The dynamics of capitalism as a system and the limits of single-issue reforms
If capitalism is the principal source of the planetary emergency, which we argue here is the case, then our political response must be one that diminishes and ultimately ends capitalism as the dominant form of social relationship for making our way within nature.
We will have a greater likelihood of moving beyond the cycle of partial victories followed by serious retreats if we consciously link our reform efforts with the necessity of system change. For that we need to first shed ourselves of the belief promulgated by our ruling elites that capitalism is a universal descriptor of economic life. Capitalism is no more a universal system than was feudalism. Its supporting ideology is no more universal than medieval belief in an earth centred universe.
We begin here by defining the individual capitalist as a person who makes a living primarily by earning income from the goods and services created by the labor of others. We likewise define a capitalist enterprise as one whose existence is dependent on the profit appropriated by the enterprise’s owners from the sale of products and services created and provided by their employees. In the first place, profits are needed by capitalist enterprises to enable them to continue their own activity. This need would also be true of enterprises owned by their workers and operating within a capitalist market economy.
Both a capitalist enterprise and a worker cooperatively owned and operated one, so long as they are active in a capitalist market economy, need additional profits for investment in new technology to match or better the productivity of rival enterprises. Distinguishing capitalist enterprises from worker cooperatively owned and operated ones, however, is the striving of the former to achieve levels of profit that enable them to expand their activity in a capitalist world in which no amount of accumulation of capital provides certain security against predation, takeover and defeat by other capitalists. In that sense, it is questionable whether any enterprise, whether owned by a capitalist or by its workers can consistently behave as a non-capitalist one in a market dominated by capitalists.
Those capitalists that survive as such recognize the crises endemic to the system as occasions when those with larger amounts of capital, both in liquid form and in the form of credit-worthy collateral, are able to absorb or expand at the expense of their more vulnerable rivals, or at the very least, subordinate less powerful capitalists, making them the equivalent of labor exploited for the additional profits they channel up to the dominant capitalists. A ready example is that of the small farmer, squeezed by financial capital, the suppliers of the equipment, seed and fertilizer they depend on and by the retail chains they depend on for bringing their produce to market. Indeed, it is likely that most such small business owners contribute more of their own labor to the benefit of the more powerful capitalists than these latter could extract by turning them into their direct employees.
The concentration in fewer hands of capital ownership also has consequences for employees as well as for rival capitalists. For example, the crises that create opportunities for some capitalists to expand at the expense of their more vulnerable rivals are also opportunities for intensifying the exploitation of the most vulnerable participants in the capitalist market economy, workers. Those thrown into a more desperate economic position, in the absence of successful collective resistance, are frequently forced to accept reduced wages or more dangerous and self-destructive working conditions.
For working people, every economic crisis in recent decades has marked a further race to the bottom in relative economic position and forced acceptance of deteriorating environmental conditions. This deterioration is fostered by deregulation, imposed on workers as a means of creating more favorable local conditions for needed capitalist investment and therefore employment.
The mobility of capital to take advantage of the lowest wage rates and weakest regulation of working conditions and environmental protections drives a global race to the bottom in these conditions. Only global solidarity of the labor, environmental and social justice movements can counter and defeat this destructive force.
For those making a living through their ownership of small businesses, naming the result as profits fosters a corresponding illusion of their independence, which in practice continuously vanishes in the exercise of the increasing power of the monopolistic enterprises, especially financial ones, that precede and follow them in the economic web in which they are immersed. To paraphrase Marx, one capitalist kills many.
Environmental and social consequences of capitalism
In sum, capitalism is characterized by increasing proportions of the wealth created by labor and nature passing into the private ownership of the capitalists at the top of the capitalist food chain. This wealth comes at the expense of labor and at the expense of nature. The latter equates to the transfer to future generations of the unpaid costs associated with the destruction of nature. Ultimately, these costs, unchecked in time, could include human life itself.
