Why Capitalism Is Doomed: The Contradictions at Its Core

Hello comrades. Today we are going to look at the contradictions inherent in capitalism. We will see, using economic logic, why capitalism’s downfall is inevitable. I am performing this analysis from a Marxist perspective, but you don’t have to be a Marxist or even a leftist to appreciate what follows. Since this focuses on the problems with capitalism rather than the benefits of communism, I hope even those hostile to the Marxist project will at least get the message that capitalism is doomed.

For our analysis today, you will need:
1. One open mind
2. A little patience
3. That’s all!






Ready? Let’s get started!


Marx and Engels predicted how capitalism would destroy itself using iron logic. We can see that they were spot-on correct, as capitalism continues to destroy itself before our very eyes.








But why? Why is capitalism failing now? What makes it a flawed system? To understand, we have to back up and look at a few basic concepts in a fresh new light.

To begin, let’s look at an idea called the labor theory of value. This was posed first by the economist David Ricardo, who influenced both Marx and capitalist theorists. The idea is that the price of any good depends on the time needed to make it. A motorbike costs more than a bicycle because more time and human effort goes into making it.





This idea is important for the way we understand commodities and their value. We can exchange any two commodities for each other: for example, a pile of paperclips can be traded for a new Mercedes-Benz…but it would have to be a big pile indeed. What determines the size of this pile? Marx wrote: ”The value of one commodity is to the value of another, as the labor time necessary for the production of one is to the other.” Human labor – the time and effort needed to bring a good to market – is the “secret sauce” that determines the value of things. This is what modern capitalists want you to forget, with all their hearts.





Next, let’s look at the concept of the fixed capital. This is the machinery, equipment, information, know-how, place of business, and other “tangible” factors that go into making a product and delivering it to market. If we are talking cars, this includes the factory, all the tools, all the patents and intellectual property that can be bought and sold, the corporate offices where the suits work, and so on. Every business that produces anything has some fixed capital. When the fixed capital is improved (like upgrading from a horse to a car, or a typewriter to a computer), businesses get more profit. So they are constantly seeking efficiency through new technological advances and better machines and production methods.







This, of course, puts people out of work. If a robot can build a car faster and cheaper than a human factory worker, guess which one goes and which stays?







The opposite of fixed capital is variable capital. This is basically a fancy way of saying “the money spent on labor power.” Now, here comes a very important but subtle point, so pay attention. The price of a product includes both the fixed capital and variable capital: For example, the price of a car includes the cost of all the raw materials and machinery used, plus the labor power.


PRICE OF GOOD = FIXED CAPITAL + VARIABLE CAPITAL + “SOMETHING EXTRA”

What is the “something extra?” It’s the extra price the capitalist tags on the end to make a profit. Without profit, a capitalist can’t survive – capitalists need profits not just to enjoy fancy steak dinners, but also to invest in new machines and technology (new fixed capital) to keep up with the competition, plus to beat inflation, and for other means. So to make a profit, a capitalist has to get more money by selling his good than he spends buying it, right? This is the “something extra” that goes on the end of the equation above. But where does it come from? How does a capitalist make profit?





The capitalist has two choices for extracting this “something extra”: He can get it from the fixed capital, or he can get it from the variable capital. Actually, as it turns out, he can’t really get it from fixed capital. If a shoe-maker buys a new shoe-making machine, he can pass the price along in final price of his shoes, but he can’t really do too much else. If he wants to squeeze out profits, he’s going to have to look to the variable capital part of the equation: in other words, the labor.





Human beings are different from machines or other forms of fixed capital, for lots of reasons. And humans are what capitalism exploits in the quest for profit: By making humans work more for less, the capitalist is able to get the “something extra,” or surplus value. This insight, which continues to be valid today, is Marx’s theory of surplus value. It shows how the capitalist squeezes the worker for the extra value: by making him work more for less, by an endless focus on “efficiency” and “productivity,” by reducing the number of workers and making those that remain do twice as much work, by pitting workers against each other and making them lower the prices at which they work, and so on. In short, profit comes by exploiting the worker. Capitalism is the unending process of bosses trying to get more out of workers for less. By making workers work more (either faster, harder, or longer) than they originally agreed to be paid for, capitalists extract profit through exploitation.











