Criticism of capitalism

To these thinkers, capitalist class processes are simply those in which surplus labor takes the form of surplus value, usable as capital; other tendencies for utilization of labor nonetheless exist simultaneously in existing societies where capitalist processes predominate. However, other late Marxian thinkers argue that a social formation as a whole may be classed as capitalist if capitalism is the mode by which a surplus is extracted, even if this surplus is not produced by capitalist activity as when an absolute majority of the population is engaged in non-capitalist economic activity.[43]

In Limits to Capital (1982), David Harvey outlines an overdetermined, "spatially restless" capitalism coupled with the spatiality of crisis formation and resolution.^[44] Harvey used Marx's theory of crisis to aid his argument that capitalism must have its "fixes", but that we cannot predetermine what fixes will be implemented, nor in what form they will be. His work on contractions of capital accumulation and international movements of capitalist modes of production and money flows has been influential.^[45] According to Harvey, capitalism creates the conditions for volatile and geographically uneven development.^[46]

Sociologists such as Ulrich Beck envisioned the society of risk as a new cultural value which saw risk as a commodity to be exchanged in globalized economies. This theory suggested that disasters and capitalist economy were inevitably entwined. Disasters allow the introduction of economic programs which otherwise would be rejected as well as decentralizing the class structure in production.^[47]

Religion

Many organized religions have criticized or opposed specific elements of capitalism. Traditional Judaism, Christianity, and Islam forbid lending money at interest,^[48][49] although alternative methods of banking have been developed. Some Christians have criticized capitalism for its materialist aspects and its inability to account for the wellbeing of all people.^[50] Many of Jesus' parables deal with economic concerns: farming, shepherding, being in debt, doing hard labor, being excluded from banquets and the houses of the rich and have implications for wealth and power distribution.^[51][52] Catholic scholars and clergy have often criticized capitalism because of its disenfranchisement of the poor, often promoting distributism as an alternative. In his 84-page apostolic exhortation Evangelii gaudium, Catholic Pope Francis described unfettered capitalism as "a new tyranny" and called on world leaders to fight rising poverty and inequality, stating:^[53]

Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.^[54]

The

The act (or threat) of striking has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation.^[97] 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.^[98][11] 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".^[99]

Some

Academics such as the developmental psychologist Howard Gardner have proposed the adoption of upper limits in individual wealth as "a solution that would make the world a better place".^[106] Marxian economist Richard D. Wolff postulates that capitalist economies prioritize profits and capital accumulation over the social needs of communities, and that capitalist enterprises rarely include the workers in the basic decisions of the enterprise.^[107]

Political economist Clara E. Mattei of the

According to economic anthropologist Jason Hickel, capitalism requires the accumulation of excess wealth in the hands of economic elites for the purpose of large scale investment, continuous growth and expansion, and enormous amounts of cheap labor. As such, there was never and could never have been a gradual or peaceful transition to capitalism, and that "organized violence, mass impoverishment, and the destruction of self-sufficient subsistence economies" ushered in the capitalist era. Its emergence was fueled by immiseration and extreme violence that accompanied enclosure and colonization, with colonized peoples becoming enslaved workers producing products that were then processed by European peasants, dispossessed by enclosure, who filled the factories in desperation as exploited cheap labor. Hickel adds that there was fierce resistance to these developments, as that the period 1500 to the 1800s, "right into the Industrial Revolution, was among the bloodiest, most tumultuous times in world history."^[112][113]

Sociologist David Nibert argues that while capitalism "turned out to be every bit as violent and oppressive as the social systems dominated by the old aristocrats", it also included "an additional and pernicious peril—the necessity for continuous growth and expansion". As an example of this, Nibert points to the mass killing of millions of buffalo on the Great Plains and the subjugation and expulsion of the indigenous population by the U.S. military in the 19th century for the purpose of expanding ranching operations, and rearing livestock for the purpose of profit.^[114]

Capitalism and capitalist governments have also been criticized by socialists as

Planned obsolescence has been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated.^[126] 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.^[129] Critics view planned obsolescence as wasteful and an inefficient use of resources.^[130] 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.^[131]

Some economists, most notably

Critics argue that capitalism is associated with the unfair distribution of wealth 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 unionists and phenomena such as social alienation, economic inequality, unemployment and economic instability. Critics have argued that there is an inherent tendency toward oligopolistic 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.^[136]

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.^[137]

