In Search of a Concise Explanation of Capitalism

24 05 2011

A few months ago I decided to give myself to a Marxist study of Capitalism for the purpose of being better able to explain its ills to friends, family, coworkers, and to people in general. Too many conversations have ended in me screaming “capitalism is just evil” at the top of my lungs in a crowded bar. That, or I get far too technical and obsess over the distinctions between use and exchange values (as a general rule, never try to explain TRPF on karaoke night).

This week I’ve just finished reading Das Kapital Volume I and watching David Harvey’s lectures to better prep myself on theory. And yes, Das Kapital is a long, boring book that uses antiquated language and is pretty redundant. It’s also well worth the read.

After reading the behemoth, a few other books by famous dead people and a couple more from not-so famous living people this is the most concise explanation of capitalism I came up with:

Capitalism is a historical system where workers, divorced from the means of production, must sell their labor for subsistence so that the upper classes may extract surplus value from their work.

Not really something we can fit on a t-shirt. Nonetheless, this statement incorporates 3 main attributes of capitalism that are critical to bringing people towards anti-capitalist beliefs.

1) Capitalism is a historic process.

Artistic depiction of the historical process of capitalism.

Artistic depiction of the historical process of capitalism.

We did not always have capitalism and the process that brought it to the forefront should be more widely know. The enclosing of the commons and the subsequent forcible divorce of peasants from their means of subsistence cannot be overly stressed. The succeeding passage of vagabond laws in which vagrancy was punished by brandings, beatings, and in some cases death highlight how unnatural the transformation from feudalism to capitalism was. Many people just wouldn’t accept a life in which they didn’t directly keep/sell what they produced.

This is a basic concept for most Marxists but fundamental to winning people over to alternative economic politics. Once it’s accepted that capitalism came about unnaturally we can start to discuss more just economic systems. This is also a great lead into a discussion on the need for accumulations of capital and its logical byproducts of imperialism and neo-liberal globalization.

2) Capitalism is based on the extraction of surplus value from exploited labor (i.e. labor theory of value [LTV]) through a wage system.

The banner “Workers Create All Wealth” might resonate with some but it seems like empty sloganeering to a lot of the population. LTV can be best explained through examples. Because America is more and more based on the service industry (an enviable result of mechanization according to Marx) I like to use the burger example.

Say you buy a burger for $4.00. What went into that price? The meat, buns, and other raw goods were purchased for $1.50; the electricity, water, rental, and other miscellaneous costs another $1.50; and the workers who produced the burger were paid $0.50 to an average of $7.00/hr each. This leaves $0.50 of profit for the burger going somewhere (Marx calls them the capitalist class). How was that $0.50 made?

Because the costs of machines, electricity, rent, etc. are at a relatively fixed price (constant capital) they cannot create this value. Also, because investment in start up capital only fronts the set-up costs it too cannot create value. The surplus vale (amount the burger is sold at minus the amount need to produce it) can only come from paying the worker less than s/he produced.

This revelation is intrinsic to a lot of the working class. It’s hard to force people to accept “innovation” or “investment” as the source of all wealth, and for good reason. Workers do indeed create all wealth.

Furthermore, due to LTV a wage system is needed. This is usually in the form a time-wage but it can also come as a piece rate system (paid based on number of items produced). The scheme is simple: buy labor from someone for, say 5 hours, and pay them enough to keep ‘em happy. The capitalist breaks even at 4 hours (that is, has covered all costs associated with selling burgers, hiring labor, etc.) and the last hour of work is solely for the capitalist’s profit.

This wage system is needed to obscure the true source of profit. Could you imagine what would happen if the burger maker stopped working after s/he had paid for his/herself?

3) Capitalism requires workers to be divorced from the means of production.

Social classes are fundamental for capitalism to function. Class differentiation starts by separating the majority of the population from ownership of the means of production; something that has been done historically through the closing of the commons and various repressive vagrancy laws.

If workers controlled the means of production they would not only own all the wealth they produced but also have a say in their exploitative conditions. Would 29 works have died in the Upper Big Branch mining disaster if they had a say in safety protocols? No, they would have never allowed their lives to be endangered by an endless search for profit.

What separates capitalism from other exploitative forms is the workers’ relation to the means of production. Under feudalism people owned most of what they produced. Everyone got screwed with having to pay tribute and didn’t own land but the vast majority still owned what they produced. Once liberated from serfdom the poor soon found a new lord under the bourgeoisie.

Craftsmen and small farmers became obsolete as a consequence of capitalism. Weavers, dye-makers, and any others had their knowledge centralized through the scientific revolution and then latter commodified through capitalism.

With the peasants having no access to land and the craftsmen having no “craft” the working class was born. The working class are people who have to sell their labor for a living (usually under the time-wage system) and have no control over the means of production. They create the wealth of nations and constitute their poor.


This is a short introduction into why capitalism sucks and is by no means meant to supplement  an actual study of capitalism. From here we can go to what better systems would look like and what needs to be done to get there. Leave a comment. Constructive criticism is welcomed.