Day 6 – Capitalism
Can I limit my definition and concerns about capitalism to only 500 words? Let’s find out!
I was listening to a podcast last week that I will not name; just using this as a jumping-off point. The hosts are generally liberal or left-leaning, and the normal topic of the show is the tech industry, but because of a reader question they were talking about tech CEOs and what they could do to push back against things like anti-labor practices, wealth inequality, and resource exploitation. In other words, the hosts were talking about capitalism, especially as it’s practiced in the early 21st century here in America and the world.
And one of the hosts said that they like capitalism. Specifically they said they like some parts of capitalism, some parts of socialism, but that neither one of them is the complete picture of how to organize society.
And that struck me as just dumb. It’s that whole “moderate” view where you try to thread the needle so you don’t take any particular stance. And my one thought was, how does this person define capitalism? Because by my understanding, there ain’t nothing good about capitalism in the basic idea. I would love to ask this person for their definition, but that would probalby just end up in an argument, and generally I like this person and their tech and social opinions.
Instead, here’s my baseline understanding of capitalism, and how it’s been running lately. The base idea of capitalism is that it’s good to accumulate capital. Capital is whatever tangible goods, objects, factories, or labor needed to make things people need. Capital is classically the machines and factories used to manufacture goods, but that ignores the very real labor that the workers in that factory also provide. The labor is also capital, human capital.
Folks with the most capital are called capitalists. We generally don’t examine, at least outside of lefty circles, what or how those capitalists accumulated their capital. How did they have the money to buy or have factories built? My inclination is that most of them inherited it, and then through the process of underpaying for the labor and overpricing the output, kept accumulating profits that gave them even more capital.
Because that’s the ethical failing, as I see it. Labor will always produce a surplus. A leftist thinks that the laborer should retain most if not all of that surplus. A capitalist, though, claims to own that surplus because they own the factory. To my mind, that’s a tautology. The factory was itself built by labor, and labor was underpaid for that construction, because the capitalist retains ownership of the property.
Capitalists, are, definitionally, profit extractors. Rent-seekers. That’s how they accumulate capital.
Let’s briefly touch on what capitalism is not. It’s not the concept of money, or markets, or buying and selling. All of those things existed before Adam Smith tried to define a new economic model. Capitalism is also not the idea of profit; that, too, existed previously in human history. Funnily enough, excessive profits was seen as a negative, nearly a sin, definitely a moral failing. It’s just that it was called usury (and to be quite honest, applied in a very discriminatory and racist way.)
I’d love to bring back the accusation of usury, but I’d apply that to billionaires. Are you with me?