In 2019, Marxian Economist Richard D. Wolff argued that Capitalism is unstable, Capitalism is unequal, and fundamentally Undemocratic. ^[138]

In a 1965 letter to Carlos Quijano, editor of Marcha, a weekly newspaper published in Montevideo, Uruguay, Che Guevara 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 Rockefeller—whether or not it is true—about the possibilities of individual success. The amount of poverty and suffering required for a Rockefeller 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.^[139]

A modern critic of 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.^[141][142] The scholars Kristen Ghodsee and Mitchell A. Orenstein suggest that left to its own devices, capitalism will result in a small group of economic elites capturing the majority of wealth and power in society.^[143] Dylan Sullivan and Jason Hickel argue that poverty continues to exist in the contemporary global capitalist system in spite of it being highly productive because it is undemocratic and has maintained conditions of extreme inequality where masses of working people, who have no ownership or control over the means of production, have their labor power "appropriated by a ruling class or an external imperial power," and are cut off from common land and resources.^[144]

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.^[146] Critics, such as Ravi Batra, argue that the capitalist system has inherent biases favoring those who already possess greater resources. The inequality may be propagated 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 United States 43.35% of the people in the Forbes magazine "400 richest individuals" list were already rich enough at birth to qualify.^[147] Another study indicated that in the United States 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.^[148] Batra has argued that the tax and benefit legislation in the United States since the Reagan presidency has contributed greatly to the inequalities and economic problems and should be repealed.^[149]

Market instability

Critics of capitalism, particularly Marxists, identify market instability as a permanent feature of capitalist economy.

Mutualists and some anarchists support markets and private property, but not in their present form.^[166] 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.^[163]

In recent times, most economies have extended private property rights to include such things as

Many aspects of capitalism have come under attack from the anti-globalization movement, which is primarily opposed to corporate capitalism. Environmentalists and scholars have argued that capitalism requires continual economic growth and that it will inevitably deplete the finite natural resources of Earth and cause mass extinctions of animal and plant life.^{[168][169][170][171]} Such critics argue that while neoliberalism, the ideological backbone of contemporary globalized capitalism, has indeed increased global trade, it has also destroyed traditional ways of life, exacerbated inequality, increased global poverty, and that environmental indicators indicate massive environmental degradation since the late 1970s.^{[172][173][174][175]}

Some scholars argue that the capitalist approach to environmental economics does not take into consideration the preservation of natural resources^[176] and that capitalism creates three ecological problems: growth, technology, and consumption.^[177] The growth problem results from the nature of capitalism, as it focuses around the pursuit of limitless economic growth and the accumulation of capital.^[177][178] The innovation of new technologies has an impact on the environmental future as they serve as a capitalist tool in which environmental technologies can result in the expansion of the system.^[179] Consumption is focused around the capital accumulation of commodities and neglects the use-value of production.^[177] Professor Radhika Desai, director of the Geopolitical Economy Research Group at the University of Manitoba, contends that ecological crises such as climate change, pollution and biodiversity loss occur when "capitalist firms compete to appropriate and plunder the free resources of nature and when this very appropriation and plunder forces working people to overexploit their ever-shrinking share of these resources."^[180]

One of the main modern criticism to the sustainability of capitalism is related to the so-called commodity chains, or production/consumption chains.^[181][182] 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; and countries exchanging with each other the same kind of commodities for the sake of consumers' choice (e.g. Europe both exporting and importing cars to and from the United States). 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").^[183]

Critics note that the statistical methods used in calculating

Under what anti-capitalists such as Murray Bookchin 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.^[186][187] 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.^[188]

A team of Finnish scientists hired by the UN Secretary-General to aid the 2019 Global Sustainable Development Report assert that capitalism as we know it is moribund, primarily because it focuses on short term profits and fails to look after the long term needs of people and the environment which is being subjected to unsustainable exploitation. Their report goes on to link many seemingly disparate contemporary crises to this system, including environmental factors such as

Some scientists contend that the rise of capitalism, which itself developed out of European imperialism and colonialism of the 15th and 16th centuries, marks the emergence of the Anthropocene epoch, in which human beings started to have significant and mostly negative impacts on the earth system.^[191] Others have warned that contemporary global capitalism "requires fundamental changes" to mitigate the worst environmental impacts, including the "abolition of perpetual economic growth, properly pricing externalities, a rapid exit from fossil-fuel use, strict regulation of markets and property acquisition, reining in corporate lobbying, and the empowerment of women".^[192][193] Jason Hickel writes that capitalism creates pressures for population growth: "more people means more labour, cheaper labour, and more consumers." He argues that continued population growth makes the challenge of sustainability even more difficult, but adds that even if the population leveled off, capitalism will simply get already existing consumers to increase their consumption, as consumption rates have always outpaced population growth rates.^[194]

