Karl Marx, being a Hegelian, was convinced that capitalism was inherently contradictory and would therefore implode and in the process it would become transformed into socialism. The state would take over the means of production after the workers revolted against the owners who were exploiting them by paying them less than their labor was worth. The problem, as Marx saw it, was that in a capitalist economy workers are forced by circumstances to sell their labor as a commodity to a factory owner and this in itself is a contradiction — since labor is not a commodity. When, say, the carpenter who makes furniture in his small shop with an apprentice or two finds he cannot compete with the factory down the road that turns out furniture at a faster rate he must go to work for the owner of that factory in order to survive. The factory owner pays him a minimum wage (?) that has no relation whatever to the value of the objects the carpenter is now helping to produce. This is another contradiction. The real problem arises because the furniture he now helps to produce for the owner of the factory creates what Marx called “surplus value,” that is, value in excess of the value of the labor that went into the production of the furniture, including a reasonable profit for the owner. The owner keeps that surplus value himself in the form of excessive profits and therein lies another contradiction: the value that ought to accrue to the worker (because he helps to create it) goes to the factory owner. When the N.F.L. struck several years ago, the players wanted their income to be predicated on the amount of money the owners were taking in from TV revenue and at the gate. They didn’t know it, but the players’ stand was thoroughly Marxist.
In any event, because of these inherent contradictions within capitalism, Marx thought the government would inevitably take over the means of production in order to protect the workers and capitalism would be replaced by socialism which would almost certainly be coupled with a democratic political system — and history has borne out that coupling, for the most part. While there are obvious exceptions, such as the former U.S.S.R., not only is our democracy itself a peculiar mixture of capitalism and socialism, but there are a number of nations that have found socialism fits nicely within the bosom of democracy — England, for one, and even more so the Scandinavian countries where, we are told, some of the happiest people on earth live and work.
It is amusing that a great many people in this country fear socialism the way folks in the middle ages feared leprosy — even though measures have been taken to make our economy more socialistic since at least the time of Franklin Roosevelt, and the government has always meddled in the economy. There has never been such a thing in this country as “free enterprise capitalism.” In the beginning the economies of the various colonies took the form of mercantile capitalism in which the colonial governments maintained considerable control in order to reduce the possibility of inordinate wealth in the hands of a few — fearing that it might develop into aristocracy, or fearing wealthy American colonists who might become a threat to Mother England. Most of the colonies also had laws prohibiting primogeniture as well, in order to spread the wealth. Despite these measures, a small group of wealthy Americans was able to help fund the revolution that eventually freed the colonies.
Many people mistakenly identify democracy and capitalism even though, while it is certainly the case that they evolved together historically, one is a political system and the other an economic one and the two are at times incompatible. Out-of-control capitalism, as we are seeing, results in incredible wealth in the hands of very few and a powerless electorate, which cripples democracy. At the same time, many people also fear things such as the Affordable Care Act because it smells of socialism and must therefore be “undemocratic” or “un-American,” whereas it does not conflict in any way with the democratic process. Folks frequently fear what they do not understand. These people need to be reminded of the fact that this country, which is ostensibly a democratic one, has been slowly but steadily moving in the direction of greater state involvement if not since the very beginning then at least since the 1930s and that a number of federal policies and agencies have sprung up since that time to avoid monopolies and to temper individual enthusiasm — largely because that enthusiasm in pursuit of profit has often shown complete disregard for the health and well-being of our citizens.
At any rate, capitalism is not to be confused with democracy and socialism is in many ways more compatible with democracy than is capitalism, especially our particular form of capitalism in which a few wealthy folks seem to have all the power and the rest of us simply go through the motions. A democracy is supposed to be a government of, by and for the people, but when the corporations and a few very wealthy families control the reins of power the political system cannot be said to be a democracy in any meaningful sense of that term. In a socialistic economy, on the other hand, in which the possibility of a few gaining the vast majority of the wealth and power is thwarted by the intervention of state and federal agencies and the courts, the people have more power and the political process is more likely to be one that is amenable to the will of the people as a whole. In other words, democracy often joins more comfortably with socialism than it does with capitalism because more of the citizens are likely to be in a position to play an effective role in self-government when the wealth and power are not allowed to collect in the banks or off-shore accounts of a very few — and the highest courts are not declaring that corporations are “persons,” thereby allowing them to unduly influence the outcome of political elections. I don’t advocate the elimination of private ownership, since I am aware of the advantages of a competitive economy, but I do wonder why so many of our citizens are frightened of an economic system that, it turns out, is quite compatible with democracy and which almost certainly gives them more power and freedom in the end.
Wonderfully written, Hugh. There is much to learn from and much to think about in this.
Great post all the way around, including the confusion with terms. As you have written about before, our system is one of fettered capitalism balanced with some socialism. Ironically, the ACA is a metaphor for our overall system as it has fettered capitalism with the exchanges and social insurance through Medicaid and the mandates. Now, if we could only get the Supreme Court from making it easier for oligarchies in our country, we will be better off.
Indeed we would. Good luck with that. The problem with the courts in this regard is precisely the fact that the Constitution doesn’t mention corporations at all and that leaves the door open for all sorts of bizarre interpretations — especially by this clown court.
May want to check out Leonard Pitts’ national column that was in my paper today called “Wake up, people, to the danger.” My post of today and his column carry the same theme, but I put a link in a comment to an initiative called “Citizens Congress 2014.”