Capitalism is an ailing, crisis-ridden system based on the exploitation of the majority of the world’s population. If the accumulation of vast wealth by a handful of people was a measure of a successful way of running society, capitalism would be judged in fantastic health. Despite the ‘Great Recession’ of 2007-09 and the new Covid-induced economic upheaval, the enrichment of the few at the expense of the many has intensified.
In Britain the average pay of the chief executives of the hundred biggest companies on the London stock market is up from 47 times that of the average worker in 1998 to 145 times today. During 2020 alone, when the Covid pandemic was at its height, the wealth of Britain’s billionaires increased by a fifth. Land ownership is overwhelmingly concentrated in the hands of a very few. Just 25,000 landowners own half of England, with 30% still owned by the old aristocracy and 18% by corporations, while the public sector holds just 8.5% and individual homeowners a mere 5%.
Capitalism is increasingly conflict-ridden, shown by the horror of the invasion of Ukraine, and is no longer capable of taking society forward. Its failure was graphically demonstrated in its catastrophic inability to deal with Covid. On the one hand, the pandemic demonstrated the enormous technological and scientific possibilities of modern society, from the development of vaccines to sophisticated genomic sequencing of the evolving virus, to apps capable of recording when any individual comes into contact with someone who has the virus. These were not developed, however, as a result of ‘capitalist greed’, as Tory Prime Minister Boris Johnson claimed, but mainly by huge state intervention.
And on a capitalist basis none of this technology was able to prevent the virus ravaging the globe, killing more than four million people. An endless succession of decisions by governments of capitalist politicians has been guided by the imperative of protecting profits, and therefore failed to contain the virus. In Britain the list is gigantic. It included doing nothing and waiting for herd immunity at the start, moving elderly and vulnerable hospital patients into care homes without first testing them for Covid, and failing to provide the financial and social support necessary to make self-isolation possible for millions of people. The official inquiry, when it eventually starts, will certainly be in the same tradition as the Chilcot Inquiry into the Iraq War, designed to cover up, delay and obfuscate rather than hold capitalist politicians to account. Building a powerful workers’ movement is the only way to really hold the Tories to account for their Covid crimes.
The response to the pandemic is only one example of capitalism’s failings. One third of the world’s population do not have enough to eat. Even in the richest countries in the world, the living standards of the majority have been falling, or at best stagnating, for many years. Of those, Britain is second only to the US for the levels of impoverishment that have taken place. In 2019, if UK workers had got the same share of national income as in the 1970s, the average median full-time salary would have been £5,471 a year higher.
Fifty years ago the majority thought that, even if they were suffering, their children would have better lives than them. Now the opposite is the case, and the myth of unending capitalist progress has been shattered. More than two thirds of young people expect their lives to be harder than their parents and their own children’s lives worse again. This pessimism is based on experience. Today, social conditions that many could take for granted fifty years ago, such as a permanent job with a living wage, a secure home, and the prospect of a living pension, are utopian dreams, particularly for working-class young people. In Britain in 2020 more than five million people had to claim benefits in order to make ends meet despite being in work, such are the poverty levels of pay. The poorest fifth of the population spent 40% or more of their income on housing, even when benefits are included. As the cost of living crisis intensifies these figures are getting far worse.
Capitalism’s failure is also writ large in its failure to deal with the developing climate catastrophe. The 2021 report from the Intergovernmental Panel on Climate Change (IPCC) warned that within two decades, temperatures are likely to rise by more than 1.5⁰C above pre-industrial levels, with devastating consequences. The previous IPCC report calculated the cost of the measures that would need to be carried out to prevent this would be $900 billion a year. They would include at least a fivefold increase in investment in low-carbon technologies, such as wind and solar power, and in energy efficiency measures like building carbon-neutral homes. The deployment of renewables will have to increase by up to 14 times. In addition, green transportation will have to be introduced, including electric cars.
