Critique of capitalism

Capitalism has been critiqued from many perspectives during its history. Criticisms range from people who disagree with the principles of capitalism in its entirety, to those who disagree with particular outcomes of capitalism. Among those wishing to replace capitalism with a different method of distributing goods, a distinction can be made between those believing that capitalism can only be overcome with revolution (e.g. communist revolution) and those believing that change can come slowly through reformism (e.g. classic social democracy). Some critics recognize merits in capitalism and wish to balance capitalism with some form of social control, typically through government regulation (e.g. British Labour Party).

History

Criticisms arose shortly after the birth of modern capitalism. Rapid industrialization following the industrial revolution created, according to contemporary critics, working conditions in Europe viewed as unfair; including 14-hour work days, child labor, and shanty towns.cite web | last = Engels | first = Frederick | title = The Condition of the Working Class in England | url = http://www.marxists.org/archive/marx/works/1845/condition-working-class/index.htm | accessdate = 2008-04-16] Some popular novels arose during this time that took a pessimistic view of the industrial revolution, such as some written by Charles Dickens. Modern economists argue that the conditions were even worse earlier and that empirical evidence shows that even the early industrial revolution increased average living standards and life expectancy. More critical modern economists argue that conditions did not or only very slowly improved before 1840 [cite web|url=http://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html|title=Industrial Revolution and the Standard of Living|author=Clark Nardinelli, economist at the U.S. Food and Drug Administration|work=The concise encyclopedia of economics|publisher=The Library of Economics and Liberty|accessdate=2008-04-20] . Some early socialist thinkers rejected capitalism altogether, attempting to create socialist communities free of the perceived injustices of early capitalism. Among these "utopian socialists" were Charles Fourier and Robert Owen. Other socialist thinkers argued that socialism could not be implemented before historical forces created the right conditions, and saw promise in the industrial revolution, viewing it as a new system that could potentially produce enough goods for the entire human population but which was hampered by its inefficient method of distributing goods. In 1848, Karl Marx and Frederick Engels released the Communist Manifesto, a pamphlet that outlined a political and economic critique of capitalism based on the philiosophy of historical materialism. Their manifesto has since become one of the most influential books ever written. A contemporary of Marx, the mutualist Pierre-Joseph Proudhon was one the first to call himself anarchist.

These classical criticisms have undergone a certain amount of transformation since their time. Many authors have changed or updated these thinkings to incorporate changes in capitalist societies. By the early 20th century, a myriad of socialist tendencies had arisen based on different interpretations of current events. Monopoly capital, accelerating colonialism, the spread of labor unions, the widening of the franchise, and clearly increasing living standards, for example, were new trends which capitalist critics, such as Mikhail Bakunin, Vladimir Lenin and Eduard Bernstein, worked to understand and which contributed to differences in organizational models (e.g. anarcho-syndicalism, social democracy, and Bolshevism). Identifying problems with free market capitalism, governments also began placing restrictions on market operations and created interventionist programs which attempted to ameliorate perceived market shortcomings. British Keynesian economics and the American New Deal have had long lasting effects on both of these countries' social policies. Starting with the Russian revolution, Communist states increased in numbers and a Cold War started with the developed capitalist nations. However, after the Revolutions of 1989 many of these states openly adapted market economies. Most of the remaining formally Communist states have also implemented widespread market liberalizations.

Criticisms of capitalism persist in the current era. Particularly with concern for the new global economy, critics have argued for government intervention or against capitalism. These can involve perceived market shortcomings around global warming, exploitation of citizens under consumer capitalism, shifts away from production-based economies towards a dependence on financial markets, and economic imperialism in an age of globalization. Many current organizations, not necessarily rejecting capitalism, focus on changing national and corporate policies (e.g. United Students Against Sweatshops or Greenpeace). Other organizations take a holistic view, viewing capitalist injustice as a systemic problem (e.g. social ecologists or participatory economics).

Markets

The free market and property rights

Pierre-Joseph Proudhon and Friedrich Engels argue that the free market is not necessarily free, but weighted towards those who already own property.cite web | last = Proudhon | first = Pierre-Joseph | title = What Is Property? An Inquiry Into the Principle of Right and Government | url = http://www.marxists.org/reference/subject/economics/proudhon/property/index.htm | format = html | accessdate = 2008-03-10] They view capitalist regulations, including the enforcement of private property on land and exclusive rights to natural resources, as unjustly enclosing upon what should be owned by all, forcing those without property to sell their labor to capitalists and landlords in a market favorable to the latter, thus forcing workers to accept low wages in order to survive.Citation | last = D'Amato | first = Paul | title = The Meaning of Marxism | publisher = Haymarket Books | year = 2006 | isbn = 1931859299 | pages = 60]

In his criticism of capitalism Pierre-Joseph Proudhon believed that the emphasis on property is the problem. He claimed that property is theft, arguing that property leads to despotism:

"Now, property necessarily engenders despotism -- the government of caprice, the reign of libidinous pleasure. That is so clearly the essence of property that, to be convinced of it, one need but remember what it is, and observe what happens around him. Property is the right to use and abuse."

