darinsullivan.blogspot.com: The case for abolishing #capitalism

Hundreds of thousands of people protested against inequality and injustice on 15 October. In cities across the world, town squares were occupied or reoccupied under the slogan “We are the 99 percent!”

Formally, there were few actual demands in many of the protests. But the content was clear from the slogan we used, which expresses a basic fact in need of redress: in every country the vast majority of us are shut out of political decision making processes, and often live precarious existences, pay cheque to pay cheque.

We watch around us as the world burns. Economic crisis is ravaging almost all of Western society. Environmental destruction is threatening ecological catastrophe. War, famine, poverty and inequality are endemic to the globe. Yet we seem powerless to do anything about any of it, unable to firmly secure even our own existences in the face of storm-like market forces.

When granted a small say in the political process – every few years come election time – we are confronted with political parties that are almost identical, the content of their policies so similar that they differentiate themselves only in the most vacuous ways: personality, likeability, fashion sense, and “leadership”. They operate like a giant cartel whose only interest is in further entrenching its own power, marginalizing, maligning and crushing any genuine opposition.

We are the 99 percent, and we face not just by a world apparently beyond our control. Just as we are everywhere shut out, so in every country there is a tiny minority of people who wield a power and influence greatly disproportionate to their number.

They are the 1 percent. They own 40 percent of the world’s wealth. When their portion is expanded to include the top 10 percent, they own over 85 per cent of it. They own it in the form of cash, stocks, bonds and other financial assets. They own real estate and infrastructure. Most importantly, almost everything we need to keep society functioning is in their control.

They make the decisions about how the world’s natural resources will be used, about how production of goods and services will be organised, about who will be allowed to work and how our capacities will be directed. They own the media outlets, which decide what is, and what is not, news; which day after day campaign to shape public opinion; and which, to a large degree, set the political agenda in society.

Their decisions are informed, not by what will produce the greatest good for the greatest number, but by what is in their own self interest. Most often that is simply and purely financial gain.

Capitalism works…

This is the basic structure of capitalist society. It is a system of class domination in which the minority of people survive simply by living off the labour performed by the majority. The 1 percent think it is a positively cracking system. And why not? They occupy the controlling position.

To them, the bulk of humanity is but a pool of potential commodity producers and consumers, useful only so long as we can participate in the creation of their wealth. They would see the lot of us drown only that they might swim in a sea of ever expanding profit. Is this hyperbole? Only just.

Today human beings are starving to death because financial institutions like Goldman Sachs find ways to profit through speculating in the commodity futures market. Their activities push the price of basic grains out of the reach of the poorest on the planet. The value of human life, by market calculus, is worth less than that of a bushel of wheat.

These same financial institutions were behind the predatory loans that were aggressively sold to the desperate and vulnerable in the US in the period leading to the global financial crisis. Purchasers of these loans were often unaware of the level of interest rates, the prospect of rate hikes after an initial teaser period, and the penalties for late or prepayment. But the financial institutions didn’t care if the people they lent to didn’t understand the terms or consequences of a loan. By the time the customer was made homeless, the problem would be offloaded to someone else in the form of a “security”.

These companies destroyed entire economies with their schemes to make mega-money. When the shit hit the fan, they were the first to come cap-in-hand for bailouts and guarantees. They got them – to the tune of trillions of dollars. With this free-flow of liquidity, the executives paid themselves bonuses, and demanded that government’s around the world cut back spending on welfare and pensions, pushing the burden of paying for the crisis on to the poor and the working class.

It’s not just this “finance capital” that is rapacious. All sections of the 1 percent – from those running the giant manufacturing firms that seek to outsource operations to semi-slave labour outfitters in the developing world, to the pharmaceutical companies using human subjects for testing new and complex chemical compounds, to agribusiness firms that deplete vast tracks of soil only to dump excess produce on the world market and drive small producers out of business, to the oil and mining companies displacing traditional owners and destroying environments – seek to boost their profits at all cost.