All of this and much more could be achieved on a socialist basis. The capitalists, however, while they are increasingly forced to be seen to take some measures to counter climate change, are totally incapable of taking the necessary decisive action on the scale required. Capitalism is based on the private ownership of the means of production by a handful, and on the continued existence of competing nation states, leaving it unable to take the necessary decisive action. The major corporations that dominate the economy are responsible for the bulk of carbon emissions, and there is no prospect of them accepting a $900 billion hit to their profits in order to take the action needed. Nor will the capitalist governments in the nations where they are based, not wanting ‘their’ corporations to lose out to global rivals. Look at the Volkswagen scandal in 2015. The world’s second biggest vehicle manufacturer had systematically rigged its diesel emissions data. The EU took no action, pressured by governments to back their ‘own’ automotive industry, no matter that thousands of people die directly as a result of this pollution. Look at the way the Tories in Britain have encouraged fracking, despite the threat to the environment and our drinking water, in pursuit of quick profits for British capitalism.
Even the mainstream pro-capitalist press is increasingly forced to recognise the need for fundamental change to achieve the global action necessary on climate change. The Financial Times, for example, carried a piece in July 2021 arguing that it is “far too risky” to rely on the market to act decisively to halt global warming, and instead that “central planning” is needed to “formulate plans” for “energy, transport, buildings, industry and agriculture”. In other words, only the socialist transformation of society can save the planet.
An oppressive system
Capitalism is also incapable of overcoming the racism, sexism, LGBTQ+phobia, discrimination against disabled people, and other forms of oppression that is built into its foundations.
While mass movements have forced progress and improvements in social attitudes on all of these issues, they have not been able to eliminate oppression or prejudice, with all the horrific consequences for the oppressed. For the capitalist class, a tiny privileged minority who are exploiting the majority, ‘divide and rule’ remains an essential tool with which to retain power.
Blaming workers from a different country, of a different religion, or with a different skin colour or gender, remains a means by which the capitalist class can distract from the responsibility of their system, capitalism, for the misery inflicted on all working-class and oppressed people.
A failing system
Capitalism from its inception was based on brutal exploitation. It came into being, as the founder of scientific socialism Karl Marx put it, “dripping from head to foot, from every pore, with blood and dirt”. Nonetheless, over the few centuries of its existence it has repeatedly transformed the world, introducing gigantic steps forward in science and technique. However, the development of technology has never been driven by meeting humanity’s needs but by the insatiable lust for profit. Wealth and power have always been concentrated in the hands of a minority – the capitalist class. In its early days – despite the inevitable periodic crises that are intrinsic to capitalism, and despite its brutal exploitation and blind, unplanned character – capitalism nonetheless took society forward. The drive to maximise their profits pushed the capitalists to invest in the development of the productive forces, of science and technique.
Today the progressive side of this basic driving force of capitalism has rotted away. In Britain, where capitalism first developed, the rot has gone particularly deep. Capitalism is not driven by what is socially useful, but by where the biggest profits can be made.
Capitalism is supposedly based on ‘free markets’ and ‘free competition’. Never true, this bears no resemblance whatsoever to modern capitalism. The world market is massively skewed in favour of the most powerful capitalist nations while the poor countries of the world are super-exploited. At the same time, there is not free competition but a relatively small number of major monopolies who dominate in each sector. In Britain there are around 150 companies that dominate the economy. On the London Stock Exchange, for example, just the top 100 companies (the FTSE 100) account for around 80% of the total share value.
Globally, capitalism is increasingly unstable and conflict-ridden. US imperialism is still the most powerful nation on the planet but is no longer strong enough to call all the shots, as the horrific invasion of the Ukraine by a weaker imperialist power – Russia – has graphically demonstrated. The Western imperialist powers, above all the US, have used the Ukraine war to try and bolster their own position. However, as the working class and poor of Syria, Afghanistan, Palestine and many other countries can attest, none of the major capitalist powers offer any real way forward, and all are prepared to trample over national democratic rights whenever it suits their interests to do so. Despite the posturing of US imperialism, the Ukraine war will prove to be another indication of its decline. The catastrophe of Afghanistan was a humiliating blow to the US and its allies, as well as a nightmare for its peoples. The weakening of the US economically and militarily does not create a level playing field, however, but an increasingly fractious struggle between the major powers – above all the US and China – leaving the weaker nations to be buffeted by the storms, where their national rights can be trampled into the dirt for the short-term interests of the ‘great powers’.
Imperialism has always offered war, conflict and oppression to the oppressed peoples of the world, as the nightmares of Afghanistan – and the suffering of the Palestinian people – demonstrate. Now, however, inter-imperialist rivalry is fuelling increasingly brutal conflicts and proxy-wars.
