A peoples guide to capit.., p.1
A People's Guide to Capitalism, page 1
© 2020 Hadas Thier
Published in 2020 by
Haymarket Books
P.O. Box 180165
Chicago, IL 60618
773-583-7884
www.haymarketbooks.org
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ISBN: 978-1-64259-218-4
Distributed to the trade in the US through Consortium Book Sales and Distribution (www.cbsd.com) and internationally through Ingram Publisher Services International (www.ingramcontent.com).
This book was published with the generous support of Lannan Foundation and Wallace Action Fund.
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Cover artwork, design, and interior illustrations by Tania Guerra.
Library of Congress Cataloging-in-Publication data is available.
To Uri and Tzvia Thier, who instilled in me a knee-jerk reaction to injustice, and who gave me enough confidence to do something about it.
And to Naim, with love, and with the hope that someday you can use this book to explain to your children what life was like before we relegated capitalism to the dustbin of history.
CONTENTS
Introduction
CHAPTER ONE
The Birth of Capital
CHAPTER TWO
The Labor Theory of Value
CHAPTER THREE
Money
CHAPTER FOUR
Where Do Profits Come From?
CHAPTER FIVE
The Accumulation of Capital
CHAPTER SIX
Capitalist Crisis
CHAPTER SEVEN
Credit and Financialization
CONCLUSION
Capitalism’s Gravediggers
AFTERWORD
The Coronavirus Crisis
Acknowledgments
GLOSSARY
FURTHER READING
NOTES
INDEX
INTRODUCTION
The world is being ravaged by a coronavirus pandemic as this book goes to print. The virus first reared its head at the end of 2019 and by now, April 2020, the known number of COVID-19 cases worldwide have surpassed a million, leaving over one hundred thousand dead, with estimates that the virus will claim still hundreds of thousands of lives, if not more.
Yet it has become painfully and tragically clear that it is not merely a virus claiming lives. We are also being assailed by a society that has no problem marshaling bombs and fighter jets, but that will not assemble enough ventilators and masks to battle the pandemic. We live in a society in which decades of budget cuts have made a run on overwhelmed hospitals inevitable and which has set countries and states bidding against one another for ventilators on the “free market” rather than devise centralized plans for their production and distribution.
Governments’ responses have been uneven across the globe. In countries where authorities responded early on with widespread testing, the transmission of the disease was slowed, as cases were identified, isolated, and quarantined. While the United States, the epicenter of global capitalism, has become also the epicenter of the pandemic. At the first sign of coronavirus-related stock market trouble, the richest country in the world quickly mobilized trillions of dollars to prop up financial capital. But the government did nothing to make testing widely available. We thus faced the obscene reality of hearing about countless celebrities’ test results while most health care workers on the frontline battled the pandemic without access to testing.
In Brooklyn, New York, where I live, sixty-eight-year old Theresa Lococo, a pediatric nurse of forty-eight years, contracted COVID-19 on the job and died within days. Her son, Anthony, was asked by the New York Post whether widespread testing could have prevented his mom’s death. He answered, “I don’t even want to hear that—because it would make me feel like someone murdered my mom.”1
The combination of ineptitude and malice has absolutely had murderous consequences, but the roots of the crisis are deeper still. “The tragedy is immediate, real, epic and unfolding before our eyes,” wrote Indian novelist Arundhati Roy. “But it isn’t new. It is the wreckage of a train that has been careening down the track for years.”2 The unthinkable scale of the tragedy is the result of a capitalist perfect storm.
First, the increasing number of novel viruses is linked to the rise of factory farming, city encroachment on wildlife, and an industrial model of livestock production.3 Second, budget cuts and a systematic undermining of health care systems across the world—at varying levels of crisis—have left countries incapable of handling a public health emergency. Finally, as coronavirus rips through our communities, the dark reality of class inequality is laid bare: who will be most vulnerable to infection, who will receive treatment, and who will be left to die? Millions of frontline workers—from nurses to grocery clerks to delivery persons to the homeless largely unprotected and unable to stay home—will bear the brunt of the death toll.
All this is to say nothing of the unprecedented economic crisis that we are plummeting toward. Before the ashes of the health care crisis even clear, we can see beneath them a decimated economy. Again, working people are paying for this. As this book heads to print, a record-breaking 17 million jobs have been lost in a matter of three weeks. During the entirety of the Great Recession, 9 million jobs were lost. The stay-at-home lockdowns rippling through the world have, in the words of Arundhati Roy, brought “the engine of capitalism to a juddering halt.”4 With workers at home, production stands still, and supply chains are broken. Mass layoffs ensue, and millions of unemployed and underemployed workers debilitate demand.