In 2024 a group of experts including Michael E. Mann and Naomi Oreskes published "An urgent call to end the age of destruction and forge a just and sustainable future". They made an extensive review of existing scientific literature about the issue. They put the blame for the ecological crisis on "imperialism, extractive capitalism, and a surging population" and proposed a paradigm shift that replaces it with a socio-economic model prioritizing sustainability, resilience, justice, kinship with nature, communal well-being. They described many ways in which the transition can be achieved.^[195]

Profit motive

The majority of criticisms against the profit motive centre on the idea that the profit motive encourages selfishness and greed, rather than serving the public good or necessarily creating an increase in net wealth. Critics of the profit motive argue that companies disregard morals or public safety in the pursuit of profits. Capitalists seek to reduce spending to increase profits, often coming at the expense of workers, such as the cutting of wages and downsizing, causing unemployment. The reason why the profit motive is harmful is because of the fundamental contradiction between the interests of capitalists and workers, as capitalists want to pay their workers as little as possible and work them as much as possible to increase profits, whereas workers want to be paid fairly and have their increased productivity result in fewer working hours. This fundamental contradiction, critics argue, shows how illogical capitalism is, as it is a system in which two classes have fundamentally opposite interests which create conflict.^{[196][197][198][199]}

Comparison to slavery

According to Noam Chomsky, analysis of the psychological implications of wage slavery goes back to the Enlightenment era. In his 1791 book On the Limits of State Action, liberal thinker Wilhelm von Humboldt explained how "whatever does not spring from a man's free choice, or is only the result of instruction and guidance, does not enter into his very nature; he does not perform it with truly human energies, but merely with mechanical exactness" and so when the laborer works under external control, "we may admire what he does, but we despise what he is".^[207] Both the Milgram and Stanford experiments have been found useful in the psychological study of wage-based workplace relations.^{[citation needed]}

Additionally, as per anthropologist David Graeber, the earliest wage labor contracts known about were in fact contracts for the rental of chattel slaves (usually the owner would receive a share of the money and the slave another, with which to maintain his or her living expenses). According to Graeber, such arrangements were quite common in New World slavery as well, whether in the United States or Brazil.^[208] C. L. R. James argued in The Black Jacobins that most of the techniques of human organisation employed on factory workers during the Industrial Revolution were first developed on slave plantations.^[209]

Some anti-capitalist thinkers claim that the elite maintain wage slavery and a divided working class through their influence over the media and entertainment industry,^[211][212] educational institutions, unjust laws, nationalist and corporate propaganda, pressures and incentives to internalize values serviceable to the power structure, state violence, fear of unemployment^[213] and a historical legacy of exploitation and profit accumulation/transfer under prior systems, which shaped the development of economic theory.

Adam Smith noted that employers often conspire together to keep wages low:^[214]

The interest of the dealers ... in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public ... [They] have generally an interest to deceive and even to oppress the public ... We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labor above their actual rate ... It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms.

To

1. The existence of property not intended for active use.
2. The concentration of ownership in few hands.
3. The lack of direct access by workers to the means of production and consumption goods.
4. The perpetuation of a reserve army of unemployed workers.

For Marxists, labor as commodity, which is how they regard wage labor,^[215] provides a fundamental point of attack against capitalism.^[216] "It can be persuasively argued", noted one concerned philosopher, "that the conception of the worker's labour as a commodity confirms Marx's stigmatization of the wage system of private capitalism as 'wage-slavery;' that is, as an instrument of the capitalist's for reducing the worker's condition to that of a slave, if not below it".^[217] That this objection is fundamental follows immediately from Marx's conclusion that wage labor is the very foundation of capitalism: "Without a class dependent on wages, the moment individuals confront each other as free persons, there can be no production of surplus value; without the production of surplus-value there can be no capitalist production, and hence no capital and no capitalist!".^[218]

Supply and demand

At least two assumptions are necessary for the validity of the standard model: first, that