The 1 percent tell us that this model of society, for all its faults, is the best of all possible worlds. They say that when individuals pursue self-enrichment through the market, the greatest welfare to society as a whole will accrue. Resources and prosperity will be efficiently allocated. It isn’t true. As the United Nations Development Program Annual Report for 2006 noted:

Never before has the goal of abolishing poverty been within our reach: there are no longer any insurmountable technical, resource or logistical obstacles to achieving it. Yet more than 800 million people suffer from hunger and malnutrition, 1.1 billion people do not have access to clean drinking water and, every hour, 1,200 children die from preventable diseases. Despite a growing world economy and significant advances in medicine and technology, many people…are not reaping the potential benefits of globalization.

This was before the collapse of the North Atlantic financial sector at the end of 2008 and the plunging of much of the Western world into recession. Things today are even worse, and the situation is deteriorating.

In Australia, inequality continues to grow. Rents are sky high, unemployment is edging up and public transport continues to be run down. The number living in poverty is 2.2 million. Homelessness is at 100,000 yet little attention is paid to creating new public housing. All the while the mining companies and the banks announce record multi-billion dollar profits and CEOs snare obscene bonuses.

There are some who are slightly more critical of the system than the 1 percent who run it. They say that it is indeed rotten, but the problem is that capitalism has broken down under reckless stewardship; what we need is to fix the system and put checks and balances in place to ensure that it is more inclusive and doesn’t “leave anyone behind”.

But capitalism isn’t broken. This is how it works. The system is founded on inequality – on one hand in the concentration of wealth and resources in a minority of hands, on the other in the dispossession and disempowerment of the majority. This is the primary reason why, despite there being no “insurmountable technical, resource or logistical obstacles” to eradicating poverty, poverty still remains: it is a structural feature of capitalist society.

Further, a system in which businesses compete against each other for profits leads to a great disjuncture between the production of things that are socially useful and the production of things solely for wealth realisation. Those things that are socially useful are often, by their very nature, not particularly profitable. For example public hospitals, housing, transport systems and educational facilities for working people; renewable energy development; and goods made to last.

The most profitable things are generally those that can be produced quickly and cheaply and which can be sold quickly. So we get a glut of things that are designed to fall apart only that we might get back to the shop to have them repaired or to buy another. For products like health and education to be profitable, they have to be sold at a high price. That simply means that often it is only the rich, with their accumulated wealth, who get the “premium product”, in the form private hospitals and schools (which nevertheless receive billions of dollars in public funding), and the best quality foods.

The workers who produce the products are paid only a fraction of the value of the things they create – and the smaller the fraction, the greater the profit. Hence the propensity of firms to downsize, to always push for “productivity gains”, and hence the frequent attacks on trade unions, the organisations that attempt to increase workers’ wages. So the system begins with inequality, but this process of screwing over workers leads to a growth in inequality over time as more and more wealth becomes concentrated in the hands of the 1 percent. In the United States for example, the top 1 percent have taken over 40 percent of the total growth of the country’s wealth since 1983. The bottom 40 percent have seen a collective drop of over 6 percent in their wealth.

The anarchy of the system, the blind chase for profits, also leads to a great misallocation of resources, as one day a rush of capital flows into the latest fad sector, the next out of it and into something else. The result is a propensity for crisis; the system breaks down, firms go bust and workers are sacked at increasing rates. This is a feature that has never disappeared, and highlights not a lack of good leadership within the system, but the fact that, while the 1 percent might control all the resources, they cannot control the forces that are unleashed in the process of economic expansion and contraction.

For all these reasons, the idea that this system can be made to work for the majority completely misses the point. In this system the majority work for the minority. If we want to get rid of the scourge of poverty, the precariousness of life that most endure, and the alienation we experience from the political process, we have to take the power from the 1 percent, not simply plead with them to be nicer to us.

We need to end the ability of a parasitic minority to exploit the majority. To that end, the current system has to be dismantled and replaced by a society founded on equality, in which the resources are shared and the economy planned democratically. This is what we mean by socialism.

This article, by Ben Hillier, first appeared in Socialist Alternative.