ecostory 106/2007 106A/2007
Why Not Capitalism?
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[complete article for "What would an economic system look like..."]
Note: Below is the complete article, for reference reasons.
ecoglobe does not engage in political issues and/or trials to change political systems.
Capitalists, commmunists, socialists, dictatorships should all be able to understand that their countries and this world is finite and in the end one cannot eat gold or the black figures in a bank account. Once resource are gone, no amount of money or weaponry can recreate anything.
We do believe, however, that real local democracy has a much better chance to deal intelligently with ecological issues than larger centralised systems.

This is an article I wrote two years ago with my father. -- FRED

Why Not Capitalism?

The case against capitalism contains a number of facets. First, capitalism is a system that must expand—leading to colonial and imperial wars and economic domination of poorer countries. The basic working of the system creates great wealth and poverty simultaneously at national and international levels. A consequence of this is that a large part of humanity is doomed to a subservient position, with many living precarious and wretched lives. Capitalism also tends to wreak ecological havoc as it develops and grows because there is no other systemic goal than the pursuit of capital accumulation—its prime moving force. It tends to use up natural resources, both renewable and nonrenewable, without regard to their limited nature. And while the worst effects of capitalism can sometimes be mitigated, reforms can be undone when capitalists view them as barriers to capital accumulation and have the power to legislate the return to more unfettered conditions.

A. Inherent Expansionism of Capitalism Trade for monetary gain and the extraction of precious metals became the dominant motive forces at the center of society in the emerging mercantile capitalism, resulting in wealth accumulation by merchants and bankers in the powerful countries. This led to struggles between social groups and wars between nations searching for more power, property, and wealth. However, the oceans set limits on European trade with other parts of the world because it was essentially confined to land routes until the late fifteenth century. The exploration of the oceans by European nations that began at this time was made possible by the development of powerful artillery, new navigational instruments, and large sailing ships that could hold significant numbers of both soldiers and cannon. “The Europeans rapidly improved upon [military technology, naval artillery, and sailing ships] before the non-Europeans were able to absorb [them]. The disequilibrium grew, therefore, progressively larger” (C. M. Cippola, Guns and Sails in the Early Phase of European Expansion 1400–1700 [Collins, 1965]).

The initial motivation for the European explorations and conquests abroad was usually mercantile trade for high value products such as spices and precious minerals. It took only a few decades for the European nations to become the predominant masters of the oceans and gain entry or access to many nations around the world. They began to establish small enclaves, some of which they were able greatly to expand because of the decimation of native populations following the introduction of Eurasian germs to which there was little resistance among the people of the conquered lands.

Although the push abroad started in the late fifteenth century, for the sake of convenience, 1500 is generally used to mark the start of the era of merchant capitalism. Merchant capitalism created a world market, a massive concentration of wealth (largely based on general trade as well as gold and silver stolen from the Americas), and the beginning of colonization that affected huge segments of the overseas world. Indigenous people were wiped out by war, enslavement, and disease or were otherwise marginalized. European markets with Africa concentrated for centuries on the slave trade, which predominantly benefited Britain.

Merchant capitalism created the beginnings of a world market and helped provide the accumulated wealth that gave birth to the industrial revolution of mid-eighteenth century. Thus, about two and a half centuries ago a new type of society developed in Europe—industrial capitalism—and has since spread to essentially all corners of the world. Built into the very fabric of modern, or industrial, capitalism is the need to expand control and influence to foreign shores—imperialism. There are a number of significant forces that led to the drive to expand and during various periods one or another may have been predominant. However, they are generally inseparable, because they are all derived from the workings of capitalism.