Perhaps our best indication of the direction we are heading in, if we do not soon and emphatically move away from fossil fuels as our principal source of energy, is the greatest mass extinction that has occurred on Earth since the one 250 million years ago at the boundary in time between the Permian and Triassic geologic periods. Associated with high concentrations of greenhouse gases in the atmosphere, comparable to those we are now heading towards, with consequent temperature increases of 6 ⁰C at the equator and more at higher latitudes, 96% of all marine species, and 70% of all land vertebrates went extinct. Ocean surface temperatures reached 40 ⁰C, too hot for most life. For more detail, see the article on the Permian-Triassic extinction at www.wikipedia.org.
The motive force of capitalism, its fundamental law, is the continuing accumulation of capital. Accumulating more capital is the only thing that maintains the individual capitalist enterprise over the longer haul. Cumulatively it characterizes the system as a whole. A consequence of this fundamental law of capitalism acting across economic cycles is economic growth, measured as the busy-ness of the economy and not necessarily as the production of goods and services needed to achieve maximum human happiness and well-being.
As irrational as this may be, destruction and waste are included in the aggregate of capitalist market economic activity and growth. The greater the expenditure of natural and human resources on destroying both nature and humans, the greater can be the measure of economic growth. The cost of rebuilding a city devastated by the storms enhanced by human caused climate change contributes to gross domestic product, the standard measure of economic growth. Likewise, the standard measure of growth increases as a result of the reconstruction of structures destroyed by war or replaced after their decay in a period of economic stagnation and disuse. The greater the destructive activity of a capitalist economy, the greater can be the measure of its economic growth. Human activity cannot get more irrational.
The greater the degradation of nature, the greater the expenditure on attempting to replace functions otherwise provided by nature, such as the restoration of soil fertility and the purification of polluted water. Short of collective action by the people to control, limit and ultimately outlaw normal capitalist behavior, the greater the share of total income and wealth going to the surviving capitalists, the greater the unpaid costs of the destruction of nature.
From decades of a losing defensive battle to a winning offensive
Decades have now come and gone during which labor productivity gains have nearly all gone to the increased income and wealth of Capital and its leading representatives. Among the consequences are the rapidly accumulating negative results for the health of people and nature. During these decades, Capital was largely victorious in its class struggle for unfettered exploitation of labor and the environment. It won on the economic front and on the political one, in a mutually supporting spiral, upwards for Capital, downwards for labor and the environment.
For decades it was commonplace to herald the newly cooperative relations between Capital and labor, the near disappearance into an amorphous middle class of the former working class. But quite evidently, this was the result of mere appearances, not reality. A far higher proportion of the people in every country on Earth now depends on working for someone else to make a living. By that definition, today most of us are working class. An increasingly smaller proportion of the population enjoys the personal wealth now rapidly accumulating at the top of the pyramid.
During these decades the ruling capitalist class has succeeded in using its political and economic power to grow the army of people who represent its financial and ideological interests. This army ranges in composition from the politicians whose campaigns it funds and the media it owns or controls to corporate spokespersons and lawyers, corporate funded researchers, public relations experts, and marketing personnel, and the top echelons of the security forces and military brass.
Capital’s achieved level of influence and control over government also provides it a powerful lever for clawing back the income gains made by employees. For isn’t that really a large part of what happens when the wealthiest corporations and the wealthiest citizens pay a declining share of taxes and receive an increasing share of government largesse? Add to that, the advantage that the wealthy have in capitalizing on government indebtedness. Do the wealthiest among us really want government deficits to disappear (which would mean a loss to them of this secure means of earning interest) or do their political representatives intend only to cut those social costs of government (the education, health care and other services needed by working people) which the wealthiest routinely purchase privately?
The fightback against Capital’s economic and political victories is well underway, as it needs to be. Our introductory arguments may help explain why the labor and environmental movements have no choice but to meet Capital on both the political and economic fronts of the struggle, to recover the ground lost over recent decades and re-gain resources of space and time for the struggle for a future for humanity and the environmental health of the planet that sustains us.
