What is Capitalism?

The late, great Ernest Mandel who was banned from entering the US for much of his life, wrote what is probably the very best introduction to Marx’s Capital ever written. Though trained as an economist, Mandel had a knack for explaining things in a simple, straightforward way that most people could understand. His long book on Marxist economic theory is really a remarkable achievement and demonstrates that even though Marx, like any important thinker, had flaws, he was also remarkably brilliant. One can use Mandel’s work to understand the ways that Marx outlined the complex ways in which capitalism functions and, amazingly, the ways that it continues to develop in ways that Marx’s ideas suggest it would.

One of the most interesting passages in Mandel’s introduction to Capital is found on page 82 of the Vintage paperback edition (1977) and concerns the definition of Capitalism. Now, defining an economic order is an immensely difficult conceptual task for many reasons. In the age of post-structuralist thought, so-called “meta-theories” are usually considered more than a little dodgy and maintaining a strict definition of an economic or social order is bound to not only find detractors but also to incite conceptual resistance. I fully understand, and often sympathize with this resistance, but I also understand the need for practical thought that helps to focus and encourage political and social activism. With this in mind, I give you Mandel’s outline for the conditions that define a capitalist order.

“(1)the fact that the mass of producers are not owners of the means of production in the economic sense of the word, but have to sell their labor power to the owners. (2)The fact that these owners are organized into separate firms which compete with each other for shares of the market on which commodities are sold, for profitable fields of investment for capital, for sources of raw material, etc. (that is the institution of private property in the economic sense of the word);  (3) the fact that these same owners of the means of production (different firms) are therefore, compelled to extort the maximum surplus-value from the producers, in order to accumulate more and more capital – which leads, under conditions of generalized commodity production and generalized alienation, to constantly growing mechanization of labor, concentration and centralization of capital, growing organic composition of capital, the tendency of the rate of profit to fall, and recurrent crises of over-production.”

Now, with a few addendums, I find this to be a remarkably cogent statement of explanation which, though written forty years ago, is still relevant today. Keeping this definition in mind also helps us understand certain apparently contrary elements in our modern capitalism. One thing that Mandel’s outline helps us remember is that even though large modern governments contain many social-democratic elements, they still function largely to grease the wheels of an increasingly globalizing capitalist order. In fact, putting aside the various socially-minded programs instituted in the last couple of generations (and these, though now being lost, are still very important), government increasingly exists to maintain the power and dominance of a relatively few very large corporations that actually dominate the economic production and distribution at a global level. In recent years we have seen a much greater concentration of wealth which is a direct result of the capitalist order as outlined by Mandel, and this concentration is integral to the nature of the capitalist order in general, and attempts during the 20^th century to mitigate it were quickly overridden by a more or less open conspiracy between big-capital and government.

Another thing that Mandel’s outline reminds us of is that modern forms of “command-capitalism” such as fascism or that which we see in the modern Chinese state are the exact opposite of socialism. Despite the fact that deeply ignorant people imagine that because the NAZI party had the word “socialist” in its name, fascism had (and continues to have) nothing to do with socialism and is in fact a form of command-capitalism. Hitler’s use of the word “socialist” was purely strategic and his party in fact functioned to maintain the very order that Mandel has outlined above. (Let us not forget that Fortune Magazine once said that Fascism was the future of Capitalism) Similarly, though the Chinese government which calls itself ‘Communist’ (never underestimate the Chinese wit), it oversees a system that is distinctly capitalist in nature.

I encourage everyone to read Mandel’s work to aid in the understanding of our modern capitalist order, a system that is increasingly lopsided at a social and economic level. Though modern technological gadgetry convinces people that they are prosperous even when they are not, economic exploitation and monetary inequality are leading to political inequality and an increasing misunderstanding of the economic order in which we live.

Who said it is a free country – your rent is due. 

Marxism and the Continued Cold-War Rhetoric of the Right. . . . .

Am I the only one who is amazed by the Conservatives who condemn fairly mainstream centrists and mild leftists with epithets such as "Marxist" and "Communist" because they are vaguely critical of the extremes of neo-liberalsim and afraid of the implications of a Prime Minister who refuses to adhere to the rules of our constitution? Has the level of knowledge and discourse fallen this far, or are these just the ignorant wackos on the conservative end of the spectrum? I would like to opt for the explanation of ignorance because anyone who is twisted enough to know anything about Marxism and freely use the label to characterize Liberal Party bloggers is absolutely beyond the pale of regular political discussion.

This is not to imply that defining Marxism, for example, is an easy or uncontroversial matter. I spent years studying Marxism and still find the question to be a fairly thorny one. Some people emphasize the Sociological aspect of Marx's work, and I am somewhat sympathetic to this idea. Though he did not originate the idea, Marx was a very important promoter of the notion that people's personal a social behaviour is a result of their socio-economic context of their lives. This idea has permeated so deeply into our collective minds that it seems almost obvious today. The idea can be found to varying degrees in German and English philosophers before Marx, but his work on economics and class gave new power to the idea and it is now an inescapable part of our social and political consciousness. Even deeply conservative thinkers use such notions today.

Others emphasize the Economic aspect of Marx's work. I have never been fond of this approach for many reasons. I am fairly distrustful of the methodology of Economics for one thing. For another, it doesn't seem to me that Marx did much strictly 'economic' work. His economic ideas always seem inexorably intertwined to his politics and so, like many leftists, I don't think economics as a separate study really means much except in the way that capitalists use it to disguise the political implications of economic issues. (One could say a lot about this subject particularly in regard to the 'labour theory of value' and the notion of so-called 'surplus value,' as well as Marx's complex notion of 'Alienation.')