(Continued below)

Now, one more fancy pair of terms, and you’ll be ready to discuss Marxist economics at your next cocktail party like a real cadre: absolute and relative surplus value. Remember, to recap briefly: surplus value is the “something extra” that capitalists tack on to the price to make a profit, and it comes from exploiting labor, or “variable capital.” The absolute surplus value is determined by a linear increase in the amount of work done: for example, by requiring workers to work longer hours for the same pay using unpaid overtime. By focusing on increasing absolute surplus value, a capitalist can increase profit, but only at a linear rate. The real profits come from increasing the rate itself at which profits are reaped. This happens when a capitalist focuses on relative surplus value. Examples include introducing new machinery or techniques that not only grows profit, but grows it faster. All capitalists need to do this, in order to stay competitive. This, ultimately, is what leads to more joblessness and to the ultimate contradiction at the heart of capitalism.


Congrats! If you have read this far, you have now passed Marxist Economics of Exploitation 101 and should have the necessary vocabulary and conceptual framework to grasp the contradiction at the heart of capitalism:

In the early days of capitalism, almost all capital was variable capital; that is, workers. There was a lot less machinery involved. But as time went on, capitalists kept increasing relative surplus value to make profits and stay ahead of the competition. Through increasing automation, outsourcing, offshoring, and an obsession with productivity/efficiency, they introduced more and more new machinery and technology – more and more fixed capital. So we have more tech, more fancy machines, yet fewer workers. As we have seen, profits can only come through changes to variable capital, i.e., workers. But with fewer workers, eventually the pool of variable capital dries up, and with it the potential for future profit. And without profit, capitalism itself dies.

Did you get that? If not, don’t worry; go back over it and let it sink in. It’s not an easy point because its one that capitalist society doesn’t want you to acknowledge. Much of our culture has been set up to make sure people don’t grasp this. But if you understand that, you will understand why capitalism cannot survive.



We are seeing the collapse of capitalism right now in our own time, for the very reason outlined above. As companies face a falling rate of profit, this forces a concentration of capital. Companies get bigger and bigger, because size is the only way to grow when the absolute amount of profit available in the entire system starts to shrink. The sharks start to eat the sharks. Ape has killed ape. With nothing left to kill, the business world starts to cannibalize itself. Big eats small, big gets bigger, eats more small, gets even bigger, and so on. Industry consolidation: fewer companies, but bigger companies. Fewer small shops, more Wal-Marts and other mega-stores. Fewer local banks, but more reach for the larger international mega-banks. Fewer delightfully cranky socialist coffee shops, more Starbucks everywhere.









The end result is a shrinking number of increasingly-successful capitalists and a growing number of increasingly-loser-ish normal people who get poorer and poorer.

Sound familiar?

Eventually capitalism will squeeze out so much variable capital that there will be nobody left to buy their products, and no further room for growth, which will kill the ability of the mega-companies to make profit. And without profit, capitalism itself dies. This is what we are seeing now, with globalism - the final and most extravagant phase of capitalism.



This understanding is the source of Marx’s famous “prophecy” that continues to resound down through the ages:

Along with the constantly diminishing number of the magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.

Source: Das Kapital Vol. 1 Ch. 32

Think about it, ATS. Even those of you who are hostile to communism must admit capitalism as we know it is a sick, sick creature. All I ask is that you give the idea a fair shake. Thanks for listening.

It has to be doomed to failure or else it will be the failure of the human race. We cannot continue towards infinite growth on a finite planet.... We will destroy our biosphere. We need something new and I dont think it is communism either...

Well done on your first thread too!

That's quite an impressive piece of propaganda you put together.

So what you'd rather have is a labor force who is employed at menial jobs that are not rewarding whatsoever and don't pay anything. A workforce who lives in tenement buildings and can barely make ends meet, who buy all their groceries at the state food market, where there are perpetual shortages...

Oh wait, I forgot that you brainwashed Omaba socialists believe that "American" socialism won't be the same as Chinese or Soviet socialism - it will be all rainbows and gummy bears and we'll all sit around singing kumbaya in the backyards of our 4500 square foot mansionettes because O mighty benevolent ruler Obama will redistribute the wealth to everyone and all those bad things in those other socialist countries won't happen because this is America, dammit.

