The Myth of Capitalism 2

The Myth of Capitalism 2

Yesterday, we introduced the Myth of Capitalism, the belief that Free-market capitalism is an unquestionably beneficial and moral economic system. And we claimed that this belief could not be more mistaken, because Capitalism is inherently immoral.

Today we will show that Capitalism is based on an immoral act that cannot be separated from it, an act of force that make the whole system intrinsically unjust.


Ineradicable immorality of capitalism

Capitalism is fundamentally and ineradicably immoral because it is founded on an act of violence. Force is at the very beginning of Capitalism in a way that cannot be excised without destroying Capitalism itself. What am I talking about?

Consider the very first capitalist act. The worker—that is, a person who has nothing else to sell but his own labor—goes to the marketplace to try to find someone willing to purchase his labor. There he meets the capitalist—that is, a person who has a store of money that he doesn’t need to support himself. The worker names a price for his labor, a price he calculates will feed himself and his family while still providing good value to the capitalist.

The capitalist, however, is not on an even playing field with the worker. The capitalist can support himself, without working, on the money he has accumulated. So he sees that he can afford to offer the worker less money than he requests, because if the worker says No, the capitalist can just scuttle the deal and wait until later.

But the worker cannot wait as long as the capitalist, because he cannot support himself. Eventually he has to give in to the demands of the capitalist. This is a form of force: the capitalist can make the worker do something he doesn’t want to do by making him fear for his survival.

This is the violence at the heart of capitalism. Every capitalist holds a gun to the head of every worker, whether or not he chooses to use it, and whether or not he even realizes it. If he doesn’t use his advantage, he’s not going to make as much profit as he could. So he probably will use it.

The Myth of Capitalism has become so ingrained that most people no longer even realize that the whole system is based on economic force. It has become so widespread that virtually everyone now holds up megacapitalists as role models—precisely because they have mastered an essentially immoral system for amassing profit!


After the weekend, we will continue our consideration of the Myth of Capitalism, and we will see that, although Capitalism is intrinsically unjust, its unjust character can be mitigated by the good works of decent people.

Until Monday, then.

4 comments (Add your own)

1. Servius wrote:
Ummm, There's more than one capitalist to bid on the worker's labor. Because of this the wage a person receives will tend towards the actual value he produces for his employer.
Most people have the experience of taking one job as an entry level position be able to command higher and higher wages as he gains experience and skills.

21 March 2013 @ 10:22 PM

2. Marshall wrote:
Ummm. That is part of "the myth of competition" not talked about. Economists simply assume competition over labor will bid the price up to a certain limit. In reality capitalists are not purely competitive. They often cooperative and create monopoly power at the expense of both workers and consumers. The other problem is large corporations can move their production anywhere in the world while workers are far less mobile. Thus "free trade" creates another huge imbalance of power.

26 April 2013 @ 10:43 PM

3. Marshall wrote:
The real reason capitalists do not use their advantage fully and bid down unskilled labor to something below bare subsistence (in the first world at least) is that they fear the political consequences. They know if they do that people will unionize and protest and strike, causing them problems. Avoiding conflict with organized labor is part of their economic calculation.

26 April 2013 @ 10:51 PM

4. Marshall wrote:
I'd also note that your notion that the wage a worker earns is the value he produces for his employer is absurd. His wage is largely inversely proportional to the scarcity of the particular skill he can offer. If his skill is in over-supply, his skill is partially set through political calculation as I described before. This political calculation is the reason wages are "sticky" and don't fall readily during a depression as predicted by silly neoclassical econ101 theory. In either case his wage has little to do with value produced unless you make an absurd contortion that the value produced IS the wage paid by definition. I notice right-wingers doing this all the time but it's fundamentally dishonest.

26 April 2013 @ 11:06 PM

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