The basic contradiction of capitalism

BY:Scott Hiley| October 11, 2016
The basic contradiction of capitalism


We bombard our kids with contradictory messages.

For their first few years, up to age 10 or so, we teach them to share, to cooperate, to be considerate of the needs and feelings of others.  Don’t grab the biggest piece of cake.  Let your friends play with your toys.  Don’t cut in line. Wait your turn.  Social-emotional pedagogy in elementary school focuses on teaching kids to keep their developmental narcissism in check.

Around middle school or so, though, another message gets added in.  We teach them to compete: for roles in school plays, spots on athletic teams, academic honors.  The message of competition gets more intense in high school, when it’s not just about who gets to start on the basketball team or who has the best GPA, but who gets the Ivy League acceptance letter, the scholarship, the internship, and eventually the job and the promotion.  I’ve often heard this injunction to compete phrased as a reality check: “If you think your boss is going to put up with that… Well, there’s always somebody else who wants your job.”

By the time kids finish college, they’ve internalized these contradictory orders. Work collaboratively, all the while looking out for yourself.  Be a team player, but keep your eyes peeled for a chance to advance your own career.  Build a network of people who can help you climb the ladder.

This isn’t just a problem with our educational system.  It’s rooted in a contradiction at the center of our economy, one that Karl Marx recognized a century and a half ago.  Under capitalism, value is produced collectively, but appropriated individually.  In other words, the vast majority of work in our world is done by groups of people cooperating with one another, but the vast majority of the wealth created by that work is captured by shareholders as individuals.  We have to teach these contradictory lessons, to share and to compete, because that’s how our economy works.  We cooperate to produce wealth, but compete for a piece of the pie we’ve made.

Marx came to his insight while examining the textile industry and tracing its evolution from cottage industry to the great factories of the Industrial Age, but we can see the social character of work and the individual character of profit  in every sector.

WalMart is the world’s largest employer, depending on armies of warehouse workers, truck drivers, greeters, cashiers–not to mention factory workers in developing countries–to bring low-cost goods to consumers.  The vast majority of the hundreds of thousands of workers in this global supply chain are paid poverty wages, so we should consider that WalMart’s workforce also includes the taxpayers who subsidize the company by providing food stamps and other welfare benefits to keep its underpaid workers alive.  Billions in profits from these millions of workers and taxpayers flow to the few members of the Walton family, who own WalMart.

Or take social media companies.  The billions of users of Facebook, Twitter, Google, and Snapchat produce and share content, for free.  Taken individually, that content has little value to the company, but the data gathered about the browsing patterns of massive user communities is immensely valuable.  Our every click, share, post, tweet and retweet builds value for the companies’ shareholders, who turn a profit off our basic human need for communication.

Marx saw capitalism as a contradictory stage between two different modes of production.  Before capitalism, he argues in the first volume of Capital, individual artisans owned the means to exercise their trade:  the spinner her spinning wheel, the weaver his loom, the builder or blacksmith the set of tools appropriate to that job.  And each received the value of his or her labor: individual ownership of the means of production, individual appropriation of the wealth created.  Capitalism unleashed vastly greater productive forces by “socializing” production, bringing workers together in factories to operate huge and much more efficient machines–but most of the value of the goods produced went to the owners of the factories.  Labor was social, but appropriation was private.

Marx predicted that this contradiction couldn’t last forever–that capitalism would be replaced by a more rational system.  Since we work collectively, he said, the appropriation of wealth will also be collective. To return to our earlier examples, the value created by WalMart’s workforce should be shared collectively, used for the common good, rather than hoarded by a few owners.  The value created by users of Facebook and Google and Twitter should go not to shareholders, but to the networked masses who generate the data.

For Marx, and for those of us who use his theory to understand history and society, this isn’t just a logical or ethical position.  The problem isn’t that capitalism is self-contradictory; it isn’t even that capitalism is unfair.  When we really dig down to the bottom of things, the contradictions of capitalism are holding us back.  We live in the richest, most productive, most interconnected society that has ever existed on Earth, and yet some of us are overworked, others are underemployed, and millions live in poverty.

This glaring social contradiction, the class divide, comes about because capitalism is designed to allow a few individuals profit from the work of the vast majority. The purpose of capitalism is to make profits for the few individuals lucky enough to own a big piece of the pie. It’s very efficient at making rich people richer. Sometimes, on the side, it generates advantages for the rest of us–just as Facebook and Google enable us to communicate in new ways, or WalMart provides low-cost consumer goods.  But the primary goal of a capitalist economy is to generate profits, not to meet human needs.

So why bother with this contradictory system, where labor and wealth are kept separate?  Why bother teaching our kids to share and compete at the same time? Why try to generate social good from a system based on private profits?  It isn’t hard to imagine a better economy, one measured not by how “big” it is, or by how rich its richest are, but by how efficiently the labor of its workers meets their collective needs.  When we talk about socialism, we aren’t singing about the Big Rock Candy Mountain.  We aren’t asking for handouts of “other people’s money.”  We just want an economy that makes sense, one where our collective, social work produces collective, social wealth.  Enough mixed messages.   It’s time to put people before profits.