As I frantically set upon rewriting this introduction and adding the afterword to reflect the new reality of a coronavirus-infected world, two things were clear. One, is that an understanding of the way that capitalism works, who it serves and why, is urgently needed. My hope is that this book makes a timely contribution to those discussions. Two, is that at this moment, as the book goes to print, it is impossible to predict how all of this will play out. The biology and evolution of the virus is uncertain, and the scale of the economic crisis is literally unprecedented. In the afterword I attempt to sketch out a few thoughts on the economic ramifications of the pandemic without the pretense of predictions.
The coronavirus pandemic has accelerated economic and social processes that have been unfolding over the decade since the GREAT RECESSION of 2007 to 2009, the longest and deepest crisis in the United States since the Great Depression. That distinction will, of course, be eclipsed by the current crisis. But the devastation wrought by the Great Recession was significant in its own right. And along with the weak and joyless recovery that followed, it fueled new heights of economic polarization.
The Federal Reserve reported that in 2019 the country’s top 1 percent controlled a record-high 33 percent of the wealth, while the bottom 90 percent of the adult population shared 30 percent of the wealth. See Figure 1. Even more shocking, the bottom half of the population have had to divvy up 1 percent of the nation’s wealth among us.5 Stepping back to look at the last three decades, the trajectory is even more dramatic. See Figure 2.
FIGURE 1. DISTRIBUTION OF WEALTH 2019
Source: Board of Governors of the Federal Reserve System, Distribution of Household Wealth in the US since 1989.
FIGURE 2. DISTRIBUTION OF WEALTH 1989–2019 (IN TRILLIONS)
Source: Board of Governors of the Federal Reserve System, Distribution of Household Wealth in the US since 1989.
These conditions have fueled an “age of global mass protests.” A 2020 report from the Center for Strategic and International Studies found that mass protests have increased by 11.5 percent per year worldwide, on average, since 2009—from the Arab Spring, to Occupy Wall Street in the United States, to the Indignados’ occupations in Spain, to strike waves in China, to pro-democracy protests in Hong Kong and Iran. As the report noted: “Even when accounting for population growth, the relative number of demonstrators over the past three years is likely higher than participation in either the anti-Vietnam War movement or the civil rights movement.”6 The need for isolation and distancing may temporarily put a pause on mass gatherings, but the circumstances that fed them—economic inequalities, planetary crisis, and disgust with political corruption—will only deepen in the years ahead.
Ideological shifts have been as dramatic as the protests on the streets. Even before the pandemic struck, polls consistently showed that the majority of millennials reject capitalism, and in some cases specifically prefer socialism.7 In the US, where the two-party system has a vice-like grip on the electoral process, Bernie Sanders, a self-proclaimed socialist, won the support of tens of millions of primary voters in 2016, who “felt the Bern” of his anti-corporate political revolution. By the 2020 election, the previously fringe candidate became a front-runner in the national elections and fundamentally shifted the national discussion on every major issue: from health care and climate change to racial justice and class inequality.
Unfortunately, opposition to the rotten status quo has also fed right-wing ideas and movements, from the election of Trump in the US and neofascist Jair Bolsonaro in Brazil, to counterrevolution in Egypt, to the rise of racism and xenophobia in Europe and Latin America, and more. Finally, we have to contend with the precipice of planetary destruction that corporate America has driven us to. We are living through the stormiest of political times in generat
We need a radical theory to address the questions that millions have asked in recent years. Why are resources so easily marshaled for war yet so impossible to rally toward stopping a pandemic from tearing through our communities? Why do profits always trump human lives and ecological sustainability? How can there be a housing glut, when millions are homeless? Why do forty-five thousand people a year die, even pre-coronavirus, in the United States—the richest country in the world—from causes linked to lack of health insurance?9 How could hunger be the leading cause of death among young children around the world, while current global food production supplies enough to feed more than one and a half times the world’s population?10 Why does money flow to oil, nuclear weapons, and junk food, rather than to fulfill human needs for health care and education? Is this rotten system the best we can do? If these questions are ever raised in mainstream discussion at all, they are presented as unrelated issues.
Contrary to what we are taught, the economic system of capitalism is intimately connected to society’s greatest political challenges of war, health and health care, climate change, and oppression. Millennials’ turn toward socialism signals an attempt to answer these questions. A new generation is investigating anti-capitalist theories and ideas, which are no longer tainted with the false “socialisms” of the totalitarian states of the past.
Karl Marx, an economist, political theorist, philosopher, and above all revolutionist developed a profoundly radical analysis of capitalism. Having written 150 years ago, he could not be expected to fully predict the ways the system would unfold. Nevertheless, as Jacobin editor Bhaskar Sunkara wrote: “The core of the system he described is little changed. Capitalism is crisis-prone, is built on domination and exploitation, and for all its micro-rationality has produced macro-irrationalities in the form of social and environmental destruction.”11
Marx’s economic theory and political method of analysis are critical tools for activists today. Marxism is a means to understand and dismantle the world of the 1 percent, a world that exploits, disenfranchises, oppresses, and dispossesses the many for the sake of the few; a world that may not make it to the next century with our planet and our humanity intact. I wrote this book for those of us who are attempting to make sense of the world in order to change it.