For all the capitalist propaganda against government intervention into the economy, it actually takes place on a huge scale, to benefit not the majority of the population but the major shareholders of the big corporations. This was particularly true during the Covid pandemic, where the governments of all the richest capitalist countries pumped money into the economy at a level unprecedented outside of wartime. Britain’s Tory government paid 80% of eleven million workers’ wages over nineteen months, for example. Had Jeremy Corbyn, when he was the left Labour leader, proposed such a thing, he would have been even more viciously attacked for his supposedly ‘Marxist’ programme than was the case. In total, Jeremy Corbyn’s 2019 election manifesto pledged an £83 billion annual increase in public spending. Yet in 2020, Johnson’s Tories increased public spending by £203 billion, more than twice as much. This was largely supported by the capitalist class because it was aimed not primarily at helping the working-class majority, but at limiting the damage to their rotten system.
The pandemic marked a stepping up of state intervention to bail out capitalism, but it was not a new phenomenon. The response to the ‘Great Recession’ of 2008-09 was dubbed ‘socialism for the rich’, using measures like quantitative easing and ultra-low interest rates to pump money into the pockets of the elite, whilst at the same time imposing austerity on the rest of us. This orgy of cheap money did not result in any significant increase in investment in production, but in unimaginable amounts of wealth for a few. For example, in 2019 the FTSE 100 companies paid a record £110bn in dividends to shareholders, double of a decade previously.
Clearly, in a rational society there would be plenty of reasons to invest in developing science and technique. The need to create clean, green industry; the need to make sure everyone has access to the components of a decent life; the possibility of shortening the working week in order to allow more leisure time – all of these are obvious and urgent reasons to act. However, they ultimately count for nothing under capitalism, where only profit matters. As a result climate change is accelerating; in 2020 one in three people globally lacked access to clean water and adequate nutrition, and technological improvements in any company usually means not a shorter working week, but some workers being thrown on the scrapheap while others work longer hours than ever. For the capitalists in Britain it has become entirely logical in recent decades to focus on financial speculation rather than investing in production, because that is where the greater profits are to be made.
Profits from exploitation of the working class
Karl Marx and Friedrich Engels first explained over 170 years ago that the capitalists’ profits stem from the unpaid labour of the working class. Even in boom time the working class cannot afford to buy back the full product of its labour power. In periods of growth, capitalism can temporarily overcome this problem by ploughing part of its profits into developing the means of production. This in turn creates new factories, workplaces – superior organisation of science and technique – but even then at a certain stage all the same contradictions reappear. Over recent decades, however, investment has remained low while profits have been restored via the driving down of the share of economic output paid in wages, resulting in a huge transfusion of wealth from the working class to the capitalists – around £130 billion a year from 1980 to today. This, however, has further exacerbated the inability of the working class to buy the goods it produces, and helped lay the basis for new capitalist crises.
Political crisis and Tory splits
The economic crisis of capitalism has undermined support for all of its institutions, not least capitalist governments. In Britain the Tory Party, the traditional party of British capitalism, is in deep crisis. It is divided from top to bottom, and was able to win the last general election only via Boris Johnson’s right-populist ‘Poundland Trump’ posturing, promising to ‘get Brexit done’.
The working-class vote for Brexit contained lots of different elements. At root though, it was a cry of rage against the capitalist establishment, which was overwhelmingly campaigning to remain. The Socialist Party opposes the EU, which is a bosses’ club driven by maximising the profits of the capitalist elites across the continent. One example of this was the brutal treatment of the Greek working class by the institutions of the EU in the aftermath of the financial crisis. Greek workers’ wages fell by an average of over a third, yet the EU continued to inflict on them further devastating austerity.
The Socialist Party backed a ‘Leave’ vote in the binary choice referendum on the UK’s EU membership in 2016 for entirely different reasons to the right-wing Leave supporters. Our starting point was fighting for working-class socialist internationalism. With no mass force fighting for ‘Lexit’, however – as a result of Jeremy Corbyn going back on his historic position on the issue, in one of his earliest concessions to Keir Starmer and the Labour right – the referendum campaign was dominated by right-wing capitalist politicians on both sides.