What a cleaned-up version of Sraffa (1926) establishes is how nearly empty are all of Marshall's partial equilibrium boxes. To a logical purist of Wittgenstein and Sraffa class, the Marshallian partial equilibrium box of constant cost is even more empty than the box of increasing cost.^[220]

Aggregate excess demand in a market is the difference between the quantity demanded and the quantity supplied as a function of price. In the model with an upward-sloping supply curve and downward-sloping demand curve, the aggregate excess demand function only intersects the axis at one point, namely at the point where the supply and demand curves intersect. The Sonnenschein–Mantel–Debreu theorem shows that the standard model cannot be rigorously derived in general from general equilibrium theory.^[221]

The model of prices being determined by supply and demand assumes perfect competition. However, "economists have no adequate model of how individuals and firms adjust prices in a competitive model. If all participants are price-takers by definition, then the actor who adjusts prices to eliminate excess demand is not specified".^[222] Goodwin, Nelson, Ackerman and Weisskopf write:

If we mistakenly confuse precision with accuracy, then we might be misled into thinking that an explanation expressed in precise mathematical or graphical terms is somehow more rigorous or useful than one that takes into account particulars of history, institutions or business strategy. This is not the case. Therefore, it is important not to put too much confidence in the apparent precision of supply and demand graphs. Supply and demand analysis is a useful precisely formulated conceptual tool that clever people have devised to help us gain an abstract understanding of a complex world. It does not—nor should it be expected to—give us in addition an accurate and complete description of any particular real world market.^[223]

Surveillance

According to Harvard academic

New information technologies continuously create conflict between privacy, the control over personal information disclosure, and surveillance.[228] In a current capitalistic society, power is harnessed through a combination of both control and freedom. This fusion of control and freedom, seen through changes in sexuality and race, is a response to the growing privatization of data, networks, public services, and physical spaces, and also to the simultaneous entry of publicity and paranoia into people's lives.^[229]

Racism

According to Immanuel Wallerstein, institutional racism has been "one of the most significant pillars" of the capitalist system and serves as "the ideological justification for the hierarchization of the work-force and its highly unequal distributions of reward".^[230] Critics argue that racism benefits capitalists in several ways. Racism divides the working class and prevents them from uniting to demand better wages and working conditions. Capitalists benefit from competition and hostility between workers because it reduces their bargaining power and ability to organise. Racism was used to justify the exploitation and oppression of certain groups of people for economic gain, such as in the era of slavery in the United States. Capitalists benefitted from the scapegoating of Jewish people as a way to divert attention from the real cause of the problems. An example of this is Henry Ford, founder of the Ford Motor Company, who spread Anti-Semitic propaganda in his newspaper The Dearborn Independent. Vladimir Lenin commented on how Anti-Semitism was being used in Tsarist Russia to distract the workers from the true problems which are inherent to capitalism by blaming the Jews.^[231]

Many theorists believed that a capitalistic free-market is the best remedy possible for racism in a functioning society because even if some business owners engaged in discriminatory wage practices targeting minority ethnic groups, entrepreneurs would take advantage of getting a equally-capable worker for a lower cost, ultimately boosting the company or business as a whole. According to Jim Sidanius and Felicia Pratto, despite the fluidity of this theory, reconciling the free market theory with the observed data presents challenges, as those who are in support of free market capitalism also often exhibit a higher likelihood of discriminating against ethnic minorities.

Marxist and Neo-Marxist theorists including Wallerstein,

Using the Latin American dependency model, the Guyanese Marxist historian Walter Rodney, in his book How Europe Underdeveloped Africa, described in 1972 an Africa that had been consciously exploited by European imperialists, leading directly to the modern underdevelopment of most of the continent.^[238]

The concept of

Countercriticism

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Austrian School

The novelist Ayn Rand made positive moral defenses of laissez-faire capitalism, most notably in her 1957 novel Atlas Shrugged and in her 1966 collection of essays Capitalism: The Unknown Ideal. She argued that capitalism should be supported on moral grounds, not just on the basis of practical benefits.^[243][244] Her ideas have had significant influence over conservative and libertarian supporters of capitalism, especially within the American Tea Party movement.^[245]

Rand defined capitalism as "a social system based on the recognition of individual rights, including property rights, in which all property is privately owned".^[246] According to Rand, the role of government in a capitalist state has three broad categories of proper functions: first, the police "to protect men from criminals"; second, the armed services "to protect men from foreign invaders"; and third, the law courts "to settle disputes among men according to objective laws".^[247]

See also

References