CAPITALISM

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.  

– John Maynard Keynes

For many long centuries most people worked hard to make a living. But there were also a few who lived on the labors of the working majority. The workers were generally in the fields, sowing and harvesting; in crafts like weaving and pottery, in small stores selling articles for a modest income.

With the coming of the industrial age, all this began to take on a new and grander aspect. Factories required people to manufacture large quantities of the same item which would be sold to a huge number of buyers near and far from the manufacturing centers. In order to establish factories one needed significant amounts of money. This was referred to as capital. Factories became  the economic heartbeat of industrial countries.

Only people with considerable cash built and owned factories. Thus arose three classes of people in industrialized societies: Those who had enough capital to launch their own companies (factories, industries, businesses) which employed people who had no capital; those who managed the running of the factories: clerks, accountants, etc.; and those whose muscle and skill were used for the actual manufacture of the goods.  This third group constituted the working class. This replaced the feudal system where lords and serfs were the two principal classes. The church-men attended to the spiritual needs of both classes.

As factories and industries grew it was no longer possible for individuals to have the money to start and run industries with  their personal resources alone. Sometimes the government put in the capital to run industries. Later on, some countries adopted this mode in the industrial age.

Since more and more capital was needed for big factories another solution was found for this. Capitalists invited others to put in some money for which they would be recompensed from the profits the factory owner would be making. This type of lending money to someone to run a monetarily productive business came to be called investment. Investments are the fuel for the engine called capitalism.

Capitalism is thus the system in which individual citizens – and not the government – invest money  with others to generate wealth through businesses and industries, in return for periodic recompense, called dividends.

In the early stages of this system the laboring class often toiled under deplorable conditions for a pittance to run the factories from which the capitalist class became rich. Gradually, the living condition of the laboring class improved in most capitalist countries. In the twentieth century the average citizen in industrialized capitalist countries became economically better off than ever before.

Aside from the ideological divide between capitalism and its opposing system in which the government invested the capital, capitalism led to some serious problems which it has yet to solve. For one thing, corruption slowly crept into the system. Also, given that the primary goal of capitalism is to increase the bottom-line, capitalist institutions and individuals are constantly working hard, spurred solely by the profit motive. Capitalism enables the investor to acquire wealth with ease – by merely investing money – even without the greed that is a powerful force in capitalism.

Another serious problem with capitalism is that it has made some people in society enormously richer than most other people. According to a 2007 report “the richest 1% of the American population owned 34.6% of the country’s total wealth and the bottom 80% owned 15%.” Currently at the global level more wealth is concentrated in the hands of one per cent of the world’s population than in others. Apparently there are efforts to alter this asymmetry, but it is difficult to see how this can be done, short of snatching the wealth from one small group and distributing it to the vast majority: an unlikely possibility.

In today’s world a global orchestration of capitalism seems to be at play, following the slogan: “Capitalists of the world, unite! You will have a lot more to accumulate when you scheme together.” Such enormous concentration of wealth is unhealthy for two reasons. First, like anything in excess, too much money has the potential to lead to moral corruption. More seriously, since money is power, that power in the hands of an unelected few can be quite dangerous. This is equally true at the international level.

The governments of some capitalism-based countries have been trying to put checks on uninhibited accumulation of wealth in the hands of the super-rich by levying heavier taxes on them. This does not occur in many places for two reasons: One is the philosophy that we need the super-rich to invest more money for economic growth. Secondly, legislators in capitalist countries tend to become puppets of the moneyed classes; so such laws are seldom passed or they have proven to be ineffective.

By its very nature capitalism will make the rich richer, and the poor stay in their status quo. This is because by definition the rich are the ones whose income far exceeds their expenses. So when a person reaches that level he/she invests the surplus and earns even more money. Thus the wealth of the rich continues to grow like a snowball unless a national or international financial crisis or catastrophe occurs. On the other hand, the not so rich who have no money to invest have no means for augmenting their riches. In other words, capitalism by its very nature fosters accumulation of wealth in one section of the citizenry. The best that one can expect is that the rich and the super-rich share their pelf for the larger good through charities, donations, endowments, and the like. Andrew Young described this as humanitarian capitalism.

Fortunately for the super-rich separating them from the really poor is a sizeable middle-class in capitalist societies with a reasonably respectable standard of living. A good many of this class participate in the capitalist system by making investments. But for this buffer class, the huge gulf between the very rich and the very poor in some capitalist countries today is not unlike what existed in eighteenth century France prior to the French Revolution, thus making the conditions rife for a bloody uprising. As long as there is a comfortable middle class such an uprising is unlikely. That is why the movements like the March on Wall Street often fizzle out.

It is difficult to deny that capitalism has been very useful and effective for the economic health and growth of many countries. Its positive potential is still there, available for all countries. However, it appears that inherent to it is exploitation of one kind or another, corruption, greed, and the emergence of a super-rich and sometimes a super-poor class also. Thus, capitalism  has succumbed to the eudys principle: every good thing introduced in society will sooner or later lead to something bad.

Many enlightened and righteous voices have been raised against capitalism. Most of the harsh criticisms of capitalism come from the intellectual and liberal classes in capitalist countries. Somehow not many of them are persuaded to move to non-capitalist countries. The moral question facing capitalism is not whether the system is so evil that it has to be dismantled, but rather in what ways it can be civilized by reducing the blatant income inequality which seems to be inevitable in the system. Those who favor capitalism point out that this is to be done not by making the monied class less monied but by making the less monied class richer.

Capitalism is but one instance of the universal truth that there are inherent inconsistencies built into all human institutions which make it impossible, in principle, to ever achieve consensus on important human-related issues.