Capitalism has entered the period of its existential crisis. Until capitalism is ended, its net costs are greater than the good that can be accomplished within the system. Allowed to continue, the ultimate limit to capitalism, as already noted, is the end of human life. In other words, the limits to capitalist economic growth are either those we consciously and deliberately set, or nature itself will end both human life and with it the capitalist system.
Facing the crisis in capitalism means engagement in a revolutionary transformation to a global ecological civilization
More than at any time in our history as a species, nature is now imposing its limits on us. The dominant social system, global capitalism, is unable to sustain our continuing existence. It is a system in its ultimate crisis. And so are we if we fail to replace capitalism with an alternative system, what we describe here as the achievement of a global ecological civilization, but which popularly goes by a range of other names, including ecosocialism and democratic socialism.
Without the establishment of an alternative economic system, one that enables us to reverse the trend to growing wealth and income inequality and sustain the biosphere as a supportive environment for human life, we as a species and the healthy living nature we depend upon will continue to suffer what in its aggregate has become a downward, expanding spiral of the degradation of life on Earth and the health and stability of human society. Our destruction as a species on Earth will be one of the consequences of this downward spiral, sooner than later if we fail in our current emergent efforts to constrain globally dominant capitalism and ultimately replace it with a global ecological civilization.
The alternative to a globally expanding, destructive capitalist market economy is to restore and expand the non-market economy (the commons) at the expense of the global capitalist market one. This can begin with the reinvestment of profits from the latter into building the former into a global ecological civilization. But such a beginning necessitates the political victory of the people over the currently ruling global network of billionaire capitalists and their political and ideological servants. This, in turn, will require global solidarity between the labor, environmental and social justice movements of the people, sufficient for joint political action.
On the basis of joint political action, we can proceed to the development of a global ecological civilization by turning labor productivity into opportunities for non-market activity to meet human needs. Policies for doing so can include reduced hours per week of work in the market economy and earlier retirement from market economic participation, with the time freed in this way transferred to non-market economic activity, to building and restoring the commons, the free sharing of the knowledge, including technology, to which past generations contributed, and of the resources which a restored nature can provide.
By working towards the elimination of waste in global material production, we can restore human health, welfare and happiness while total economic activity can decrease. Increasingly efficient use of materials, including greater durability of structures and technology, can multiply this effect. The reduction and ultimate elimination in the use of non-renewable resources is an integral part of such a process, putting increasing reliance on recycling and substitutions for non-renewable resources. We can also reduce the use of renewable resources to the level that can be maintained by a restored nature through our increasingly knowledgeable stewardship.
The alternative to oligarchic rule is distributed economic and political power, initially by reversing the neoliberal trend from increasing concentration of income, wealth and political power to increasing equality in each of these dimensions. This achievement can be facilitated
by making the financial industry a public utility and placing it in the service of an expanding commons. This can be accompanied by decentralized usufruct rights and stewardship responsibilities, where local communities would have control, based on informed consent, of the extent and nature of larger scale economic projects.
All the above will need to be accomplished globally as well as locally if the result is to be a globally sustainable relationship with nature. This, in turn, is only achievable with commitment to and construction of globally equitable economic and political structures and results. The presently dominating transnational corporations (financial and non-financial) and the international agencies established by the current globally ruling transnational capitalist class to serve their private interests must be brought under global democratic control. Again, this means radically democratic global coordination of those projects that are to remain transnational in character, based on informed consent by the communities electing to participate in them.
The existing market economy, in which goods and services are exchanged using money as a medium, will need to be reduced and largely replaced by the expansion of the commons, meaning reciprocity in the exchange of use values, based on mutual interest and agreement. These economic and political changes will need to be institutionalized by corresponding constitutional and legislative changes in every participating community, bottom-up from local communities to coordination at regional, national and global levels as desired.