Mutualists and some anarchists support markets and private property, but not in their present form.Citation | last = Carson | first = Kevin | title = Studies in Mutualist Political Economy | publisher = BookSurge Publishing | year = 2007 | isbn = 1419658697] They argue that particular aspects of modern capitalism violate the ability of individuals to trade in the absence of coercion. Mutualists support markets and private property in the product of labor, but only when these markets guarantee that workers will realize for themselves the value of their labor.

Similarly, in recent times, most economies have also extended property rights to include such things as patents and copyrights. Critics also see this as coercive against those with few prior resources. They argue that such regulations discourage the sharing of ideas, and encourage nonproductive rent seeking behavior, both of which enact a deadweight loss on the economy, erecting a prohibitive barrier to entry into the market.cite web | last1 = Landes | first2 = William | last1 = Posner | first2 = Richard | title = An Economic Analysis of Property Law | url = http://cyber.law.harvard.edu/IPCoop/89land1.html | format = html | accessdate = 2008-03-10] Not all pro-capitalists support the concept of copyrights, but those who do argue that compensation to the creator is necessary as an incentive.

Market failures

Market failure is a term used by economists to describe the condition where the allocation of goods and services by a market is not efficient. Market failure can be viewed as a scenario in which individuals' pursuit of self-interest leads to bad results for society as a whole.Krugman, Paul, Wells, Robin, "Economics", Worth Publishers, New York, (2006)] From this, some critics of capitalism prefer economic intervention by government into free markets.Citation | last = Keynes | first = John Maynard | title = The General Theory of Employment, Interest and Money | publisher = Palgrave Macmillan | year = 2007 | isbn = 0230004768] Some believe that the lack of perfect information and perfect competition in a free market is grounds for government intervention. Others perceive certain unique problems with a free market including: monopolies, monopsonies, insider trading, and price gouging.cite web | last = Rea | first = K.J. | title = Monopoly, Imperfect Competition, and Oligopoly | url = http://www.chass.utoronto.ca/~reak/eco100/100_6.htm | format = html | accessdate = 2008-03-11]

Legislation has been introduced to deal with these concerns (e.g. anti-trust legislation or financial regulation). Also, governments overseeing capitalist economies have been known to set mandatory price floors or price ceilings at times, thereby interfering with the free market mechanism. This usually occurs in times of crisis, or relating to goods and services viewed as strategically important. Electricity, for example, is a good that has typically been subject to price ceilings in many countries.cite web | last = Krugman | first = Paul | title = Reckonings, Watt Price Ideology? | url = http://query.nytimes.com/gst/fullpage.html?res=990CEFDF173FF930A35755C0A9679C8B63&scp=1&sq=electricity+price+ceiling&st=nyt | publisher = New York Times | format = html | accessdate = 2008-03-11] Some economists have analysed market failures, and see governments as having a legitimate role in mitigating these failures through regulation and compensation schemes.

Wages determined by a free market mechanism are also commonly seen as a problem by those who claim that some wages are unjustifiably low or unjustifiably high. Another perceived failure is that free markets usually fail to deal with the problem of externalities, where an action by an outside agent positively or negatively affects another agent without any compensation.cite web | last = Johnson | first = Paul | title = Externality: A Glossary of Political Economy Terms | url = http://www.auburn.edu/~johnspm/gloss/externality | publisher = Auburn University | format = html | accessdate = 2008-03-11] The most widely known externality is pollution. More generally, free market allocation of resources in areas such as health care, unemployment, wealth inequality, and education are considered market failures by some.cite web | title = www.nader.org | url = http://www.nader.org/ | format = html | accessdate = 2008-03-11]

Poor distribution of goods has also been identified as a market failure. Critics criticize the distribution of goods based on profit, rather than need. One critic noted that 200 million Indians went hungry in 1995, while the Indian economy was exporting $625 million worth of wheat and $1.3 billion worth of rice that same year.cite web | last = Moore Lappe | first = Frances | title = The Myth - Scarcity: The Reality - There IS Enough Food | url = http://www.foodfirst.org/w98v5n1 | format = html | accessdate = 2008-03-11]

Market instability

Critics of capitalism, particularly Marxists, identify market instability as a permanent feature of capitalist economy.cite web | last = Engels | first = Frederick | title = On the Question of Free Trade | url = http://www.marxists.org/archive/marx/works/1888/free-trade/index.htm | format = html | accessdate = 2008-03-11] cite web | last = Easterling | first = Earl | title = Marx's Theory of Economic Crisis | url = http://www.isreview.org/issues/32/crisis_theory.shtml | format = html | publisher = International Socialist Review | accessdate = 2008-03-13] Marx believed that the unplanned and explosive growth of capitalism does not occur in a smooth manner, but is interrupted by periods of overproduction in which stagnation or decline occur (i.e. recessions).cite web | last = Marx | first = Karl | title = The Communist Manifesto | url = http://marxists.org/archive/marx/works/1848/communist-manifesto/index.htm | format = html | accessdate = 2008-03-11] In the view of Marxists, several contradictions in the capitalist mode of production are present, particularly the internal contradiction between anarchy in the sphere of capital (i.e. free market) and socialised production in the sphere of labor (i.e. industrialism).cite web | last = Engels | first = Frederick | title = Part III: Socialism (Theoretical) -- Anti-Duhring | url = http://www.marxists.org/archive/marx/works/1877/anti-duhring/ch24.htm | format = html | accessdate = 2008-03-11] Due to the unplanned nature of the system, capitalists produce without knowing in advance what they can sell, while at the same time unleashing huge productive capabilities through industrial organization. The result is that crises are not caused by shortages, like a crop failure, but rather from a production of too many goods. Marx and Engels, in the Communist Manifesto, highlighted what they saw as a uniquely capitalist juxtaposition of overabundance and poverty:

"Society suddenly finds itself put back into a state of momentary barbarism. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce."

Modern critics believe that instability is the rule, not the exception. During capitalism's short history, they note many well-known examples of recession (e.g. the American Great Depression) and highlight recent examples (e.g. Asian financial crisis (1997), Mexican peso crisis (1999), Argentina (1999), and early 2000s recession). Most recently, the [http://en.wikipedia.org/wiki/Economic_crisis_of_2008 crisis of 2008] has been attributed to capitalism. [http://www.wsws.org/articles/2008/sep2008/fafr-s10.shtml]

Profit and exploitation

Critics of capitalism view the system as inherently exploitative. In an economic sense, exploitation is often related to the expropriation of labor for profit and based on Marx's version of the labor theory of value. The labor theory of value was supported by classical economists like David Ricardo and Adam Smith who believed that "the value of a commodity depends on the relative quantity of labor which is necessary for its production."cite web | last = Ricardo | first = David | title = Chapter 1: On Value -- On the Principles of Political Economy and Taxation | url = http://www.marxists.org/reference/subject/economics/ricardo/tax/ch01.htm | format = html | accessdate = 2008-03-10]

In Capital, Marx identified the commodity as the basic unit of capitalist organization. Marx noted a "common denominator" between commodities, in particular that commodities are the product of labor and are related to each other by an exchange value (i.e. price).Citation | last = Marx | first = Karl | title = Chapter 1: Commodities -- Capital, Volume 1 | publisher = Penguin Classics | year = 1992 | url = http://marxists.org/archive/marx/works/1867-c1/ch01.htm#S1 | isbn = 0140445684] By using the labor theory of value, Marxists see a connection between labor and exchange value, in that commodities are exchanged depending on the socially necessary labor time needed to produce them.cite web | last = Marx | first = Karl | title = Value, Price, and Profit | url = http://www.marxists.org/archive/marx/works/1865/value-price-profit/ | format = html | accessdate = 2008-03-10] However, due to the productive forces of industrial organization, laborers are seen as creating more exchange value during the course of the working day than the cost of their survival (food, shelter, clothing, etc).cite web | last = Marx | first = Karl | title = Wage Labour and Capital | url = http://marxists.org/archive/marx/works/1847/wage-labour/ch06.htm | format = html | accessdate = 2008-03-10] Marxists argue that capitalists are thus able to pay for this cost of survival, while expropriating the excess labor (i.e. surplus value). In other words, workers are seen as producing enough value to cover their wages during part of the working day, while the rest of the working day produces value in excess of what they're paid (and results in profits).

Marxists further claim that due to economic inequality, the purchase of labor cannot occur under "free" conditions. Since capitalists control the means of production (e.g. factories, businesses, machinery) and workers control only their labor, the worker is naturally coerced into allowing their labor to be exploited.cite web | last = Engels | first = Frederick | title = Competition -- The Condition of the Working Class in England | url = http://www.marxists.org/archive/marx/works/1845/condition-working-class/ch05.htm | format = html | accessdate = 2008-03-10] Critics argue that exploitation occurs even if the exploited consents, since the definition of exploitation is independent of consent. In essence, workers must allow their labor to be exploited or face starvation. Since some degree of unemployment is typical in capitalist economies, Marxists argue that wages are naturally driven down in free market systems. Hence, even if a worker contests their wages, capitalists are able to find someone from the reserve army of labor who is more desperate.cite web | last = Engels | first = Frederick | title = Historical Materialism -- Socialism: Utopian and Scientific | url = http://www.marxists.org/archive/marx/works/1880/soc-utop/ch03.htm | format = html | accessdate = 2008-03-10]

Unions are the traditional method of giving workers more bargaining power in the marketplace. The act (or threat) of striking has historically been an organized action to withhold labor from capitalists, without fear of individual retaliation.cite web | last = Kautsky | first = Karl | title = Trade Unions and Socialism | url = http://www.marxists.org/archive/kautsky/1901/04/unions.htm | format = html | accessdate = 2008-03-10] Some critics of capitalism, while acknowledging the necessity of trade unionism, believe that trade unions simply reform an already exploitative system, leaving the system of exploitation intact.Citation | last = Smith | first = Sharon | title = Subterranean Fire: A History of Working Class Radicalism in the United States | publisher = Haymarket Books | year = 2006 | isbn = 193185923X | pages = 320] cite web | last = Luxembourg| first = Rosa | title = Chapter VII: Co-operatives, Unions, Democracy -- Reform or Revolution | url = http://marxists.org/archive/luxemburg/1900/reform-revolution/ch07.htm | format = html | accessdate = 2008-03-10]