Dream on, sister. You've been tricked.

Economic Philosophies don't fail or succeed, people do. Communism, Capitalism, socialism are meaningless terms because no one can agree as to what they mean. Economics is nothing more than the exchange of wealth and materials between parties. Exchanges that benefit both parties succeed, while those that do not, fail to varying degrees. I call an exchange between two parties of goods or services a success if it is a win-win. Any other scenario results in further uneven scenarios, which lead to ultimate failure.
Simplifying economic systems: Aim for win-win exchanges.
No need for economists, philosophers, ideologues, hammers and sickles, or flag wavers.

reply to post by AwakeinNM


Propaganda. Blindly following a defect system without question in my eyes means you have swallod more than your far share of propoganda. What do you think organisations like the WTO, IMF and World Bank are for. They are tools of the banking empire that you blindly follow.

Go and do some homework before accusing others of propaganda. Why do you think there have been a recent spate of wars and governments overthrown in the middle east. To install central banks Afganistan, Libya and Iraq... Guess what other countries dont have central banks.. N.Korea, Iran and cuba....

What alternatives are you offering. It is easy to criticise.. It is evident that the system we have in place is flawed and far from perfect. The disparity between rich and poor continues to grow along with social inequalities. Do you think its all good and that banks should be allowed to cripple economies whilst the politicians grant them immunity from prosecution.

If we continue to do things the same way we will continue to have the same results.....Change is coming and its long overdue....

reply to post by Leftist


I agree my friend. What many fail to realise, is that like democracy, there are many forms of communism. It's all on how it is run or in other words how the system is set up.

I ultimately feel that when we are finally freed from this capitalistic system communism will rule the day. This time religion will be left out of it though, we must remember liberty of conscience and freedom of belief and spiritual convictions. It could even be a type of democratic communism.

Remember communism uses central planning. As long as the government is in touch with the people's interests things could be great. It's just the power corrupting individuals in leadership positions that would be hard to curb.

There are so many things wrong with this nonsense. Labor is the ONLY place to look for a companies profitability?

The charts are bogus, the information itself is all bogus, and so is the idea that capitalism doesn't work.. I challenge anyone, ANYONE, who wants to pick one of the topics above mentioned to challenge me so I can rip it apart just to show how much this entire thread stinks of senseless propaganda.

Originally posted by purplemer
reply to post by AwakeinNM

 

Propaganda. Blindly following a defect system without question in my eyes means you have swallod more than your far share of propoganda. What do you think organisations like the WTO, IMF and World Bank are for. They are tools of the banking empire that you blindly follow.

Go and do some homework before accusing others of propaganda. Why do you think there have been a recent spate of wars and governments overthrown in the middle east. To install central banks Afganistan, Libya and Iraq... Guess what other countries dont have central banks.. N.Korea, Iran and cuba....

What alternatives are you offering. It is easy to criticise.. It is evident that the system we have in place is flawed and far from perfect. The disparity between rich and poor continues to grow along with social inequalities. Do you think its all good and that banks should be allowed to cripple economies whilst the politicians grant them immunity from prosecution.

If we continue to do things the same way we will continue to have the same results.....Change is coming and its long overdue....

Change is most certainly is coming, baby, but it's not the kind you think it is. People like me are going to enact it. People like you had better get the hell out of the way when we do.

reply to post by Leftist


I feel thoroughly indoctrinated, thank you and have a nice day.

reply to post by AwakeinNM

Change is most certainly is coming, baby, but it's not the kind you think it is. People like me are going to enact it. People like you had better get the hell out of the way when we do.

Have you got anything of value to add to the OP really.. All you have done is criticise. Have you addressed any of the points I raised for you.. No you have not. If you are capable of it please respond...

Maybe you could elaborate regarding what change is coming and why this change is needed. Then you would be adding something of value to the thread and using your grey matter.

and dont bother with the people like me rubbish Get off your egotistical horse. You do not have a clue about me and what I do with my life. Sounds to me like you are rich mens cannon fodder....

