Capitalism is defined as an “economic and political system” but it is not the economy as a whole, it is a very specific part of it, at least in those countries where it is a dominant ideology. Its boundaries change over time. In some countries with a socialised health care system, there is constant pressure from the right to privatise aspects of the economy and from the left to bring more aspects of health care, such as as dental, pharmaceutical and mental health within the socialised part.
Some parts of the economy are well integrated across socialised and private sectors, such as the provision of infrastructure and supplies to government by the private sector, along with the lobbying, funding and personnel exchange that biases government towards support of the private sector, so boundaries are not always easy to find.
Capitalism is the part of the system which supports the extraction of wealth from other parts of the economy, concentrates them in private hands, and uses that concentration to shape the rest of society. While writing this I began to wonder if capitalism isn’t a part of the economy but something a little different. Perhaps more like a parasite within the political and economic system. To start with, here is my first cut at modifying the generic diagram from the workshop on Social Systems Thinking.
Figure 1: External View of Capitalism
I have changed the relationship to “boundary” to “capitalism has a loose boundary” because in most economies, the physical and abstract things that flow — decisions, finances, ownership, resources, power and more — do not always follow the same boundaries and it is not clear to me now that it is worth spending time identifying them. I may look further into it later. There are many stakeholders in capitalism but the ones that make it capitalism, principally capitalists and workers are definitely part of the system. This will be the subject of several workshops.
Capitalists in particular create false images, which are essential to the survival of the system, and I will look at these in more detail in a later workshop, but there are other stakeholders who contribute, particularly politicians and media. Capitalists have considerable effects on the environment. The most obvious are that they extract many raw materials and they dump a lot of waste, with greenhouse gases being of particular importance. This is not unique to capitalism but the decision-making structures where there is low cost and no accountability for those who profit by it to those who are injured by it, guarantee that it will continue. Certainly it has continued since capitalism (including state capitalism under oligarchy) has become the dominant economic structure. It is vastly exacerbated by the exponential economic growth that the proponents of capitalism claim as one of its greatest strengths, but exponential growth in consumption and waste are one of its greatest problems.
Looking at capitalism from the inside, there are three major components — the capitalist, the means of production and labour. Of the two supporting components, one is a very important type of means of production — the corporation — and one relationship concept — the job — which is the means by which capitalists.
Figure 2: Core Components of Capitalism
I take these as being the core concepts of capitalism, with their core relationships:
A capitalist is defined by the fact that they own some of the means of production. In most cases, they rely on someone else to perform labour before they can get any profit from it. We call this relationship a job, which is represented on the diagram by an arrow from the relationship “capitalist employs labour” to the concept of “job”.
Although we often think of the means of production in terms of machinery, land or other physical things, I find it useful to include more abstract ones, especially the corporation. This is a specialised structure built both to organise jobs and to reduce risks for capitalists by giving it the rights of a person and letting it be stand between the capitalists and consequences for their actions.
Capitalists have largely replaced enslavers and feudal lords in their role as exploiters of labour, with some gains in freedom for those who have only their labour to sell, though the primary gains have come from the ability of workers to withhold their labour and to compel governments to acknowledge their rights. It is not an inherent consequence of the shift to wage labour, as can be seen in the conditions of early industrial revolution factory and mine workers including those in some countries today.
Eurocentric societies (and many others, but not all) have had huge equality gaps for a long time, with royalty, lords and capitalists having vastly more wealth than peasants, tradespeople and employees1.
Occasionally there are mass reactions to this, usually when conditions are particularly harsh, taking the forms of marches, revolutions and large-scale or general strikes. These are not considered good things by capitalists and their apologists, so they need some mechanisms to prevent them. The first line of defence is their official ideology: a set of concepts that provide legitimacy, just as the Divine Right of Kings provided legitimacy for the idea that a hereditary monarch should control everything. The survival of capitalism absolutely depends on most people accepting the ideology.
Figure 3: Capitalism and ideology
I will go into more details on this in a later workshop, because there is a complex network of concepts which lend legitimacy to each other and support the idea that capitalism is the best of all economic systems, not necessarily through logic but by the emotions we learn to attach to them. After all, how could hereditary monarchy be wrong if it was by divine right, supported by the creator and ruler of the universe, regardless of whether the consequences were cruel treatment of the peasants under that rule?