Twenty years ago, when I first picked up a book on economics, I made it about two pages in before I broke down in tears, feeling hopeless that I could ever understand economics. The capitalist system in general, and economics in particular, are purposefully mystified. Analyzing how capitalism works is left to “the experts,” and if things look a little askew to you, well, that must be because you don’t know any better. This is doubly and triply so for working-class people, women, people of color, and other oppressed constituencies who are daily barraged with the message that we cannot hope to comprehend complex systems and ideas, let alone hope to impact them.
And so, not long after I had my big cry, I decided that I would figure this thing out. Even the study of Marxist economics, whose purpose is the demystification of the system, is still mostly dominated by men. So I broke open the pages of Capital, Marx’s seminal work on economics, and discussed it and re-discussed it, and discussed it some more with fellow comrades, until the world started to come into focus. With the benefit of this experience, my hope is that this book will draw Marx’s critical ideas into the reach of broader and more diverse audiences and direct readers toward further investigations of Marxist economics. I also hope that it makes the way the world works a bit clearer—and that it only makes you cry tears of joy at better understanding the world.
This book aims to follow the content and arc of Marx’s Capital. Capital’s three volumes were written to provide a theoretical arsenal to a workers’ movement for the revolutionary overthrow of the system—and to do so on the most scientific foundation possible. As Ernest Mandel wrote in his introduction of it: “Precisely because Marx was convinced that the cause of the proletariat was of decisive importance for the whole future of mankind, he wanted to create for that cause not a flimsy platform of rhetorical invective or wishful thinking, but the rock-like foundation of scientific truth.”12
In Capital, Marx employed a method of scientific inquiry to investigate the inner workings and contradictions of the system. To do so, much as a chemist or a physicist must set up a controlled laboratory, Marx sought to establish a social corollary of such a laboratory, but, as Marx wrote: “In the analysis of economic forms neither microscopes nor chemical reagents are of assistance. The power of abstraction must replace both.”13 By distilling, simplifying, and abstracting the key elements of the system, Marx was able to present them in their purest form, isolated from complicating factors. Once he set up the foundations, he built out the layers of complexities so that we are able to apply the deeper concepts to concrete reality. Penetrating beneath the surface appearance of capitalism to its deeper underlying laws and tendencies is central to his method.14
At its core, capitalism was defined by Marx as a social relation of production. He meant that profits are not the result of good accounting or the inventive ideas of the superrich, but are instead the outcome of an exploitative relationship between two classes of people: bosses and workers. In our society, employers and workers meet each other on a very unequal playing field, in which one owns the means to produce value, and the other has no choice but to sell their labor in order to live. No matter how “essential” we discover workers to be, the bosses are the ones that make sometimes life-or-death decisions at workplaces, and, at the end of the day, take home the profits. Capitalism is therefore a system in which production and exchange are determined by these positions of exploitation.
This social order of haves and have-nots is neither natural nor timeless. In fact, the precondition for the early development of capitalism was the violent expropriation of the masses of people from their land in order to create the conditions in which capitalism could develop and flourish. “The expropriation,” wrote Marx, “of the agricultural producer, of the peasant, from the soil is the basis of the whole process.”15
Because class and exploitation are central to understanding capitalism, and because their existence can only be understood within a historical context, I begin A People’s Guide to Capitalism with the story of the birth of capital. It is perhaps a historical detour to what is otherwise a theoretical exposition of the way that the system works. Here again, I follow Marx, who peppered Capital with this same history. My hope is that the first chapter provides a useful context to situate the themes introduced later in the book, and also illuminates the historical, rather than static, reality of these conditions. Looking at the roots of capitalist society also makes it clear from the start that the system is built upon the subjugation of humankind and the planet alike.
In the next two chapters, I come back to the basic, but often abstract concepts where Marx began Capital: commodities, value, and money. These are taken up by Marx in the first three chapters of volume 1, and often stump readers who go no further. As Marx warned:
The method of analysis which I have employed, and which had not previously been applied to economic subjects, makes the reading of the first chapters rather arduous…. That is a disadvantage I am powerless to overcome, unless it be by forewarning and forearming those readers who zealously seek the truth. There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.16
I do my best to offer enough concrete examples and jargon-free descriptions to clarify the points, which will help you keep climbing with minimal huffing and puffing. The following two chapters get to the juicy questions of where profits come from and capitalism’s particular form of exploitation. To do so, it is necessary to unpack vital concepts of capital, labor, and class society. And from there we’ll be able to see the system’s driving tendencies of competition and accumulation.
The final chapters of the book look at the contradictions embedded within capitalism, which ultimately can lay the basis for a different kind of society. The anarchy of competition, an unceasing impulse to grow, gives way to regular crises and threatens profitability. I end with an analysis of debt and the financial markets, which so thoroughly and grotesquely score our current economic landscape.