Control over foreign natural resources (in competition with other capitalists and/or other nations) is needed to obtain secure sources of essential materials for production—from cotton to bauxite to oil to copper and so on. The U.S. war on Iraq and the attempt to influence the politics and economy of that country and region are incomprehensible without viewing it as part of a strategy to control Middle Eastern oil, which amounts to 65 percent of the world’s known reserves. The United States currently imports over half its oil needs, 100 percent of its needs for seventeen minerals, and relies heavily on imports for many more. The push continually to invest profits in order to accumulate more and more capital—the driving force of industrial capitalism—and production stimulated by competition among firms for market share led capitalists to develop new products and expand their markets internally. Once internal markets are saturated or close to saturation capitalists search abroad for profitable opportunities to overcome the stagnation that begins to develop. The persistent excess of investment and production relative to effective demand, the cause of capitalism’s tendency toward stagnation, was identified by Marx as a characteristic of the system.

If this new accumulation meets with difficulties in its employment, through a lack of spheres of investment, i.e. due to a surplus in the branches of production and an oversupply of loan capital, this plethora of loanable money capital merely shows the limitations of capitalist production.. .an obstacle is indeed immanent in its laws of expansion, i.e., in the limits in which capital can realize itself as capital. (Karl Marx, Capital, vol. 3, 507)

Investing abroad also offers opportunities to take advantage of lower-cost labor and fewer environmental restrictions, allowing more profitable production for the foreign and/or home markets. Having many operations abroad offers the opportunity for firms to allocate costs and income to various international subsidiaries in ways that minimize tax obligations. In the monopolistic stage of capitalism that arose in the twentieth century, the struggle between giant corporations for bigger shares of the markets at home and abroad was another factor contributing to the drive for expansion. Corporations frequently need external funding to feed this.

Much of the surplus generated by corporations is dissipated in nonproductive ways, such as for advertising and promotion or outrageously high compensation for senior corporate officers. For example, the amount that the CEO of Wal-Mart earns every two weeks is equivalent to what an average worker in that company earns in an entire lifetime (Paul Krugman, New York Times, May 13, 2005). Hence, although corporations can still generate profits for investment internally, they frequently require access to capital for expansion of production or acquisitions of other companies. In order to attract the bankers and stock market investors they need to show significant or potential growth.

Lastly, the invasion of the periphery by banks from the core capitalist countries assists foreign investment and helps foreign investors and their allies in the local ruling class transfer profits back to the core countries. Banks from the center also find it profitable to peddle loans to private and public agencies in the periphery, enhancing the development of debt peonage. Interest (plus some of the principal) equivalent to the original loan is rapidly transferred back to the center, leaving behind a long-term obligation to pay.

Creating colonial control was the way emerging capitalist centers assured power over foreign resources and markets. The expansion of the more advanced industrial and military powers led to outright control of most of the globe. By 1914, colonies of the rich and industrialized countries covered approximately 85 percent of the earth’s land surface. (And people talk nowadays about “globalization” as if it were a completely new phenomenon rather than a renewed imperialist thrust!) The World Wars of the twentieth century were fought primarily over the question of the division of the world among the great powers. Bitter struggles and wars after the Second World War forced the colonial powers to decolonize. However, after decolonization, the rich nations of the center of the capitalist world economy continued to dominate the much larger underdeveloped world. A common feature of the years of colonialism and those after the former colonies gained political independence was the economic subordination of the poor nations to the needs and wishes of capital from the center. This history of colonial and imperialist domination has distorted the economies of the periphery in ways that have inhibited self-development. The main feature of this dependency of the poorer nations—the extraction of wealth to support capital accumulation by the dominant powers—continues to this day. Following decolonization, new means were needed to oversee and continue to reproduce the dependence of the poor countries of the periphery. The IMF and World Bank now perform much of the enforcement role once played by colonial occupation and military force, but armed forces are still used to enforce imperial will.

The importance of the global penetration of capital to the success of the system as a whole has been simply stated by Joan Robinson: “few would deny that the expansion of capitalism into new territories was the mainspring of. . . ‘the vast secular boom’ of the last two hundred years.”2 However, this expansion inherent to capitalism creates nearly perpetual warfare and subjugates the economies of the periphery to the needs of the corporations based in the system’s center. It also works to maintain a large portion of the world’s people under very harsh conditions (see below).