Inefficiency and waste

Some opponents criticize capitalism's perceived inefficiency. They note a shift from pre-industrial reuse and thriftiness before capitalism to a consumer-based economy that pushes "ready-made" materials.cite web | last = Rogers | first = Heather | title = The Conquest of Garbage | url = http://www.isreview.org/issues/53/garbage.shtml | publisher = International Socialist Review | format = html | accessdate = 2008-03-13] It is argued that a sanitation industry arose under capitalism that deemed trash valueless; a significant break from the past when much "waste" was used and reused almost indefinitely. In the process, critics say, capitalism has created a profit driven system based on selling as many products as possible.cite web | last = Hawken | first = Paul | title = Natural Capitalism | url = http://www.motherjones.com/news/feature/1997/03/hawken.html | format = html | accessdate = 2008-03-13] Critics relate the "ready-made" trend to a growing garbage problem in which the average American throws out 4.5 pounds of trash per day (compared to 2.7 pounds in 1960).cite web | last = U.S. EPA | title = Municipal Solid Waste (MSW) Pie Chart | url = http://www.epa.gov/msw/facts-text.htm | format = html | accessdate = 2008-03-13] Anti-capitalist groups with an emphasis on conservation include eco-socialists and social ecologists.

Planned obsolescence has also been criticized as a wasteful practice under capitalism. By designing products to wear out faster than need be, new consumption is generated. This would benefit corporations by increasing sales, while at the same time generating excessive waste. A well-known example is the charge that Apple designed its iPod to fail after 18 months.cite web | last = Inman | first = Phillip | title = When your iPod isn't all that it's cracked up to be | url = http://www.guardian.co.uk/technology/2006/sep/30/news.consumernews | publisher = The Guardian | format = html | accessdate = 2008-03-13] Critics view planned obsolescence as wasteful and an inefficient use of resources.cite web | last = McMinn | first = David | title = Planned Obsolescence: The Ultimate Economic Inefficiency | url = http://www.davidmcminn.com/ngc/pages/obsol.htm | format = html | accessdate = 2008-03-13]

Critics of capitalism identify marketing as wasteful. They note that American corporations spend upwards of $1 trillion on marketing, and wonder whether this money could be better spent.cite web | last = Wall | first = Derek | title = Another Green World: Socialism today must be Green | url = http://another-green-world.blogspot.com/2007/10/socialism-today-must-be-green.html | format = html | accessdate = 2008-03-13] Authors such as Naomi Klein have criticized brand-based marketing for putting more emphasis on the company's name-brand than on manufacturing products.cite web | last = PBS Frontline | title = Interview with Naomi Klein | url = http://www.pbs.org/wgbh/pages/frontline/shows/persuaders/interviews/klein.html | format = html | accessdate = 2008-03-13]

Unequal distribution of wealth and income

Some view a significant disparity and concentration of wealth to be endemic to capitalism. Opponents of capitalism assert that there should be much less inequality in wealth and earnings among individuals than exists in capitalism.

Excessive inequality

Other critics agree that inequality is necessary but argue that in capitalism, the distribution of wealth and earnings is too unfair, dysfunctional, or immoral. They cite the fact that, in the US, the shares of earnings and wealth of the households in the top 1 percent of the corresponding distributions are 15 percent and 30 percent, respectively [http://www.ssc.upenn.edu/~vr0j/papers/maxrefin.pdf] .

Some critics note that there are very few people who are twice as tall as average, or who can run twice as fast, or have twice as high an IQ. They argue that the fact capitalism doesn't distribute wealth in a similar fashion means that something is fundamentally wrong with the system. Supporters specify argue that human contributions vary much more than humans vary in height or IQ (as can be illustrated, for example, by comparing the contributions of an arsonist and an inventor/producer of antibiotics); however, the correlation between contribution to society and wealth is extremely suspect (as can be illustrated, for example, by pointing out that Paris Hilton is far wealthier than Nelson Mandela, or the average teacher, or an employee of McDonalds, yet yet social contribution is arguably much lower than any of the latter).

Critics also note that there are many people who have no wealth. If wealth followed a bell shaped curve (standard normal distribution), as many other human characteristics and it might be surmised people's ability to be productive, then there should be very few people with no wealth.

Critics claim that an untamed capitalist system may have inherent biases favoring those who already possess greater resources. For example, they say, rich people can give their children a better education and inherited wealth. They say that this can create or even increase large differences in wealth between people who do not differ in ability or effort. They cite the examples that in the U.S., 43.35% of the people in the Forbes magazine "400 richest individuals" list were already rich enough at birth to qualify [http://www.faireconomy.org/press/archive/Pre_1999/forbes_400_study.html] , or a study that indicates that in the US wealth, race, and schooling are important to the inheritance of economic status, but IQ is not a major contributor and the genetic transmission of IQ is even less important [http://www.umass.edu/preferen/gintis/intergen.pdf] .

