The bosses like to call it “free enterprise.” But for the millions locked into hard, boring jobs with no relief except unemployment, the present system is neither free nor enterprising. What makes capitalism tick — and why does it so often leave people with either war or economic catastrophe?

Capitalism is a society divided into classes where a few fabulously rich parasites are supported by the sweat and labor of a vast number of working and oppressed people.

In every society, from ancient times to feudalism and modern capitalist society, it has been the labor of human beings that sustains the society and creates wealth. But capitalism is very different from earlier forms of class society. For one thing, the laborers are legally “free.” They are not owned outright as chattel slaves, nor are they bound to the land as serfs. Their labor is sold to the owners of capital (called capitalists, or bosses, or the bourgeoisie) in a concealed form of bondage — wage slavery.

The boss, who buys the workers’ labor power in exchange for wages, always pays the workers less than the value they have added through their labor. The difference is surplus value, from which the capitalist extracts profits.

Capitalism has been very dynamic in developing the means of production. Unlike feudalism, where the land owned by the lord or king was used to produce mainly what the nobleman and his court could consume themselves (with a bare subsistence going to the peasants), capitalist production is mainly for exchange. This means finding markets to sell what is produced.

Capitalist competition for markets means that every effort is made to increase production and make it more efficient — most often at the direct expense of the workers themselves, who are exploited at an intensity and efficiency unknown under earlier systems.

The drive for efficiency in order to gain a competitive edge has led to a greater and greater concentration of production under the control of giant enterprises. Increasingly, corporations emerge that employ thousands of workers and control every step in the production of goods from extracting the raw materials to delivering the finished product. In this way production becomes more and more socialized.

The development of capitalism has also produced the force that must overthrow it — the working class or proletariat. Hundreds and thousands of workers are now brought together to labor cooperatively, often under the same roof.

But this social character of work and production is completely at odds with the individual ownership of production. There is a constant struggle going on between the workers and the bosses over the division of surplus value, with the workers trying to raise their standard of living and the bosses trying to maximize their profits.

Capitalist efficiency, too, exists only within each corporate enterprise. Taken as a whole, the system is horribly inefficient, with millions of worker-hours being poured into parasitic industries like armaments and advertising. There is duplication and waste of effort because of secrecy and competition (patents, for example, and 40 different brands of toothpaste).

Moreover, as the world economy becomes more complex, it becomes ever clearer that humanity must plan production to use raw materials wisely and keep the earth beautiful and habitable.

But overall planning is impossible under capitalism; production is geared to making profits, and every other consideration is sacrificed to this underlying motive. Also, capitalist rivalries and the need for markets inevitably lead to war, which is the greatest destroyer and polluter of all and threatens the very foundations of life on this planet.

Additional reading

  • Marx’s Economic Doctrine – by V.I. Lenin
  • Value, Price and Profit – by Karl Marx

    From 1865.”Value, Price, and Profit” is based on a speech Marx gave while he was completing Capital. The first five chapters answer the claim that “wage increases only cause prices to rise,” still a familiar viewpoint. From chapter six on, you could call it a condensed version of Marx’s “Capital.” Those chapters can be categorized as
    1. The value of a commodity (Chapter 6)
    2. The source of profit (Chapters 7 to 11)
    3. Wages and profits (Chapters 12 to 14)

  • Also see Capital, Chapter 31: Genesis of the Industrial Capitalist
    Marx concludes: “If money ‘comes into the world with a congenital blood-stain on one cheek,’ capital comes dripping from head to toe, from every pore, with blood and dirt.”