Photo: Creative Commons 3.0

    Scott Hiley has taught French, literature, history, and philosophy at the high school, college, and post-graduate levels.  A member of CPUSA since 2010, he is active in struggles against austerity and for education justice and labor rights. His articles have appeared in the People's World (US), the Morning Star (UK), and l'Humanité (France). He lives in a rural town in upstate NY.

Comments (13)

Hannah | December 15, 2016 at 7:39 PM

J’aime. C’est vrai.

Michael Decker | December 08, 2016 at 2:37 PM

I agree capitalism must be bridled by a govt that understands economics and will do the right thing for the people. Instead we have these career politicians that vote to make rich donors more powerful than the millions of middle class citizens. Trump and Sanders are a sign that the populace is waking up to the BS of both parties. Here is the biggest lie told to the public for more than 40 years “Tax cuts for the Rich Grow the the economy”. Go to the the BEA.GOV website and download the REAL (adjusted for inflation) GDP growth by year. Now add the values when the top tax rate was from 70% thru 94% and take the average. You will get 46 years with an average REAL GDP growth rate of 4.5%. We are at 2% today. Now do the same calculation when the Top Rate is less than 40% like today. You will get 32 years with an average REAL GDP growth Rate of 1.9%–I know it’s crazy that our gov’t continues with this charade. Trump ran on raising taxes on the wealthy but has flipped 180 degrees now to the GOP party slogan “Tax cuts for the Rich __ Again”. Just as a side note the Great Depression and the Great Recession were preceded by the lowest effective tax rates on the 1%. So plant your garden now–E

Dani | November 27, 2016 at 2:57 PM

No one sees the irony in talking about selfishness..but is this “fair” that a person who didn’t educate themselves and didn’t work as hard as someone who put themselves through school, who worked long hours to get somewhere is entitled to the same outcome in life and pay? That is the epitome of selfishness.

Emmett Hoops | November 17, 2016 at 12:36 AM

The main problem with capitalism, from a purely theoretical point of view, is that it is inherently self-destructive. If Mr. X wants to make money in the stock market, he buys low and sells high. Of course, the lows and highs of a company often coincide with hirings and firings, which in no way benefit the workers. Capitalism means ruthless efficiency, which means increasing consolidation of ownership: monopoly becomes the rule. Thus, the process of capitalism, which is competition, becomes its prisoner of war. Competition eats away at profits and thus destroys capital. In order to survive, capitalism must be regulated by a government, but this government becomes too entwined in capitalism and becomes a plutocracy. The plutocracy ceases to make impartial decisions and backs the increasing consolidation and the warping of competition that mark late-stage capitalism. We cannot live in an economic system whose constant waves benefit a few while making the many insecure.

Beth Edelman | October 24, 2016 at 5:34 PM

A modern and accessible discussion of capitalism and socialism. very nice article.

Jules Rensch | October 23, 2016 at 1:33 AM

beautifully explained…thanks Scott….love the intro where kids are programmed to become selfish, as in un-bridled capitalism…so true..

great job…in solidarity, Observer Jules

    Jacob C. | November 03, 2016 at 1:07 PM

    Why do you say ¨selfish, as in un-bridled capitalism” like it is something everyone should know? Why is capitalism associated with selfish values. Why is being a little selfish a bad thing.

Matt Lingo | October 22, 2016 at 2:50 AM

But, isn’t the communist slant of the government, i.e. Food stamps and welfare allowing the wage situation to continue? Wouldn’t Walmart have to pay employees more if no one was willing to work for the wages they offered? And, isn’t the minimum wage (another interference by the government in the economy) also to blame?

And, if it weren’t for the Waltons, the jobs wouldn’t have been created. That’s why communists can’t create jobs. It takes individuals to do that.

Reality doesn’t play well with communism. Eventually Stalin comes to clean up all the nasty contradictions.

Estevan Bassett-Nembhard | October 12, 2016 at 1:32 AM

This is a great contribution! Like you said “We just want an economy that makes sense, one where our collective, social work produces collective, social wealth. Enough mixed messages. It’s time to put people before profits.” I am sharing now and will lay out and print for distribution asap.

    Jacob C. | November 03, 2016 at 1:11 PM

    Communism makes sense on paper, but if you actually put it into action the only way it succeeds is through a very violent revolution where millions upon millions would have to be killed, just for the goal of achieving a classless society, which is not worth it.

Emile Schepers | October 12, 2016 at 3:53 PM

Excellent piece. This makes me optimistic that these pages will now become a great resource for the development of Marxist theory.

    Jacob C. | November 03, 2016 at 1:12 PM

    Why do you want marxism to be the dominant economic system?

Art Perlo | October 11, 2016 at 3:56 PM

Good job, Scott!

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