Other criticisms of capitalism's unequal wealth distribution include:

** The capitalists gather their wealth by exploiting employees. An employee is not paid according to the true worth of his labor but according to what the employer is willing to pay him. The employer pays him less than what his labor is worth so that the employer can make a profit when he sells the produce. In this way, the employee's labor is being exploited.
** Wealth and unequal distribution can create social problems (such as higher crime rates). These problems affect both poor and rich.
** Government interference in markets can be skewed to benefit the wealthy. In particular, wealthy people have the financial means and incentives to influence or corrupt government officials and to lobby for favourable legislation.
** Many people have little wealth left over after living expenses, so they can't make it grow quickly. This further deepens the disparity between rich and poor.
** Persistent long-term inequality of wealth undermines the motivation of the poor to improve their stance. This creates not only direct but perpetual sociological inequity.
** Wealthy people save relatively more than poor people. Hence some economists believe that an unequal distribution of wealth undermines an economy's mass buying power, effectively leading to lower aggregate sales, reduced wealth production, unemployment and crises. (see Keynes)
** Wealth is defined and judged incorrectly, in many different ways. In particular, people may attach value to things for seemingly irrational reasons (sentimental value). Some may also value spiritual development more than material wealth. Capitalism's focus on absolute monetary value thus undermines the legitimacy of alternate paradigms.
** The wealthy may not put their wealth to productive use. For example, they may buy land just to deny access to it to others, for personal or environmental reasons. Other critics of capitalism, however, would ask whether or not capitalistic production narrowly-defined is a good thing, especially if it is seen as damaging the environment, and such an action of denial may be seen as the lesser of two evils.

Employment/unemployment

Since individuals in a capitalist economy typically earn their incomes from working for companies whose requirements are constantly changing, it is quite possible that at any given time not all members of a country's potential work force will be able to find an employer that needs their labor. This would be less problematic in an economy in which such individuals had unlimited access to resources such as land in order to provide for themselves (as is the ideal towards which socialism strives), but when the ownership of the bulk of its productive capacity resides in relatively few hands(ie., the 'bourgeousie': capitalists, corporations), most individuals will be dependent on employment for their economic well-being. It is typical for capitalist economies to have rates of unemployment that fluctuate between 3% and 10%. From a Marxist perspective, this is an artificially high amount, which leads to crime, homelessness, and social alienation, serious -and unnecessary- problems.

Depressed or stagnant capitalist economies have been known to reach unemployment rates as high as 30%, while events such as military mobilization (a good example is that of World War II) have resulted in just 1-2% unemployment, a level that is often termed "full employment". Typical unemployment rates in Western economies range between 5% and 10%. Some economists consider that a certain level of unemployment is necessary for the proper functioning of capitalist economies. Equally, some politicians have claimed that the "natural rate of unemployment" highlights the inefficiency of a capitalist economy, since not all its resources -- in this case human labor -- are being allocated efficiently.

Islamic criticism of capitalism

Islamic Law recognizes the right to private property but regulates economic activities with a system of checks and balances. A 2.5% alms tax ("Zakat") is levied on all savings and assets beyond those normally used, including bank savings, a second home etc.

Usury or riba is forbidden, and religious law encourages the use of capital to spur economic activity while placing the burden of risk along with the benefit of profit with the owner of the capital.

Many Islamic thinkers have spoken out against capitalism along with totalitarian socialism usually by condemning "materialism." Notably, Sayyid Qutb did so in "The Battle Between Islam and Capitalism", published in 1951. [ [http://www.nndb.com/people/551/000113212/ Sayyid Qutb ] ]

The Islamic constitution of Iran which was drafted by mostly Islamic clerics (see the Assembly of Experts) dispraises the "materialist schools of thought" that encourage "concentration and accumulation of wealth and maximization of profit." [ [http://www.servat.unibe.ch/law/icl/ir00000_.html ICL - Iran - Constitution ] ]

Currently, many governments of countries where Islam is the official state religion own a controlling stake in large businesses like the telecommunication, airlines, transportation, and energy industry.Fact|date=May 2008

Marxist critique of capitalism

Marxists define capital as "a social, economic relation" between people (rather than between people and things). In this sense they seek to abolish capital. They believe that private ownership of the means of production enriches capitalists (owners of capital) at the expense of workers ("the rich get richer, and the poor get poorer"). In brief, they argue that the owners of capital do not work and therefore steal from or exploit the workers. Gradually, the capitalists will accumulate more and more capital and make the workers continually poorer, in the end causing a revolution. The private ownership of the means of production is therefore seen as a restriction on freedom.

