3.3 The nature of capitalism: Misconceptions and scientific conceptions

Before considering in more detail some of the economic policy goals inherent in a green social democracy we need to digress momentarily to consider, albeit briefly, the nature of capitalism, contrasting common misconceptions with something at least closer to scientific conceptions. Recommended to the reader interested in a better understanding of the nature of capitalism are the related works we refer to in this chapter.

There is a necessary qualification to our attempt to identify "scientific conceptions" of the nature of capitalism. Whereas debate within the community of natural scientists eventually leads to consensus on what theories have the status of being scientifically confirmed by the available evidence, the same cannot always be said of the results of debate within the community of social scientists. Nowhere is the "science" more problematic than in the case of economics, where the persons engaged professionally in the study of the economy include a preponderance of those funded or otherwise politically constrained to make the system function in the interests of continued capital accumulation.

Listed below as "scientific conceptions" are those that the authors accept as scientifically corroborated. These can be found throughout the works cited in this chapter. Contrasting to these are corresponding misconceptions. Their prevalence confirms Marx's view that "the ruling ideas of any society are ever the ideas of its ruling class". If that be true, then the replacement of these misconceptions by scientific conceptions should ultimately correspond to a change in the ruling class and in the socio-economic system that the present ruling class heads. In our view, this would be a change from capitalism, now guided by neoliberal theory and policy, to what we have defined (primarily in our second chapter) as green social democracy. A ruling class that may in practice today number no more than 7,000 interlocking directors of the world's most powerful capitalist corporations would thus give way to rule by all the rest of us.

Peter Phillips and Kimberly Soeiro have described our present ruling class as a "superclass". "They are the Davos-attending, Gulfstream/private jet-flying, money-incrusted, mega corporation-interlocked, policy-building elites of the world, people at the absolute peak of the global power pyramid. They are 94 percent male, predominantly white, and mostly from North America and Europe. These are the people setting the agendas of the Trilateral Commission, the Bilderberg Group, G-8, G-20, NATO, the World Bank, and the World Trade Organization." [See: Phillips & Soeiro, The Global 1%: Exposing the Transnational Ruling Class (www.global research.ca/index.php?va&aid=32356).]

For engaging book-length works of investigative journalism on our present global ruling class and how they exercise their direction of our political and economic lives, readers may find the following informative: David Rothkopf (2008, Farrar, Straus and Giroux) Superclass: The global power elite and the world they are making, and Chrystia Freeland (2012, Doubleday Canada) Plutocrats: The rise of the new global super-rich and the fall of everyone else.

The sources of wealth?

Scientific conception (classical and Marxian political economy): nature and human labor are the sources of all wealth.
Misconception (vulgar and neoclassical economics, especially the neo-liberal world view): the claim by capitalists that their additional contribution is the capital consumed in the process of producing goods and services. In reality, this part of capital can be traced to nature and to the expenditure of human labor power, purchased but not created by capitalists. The "work" of capitalists in the process of producing and selling goods and services is to add to their own bank accounts some of the proceeds. The short-changed accounts are those of nature and the people who have provided their labor. [Aside from Karl Marx's Capital, Volume I, the reader can also find a comprehensive contemporary correction of the misconception promulgated by the representatives of Capital in Istvan Meszaros (1995, 2010, Monthly Review Press) Beyond Capital.]

Distribution of income from the sale of goods and services?

Scientific conceptions (Marxian political economic theory): (1) After all the expenses of production and distribution of goods and services are paid, including the wages and salaries due to the workers and the replacement costs of used up materials and tools, the remainder of the income from the sale of the commodities and services (called "surplus value") is split between personal consumption expenses of the capitalists, their investment in expansion and their savings for later investment. (2) The part retained by workers is less than the value of the labor power they have expended in the production process; the surplus is added to the income, savings and investment accounts of the capitalists (called "exploitation of labor".)
Misconceptions (neo-classical and vulgar economics, neo-liberal view): (1) Workers and capitalists participate as equals in the market place, the workers selling their labor power and the capitalists purchasing that labor power; (2) The part of the income retained by the capitalists is equal to their contribution in the forms of their own capital and labor.

Social and environmental outcomes of capitalist markets?