This presumes the commitment of people in all corners of the Earth to the achievement of global equality. In turn, this means commitment to measures needed to address uneven development between and within countries, in large part the historical consequence of imperialism, including unequal contributions to the global ecological effects of fossil-fuel-based capitalist industrial development. Included must be a commitment to free movement of people across current political boundaries, partly in response to the uneven global effects of the environmental crisis and partly to ensure global equality in the distribution of the results of global economic activity.
Paving the way to a globally sustainable civilization are peoples’ struggles for:
- keeping fossil fuels in the ground, moving instead to a low-carbon economy,
- bringing to a halt any project that irremediably degrades the natural environment that sustains all human activity,
- moving decisively towards greater democracy and accountability by business and government,
- extending human rights to include the right to a healthy environment, including full implementation everywhere of the United Nations Declaration of the Rights of Indigenous Peoples,
- extending the rights to collective bargaining to all workers in both the private and public sectors, and including the duty of every employer to provide opportunities during working hours for their employees to meet and formulate their demands, with severe penalties for employers or government officials who place obstacles or otherwise obstruct the exercise of these rights,
- inclusion in collective bargaining agreements the right of workers to have an equal say in the decisions now reserved as the rights of owners and their managers,
- setting the minimum wage above the poverty level;
- ending poverty by establishing a basic living income guarantee to all, and
- making the banking system a public, not-for-private-profit service.
Some of these demands assume the continuation of a market economy, and as such must be considered as transitional reforms, paving the way to a non-market alternative to capitalism. Indeed, some, if not all these have been partially met in some capitalist countries, without, however, replacing the dominant capitalist system of social relations. Public banks are an example. Within capitalist market economies, they can serve as:
- a repository of government income (which after all belongs by right to the people), responsible to the public for making government economically accountable and transparent,
- the manager of the government insurance accounts (such as unemployment insurance, social security, disability funds and any other social insurance fund the people decide to create for themselves),
- support for introducing elements of a more sustainable economy,
- the source of credit to government, so that payments on future public debts, including any interest payments, would go back to the people, rather than to enrich private investors,
- and as a source of credit for credit-worthy initiatives to build a more just, sustainable economy, with repayment to the people, with interest.
But supporters of this proposal need to understand that this reform is only a transitional one. In a subsequent article we will advance a decisive argument against those who propose any kind of market system as an adequate response to the crises created by capitalism.
Even before a globally decisive political victory of the people over the currently ruling capitalist class is won, the means to such a victory can be achieved. This includes the further creation and strengthening of non-governmental organizations that are not limited to working for capitalist solutions. Enduring accomplishments can include successful experimentation in the creation of more democratic social, political and work organizations, featuring cooperation and solidarity within and between organizations and bottom-up decision making. This experience provides models and experience for institutional changes in the structure of democratic decision-making both at work and in government. In effect, the people’s non-governmental organizations and their public activity are educational means to a more democratic society.
Success in the building and strengthening of our organizations and achieving solidarity between them – locally, nationally and globally - also serves as our best defense against the potential for violence against the people by an increasingly isolated ruling economic-political elite. If a political crisis were to arise in which an isolated ruling elite were tempted to cut-off democratic channels of response, the people’s non-governmental organizations provide an alternative means of civil response to the crisis.
If necessary, the people can mobilize to resist peacefully but forcefully any ruling class violence aimed at closing off peaceful, democratic channels. A politically engaged people faced with a ruling elite unwilling to permit the people to exercise their democratic right to self-government would then have the means and the moral right to convene a fully democratic constitutional convention which could make the institutional changes needed. Hopefully, this will not become necessary; the existing institutions would be amenable to the changes that most people insist upon. But if necessary, then action to create more fully democratic institutions of self-government is always the people’s moral right, one they might elect to exercise when sufficiently engaged and determined to do so, particularly in the face of ruling class violence against them.
Charles Posa McFadden and Karen Howell McFadden
Fredericton, New Brunswick, CANADA