Marx and his followers have proffered various related lines of argument suggesting that capitalism is a contradiction-laden system characterized by recurring crises having a tendency towards increasing severity. They have claimed that this tendency of the system to unravel combined with a socialization process which links workers in a world-wide market are two major factors that create the objective conditions for revolutionary change. Capitalism is seen as just one stage in the evolution of the economy of a society. Immanuel Wallerstein approaching matters from a world-systems perspective, cites the intransigence of rising real wages, rising costs of material inputs, and steadily rising tax rates, along with the rise of popular antisystemic movements as the most important global secular trends creating unprecedented limiting pressures on the accumulation of capital. According to Wallerstein, "the capitalist world-economy has now entered its terminal crisis, a crisis that may last up to fifty years. The real question before us is what will happen during this crisis, this transition from the present world-system to some other kind of historical system or systems." [Wallerstein, Immanuel- The Decline of American Power,New Press Books,66]

Supporters of capitalism believe that private ownership of productive capacity provides motivation to owners to increase productive capacity and so generally increase the average material wealth. Opponents of capitalism counter this by pointing out the unchanged after-tax income of the poorest quintile of the U.S. population during the last two decades. While at the same time the average income and especially the income of the rich have increased. [http://www.cbo.gov/showdoc.cfm?index=5324&sequence=0] . According to "United for a Fair Economy," in 1982 CEOs of major corporations in the U.S. earned 42 times the annual wages of the average worker; in 2002 the ratio stood at 282:1 [http://www.faireconomy.org/press/2004/CEOPayRatio_pr.html] .

In mainland China differences in terminology sometimes confuse and complicate discussions of Chinese economic reform. Under Marxist ideology, capitalism refers to a stage of history in which there is a class system in which the proletariat is exploited by the bourgeoisie. Officially, according to the Chinese governments State ideology, China is currently in the primary stage of socialism with Chinese characteristics. However, because of Deng Xiaoping's and subsequent leaders Chinese economic reforms, instituting pragmatism within policy, China has undertaken policies which are commonly considered capitalistic, including employing wage labor, increasing unemployment to motivate those who are still working, transforming state owned enterprises into joint stock companies, and encouraging the growth of the joint venture and private capitalist sectors. A contrary Marxist view would describe China as just another variant of capitalism (state capitalism), much like the former USSR, which was also claiming to be operating on principals of socialism. This is echoed by what Mao Tse-Tung termed "capitalist roaders" who he argued existed within the ruling Party structures and would try to restore the bourgeoisie and thus their class interests to power reflected in new policies, while only keeping the outer appearance of socialism for legitimacy purposes. Deng Xiaoping was identified as one of these "capitalist roaders" during the Chinese Cultural Revolution, when he was placed under house arrest.

Imperialism and human rights violations

Critics argue that the ills caused by capitalism include imperialism, poverty, oppression, exploitation and abuse of human rights. They point systematic violence against political opponents, participation in coups which have placed dictators in power (for example Pinochet in Chile, Argentina with its dirty war); and large scale democide (like in the Congo Free State). Some argue that capitalism thrives on an uneven and exploitative relationship between wealthy nations (see dependency theory) who force regime or system changes in poor countries which are only beneficial to them, often through exploitative wars (like the Opium wars or the Second Sino-Japanese War). Although some of these violations occurred during a time period and in states sometimes considered being more capitalist than today since the government share of the economy was much smaller, U.S and European support of multinational-friendly capitalist dictatorships in Latin America and Africa lasted until the mid 1980s.

Near the start of the 20th century, Vladimir Lenin claimed that state use of military power to defend capitalist interests abroad was an inevitable corollary of monopoly capitalism. [cite web | url=http://www.marxists.org/archive/lenin/works/1916/imp-hsc/index.htm | title=Imperialism: The Highest Stage of Capitalism | author=Vladimir Lenin | accessdate=June 29|accessyear=2006] This concept of political economy concerning the relationship between economic and political power among and within states includes critics of capitalism who allege the system is responsible for not only economic exploitation, but imperialist, colonialist and counter-revolutionary wars, repressions of workers and trade unionists, genocides, and so on. For example The Black Book of Capitalism concludes that capitalism has killed approximately 147 million people between 1500-1997.

Marxists, importantly Lenin, argue that capitalism needs imperialism in order to survive. The unplanned nature of capitalism, they say, inevitably overproduces commodities and overuses resources, which leads it to expand its markets into and drain the resources out of other, less-developed nations. The wealthy nations must maintain cheap access to third world natural resources and unfree labor, by force if necessary. They argue that the capitalist countries like England initially were helped by the primitive accumulation of capital through the theft of natural resources and exploitation of slave labor from large parts of Asia, Africa and the Americas which spurred the industrial revolution. They see what they characterize as unjust exploitation, militarily (such as India in 19th century) or economically (e.g. through IMF structural adjustment programs during the 1980s), as part of the nature of capitalism. The constant, capitalist drive to expand markets is viewed by many as the primary cause of globalization.

In his essay, " [http://www.marxists.org/archive/lenin/works/1916/imp-hsc/index.htm Imperialism: The Highest Stage of Capitalism] ", Vladimir Lenin advanced the now widespread thesis that the ‘New Imperialism’ of the late 19th and early 20th centuries was an inevitable corollary of monopoly capitalism. According to Lenin, the export of financial capital superseded the export of commodities; banking and industrial capital merged to form large financial cartels and trusts in which production distribution are highly centralized; and monopoly capitalists influenced state policy to carve up the world into spheres of interest (Burnham). These trends led states to defend their capitalist interests abroad through military power.