Scientific conceptions (most serious academic economists): (1) a characteristic of capitalism is the continual expansion of capital, driven by incessant competition which sees those groups of capitalists who have been less successful in expanding the capital under their control being eaten up by other groups of capitalists who have been more successful; (2) the development of capitalism is in the direction of monopolistic capitalism, facilitating collusion between the smaller number of competing capitalists to the disadvantage of smaller capital formations, relegated to the role of exploited suppliers to the more monopolistic ones; (3) the distribution of capital between its various branches (such as the production and sales of consumer goods and services, production and sales of the tools and services needed for production, savings and investment of money capital, and purchase and sale of real estate) tends to move away from equilibrium, resulting in periodic economic crises; (4) given the inherent priority, reinforced by law in the societies dominated politically by capitalists, of profits over environment and human development, the conservation of nature and the development of human beings are underserved; (5) results, in part, of these tendencies are periodic social and environmental crises, increasing in severity over time.
Misconceptions (promoted by corporate sponsored right-wing think-tanks and neo-liberal politicians): (1) capitalist competition in a free capitalist market results in ever-increasing economic growth and development by replacing poorly functioning businesses with those that do a better job of meeting human need; (2) increased competition would be the result of capitalist markets freed of government "interference"; (3) a capitalist market freed of government "interference" would naturally restore equilibrium, reducing if not eliminating the periodic crises that have occurred throughout the history of capitalism; (4) when freed of excess government "interference", capitalist corporations acting in their own self-interest would serve to protect nature and enhance human welfare and development; (5) social crises and environmental degradation have always been with us, evidence that the causes are other than the natural behavior of a capitalist economic system when it is left free of government regulation.
(For an understanding of the tendency of capitalism towards crisis, including a well-documented analysis of the 2008 crisis, see: David Harvey (2010, Oxford University Press) The Enigma of Capital.)

Welcome!

This website was launched September 1, 2010 in support of a green social democratic alternative to neoliberal capitalist policy and practice. The primary result is a work by Charles and Karen McFadden of seven chapters, grouped under the title, Towards a Green Social Democratic Alternative to Capitalism available here in pdf and html formats.

Below under the heading What’s New can be found the most recent materials posted on this website, including opinion pieces, book reviews, articles and selections from the 2017 edition of the main work.  For the interest of new and returning visitors, new materials will be included quarterly.

What's New

NEW & REVISED

Authors' Preface

1.6 The epochal nature of the period we are entering

6.0 The socialism we need against the "socialism" of the 20th century

6.8 Additional concerns about 20th century variants of "socialism"

6.9 The people united!

7.1 Policy alternatives and political movements to advance them

OPINION

Charles and Karen McFadden, Is revolutionary transformation on the agenda

Charles and Karen McFaddenHumanity on the Brink

Charles and Karen McFaddenMovements of Resistance to Movements for System Change

Charles McFaddenTranslating Green Principles into Education Policy and Practice

Charles and Karen McFadden, The Role of Revolutionaries in the Labor Movement

REVIEWS

Charles McFadden, The People United for a More Just Sustainable Future

Karen and Charles McFaddenCan emergent early 21st century neo-fascism be defeated without coming to grips with late 20th century restructuring of capitalism into a global system

Karen and Charles McFaddenA Dominant Capitalism or a Sustainable Environment? Why we can't have both.

US CORNER

William I. RobinsonThe Crisis of Global Capitalism and Trump's March to War

William I. RobinsonTrumpism, 21st Century Fascism, and the Dictatorship of the Transnational Capitalist Class

CANADA CORNER

George HewisonWINNIPEG 1919 & THE COLD WAR

George HewisonArt Manuel - "Unsettling Canada

George HewisonThe NDP and LEAP

RECOMMENDED

Albert Einstein, David Swanson, Jill Stein, Chris Hedges, William I. Robinson, and others Selected articles for Winter 2018

FEATURED WORK

ECONOMICS

1.7 The dynamics of capitalism as a system and the limits of single issue reforms

2.11 The economy in transition towards a new deal for labor and the community

3.1 The challenge of a moribund economic system

3.7 Public banking: A cornerstone of a green social democracy

4.7 Economics and culture

6.5 Using the non-market economy as an opportunity to begin moving beyond capitalism

HISTORY

1.6 The epochal nature of the period we are entering

2.0 Theoretical Perspective: Defining Green Social Democracy

2.5. Socialism and green social democracy in historical materialist theory

4.3 Culture in historical perspective

5.1 Contrasting a green social democratic world with the currently prevailing, but challenged neo-liberal one

6.2 Socialism and capitalism as coexisting social systems

LABOR

2.11 The economy in transition towards a new deal for labor and the community

5.7 Defeating neo-liberal capitalism: The role of social movements

7.3 Justice: Creating a just society, based on the right of all to a dignified, secure existence

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Creative Commons License: Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) applies to all work posted on this website except that which appears with authors whose last name is other than McFadden, in which case standard copyright should be assumed to apply.