What is Capitalism? – Part 5

Capitalism: A Definition

Historically, the definition of capitalism depended on what source one used. According to the Brooklyn College Core web site, “the term capitalism was first used to describe the system of private investment and industry with little governmental control which emerged, without an ideological basis, in the Netherlands and Britain in the 17th and 18th centuries.” Most Marxists define capitalism as the, “socio-economic system where social relations are based on commodities for exchange, in particular private ownership of the means of production and on the exploitation of wage labour.” David Schweickart defines capitalism as consisting of three components: the bulk of the means of production are privately owned, the products are exchanged in a market, and that most of the people work for those that own the means of production. David Ellerman reduces capitalism to being defined by one primary feature, which is “the legal relation for the voluntary renting or hiring of human beings.” When one combines all of the previous installments of this series one can see that, in my opinion, Schweickart’s definition is the closest of them all in providing a complete and accurate definition of capitalism, which is that capitalism is a socio-economic system that has essentially three co-dependent elements: Capital, a Two-tiered Class System, and Market Domination.

One element is private investment known as “capital” from which capitalism gets its name. Capital is, by its very nature, always striving to expand and reproduce itself. When reproduction isn't possible, such as an economic downturn, it then strives to at least survive until the day when it can again begin to reproduce. It’s an essential nature of capital to attempt to grow.

A second element is that capitalism is a class system in which there are two primary socio-economic classes. There is an upper class (“capitalists”) whose members control the capital and who maintains power in society due to their ownership of the majority of the marketable assets (i.e. wealth). In addition, there is a lower class that has limited power and survives largely through wages acquired from employment by the upper class along with the self-employed, entrepreneurs and sole proprietors. (The homeless make up a hidden underclass who have little productive role in capitalist society and is essentially powerless.)

The third element is the absolute domination by the markets, which molds the culture to service the capitalist system; using the force of the State if necessary. This domination by the markets provides a vital means by which the capitalists appropriate the fruits of the labor of the lower class so that they can increase their own wealth and the market provides a mechanism by which capital is able to reproduce itself. Ultimately the domination of the market provides the means by which the capitalist class is able to obtain its wealth and hence to maintain its position of power.