Democracy

Marxists also often argue that the structure of capitalism necessarily leads to this exploitation of workers, regardless of whether or not the political system is one of a bourgeois democracy. For this reason, Marxists typically emphasize the capitalist economic system of Western countries rather than the democratic political system. A capitalist system is an economic, not political system; although often associated with democratic political systems, [http://www.seekermagazine.com/v1095/capadem.html] the politcal and economic structures are independent from each other. Capitalist systems have often functioned under unelected governments: the classic case is the United Kingdom, where less than 20% of adult males could vote prior to 1885, and women did not receive the vote until 1918. [http://www.electoral-reform.org.uk/diary/historylesson.htm] Some recent examples include Hong Kong, Singapore, and Chile under the rule of General Pinochet. It is also argued by Marxists that governments espousing fascist (or "national socialist") rhetoric do not make substantive changes to the capitalist economies when they assume power.

However, many communists reject the Communist states for their lack of freedom to vote for various political parties, despite their central planning and common ownership of the means of production. Similarly, many pro-capitalists reject states having some characteristics of capitalism but lacking democracy.

A common criticism that Marxists make about capitalism is that it is only democratic to the capitalist class, citing examples such as people not being able to criticize one's boss out of risk of getting fired and not being able to express their opinions due to lack of funds to afford access to the media. Pro-capitalists think that that in a free market one can always change work or start one's own enterprise, and that if one has an interesting opinion and there is freedom of speech, there will be a profitable market for this; critics respond that in capitalism, most people are too concerned about their own economic welfare that they have no such opportunities, and that to change work often requires risking one's life if there is no social safety net.

Intellectuals, historians and others like Eduardo Galeano argue that capitalist practices do more to damage democracy in peripheral countries than encourage it. He points to democratically elected leaders like João Goulart, Salvador Allende, and Juan Peron who were forced out of office by U.S. and European capitalist interests and replaced with pro-business military dictators during the 1960s and 1970s.

Economic freedom

Critics maintain that capitalism undermines true economic freedoms due to an unfair and inefficient distribution of wealth and power; a tendency toward market monopoly or oligopoly (and government by oligarchy); imperialism, various forms of economic exploitation; and phenomena such as social alienation, inequality, unemployment, and economic instability. Critics have maintained that there is an inherent tendency towards oligopolistic structures when laissez-faire is combined with capitalist private property. Because of this tendency either laissez-faire, or private property, or both, have drawn fire from critics who believe an essential aspect of economic freedom is the extension of the freedom to have meaningful decision-making control over productive resources to everyone. Economist Branko Horvat explains, "it is now well known that capitalist development leads to the concentration of capital, employment and power. It is somewhat less known that it leads to the almost complete destruction of economic freedom." [B.Horvat, The Political Economy of Socialism,Armonk, NY,M.E.Sharpe,Inc, p.11 ] .

ustainability

:"See also: OverpopulationAn economic system that depends upon perpetual economic growth and which requires essentially free trade may have a large effect on the environment. Some question the continued sustainability of this, arguing that many aspects of the environment have been degraded since the industrial revolution.

One of the main modern criticisms to the sustainability of capitalism is related to the so called commodity chains, or production/consumption chains [http://www.it-environment.org/publications/QITS%20report.pdf] , [http://www.unpop.nl/inhoud/artikelen/Francken%20CRR%20sept%202006%20dublin.ppt] . These terms refer to the network of transfers of materials and commodities which is currently part of the functioning of the global capitalist system. Examples include high tech commodities produced in countries with low average wages by multinational firms, and then being sold in distant high income countries; materials and resources being extracted in some countries, turned into finished products in some others and sold as commodities in further ones; countries exchanging with each other the same kind of commodities for the sake of consumer's choice (e.g. Europe both exporting and importing cars to and from the U.S.). According to critics such processes, all of which produce pollution and waste of resources, are an integral part of the functioning of capitalism (i.e. its "metabolism" [http://www.unu.edu/unupress/unupbooks/80841e/80841E00.htm#Contents] ). Furthermore, it is sometimes argued that such chains, being resistant to change, may be partly responsible for persisting inequalities between different areas of the world.

Leading conservation organizations such as the WWF and The United Nations Environment Programme argue that the impact of humanity on Earth is continually increasing. In 2004 they jointly reported that "humanity's Ecological Footprint grew by 150% between 1961 and 2000" and that most of this growth occurred in the 27 wealthiest countries of the world, in other words, the leading capitalist countries [http://www.panda.org/news_facts/publications/general/livingplanet/lpr04.cfm] .