B. Capitalism and the Human Condition Capitalism, with a number of political variations, has produced more goods, inventions, new ideas, and technological advances than in all of previous history. During the approximately two and a half centuries of industrial capitalism there has been—with the important exceptions of severe recessions, depressions, and wars—nearly continuous expansion of the leading capitalist countries. But what has this enormous progress and development of productive capacities created as far as the living conditions and relations of the people on this earth? On the one hand, there is a significant portion of the world’s population, perhaps 20 percent, that lives in comfort with many opportunities for education, housing, and purchasing a variety of goods almost at will. But within this generally well-off group there is a very uneven distribution of riches, with the wealthiest controlling huge amounts of wealth. The wealthiest 691 people on earth have a net worth of $2.2 trillion, equivalent to the combined annual GDP of 145 countries—more than all of Latin America and Africa combined! The richest 7.7 million people (about 0.1 percent of world’s population), with net financial worth of more than $1 million, control approximately $28.8 trillion—equivalent to 80 percent of the annual gross domestic product of all the countries of the world. This is more than the combined annual GDP of all countries of the world minus the United States. (It actually also encompasses about 40 percent of the U.S. GDP as well.)

Despite the huge quantity of wealth produced and accumulated in a few hands, the details of how so much of humanity actually lives—the numbers and conditions of the wretched of the earth—are outrageous. Of the approximately 6.3 billion people in the world:

About half of humanity (three billion people) are malnourished and are chronically short of calories, proteins, vitamins, and/or minerals.3 Many more are “food insecure,” not knowing where their next meal is coming from. The UN estimates that “only” 840 million (including ten million in the wealthy core industrialized countries) are undernourished, but this is greatly below most other estimates. One billion live in slums (about one-third of the approximately three billion people living in cities). About half of humanity lives on less than what two dollars a day can purchase in the United States. One billion have no access to clean water. Two billion have no electricity. Two and a half billion have no sanitary facilities. One billion children, half of the world’s total, suffer extreme deprivation because of poverty, war, and disease (including AIDS). Even in wealthy core capitalist countries, a significant portion of the population lives insecure lives. For example, in the United States twelve million families are considered food insecure and in four million families (with nine million people) someone regularly skips a meal so there will be enough food for other family members.4

Another part of the human condition over the past two and a half centuries of industrial capitalism has been the almost continuous warfare with hundreds of millions of people killed. Occupation, slavery, genocide, wars, and exploitation are part of the continuing history of capitalism. Wars have resulted from capitalist countries fighting among themselves for dominance and access to global markets, from attempts to subjugate colonies or neocolonies, and ethnic or religious differences among people—many of which have been exacerbated by colonial occupation and/or imperial interference.

The basic driving force of capitalism, to accumulate capital, compels capitalist countries to penetrate foreign markets and expand their market share. However, it is impossible to separate the leading imperialist countries’ economic drive to invest and sell abroad from their political and military policies— all interests are intertwined in a very dangerous combination. Warfare is continuing in the post-Cold War era—with the United States eager to display its military power—and there is potential for even more misery. The estimate that 100,000 Iraqis have died as a result of the U.S. invasion gives some idea of the magnitude of the disaster that has fallen on that nation.

C. The Connection Between Wealth and Poverty There is a logical connection between capitalism’s achievements and its failures. The poverty and misery of a large mass of the world’s people is not an accident, some inadvertent byproduct of the system, one that can be eliminated with a little tinkering here or there. The fabulous accumulation of wealth—as a direct consequence of the way capitalism works nationally and internationally—has simultaneously produced persistent hunger, malnutrition, health problems, lack of water, lack of sanitation, and general misery for a large portion of the people of the world.

The difficult situation of so much of humanity partly occurs because the economic system does not produce full employment. Instead, capitalism develops and maintains what Marx called the reserve army of labor—a large sector of the population that lives precariously, sometimes working, sometimes not. These workers might be needed seasonally, at irregular times, when there is a temporary economic boom, for the military, or not at all. In the wealthy countries, members of the reserve army of the unemployed and underemployed are generally the poorest, living under difficult conditions including homelessness. Their very existence maintains a downward pressure on wages for the lower echelons of workers. (For a full discussion, see Fred Magdoff & Harry Magdoff, “Disposable Workers,” Monthly Review, April 2004.)