Some are more interested in the idea of Marx as a philosopher of history. This is indeed an interesting topic. Marx's notion of history as a motion pushed forward by conflict between social and economic classes is fascinating. I am putting this in very simple terms here because I obviously cannot discuss the complex issues of Hegelian dialects etc., but I think most people get the point. I think, whether they realize it or not, most people who are attracted to Marxian ideas are attracted to this aspect of his thinking. And as compelling as it can be, as time has gone by I lost my attachment to such a historicist notion for many reasons. Traditional rationalism has lost most of its appeal to me and this historical model seems to be a mental construct that we thrust onto historical events. History and the social order seem much more random and chaotic than this to me now.

And then there are, of course, more complex aspects of Marxist theory such as the philosophical outlooks of thinkers like Lois Althusser. We obviously cannot discuss these in this context because there is just too much to say and investigate.

Anyway, in the complex web of all of these notions of Marxism, not one of them would make any Liberal bloggers I have read, a Marxist. Because simply being influenced by the impact of Marx's thought on simple sociological analysis does not make one a Marxist. Surely to be considered a Marxist one must adhere to some degree to idea that history moves forward through class conflict, that the capitalist order is a historical phenomenon which is by no means "natural," that capitalist development leads to the possibility of a different, more cooperative social and economic order, that as a system of production capitalism begins to become a fetter on itself, that is to say at some point many aspects of Capitalist production will lose their promotion of efficiency and innovation. These are the kinds of things that make one, in any sense, a Marxist. However, the idea that one is a Marxist because one is critical of the arbitrary use of state power, the dangers of an anti-democratic tendency in our executive branch of government, etc is patently absurd. Even a commitment to a semi-socialist, mixed economy, does not make one a Marxist, or even a 'socialist' in any serious sense.

Ironically, many of those who carelessly throw labels like Marxist and Communist around as a political strategy, claim to be concerned with the power of the government and the so-called nanny-state. Of course, this is largely a fantasy. Modern right-wing governments actively overspend, consistently create larger state structures, and are fully in favour of legislating moral behaviour when it offends their particular sensibilities.


It is very unfortunate that many in this country continue to use to the inflammatory (and meaningless) discourse of the cold-war in attempting to marginalize anyone who believes in social democracy or is cautious of political groups that seem to have little regard for constitutionalism. The fact is that capitalism as it now exists is nothing like the innovative, free-market system that it was, say, a hundred and fifty years ago. Already, we have a profoundly regulated, partially socialized economy. And if a party in Canada actually ran on a strong 'capitalist' and socially right-wing agenda they would have significantly less of a chance to win than the NDP does today. The vast majority of people have accepted some 'socialism,' extensive regulation, and a progressive tax system. Thus to try to marginalize people as 'socialists' or 'Marxists' is not only usually factually wrong but deeply disingenuous.

Conflating categories in Political Science. . . .

Reading the thoughts of some bloggers I continue to be amazed by the degree of confusion that exists concerning the basic concepts usually associated with political science. People are continually conflating different categories within the canon to the detriment of our basic understanding of the central concepts. For example, I read one blogger who claimed that Canada is ‘not a democracy’ but a constitutional monarchy. Here is a basic misunderstanding; a conflation of categories if you will. Constitutional monarchy refers, or course, to the central ways in which a government functions on a technical level. Democracy, on the other hand, refers to the method by which the government is chosen. You could, in theory, have a non-democratic constitutional monarchy, or a very democratic one. (Some one might, of course, try to make the argument that any form of constitutionalism implies some form of democratic process but suffice to say, given the history of constitutional monarchies, this level of democracy could be, like 18^th century Britain, barely considered democratic).

Similarly some people seem to think that any form of democracy implies a priori some form of ‘market economy.’ Again this is a conflation of separate categories. If the constitutional monarchy refers to the technical functioning of government, and democracy refers to the method of choosing a government, a so-called ‘market economy’ refers simply to the way in which the production and distribution of the goods is organized. You could have a, for example, a Socialist Constitutional Monarchy with a high degree of democratic representation. You could also, as is the case with China, have a capitalist system of production with very little democratic process.

One of the most common conflations in this regard is that of ‘Capitalism’ with a so-called free market.  Even a close reading of Smith will make clear this conflation. Capitalism is a generalized system of commodity production in which firms employ labor in the production of goods or services and make a profit from this process while the state ensures the smooth running of these relations. A market, on the other hand, refers specifically to a system of distribution. People love to throw the words ‘free market’ around even though there is very little that is actually ‘free’ in our so-called market. This is because to ensure the smooth running of ‘capitalism’ the markets must be tightly controlled and regulated. The conceptual proof of this argument is found in the fact that you could have a fairly free market without actually having ‘capitalism’ per se. People could come to a market selling goods and services that they have produced on their own without the profit of surplus value procured from excess labor and make sales in this market. This would be a free-market without capitalism.

Anyway, no time now to expand on these issues. Just wanted to make the observation that the concepts of political science are becoming terribly muddy and this is resulting in some shabby analysis. 

Put Ayn Rand in the dustbin

This is rich. Alan Greenspan, known to be a big fan of Ayn Rand, is now talking about nationalizing banks. Well, well, well. So much for laissez faire. In a philosophy in which selfishness is a virtue and capitalism is the highest ideal, it seems that Rand and her followers have suffered something of an ideological TKO. Time to face up to the simple fact of anyone with any sense has always been aware; unchecked selfishness leads to nothing but chaos and disaster. Not only does the market need to be heavily regulated to function properly, but there are major sections of society in which the market simply doesn’t belong. Regardless of what Greenspan , Rand, or their followers think, it is not socialism, but capitalism that will fall into the dustbin of history. 

A message to Capitalist...

A message from the socialists to the capitalists......WE TOLD YOU SO!!!!!!!!!!!!!!!!!!!!!!!!!