Many environmentalists have long argued that the real dangers are due to environmentally irresponsible consumption and production. Under what they call the "grow or die" imperative of capitalism, they say, there is little reason to expect hazardous consumption and production practices to change in a timely manner. They also claim that markets and capitalist states invariably drag their feet on substantive environmental reform, and are notoriously slow to adopt viable sustainable technologies. [http://www.social-ecology.org/article.php?story=20031118113538865] [http://www.monthlyreview.org/1200jbf.htm] . Immanuel Wallerstein, referring to the [http://www.pbs.org/itvs/openoutcry/talkback.html externalization of costs] as the "dirty secret" of capitalism, claims that there are built-in limits to ecological reform; the costs of doing business in the world capitalist economy are ratcheting upward because of urbanization. He therefore sees no exit from our dilemmas within the framework of the capitalist world-system. [http://fbc.binghamton.edu/iwecol.htm]

Some critics claim that incessant economic growth also requires increasingly greater amounts of natural resources and energy and they question whether this can continue in the future. For example, it is accepted by the oil industry that world oil production will peak or has already. See peak oil.

Religious criticism

Some religions criticize or reject capitalism outright. For example, Islam strongly forbids usury (lending money at an interest). Christianity has been the source of many other criticisms of capitalism, particularly its materialist aspects. The first socialists drew many of their principles from the Gospels (see Christian socialism), against secular "bourgeois values" of profiteering, greed, selfishness and hoarding. Whilst anti-capitalist sentiments vary, generally, Protestant Christians do not oppose capitalism. Some that do also support a mixed economy in order to ensure "decent" labour standards and relations, as well as economic justice. However, Soviet Russia and the misidentification of it as "godless communism" convinced some Christians, especially in the United States, to hold strict forms of socialism with high suspicion, particularly in the early 20th centuryFact|date=May 2008. Later, that changed to embracing soft forms of socialism and state welfare, as well as Christian religions embracing soft forms of capitalism.Fact|date=May 2008

Noam Chomsky's critique

Noam Chomsky has argued that the asymmetric application of free market principles creates a "privatized tyranny": "The talk about labor mobility doesn't mean the right of people to move anywhere they want, as has been required by free market theory ever since Adam Smith, but rather the right to fire employees at will. And, under the current investor-based version of globalization, capital and corporations must be free to move, but not people, because their rights are secondary, incidental." Further, he emphasizes that it can matter what entities have rights in the market—"Do they inhere in persons of flesh and blood, or only in small sectors of wealth and privilege? Or even in abstract constructions like corporations, or capital, or states?"—and remarks that of what he sees as the three tyrannical systems of the 20th century, Bolshevism, and fascism have "collapsed", but "private corporatism… is alive and flourishing… [a] system of state corporate mercantilism disguised with various mantras like globalization and free trade." [Noam Chomsky, [http://www.irc-online.org/content/chomsky/text_transcripts.php unnamed lecture] given February 26 2000 in Albuquerque, New Mexico on the occasion of the 20th anniversary of the International Relations Center. Accessed 3 September 2006.]

Chomsky argues that the wealthy use free-market rhetoric to justify imposing greater economic risk upon the lower classes, while being insulated from the rigours of the market by the political and economic advantages that such wealth affords. [Takis Michas, "The Other Chomsky", "Wall Street Journal", November 4 2005. [http://www.chomsky.info/onchomsky/20051104.htm Reproduced on Chomsky's official site] .] He remarked, "the free market is socialism for the rich— [free] markets for the poor and state protection for the rich." [Noam Chomsky, "The Passion for Free Markets", "Z Magazine", May 1997. [http://www.chomsky.info/articles/199705--.htm Reproduced on Chomsky's official site] .]

ee also

* Anti-capitalism
* Anti-globalisation
* Capitalist mode of production
* Colonialism
* Communism
* Critique of technology
* Economic calculation problem
* Exploitation
* Freiwirtschaft
* Imperialism
* Labor theory of value
* Localism
* Market fundamentalism
* Marxism
* Marxian economics
* Netocracy
* Socialism
* Social criticism
* Social democracy
* Wage slavery
* Wealth distribution
* Post-capitalism

Notes

External links

* [http://www.econ.boun.edu.tr/staff/adaman/research/adaman-devine.PDF A Reconsideration of the Theory of Entrepreneurship: a participatory approach - Critique of capitalism]
* [http://economicdemocracy.org/miners.html How The Miners Were Robbed] 1907 anti-capitalist pamphlet.
* [http://reality.gn.apc.org/econ/hayek.htm Information and Economics: A Critique of Hayek] by Allin F. Cottrell and W. Paul Cockshott
* [http://www.marxists.org/ Marxists Internet Archive] - Archive of Marxist and anti-capitalist literature.
* Ringmar, Erik. [http://www.archive.org/download/SurvivingCapitallismHowWeLearnedToLiveWithTheMarketAndRemained/ErikRingmarSurvivingCapitalism.pdf Surviving Capitalism: How We Learned to Live with the Market and Remained Almost Human] (London: Anthem Press, 2005)
* [http://www.sozialoekonomie.info/Info_Foreign_Languages/info_foreign_languages.htm Social economy: A Market Economy without Capitalism]
* [http://libcom.org/library/value-price-and-profit-karl-marx Value, Price and Profit] - Karl Marx on the basic features of capitalism.