In the countries of capitalism’s periphery there are several factors at work that maintain such large numbers of people in miserable circumstances. Part of the story is the wealth extracted from the countries of the periphery when repatriated profits exceed new investments and natural resources are exploited for the wealthy core countries. Also, banks push loans on countries resulting in even more extraction of wealth from the periphery through a system of debt peonage. More and more, the people of the periphery serve as participants in the reserve army of labor for capital from abroad as well as for their own capitalists. The labor forces of many former colonies were created purposefully by breaking up their societies and their way of living. One way this was accomplished was to require that a tax be paid, compelling people to join the money economy. The change from traditional land tenure patterns to one based on private ownership was another way colonial powers undermined the conditions of peasant communities. And as many people are pushed from the land and into urban slums in the periphery, there are not sufficient jobs to absorb the workers, creating a huge humanitarian crisis.5 Additionally, the power that goes along with wealth allows the manipulation of the political and legal system to benefit continued accumulation at the expense of the sharing or redistribution that might have occurred in more “primitive” societies.

The wealth of the rich countries at the center of the capitalist system depends heavily to this day on the extraction of resources and riches from the periphery. The leading global capitalist investors are in the wealthy industrial countries, but their accumulation is based on the exploitation of the entire world: Accumulation on a World Scale is the way Samir Amin described this in the title of his famous book. Instead of allowing the countries of the periphery to use their economic surplus to advance their own internal interests, the center countries invest part of this surplus to penetrate the rest of the world, actively assisted in this process by the home country’s political establishment and U.S. (or NATO) military force. This means that poor countries are not able to use their potential economic surplus to meet their societal needs; instead it flows into the coffers of the ruling classes in the rich countries and partly into luxury goods for their own small, wealthy comprador elites that are complicit with the interests of foreign capital. In the early years of industrial capitalism, accumulation of capital from the periphery mainly took the form of outright robbery of precious metals, followed by agricultural products produced by slave labor, the supply of which was itself a profitable business. Later, loans and investments resulted in the extraction of profits in the form of hard currency—creating a perpetual debt crisis for many countries—while natural resources such as oil and bauxite were also extracted. In the early phase of capitalism the “mother countries” of the center did everything possible to destroy businesses in the periphery that might compete with those at home. Thus, the forcible British destruction of India’s textile industry so that Indians would be compelled to purchase goods produced in England.

During the early years of capitalism the core countries worked energetically to protect their industries and other businesses from competition from abroad. Now, the great strength of these mature businesses and their need to penetrate the periphery more efficiently has resulted in capital in the center states, their governments, and the “international” organizations working in their interests all jointly promoting “free trade”—while hypocritically still supporting many advantages for “home” industries both internally and in their dealings around the world. In the current wave of global capitalist expansion, with capital having gained a great degree of mobility, goods once produced in the countries of the center are more and more produced in countries with low wages. This serves two purposes: In addition to making it possible to undersell competitors still producing in the core, it provides an opening to new markets in the country and region in which the products are now produced, as a class with significant purchasing power develops in the countries of the periphery. Importation of low-cost manufactured goods from abroad, produced with exploited and underpaid labor, provides another way that the wealth of the core is reinforced and reproduced.

Capitalism, through a variety of mechanisms—from outright robbery and colonial domination in the early years to the imperialist relations in its more mature version—continues to reproduce the wealth of the core and the underdevelopment of the periphery. It also continues to produce and reproduce a class structure in each country—including a servile ruling class in the periphery with their foreign bank accounts and faith in U.S. military force.