One of the core concepts of the ideology is that of ownership. This is a complex concept and capitalism has continually sought to extend it or restrict it as is convenient. This continues the trend started by feudal lords who began to claim ownership of land which was previously thought to belong to nobody or to everyone. Under capitalism, ownership is transformed from the right of a person who owns the tools of their trade to own the product of their labour, to that of factory owners to own the product of the labour, performed not by them but by workers. With any alternative model of the relationship of workers or the community to the means of production, we would not have capitalism. But it is sold as the “best” model because of course nobody wants to lose ownership of their personal possessions and their emotional attachment to possessions can be used as the model for ownership of a factory or a vast network of factories or corporations. This is in spite of the fact that many people do not own their home and can be kicked out with little notice, regardless of the attachment they may feel to that home, even if the rent they have paid was enough to have paid for the house.
Another is “freedom”. We are seeing that amplified now in 2022 through protesters demanding the right not to get vaccines or wear masks, to prevent the spread of deadly or debilitating disease, in the name of “freedom”, or wealthy oligarchs buying social media in the name of “free speech”. Certainly capitalism provides more freedom to change employment than feudalism does for most people, but the amount of freedom is much higher for those with more capital and is limited to trivial avoidance of responsibility for those who think that freedom means the choice of whether or not to wear a mask regardless of the impact on the health of others. Capitalism uses the concept of freedom to mean freedom from responsibility, removing constraints on the freedom of the powerful, no matter how harmful their actions.
Their are many other important concepts that undermine our potential hostility to capitalism. For now, I will just add “communism”. This is important because it provides a bogeyman for us to fear. It is presented as a fearsome opposite to capitalism, although a manufactured version, based on the images of Stalin’s USSR as being communist, even though it was no more communist than the associated East Germany, which called itself the German Democratic Republic, was remotely democratic. Of course, an ideology by itself is of no use unless it is widely accepted. For that, it needs a voice, or a choir.
Figure 3: Main supporting components for capitalism and its ideology
That support comes from four main sources. The biggest, not shown on the diagram, is all of us. We have internalised much of the ideology so much. It is an unconscious part of our language and reasoning. For example, every time we say or read that somebody is “worth” an billion dollars, we show that we have internalised (to some extent) the idea that a person’s worth can be stated in terms of the value of the things they own. Like all language, this is both a personal selection and a community selection; the language we use changes frequently as words and phrases gain and lose popularity in the communities we engage with.
The three shown on the diagram are the media, the education system and the government, all of which promote the dominant ideologies. The education systems are largely controlled by the government, though some parts are private and as such it is in their interests to promote the official ideology.
The media are themselves corporations, often owned by very wealthy people and so have their own interest in promoting it, but are also fed with “news releases” and advertising by the government and by corporations. The rest of us have to be content with social media posts, letters to the editor and comments sections. Disclaimer: a few decades ago, I appeared on national TV across Canada for almost a minute. This is often sufficient to create consent for the official ideology. However, sometimes it needs more direct regulation and enforcement, through “law and order”
Figure 3: Enforcement of Capitalism
This requires a government to pass laws to regulate the system and to enforce it. I immediately think of the police when it comes to enforcement. In most countries they have guns. It is interesting to note that where labour has managed to obtain some regulation, such as wage laws, common crimes such as wage theft which is a huge part of monetary theft in at least the US and Canada, these laws are often not enforced by the police but by poorly funded organisations such as labour boards which often take years to recover money, if indeed they ever do. Nor do many capitalists go to jail over any offences at all.
One major part of the ideology in many countries is the myth of democracy. I will explore this in more detail in later workshops but will note for now that democracies dominated by political parties and the high cost of elections are particularly susceptible to domination by wealthy individuals and corporations. If they were not, they would not spend so much money on lobbying, networking, funding and finding jobs for retired or losing elected politicians and senior civil servants.
The final increment for this workshop is the role of labour. I already noted that labour is employed — used — by capitalists. Of course, that labour is provided by people.
Figure 4: Labour and Capitalism
When people unite, principally through unions in the context of labour, we are very powerful. We have obtained weekends, forty-hour work weeks, vacations and many more benefits by the power of strikes, threats of strikes and political action.
In order to counter this, we are divided by the forces of racism and nationalism (in the guise of “patriotism”) and other forms of bigotry. These are sometimes part of the official ideology though racism is often officially prohibited, but along with other bigotries is structurally pervasive in official institutions from universities to police and military.
Both racism and nationalism are required to support colonialism by portraying people of other countries as appropriate targets for exploitation, especially if they are not white.
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“Employee”: literally a person who is used. The employer being the user. ↩