Johnson, having whipped up nationalism during the referendum and after, was then able to successfully harness popular anger that the referendum result might be ignored to win the general election. The Socialist Party does not give a shred of support to the Brexit deal that he went on to negotiate, which offers nothing but further job and wage cuts for working-class people.
For entirely different reasons the big majority of Britain’s capitalist class also opposed the deal, because they thought it would be destabilising, and would hit them in the profits! They were right. For British capitalists, Johnson – like Trump was for US capitalism – is an unreliable representative of their interests. That he became prime minister – elected as Tory leader in 2019 by just 92,153 Tory party members – is ultimately a reflection of the anger and alienation felt towards all governmental parties that act in the interests of the capitalist class. Back in the 1950s there were more than two million members of the Tory Party, but that social base was only possible at a time when capitalism was improving the living standards of big sections of society. Today, being a reliable representative of the capitalist class tends to be an electoral liability. The Tories current majority in parliament will not protect them from being shaken by huge class battles, with the potential to force them out of office in short order. Only the unpopularity of the reliable representatives of capitalism on the Labour front benches might save them for a period, although that is far from guaranteed.
Search for a socialist alternative
There is a deep anger at the horrific consequences of twenty-first century capitalism, and growing numbers searching for an alternative. This can go in all kinds of directions, including in the development of new right-populist or even far-right parties as discontent with the Tories grows. However, the dominant and most important trend is the search for a solution on the left. Particularly among young people, identification with socialism is on the rise. For example, in July 2021 an opinion poll by the Institute of Economic Affairs, which describes itself as the “UK’s original free-market think-tank”, found that its pro-capitalist views are in a small minority among young people in Britain. Instead they reported that 67% of UK 16-34 year olds want to live in a “socialist economic system”. Three quarters of those polled agreed with the assertion that climate change was specifically a capitalist problem, while 78% blamed capitalism for Britain’s housing crisis. They favoured the nationalisation of industries such as energy, water and the railways, and are concerned that private sector involvement would put the NHS at risk. 75% agreed that “socialism is a good idea, but it has failed in the past because it has been badly done.”
No wonder that the capitalist elites globally are terrified of the growing opposition to their system. They fear that ‘the pitchforks are coming’ for them, as US billionaire Nick Hanauer famously warned in the aftermath of the 2007-09 crisis. They have no solution to their problems, which are a consequence of the insoluble contradictions of their system. Correctly they worry that the state intervention they were forced into during the pandemic will reveal to millions that the market doesn’t work, and that dramatically increased state intervention is possible, therefore fuelling support for wide-ranging measures in the interests of the working class. That is what the Financial Times – the newspaper in which the British capitalist class discuss among themselves – meant when, in May 2020, they ran an editorial warning that the pandemic might bring “socialism on its coat-tails”.
On the other side, the Biden government in the US has drawn the conclusion that they have to try to save US capitalism by carrying out further state intervention in an attempt to increase the living standards of sections of the US working class. After 40 years of wage stagnation for the majority, over 140 million Americans officially lived in poverty before the pandemic. Now their situation is far worse. The majority of the US capitalist class supported the stimulus, at least initially before being asked to pay towards it. They are terrified on the one hand of the growing anger and leftward radicalisation of wide sections of US society – as demonstrated in the scale and support for the Black Lives Matter movement in 2020 – and on the other hand of the size of the continued base of Trumpian right-wing populism.
However, in practise the US stimulus has been quite limited, and it is clear that it will not be sufficient to overcome the underlying crisis of US capitalism. Nor are even its limited measures a path that is easily available to weaker capitalist powers. The leading Russian revolutionary Leon Trotsky made the point about the US New Deal stimulus package in the 1930s that it “offered no new exit from the economic blind alley” but was possible only in a country where the capitalist class had “succeeded in accumulating incalculable wealth.”
Today, the contrast between Biden’s stimulus, however limited, and the Johnson government’s post-Covid austerity could not be clearer. A diet of real terms wage decreases via inflation, and relentless cuts to benefits and public services are what is on offer for the working class in Britain, with – for example – NHS waiting lists expected to soar on present funding levels. Austerity is being combined with beefing up the state and criminalising protest via new repressive legislation, in a vain attempt to curtail the mass protests that will inevitably result.