The production and continual reproduction of a class structure, with an always present reserve army of labor means that there will always be significant inequality under capitalism. Hierarchy and classes mean that differences prevail at every level and with a large overwhelming number of people with little to no effective power. The distribution of wealth in the United States indicates the extent of inequality. The bottom 80 percent of the people own less than half the wealth that is owned by the top 1 percent, and the bottom 40 percent of households own 0.3 percent of the total wealth (table 1). Differences also persist between regions of countries and among different ethnic groups. For example, in 2002 the average family net worth of whites ($88,000) was eleven times greater than for Hispanics and fourteen times that of blacks (“Wealth Gap among Races Widens in Recession,” Associated Press, October 18, 2004). While only 13 percent of white families had zero or negative net worth, close to one-third of black and Hispanic families had no net wealth. Average family incomes of blacks and Hispanics in 2000 were approximately half that of whites. And significantly fewer black males are in the labor force than their white counterparts—67 versus 74 percent participation rates, respectively (2005 Economic Report of the President,

Table 1. Household Distribution of Net Worth in the United States (2001)
Percent of families 	Percent of net worth 
Top 1% 		        33.4% 
Top 5%                  59.2% 
Top 10%                 71.5% 
Top 20%                 84.4% 
Bottom 80%              15.5% 
Bottom 40%               0.3% 
Souce: “Changes in Household Wealth in the 1980s and 1990s in the U.S.” in Edward N. Wolff, ed., International Perspectives on Household Wealth (Elgar Publishing Ltd., forthcoming).

Little needs to be said about the huge difference in national wealth between the highly developed capitalist countries and those in the periphery. While the average developed country’s per capita GDP is approximately $30,000, it is around $6,000 in Latin America and the Caribbean, $4,000 in North Africa, and $2,000 in sub-Saharan Africa. But these numbers hide the worst of the problems, because per capita GDP in Haiti is $1,600, in Ethiopia it is $700, and in six countries in sub-Saharan Africa average per capita income is $600 or less. The wealthy countries with 15 percent of the world’s population produce 80 percent of its GDP. On the other hand, the poorest countries with close to 40 percent of the world’s population produce only 3 percent of its wealth.

D. Ecological Degradation Ecological degradation occurred in numerous precapitalist societies. But with capitalism there is a new dimension to the problem, even as we have better understood the ecological harm that human activity can create. The drive for profits and capital accumulation as the overriding objective of economic activity, the control that economic interests exert over political life, and the many technologies developed in capitalist societies that allow humans rapidly to change their environment—near and wide, intentionally or not—mean that adverse effects on the environment are inevitable. Pollution of water, air, and soil are natural byproducts of production systems organized for the single goal of making profits.

Under the logic of capitalist production and exchange there is no inherent mechanism to encourage or force industry to find methods that have minimal impact on the environment. For example, new chemicals that are found useful to produce manufactured goods are routinely introduced into the environment— without the adequate assessment of whether or not they cause harm to humans or other species. The mercury given off into the air by coalburning power plants pollutes lakes hundreds of miles away as well as the ocean. The routine misuse of antibiotics, added to feeds of animals that are being maintained in the overcrowded and unhealthy conditions of factory farms, has caused the development of antibiotic resistant strains of disease organisms. It is a technique that is inconsistent with any sound ecological approach to raising animals, but it is important to capital because profits are enhanced. In addition, the development of an automobile-centered society in the United States has had huge environmental consequences. Vast areas of suburbs, sometimes merging into a “megatropolis,” partially erase the boundaries between communities. The waste of fuel by commuting to work by car is only part of the story of suburbanization, as some people work in the city while others work in different suburbs. Shopping in malls reachable only by cars and taking children to school and play require transportation over significant distances.

Climate change resulting from global warming, not completely predictable, but with mostly negative consequences, is another repercussion of unfettered capitalist exploitation of resources. As fossil fuels are burned in large quantities by factories, electrical generation plants, and automobiles and trucks, carbon dioxide levels in the atmosphere have increased. There is some concern that the gradual warming could actually lead to a fairly rapid change, with such factors as the melting of polar ice, changes in precipitation and river flow, and a cessation of the thermohaline conveyor (of which the Gulf Stream is a part) that brings warm water to the North Atlantic and helps keep North America and Europe warm (see “The Pentagon and Climate Change,” Monthly Review, May 2004).

