and maximization of profit." Sayyid Qutb
Sayyid Qutb
Sayyid Qutb was an Egyptian author, educator, Islamist theorist, poet, and the leading member of the Egyptian Muslim Brotherhood in the 1950s and '60s....
, an Islamist
Islamism
Islamism also , lit., "Political Islam" is set of ideologies holding that Islam is not only a religion but also a political system. Islamism is a controversial term, and definitions of it sometimes vary...
writer, criticized capitalism in his 1951 book The Battle Between Islam and Capitalism.
External links
- A Reconsideration of the Theory of Entrepreneurship: a participatory approach - Critique of capitalism
- How The Miners Were Robbed 1907 anti-capitalist pamphlet by John Wheatley.
- Critique of Competitive Freedom and the Bourgeois-Democratic State: Outline of a Form-analytic Extension of Marx's Uncompleted System by Michael Eldred, With an Appendix 'Value-form Analytic Reconstruction of the Capital-Analysis' by Michael Eldred, Marnie Hanlon, Lucia Kleiber and Mike Roth, Kurasje, Copenhagen, 1984. Emended, digitized edition 2010 with new Preface. ISBN 8787437406, ISBN 9788787437400.
- Eldred, Michael (2000) 'Capital and Technology: Marx and Heidegger', Left Curve No.24, May 2000 ISSN:0160-1857 (Ver. 3.0 2010). Original German edition Kapital und Technik: Marx und Heidegger, Roell Verlag, Dettelbach, 2000 117 pp. ISBN 3-89754-171-8.
- Information and Economics: A Critique of Hayek by Allin F. Cottrell and W. Paul Cockshott
- Marxists Internet Archive - Archive of Marxist and anti-capitalist literature.
- Ringmar, Erik. Surviving Capitalism: How We Learned to Live with the Market and Remained Almost Human
- Social economy: A Market Economy without Capitalism
- Value, Price and Profit - Karl Marx on the basic features of capitalism.
- Capitalist eco-sustainability is a contradiction in terms
- Why Do Intellectuals Oppose Capitalism? by Robert NozickRobert NozickRobert Nozick was an American political philosopher, most prominent in the 1970s and 1980s. He was a professor at Harvard University. He is best known for his book Anarchy, State, and Utopia , a right-libertarian answer to John Rawls's A Theory of Justice...