What actually is Capitalism?

[UndercoverElephant]

Class warfare is as old as civilisation – the very first written story begins by telling us the people of Uruk were oppressed by their King (Gilgamesh). Civilisations were hierarchical from the start.

The first gold/silver coins, used as general purpose money, appeared in Anatolia (now Turkey) in the 6th century bc. This was the start of free market economics. International trade already existed before then, and there had already been civilisations organised around trade (eg the phoenicians), but it was based on barter (including the exchange of relatively large lumps of precious metals).

The idea of the “businessman” and private ownership of property was already well established in ancient Greece, the whole history of the Roman Republic is that of a class war between the aristocracy, rich businessmen, and the “plebian” ordinary people. Banks or money lenders already existed at this time, as did the concept of charging for lending money (ie interest, usury, rent-seeking). Usury was frequently banned or restricted, either by limiting who could legally do it, or setting maximum limits to interest rates. Or there were “debt jubilees” to stop borrowing from getting out of control.

These things all took a back seat during the millenium of Catholic hegemony, but started re-appearing again in northern Italy in the 12th century. The main centres were Venice and Genoa – cities which developed an independent culture, resisting the power of the Holy Roman Emperor, and progressing in literature, art and proto-science. These “free cities” started to develop big trading networks and would eventually spawn the rennaissance.

Then came the Black Death in 1346-1353, which took out half the population of Europe. This led to a severe shortage of labour and a sudden over-supply of land and other physical resources, which in turn forced a free market of labour into existence and encouraged the development of labour-saving technologies. These included the printing press in 1440, and so to bibles printed in German, English and Dutch. This in turn led to the Reformation and the “protestant work ethic”. This is the idea that hard work is good for your soul, and being successful in business is more important than enjoying yourself – therefore you should seek profit to invest back into business, rather than take time off and spend it having fun.
All of the above led to the slow decline of feudalism and the enclosure of common land, forcing the rural poor to head for towns and cities in search of work which was usually badly paid and in poor conditions. This process was then supercharged by the scientific and industrial revolutions. In 1776 Adam Smith's “Wealth of Nations” argued that the “invisible hand of the free market” worked in the favour of the whole of society.

It wasn't until the mid-19th century that there was organised intellectual resistance to all this. First Charles Dickens wrote about the plight of the poor, then John Ruskin argued that consumerism is bad for both people and environment, that factories make loads of stuff that people don't need, and money should be made and spent ethically. Then in 1867 Karl Marx claimed that capitalism is a “mode of production” based on the exploitation of labour, and leads inevitably to a concentration of wealth in the hands of the owners of the means of production. Marx claimed that this was a temporary era, and that this system would eventually collapse due to is own contradictions, or be brought down by a working class revolution.
In the 20th century we had communist revolutions in many places, none of which can claim to be successful. Some went disastrously wrong, others collapsed, one or two limp on. China's system is a sort of authoritarian post-communist quasi-capitalism. In its current western manifestation “capitalism” became neo-liberalism in the 1980s, which would have collapsed in 2008 if the free market had been allowed to do what it naturally does. Instead, the system was put on life support (QE and low interest rates) and now the western world is deep in debt and facing long-term stagflation.

My question is this: What do you think the word “capitalism” should mean? What does it mean to you? What do you mean when you use it? When you think of a post-capitalist world, what is it that makes it post-capitalist?

It seems to me that if “capitalism” doesn't mean what Marx meant by it, then we're left with no clear definition at all. Clearly Maoist China and Stalinist USSR weren't capitalism, and neither is present day North Korea. Those systems rejected pretty much everything I described above – they involved a complete redesign of society, economy and money itself. When people say they want capitalism to end, this presumably isn't what they have in mind as a replacement. Which means they aren't much use in constructing a definition of “capitalism”.

I am forced to conclude that “capitalism” isn't a clearly defined thing at all, and that is a major problem if you truly believe that capitalism is the main explanation for what has gone wrong in the world. The only definition of “capitalism” that makes sense to me is Alf Hornborg's:“the aggregate logic of human decisions about the management of money. “

If so, the only way to get rid of capitalism is to get rid of money. But that seems to be incompatible with civilisation itself, which means in fact our starting point ought to be a complete redesign of money, which will required a complete redesign of society. But that redesign cannot just be along Marxist/Communist lines, partly because that has already been tried and failed, and partly because it predates the current ecological/sustainability predicament. I think what I am saying is that maybe we need to radically rethink capitalism rather than replacing it. Or maybe we need to get rid of the term “capitalism” altogether and replace it with something else such as “growth based economics” – which is much easier to define.

[mr brightside]

I think its mainly a pejorative term now, unless you're the head of a large corporation such as BP. It has set up a divide in our society, where you're either in or out, rich or poor. I had a pretty torrid discussion about this a while ago with a friend who is a sales director, he won't have capitalism criticised on the basis that anyone can take advantage of it and live the so-called 'American Dream'; which i firmly believe to be a fantasy constructed to stop people from realising capitalism exploits the vulnerable.

[UndercoverElephant]

I think its mainly a pejorative term now, unless you're the head of a large corporation such as BP. It has set up a divide in our society, where you're either in or out, rich or poor.

But that divide has been around as long as civilisation itself. It was even worse under feudalism and slavery. The capitalists would surely argue that capitalist wage slaves are more free than actual slaves or serfs.