An added dimension of capitalism’s threat to the environment is the deep thread in western thought that God gave the earth to humans to exploit. This notion is derived from the Bible, where the book of Genesis (1:28) contains the following:

And God blessed them [Adam and Eve], and God said unto them, Be fruitful, and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and over every living thing that moveth upon the earth.

A relatively recent virulent strain of anti-environmentalism exists among evangelical Protestants in the United States, maintaining that the end of the resources and the earth’s life support systems (see Bill Moyers, “Welcome to Doomsday” New York Review of Books 52, no. 5 [March 24, 2005]).

E. Resource Limits A system that by its very nature must grow and expand will eventually come up against the reality of finite global natural resources. The water, air, and soil can continue to function well for the living creatures on the planet only if pollution doesn’t exceed their capacity to assimilate and render the pollutants harmless. Additionally, natural resources are used in the process of production—fuel (oil and gas), water (in industry and agriculture), trees for lumber and paper, a variety of mineral deposits such as iron ore and bauxite, and so on. Some resources such as forests and fisheries are of a finite size, but can be renewed by natural processes if used in a planned system that is flexible enough to change as conditions warrant. Future use of other resources—oil and gas, minerals, aquifers in some desert areas (prehistorically deposited water)—are limited forever to the supply that currently exists.

Capitalists generally only consider the short term in their operations— perhaps three to five years at best. This is the way they must function because of unpredictable business conditions (phases of the business cycle, competition from other corporations, prices of needed inputs, etc.) and demands from speculators looking for short-term returns. Capitalists, therefore, act without any recognition that there are natural limits to their activities— as if there is an unlimited supply of natural resources for exploitation. When each individual capitalist pursues the goal of making a profit and accumulating capital, decisions are made that collectively harm society as a whole. For example, the well-documented decline, almost to the point of extinction, of many ocean fish species is an example. It is in the short-term individual interests of the owner of a fishing boat—some of which operate at factory scale, catching, processing, and freezing fish—to maximize their take. Although there is no natural limit to human greed, there are limits to many resources, including the productivity of the seas.

The use of water for irrigation is an old practice, which only in the last fifty years has started to reach its natural limits. The capacity of some watersheds and rivers are fully exploited—so much water is withdrawn from the Yellow River in Northern China, in most years it doesn’t reach the sea. With the use of powerful pumps that can exploit the deeper aquifers and pump at higher rates, water can be withdrawn faster than it is replenished by rainfall percolating through the soil. The first people to point out that withdrawing more water than was replenished by rainfall from the Oglala Aquifer, which underlies the portion of the Great Plains from South Dakota to the panhandle of Texas, could not continue for much longer and would require deeper and deeper wells until it was impractical if not impossible to continue its use, were accused of being communists! That’s one indication of how uncapitalist it is to think about possible resource limits to economic activity.

How long it will take before nonrenewable deposits are exhausted depends upon the size of the deposit and the rate of extraction of the resource. While depletion of some resources may be hundreds of years away (assuming that the rate of growth of extraction remains the same) limits for some important ones—oil and some minerals—are not that far off. For example, it is estimated that at the rate oil is currently being used, known reserves will be exhausted within the next fifty years—the 2003 ratio of reserves to annual extraction is forty-one years, down from nearly forty-four years in 1989 (British Petroleum, Statistical Review of World Energy 2004, Iron ore production—the basic ingredient of iron and steel products used—grew by about 16 percent from 2003 to 2004. If it grows by 7 percent annually from now on, known deposits of iron ore will be exhausted in about sixty years. If the rapid increase in use of copper continues, all known reserves will be exhausted in a little over sixty years. In the face of limited natural resources, there is no rational way to prioritize under a capitalist system, in which the market—that is the wealthy with their market power—decides how commodities are allocated. When extraction begins to decline, as is projected for oil within the near future, price increases will put increased pressure on what had been until recently the boast of world capitalism, the supposedly middle-class workers of the center.

