Capitalism, the end of ideology
By Prem Misir, Ph.D.
THE cry for capitalism can be heard loud and clear today. Since the end of the cold war, we have witnessed a barrage of testimonies on the failure of Marxism and socialism. The former Soviet Union and several other Eastern European countries are consistently being cited as examples of the failure of socialism; many of these countries masqueraded with socialism as an economic system of production, when in fact, they really had totalitarian regimes driving the entire societies.
However, most of these so-called socialist experiments were non-Marxist versions of socialism. Today, the supercession of these experiments by capitalism is presented as a panacea for all of society's ills.
It is as if capitalism, the miracle-maker, is the ultimate champion of social and economic disadvantage. It is as if we have reached the end of ideology, meaning that capitalism is the last stage of economic evolution.
But this is not the case, as evidenced throughout history. Every economic system of production, as all social phenomena, is subject to change. The rate of change, however, varies from society to society.
Capitalism is an ideology for the rulers in a society where capitalism is the economic system of production. Capital accumulation, private ownership of the means of production, self-interest and the profit motive, and free competition, are important components of capitalism. Its unifying feature is individual competition. The supposed flourish of capitalism has stagnated and even weakened, as supported by the following: * The increase in joint-stock companies has occurred, but they have not consistently enabled accumulated capital to be redistributed as profit among shareholders. * The trade unions, while ably inflicting workers' demands on the capitalists, however, have left unchecked the pauperisation of the masses.
Real incomes of poor people, not only in third world countries, but also the poor from the United States, have declined, despite unionisation. * Modern capitalist states have set goals of intervention to protect the poor in such areas as establishing minimum wages, housing grants, school subsidies, social security programmes, and progressive tax systems to the creation of a welfare state.
Marx would have found some of these developments incredible. The purpose of these interventions is to effect a balance between private and public control over the activities of capitalism, in order to prevent labour exploitation. But given the consistent declines in real incomes and increasing poverty rates, even within the United States, we can hardly say that labour exploitation is a thing of the past. It is true that Marx did not foresee the expansion of the middle class brought about, initially, by capitalist endeavors. This new middle class has been acquiring shares in capital; therefore, they should have a vested interest in sustaining capitalism. But this development now has taken a u-turn. The middle class in the United States is shrinking. Median wages and salaries have decreased over the last two decades.
If the present trends in earnings continue, less than half of all Americans will be in the middle class by 2000. Today, this is shown to be true in the United States. * As capitalism penetrates the society, economic prosperity consumes the nation. This level of prosperity can dissipate class-consciousness, and may have very well done so during the different phases of capitalism. But given a shrinking middle class and rising poverty occurring together in the United States, the possibility of class-consciousness aggressively becoming part of the social fabric of society is real. * Clearly increasing poverty and a shrinking middle class, also, will require government interventions, such as, housing grants, school subsidies, etc. These interventions intended to protect the poor, invariably, are based on socialist principles. Capitalism as an economic system of production is fine if everyone starts on a level playing field. However, this is not the case in capitalism, also referred to as market economy. Support for these capitalistic elements is desired. However, capitalism by itself is not sufficient for any society with a high level of social stratification, that is, a society characterised by considerable inequalities. The United States, the bulwark of capitalism, has not worked well in the interest of working people; but capitalism has always enhanced the quality of life of the upper classes and the power elite. A close examination of the American Society will attest to this scenario. Right now, the US has about 38 million Americans living below the federal poverty line, 43 million without health insurance, and parts of the US like Central Harlem has an infant mortality rate higher than that of Bangladesh. Wealth and income inequality are spectacularly striking in the US.
According to the Statistical Abstract of 1993, this wealth constitutes real estate, corporate stocks, bonds, and business assets. The largest amount, 68 per cent of the wealth, is owned by 10 per cent of the country's families.
This 10 per cent controls over 50 per cent of all real estate, 90 per cent of corporate stocks and business assets, and 95 per cent of bonds. The super- rich, 0.5 per cent of Americans possess 27 per cent of the nation's total wealth. The average per capita income is about $19,000 per year, and the average family income runs about $36,000 annually. The top 20 per cent of the population earns about 44 per cent of the income in the US, and the bottom 20 per cent gets less than five per cent of the country's income. In the Reagan-Bush era with the use of supply-side economics (trickle- down economics), the evidence is clear that those in the highest income brackets did exceedingly well, while the working classes experienced reduced real incomes. The argument in supply - side economics is that exempting capitalists from the capital gains tax and other financial burdens, will induce these capitalists to plough more investments into their corporations, and in the final analysis, workers stand to benefit. The history of those Reagan- Bush years has demonstrated the fallacy of capitalism helping the working people through its individualistic orientations. More recently, allowing corporations to administer welfare programmes to corporations have produced minimal results for poor people in the US. The Asian financial crisis of 1997, especially the bankruptcy of Japanese Banks, shows how vulnerable capitalism is to the global economy.
The repercussions are being felt in the US, and the consequences are far from over. Societies with sharp inequalities may require a complementary relationship between capitalism and socialism. Fukuyama in the Time, May 22, 2000, believes that the rumblings of anti-globalists show that the egalitarian sentiment still is alive, and that socialism is making a comeback.
The push toward social equality is returning, as evidenced by the World Trade Organisation meeting in Seattle in 1999, the World Bank-IMF meeting this year in Washington, and most recently, in Prague, Czechoslovakia. Make no mistake about the changing nature of capitalism, or, for that matter, any economic system of production. Let's also not be naive about the social change process; change could involve internal modifications to a system, but that change also could lead to replacement. One spectacular change currently occurring in the United States is the application of convergence theory where both features of capitalist and socialist economic systems are adopted to form a hybrid or mixed economic system. Even this hybrid development in the United States, considered
The centre of capitalism is in itself, experiencing change, some manifest and some latent. The current glory bestowed upon capitalism, certainly, does not represent the end of ideology.
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