Originally posted by FarmerGeneral
reply to post by Leftist

 

I agree my friend. What many fail to realise, is that like democracy, there are many forms of communism. It's all on how it is run or in other words how the system is set up.

Yet we have seen it run in many countries around the globe and it hasn't ever worked. What precisely does that tell you?

But maybe we should stick the fork in the toaster again because someone has a good feeling this time we wont get shocked.

First of all, capitalism is failing because of the infiltration of progressive liberal policies. For example millions of NON CITIZENS receive social welfare while putting NOTHING back into the system in paid taxes. Secondly, corporations along with politicians have ignored all anti monopoly policies in place to safeguard jobs and power. Thirdly, the federal government is spending out of control. This is not a result of capitalism but more of a socialist infiltration that has taken place in our countries policies. Fourth, corruption in government. Those are some big problems and I could probably list 50 more if I had the time, and none of which would have to do with failures in capitalism..

Don't even get me started on what's been accomplished through capitalism..

Originally posted by libertytoall
There are so many things wrong with this nonsense. Labor is the ONLY place to look for a companies profitability?

The charts are bogus, the information itself is all bogus, and so is the idea that capitalism doesn't work.. I challenge anyone, ANYONE, who wants to pick one of the topics above mentioned to challenge me so I can rip it apart just to show how much this entire thread stinks of senseless propaganda.

I will pick up your challenge and pick my point from above for you to address. How can a system based on infinite growth work on a finite planet...?

Originally posted by purplemer

Originally posted by libertytoall
There are so many things wrong with this nonsense. Labor is the ONLY place to look for a companies profitability?

The charts are bogus, the information itself is all bogus, and so is the idea that capitalism doesn't work.. I challenge anyone, ANYONE, who wants to pick one of the topics above mentioned to challenge me so I can rip it apart just to show how much this entire thread stinks of senseless propaganda.

I will pick up your challenge and pick my point from above for you to address. How can a system based on infinite growth work on a finite planet...?

Define what you mean by a finite planet first? Do you mean people and resources? The only thing required of capitalism working is long term increases in capital. This can be achieved via tangible and intangible industries. For example service bases industries vs manufacturing. Could you be more specific?

Originally posted by AwakeinNM

Oh wait, I forgot that you brainwashed Omaba socialists believe that "American" socialism won't be the same as Chinese or Soviet socialism - it will be all rainbows and gummy bears and we'll all sit around singing kumbaya in the backyards of our 4500 square foot mansionettes because O mighty benevolent ruler Obama will redistribute the wealth to everyone and all those bad things in those other socialist countries won't happen because this is America, dammit.

Dream on, sister. You've been tricked.

Obama?

Please.

Obama is a right-winger as far as I'm concerned. He's in the same basket with Nixon and Hitler.

Capitalism always works as long as you keep the free and open "market" out of the hands of the legislatures-government.

However, it's demise is always when a hand-full of politicians set their governmental policies that bail out the "to big to fail", which ultimately creates socialism, then once these same azz-hats need to further their manipulation, they use every aspect of the government, thus creates "communism.'

This paradigm has happened so many times throughout our history, i digress. True Democracy works, and true Capitalism works, until the greedy use it's government as the forced hand that ends it's Republic.

Owe, and I almost forgot the most important topic, ONLY the government of the nation-state should hold and raise the currency of it's masses. when you observe any nation-state that forfeits its currency to another entity, you can observe what the U.S. is going through now

reply to post by libertytoall


Why don't you rip the whole thing apart then, instead of boasting about how you can? I won't hold my breath for you to do this though.

reply to post by allprowolfy



So you would like to return to the time of watered down milk, buying items that are not what they're labeled as, and you really think that corporations will maintain roads and interstates out of the goodness of their hearts?

I have a bridge to sell you then..

Originally posted by purplemer
reply to post by AwakeinNM

 

Change is most certainly is coming, baby, but it's not the kind you think it is. People like me are going to enact it. People like you had better get the hell out of the way when we do.

Have you got anything of value to add to the OP really.. All you have done is criticise.

thats when we hear your best answers for what you're really trying to say, then you have some emotion in your belly and are ready to roar it out like a lion.