F. Capitalism with a Human Face? Reform and Counter-Reform Reforms can be enacted to soften the social and ecological effects of the raw workings of the capitalist system. Certainly many have occurred, including those that resulted in workers’ gains in the core capitalist countries such as a shorter workday and week, the right to form a union, a government run social security retirement system, higher incomes, and worker safety laws. Concern over the environment has led to laws that have improved the sorry state of air and water quality in most of the advanced capitalist countries. However, as we are now seeing in the countries of the core, it is possible for capital to reverse the gains that were won through hard-fought struggles of the working class. During periods in the ebb and flow of the class struggle when conditions are decidedly in favor of capital, there will be an attempt to reverse the gains and to push towards minimal constraints and maximum flexibility for capital.

At the end of the Second World War, capital, fearing revolution that could destroy the system and needing the cooperation of labor to get the countries back on their feet, promoted a welfare state in much of Europe—paid vacations, better wages, and Germany even placed workers on corporations’ boards of directors. In the United States the welfare state began with Roosevelt’s New Deal and new programs were added through the 1960s.

Following the Second World War as the economies were rapidly rebuilding— spurred on by the stimulus of the automobile and suburbanization with all their ramifications—there was plenty of money to fund welfare programs, provide higher salaries for labor, and still make large profits. When the economy was growing rapidly taxes also increased (without much effort) to fund new programs. The concern for social stability in the 1960s and the desire to have the masses’ support in the Cold War, especially in the United States, are also part of the explanation for increases in social programs. What actually happened also depended on the militancy of unions as well as other forms of class struggle such as the black movement for political and economic rights. But with the growth of larger and larger corporations, competition between countries became more intense and there were no new forces stimulating the economy to grow rapidly, as had occurred from the end of the Second World War through the 1960s.

When economic stagnation developed in the 1970s, capital responded in a number of ways. Investment strategies changed in order to sustain profits— there was a diversion from investment to produce physical commodities toward the service sectors and the speculative world of finance (creating and selling a variety of financial products). With stagnation, capitalist societies, as throughout their history in depressions, also shifted the burdens of stagnation, militarism, and wars to the working people (and the colonial possessions). Beginning in the 1980s those at the top of society have promoted a continuous class war aimed at reducing corporate taxes and taxes on the wealthy. Also starting in the 1980s—and accelerating at this time— the vested interests of capital have unleashed a campaign to dismantle as many worker rights as possible (including those in the reserve army): attacking welfare programs, making it harder to unionize workers and easier to fire them, decreased pension coverage, privatizing basic services (including schools), and attempting to privatize social security. Conservatives in United States never accepted government social programs and have established the goal of rolling back those initiated during Franklin D. Roosevelt’s New Deal and the 1960s Great Society era, returning to the situation before the national government had a major role in protecting the rights of workers. There is also a similar drive by capital in Europe to decrease worker protections and rights under the guise that it is necessary to make their industries more competitive in the world market.

The greed, individualism, and competition fostered by capitalism makes it relatively easy to justify elimination of programs that help workers and the poor. Thus, capitalism can have a “human face” for only short periods of time. Reforms that achieve modest gains can never be counted on to achieve a truly humane society. As we now see, counter-reforms will occur as the strength of capital increases relative to that of labor, and class war from above becomes the norm. But more importantly, the evils of inequality, poverty and misery, environmental degradation, using up resources faster than replacements can be found or developed—as well as the imperialist economic, political, and military penetration of the periphery by leading core countries—all flow out of the very nature of the capitalism.

A new society is needed because the evils are part of the DNA of the capitalist system. Moving away from capitalism is not really a choice—the environmental constraints and the growth of immiseration will force a change in the society. The future points to limited possibilities—a turn to fascism (barbarism) or the creation of a collective society that can provide the basic needs for all of humanity.

FRED Magdoff (f m a g d o f f @ u v m . e d u)
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