Shareef Kamal

GE273
07/02/2014
Capitalism:
Capitalism typically refers to an economic and social system in which the means of production
(also known as capital) are privately controlled; labor, goods and capital are traded in a market; profits
are distributed to owners or invested in new technologies and industries; and wages are paid to labor.
The extent to which different markets are free, as well as rules determining what may and may
not be private property, is a matter of politics and policy; consequently, historians and economic
sociologists have debated over how to define capitalism, and many states have what are termed "mixed
economies."
Capitalism as a system developed incrementally from the 16th century in Europe and England,
although some features of capitalist organization existed in the ancient world, and early aspects of
merchant capitalism flourished during the Late Middle Ages. Capitalism has been dominant in the
Western world since the end of feudalism. Capitalism gradually spread throughout Europe, and in the
19th and 20th centuries, it provided the main means of industrialization throughout much of the world.
There is no consensus on capitalism or how it should be used as an analytical category. There
are a variety of historical cases over which it is applied, varying in time, geography, politics and culture.
Economists, political economists and historians have taken different perspectives on the analysis of
capitalism.
Economists usually put emphasis on the market mechanism, degree of government control over
markets (laissez faire), and property rights, while most political economists emphasize private property,
power relations, wage labor, and class. Neither is there universal agreement on whether capitalism is
ultimately beneficial for societies or whether it is destructive, resulting in political advocacy both for and
against capitalism.
Criticism:
Notable critics of capitalism have included: socialists, anarchists, communists, some forms of
conservatism, Luddites, Narodniks, some schools of nationalism and Shakers. Marxism advocated a
revolutionary overthrow of capitalism that would lead to socialism before eventually transforming into
communism after class antagonisms and the state ceased to exist. Marxism influenced social democratic
and labour parties as well as some moderate democratic socialists, who seek change through existing
democratic channels instead of revolution, and believe that capitalism should be heavily regulated
rather than abolished, supplementing the market economy with a mixed economy. Many aspects of
capitalism have come under attack from the anti-globalization movement, which is primarily opposed to
corporate capitalism.

Religious criticism and opposition:

Many religions have criticized or opposed specific elements of capitalism; traditional Judaism,
Christianity, and Islam forbid lending money at interest, although methods of Islamic banking have been
developed. Christianity has been a source of both praise and criticism for capitalism, particularly its
materialist aspects. The first socialists drew many of their principles from Christian values, against
"bourgeois" values of profiteering, greed, selfishness, and hoarding. Some Christian critics of capitalism
may not oppose capitalism entirely, but support a mixed economy in order to ensure adequate labor
standards and relations, as well as economic justice. Indian philosopher P.R. Sarkar, founder of the
Ananda Marga movement, developed the Law of Social Cycle to identify the problems of capitalism and
proposed the Progressive Utilization Theory (PROUT) as a solution to its ills. Pope Benedict XVI issued an
encyclical Caritas in veritate (Charity in Truth) in 2009; he stated: "The dignity of the individual and the
demands of justice require, particularly today, that economic choices do not cause disparities in wealth
to increase in an excessive and morally unacceptable manner" and "Therefore, it must be borne in mind
that grave imbalances are produced when economic action, conceived merely as an engine for wealth
creation, is detached from political action, conceived as a means for pursuing justice through
redistribution.
Tendency towards oligopoly and monopoly:
Critics argue that capitalism is associated with: unfair and inefficient 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; repressions of
workers and trade unionists, and phenomena such as social alienation, inequality, unemployment, and
economic instability. Critics have argued that there is an inherent tendency towards oligolopolistic
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 the economy is unplanned, creating
many inconsistencies and internal contradictions.
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.[89] Economist Branko
Horvat states, "it is now well known that capitalist development leads to the concentration of capital,
employment and power. It is somewhat less known that it leads to the almost complete destruction of
economic freedom."[90] Southern Methodist University Economics Professor Ravi Batra argues that
excessive income and wealth inequalities are a fundamental cause of financial crisis and economic
depression, which will lead to the collapse of capitalism and the emergence of a new social order.

Environmental destruction of unfettered economic growth:

Environmentalists have argued that capitalism requires continual economic growth, and will
inevitably deplete the finite natural resources of the earth, and other broadly utilized resources. Murray
Bookchin has argued that capitalist production externalizes environmental costs to all of society, and is
unable to adequately mitigate its impact upon ecosystems and the biosphere at large. Labor historians
and scholars, such as Immanuel Wallerstein, Tom Brass and latterly Marcel van der Linden, have argued

that unfree labor by slaves, indentured servants, prisoners, and other coerced persons is
compatible with capitalist relations.
The profit motive:
In capitalism, the motive for producing goods and services is to sell them for a profit, not to
satisfy people's needs. The products of capitalist production have to find a buyer, of course, but this is
only incidental to the main aim of making a profit, of ending up with more money than was originally
invested. This is not a theory that we have thought up but a fact you can easily confirm for yourself by
reading the financial press. Production is started not by what consumers are prepared to pay for to
satisfy their needs but by what the capitalists calculate can be sold at a profit. Those goods may satisfy
human needs but those needs will not be met if people do not have sufficient money.
The profit motive is not just the result of greed on behalf of individual capitalists. They do not
have a choice about it. The need to make a profit is imposed on capitalists as a condition for not losing
their investments and their position as capitalists. Competition with other capitalists forces them to
reinvest as much of their profits as they can afford to keep their means and methods of production up
to date.
As you will see, we hold that it is the class division and profit motive of capitalism that is at the
root of most of the world's problems today, from starvation to war, to alienation and crime. Every
aspect of our lives is subordinated to the worst excesses of the drive to make profit. In capitalist society,
our real needs will only ever come a poor second to the requirements of profit
Capitalism = free market?
It is widely assumed that capitalism means a free market economy. But it is possible to have
capitalism without a free market. The systems that existed in the U.S.S.R and exist in China and Cuba
demonstrate this. These class-divided societies are widely called 'socialist'. A cursory glance at what in
fact existed there reveals that these countries were simply 'state capitalist'. In supposedly 'socialist'
Russia, for example, there still existed wage slavery, commodity production, buying, selling and
exchange, with production only taking place when it was viable to do so. 'Socialist' Russia continued to
trade according to the dictates of international capital and, like every other capitalist, state, was
prepared to go to war to defend its economic interests. The role of the Soviet state became simply to
act as the functionary of capital in the exploitation of wage labour, setting targets for production and
largely controlling what could or could not be produced. We therefore feel justified in asserting that
such countries had nothing to do with socialism as we define it. In fact, socialism as we define it could
not exist in one country alonelike capitalism it must be a global system of society.
Capitalism and the exploitation of workers:
Under capitalism, the chief means of productionthe factories, the railroads, the mines, the
banks, the public utilities, the offices, and all of the related technologyare privately owned by a superrich minority, the capitalist class. The capitalists then compete with each other in the marketplace and
run production on the basis of what will bring them the biggest profit.

This drive to successfully compete and to maximize profit leads big business to exploit workers,
to pay their employees as little as possible, a mere fraction of the actual value that they produce. It also
leads big business to resist the efforts of workers to unionize and to obtain increased pay, reduced
working hours, and improved working conditions.
This exploitation of workers results in a gross concentration of wealth, to the benefit of the
capitalists and at the expense of working people. Even in the United States, the richest country in the
world, where workers admittedly have one of the highest living standards, there is nonetheless a gross
concentration of wealth. According to the Federal Reserve Survey of Consumer Finances, the top 1% of
American families (834,000 households) own more than the bottom 90% (84 million households).