Find the full lesson plan here. The United States and many other nations around the world are capitalist countries, but capitalism is not the only economic system available. Younger Americans, in particular, are challenging long-held assumptions about the way our economy functions.
A newly formed class of merchants began to trade with foreign countries, and this newfound demand for exports hurt local economies and began to dictate overall production and pricing of goods. It also led to the spread of colonialism , slavery , and imperialism. By the 18th century, England had converted into an industrial nation , and the dawn of the Industrial Revolution saw an explosion of manufacturing overtake the island.
It is within those smoky factories and flammable textile mills that our modern idea of capitalism — and the opposition to it — began to fully flourish. Indeed, if you judge by measures such as inequality and environmental damage, "the performance of Western capitalism in recent decades has been deeply problematic", the economists Michael Jacobs and Mariana Mazzucato wrote recently in the book Rethinking Capitalism. However, that does not mean there are no solutions. So, will capitalism as we know it continue in its current form — or might it have another future ahead?
Capitalism has spawned thousands of books and millions of words, and so it would be impossible to explore all its facets. That said, we can start to understand where capitalism could be headed in the future by exploring where it began. Between the 9th and 15th Centuries, autocratic monarchies and ecclesiastical hierarchies dominated Western society. These systems began to fall away as people increasingly asserted their right to individual liberty. This push for a greater focus on the individual favoured capitalism as an economic system because of the flexibility it allowed for private property rights, personal choice, entrepreneurship and innovation.
It also favoured democracy as a governing system for its focus on individual political freedom. The shift toward greater individual liberty changed the social contract. Previously, many resources were provided by those in power land, food and protection in exchange for significant contributions from citizens for instance, from slave labour to hard labour with little pay, high taxes and unquestioning loyalty.
With capitalism, people expected less from governing authorities, in exchange for greater civil liberties, including individual, political and economic freedom.
But capitalism would evolve significantly over the following centuries — and particularly so during the second half of the 20th Century. After World War Two, the Mont Pelerin Society , an economic policy think tank, was founded with the goal of addressing the challenges confronting the West. Its specific focus was on defending the political values of an open society, rule of law, freedom of expression and free market economic policies — central tenents of classical liberalism.
Its ideas eventually gave rise to "supply-side economics". This was the belief that lower taxes and minimal regulation of the free market would lead to the most economic growth — and, therefore, better lives for all. In the s, coupled with the emergence of political neoliberalism, supply-side economics became a priority for the US and many European governments.
This newer strain of capitalism has led to increased economic growth worldwide, while lifting a substantive number of people out of absolute poverty. But at the same time, critics argue that its tenets of lowering taxes and deregulating business has done little to support political investment in public services, such as crumbling public infrastructure, improving education and mitigating health risks.
Perhaps most significantly, in many developed nations lateth Century capitalism has contributed to a significant gap between the wealth of the richest and poorest people, as measured by the Gini Index. And in some countries, that gap is growing ever-wider.
What will the US economy be like in , or ? How big? Growing how fast? What jobs will it contain? How many? A great deal of time and money is spent, both by governments and companies, trying to answer these questions, as well as they can which is, inevitably, not very well.
Maybe my children would have more than me; maybe not. Either way, the condition of the future was unlikely to have much to do with human activities. This is why pre-capitalist societies tended to be deeply religious; a good harvest was in the hands of weather systems, which in turn meant it was in the hands of the Gods. Marx accused religion of being the opium of the masses, distracting them from capitalist exploitation.
But capitalism has steadily undermined religion by reliably promising that the future will in fact be materially better, and not because of divine intervention but because of the manmade market.
The greatest promise of capitalism is that each generation will rise, on the shoulders of the one before, as a result of the natural workings of a market economy. It should be no surprise that the greatest challenges to capitalism come when that promise begins to be questioned. If capitalism loses its lease on the future, it is in trouble.
Markets run on psychology. We work to live see my previous essay in the series on work. At an individual level, we might say we are saving for a rainy day. But collectively, savings allow for capital accumulation, for investment, which spurs growth.
The basic human instinct to see our children flourish has been powerfully channeled through market-led growth. We work not only for ourselves, but for our children. We might invest in their education, so that their enhanced skills will mean a better life. People will invest in a better future if — and it is a very big if — there is a good chance that it will pay off, that the system reliably delivers that better future. Capitalism not only produces a society focused on the future, it requires it.
If the promise of a better future starts to fade, a vicious cycle sets in. Why save? Why sacrifice? Why stick at education for longer? For the wage-laborer, the real tragedy is not the sale of her labor-power; it is the inability to sell it. What can be worse for one who must sell a commodity than to find no buyer? Workers, it appears, have an interest in the health of capitalists, have an interest in expanding demand on the part of capitalists for their labor-power—by education, tradition, and habit, they come to look upon the needs of capital as self-evident natural laws, as common sense.
The reproduction of workers as wage-laborers requires the reproduction of capital. Do we need any further reasons for the continuation of capitalism as a system? Let me throw in just one more before we consider some of the implications. Workers are not simply dependent upon the state of capital in general for their jobs and thus their ability to satisfy their needs; they are dependent on particular capitals!
Precisely because capital exists in the form of many capitals, and those capitals compete against each other to expand, there is a basis for groups of workers to link their ability to satisfy their needs to the success of those particular capitals that employ them. In short, even without talking about the conscious efforts of capital to divide, we can say that there exists a basis for the separation of workers in different firms—both inside and between countries.
In other words, we can easily see how workers may see other workers as the enemy and will make concessions to their employers in order to help them compete better. When we think about the dependence of the worker on capital, is it difficult to grasp why capitalism keeps going? Capitalism tends, in short, to produce the workers it needs. What about economic crises?
Some people predict the collapse of the system once a week. But, the system does have crises—periods in which profits fall, production drops, people are unemployed. Without question, an economic crisis brings the nature of the economic system to the surface.
When there are unemployed people, resources, machinery, and factories—and at the very same time people with the need for those things that could be produced—it is pretty obvious that production in capitalism is not based on human needs but, rather, only on what can be produced for a profit. This is a time when people can be mobilized to question the system.
However, so long as people continue to think capital is necessary , then the solutions they look for will not be ones which challenge the logic of capital.
The same will be true in the case of the environmental crises that capitalism produces. The same point needs to be made in relation to the struggles of workers against capital to reduce the workday, improve working conditions and raise wages—both directly against specific employers and also in the attempt to capture the state and to use it in their own interests.
So long as workers do not see capital as their own product and continue instead to think of the need for healthy capitalists as common sense and as in their own interest , they will hold back from actions that place capital in crisis. As long as workers have not broken with the idea that capital is necessary, a state under their control will act to facilitate the conditions for the expanded reproduction of capital.
Here, in a nutshell, is the sorry history of social democracy—which, despite the subjective perspective of some of its supporters, ends by reinforcing the rule of capital. So, we return to our question—what keeps capitalism going? How is capitalism reproduced as a system? I think you can see the answer that I am offering: capital tends to produce the working class it needs.
It produces workers who look upon it as necessary—a system that is unfair, one that requires you to struggle constantly to realize your needs, a system run by people out to get you, yet a system where the reproduction of capital is necessary for the reproduction of wage-laborers.
The reproduction of workers as wage-laborers is necessary for the reproduction of capital.
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