A Basic Teardown of Capitalism
and how its late stages reveal its inherent flaws and iniquities
by Skip Pulley
*taken from the forthcoming book "Apathy in Babylon"
Capitalism, as an economic system, is fundamentally characterized
by private ownership of the means of production and operates on the
principle of so-called market competition. Its supporters argue that it fosters
innovation, efficiency, and economic growth by incentivizing
individuals and businesses to compete in producing goods and
services. However, critical analysis reveals several inherent
challenges and issues associated with capitalism that are now being exposed all together as having the built-in mechanisms of racism, inequality and exploitation. The unethical inner-workings of the capitalist concept are now being widely acknowledged and more easily understood by the masses, providing insight into the eventual (and imminent) economic collapse of the fiat petrodollar and the Anglosphere.
Negative Aspects Highlighted by Systemic Decay
Exploitation:
A crucial component of capitalism is exploitation, which occurs when workers are paid less than the full value they create. Capitalists extract surplus value from the labor process, which constitutes their profit. This leads to inadequate wages, poor working conditions, and a lack of job security for workers. This system relies on the labor of
workers who do not own the means of production. In seeking to
maximize profits, business owners pay workers less than the value
of their labor, extracting surplus value. This asymmetric power
dynamic causes income inequality, as wealth concentrates in the
hands of those who own capital, leaving workers with limited
bargaining power and precarious economic circumstances.
Income Inequality: Capitalism generates a significant disparity in wealth and income distribution. The system creates substantial wealth for a select few which is not evenly distributed among the people who actually generate it (a textbook definition of exploitation). The accumulation of capital tends to amplify the divide between the rich and the poor, leading to societal tensions and social instability. This aspect is exacerbated with the absence of redistributive policies or regulatory frameworks aimed at mitigating inequality. A significant portion of wealth and income often accumulates in the hands of a minority, while the majority struggles to make ends meet. According to the Oxfam International report 2020, the world's richest 1% owned more wealth than the bottom 90%.
Market Failures and Externalities: Capitalism, by nature of its fractional trading and investment models, will invariably lead to market failures in which certain goods and services that are beneficial to society, such as public goods and services, are underprovided. Additionally, negative externalities, like environmental degradation, often arise when the costs are not borne by the producers but by society at large. Due to the complete lack of standard intervention (or accountability), such as corporate regulation or taxation, these issues have become systemic problems with broad societal implications. Fractional reserve banking, for example, creates an environment with inherent instability, such as procyclical and predatory lending, by allowing banks to lend out a large portion of deposits. The final nail in systemic coffin came from the walls between investment and commercial banking being officially torn down, with the passing of the Gramm-Leach-Bliley Act in November 1999. This legislation repealed key provisions of the 1933 Glass-Steagall Act, allowing commercial banks, securities firms, and insurance companies to merge.
Short-Term Focus: Capitalist markets prioritize short-term gains over long-term sustainability. This results in decisions that are detrimental in the long run, such as insufficient investment in infrastructure, environmental sustainability and the intangible economic value of the workforce's collective skills, knowledge, experience, health, and personal traits. Companies may focus on quarterly earnings at the expense of future stability or societal wellbeing. The pressure to maximize short-term profits leads businesses to neglect long-term social and environmental sustainability. This typically results in exploitation of natural resources, pollution, and inadequate investment in vital public works and social programs.
The Meritocracy Myth: Capitalism is frequently lauded
for promoting a meritocratic society in which hard work leads to
success. However, systemic inequities in hiring practices, corporate suppression of innovation, lack of access to education or networking opportunities, debt or negative equity and the lack of investment capital hinder this ideal considerably. Social
mobility is intentionally limited, reinforcing existing class structures rather
than dismantling them. The ideal that individuals advance based solely on talent and hard work is undermined by these systematic barriers and social disparities, which are deliberately put in place by the owners of capital to prevent individuals from achieving their potential within the system.
An Examination of Class and Capitalism
“Class is this difference between those who do the work, the overwhelming majority, and those who gather the profit
into their hands. The way our society splits up the output leaves those who get the profits in the position
of deciding and figuring out what to do with them.” - Richard Wolff
Common False Paradigms Cited by Capitalism
Apologists
Some common paradigms promoted by capitalism apologists include the idea of the "free market" as entirely self-regulating and inherently just. In reality, markets are often distorted by monopolistic practices, political influence, and information asymmetries. In addition, the notion that capitalism inherently promotes individual freedom, overlooks or ignores the systemic barriers and structural inequalities that limit opportunities for most people. These false paradigms or myths are used by defenders of capitalism in an attempt to justify the system's outcomes or dismiss the systemic flaws.
The Top Three Arguments
Trickle-Down Economics: This paradigm suggests that economic growth benefiting the wealthy will eventually trickle down and improve the lives of the poor. However, empirical evidence has shown that trickle-down economics fails to materialize, and income inequality typically worsens.
Free Market Perfection: Apologists argue that free markets are self-regulating and efficient, and government intervention is generally detrimental. However, free markets can fail to account for externalities, public goods and market power, leading to inefficiencies and inequalities.
Competition as the Ultimate Solution: While competition may be beneficial, it is not without its flaws. Unchecked competition can lead to monopolies, oligopolies, and exploitative practices. Additionally, competition may not always address social and environmental concerns effectively.
The "Benevolence" and "Natural Progress" Myth
Undue Credit for Human Advancement: Apologists often claim that the dramatic improvements in living standards, healthcare, and education over the last three centuries are direct results of capitalism. However, this is a false correlation; many of these gains, such as the 40-hour workweek, child labor laws and minimum wages were actually won by labor movements and unions supported by socialists and communist movements, despite fierce opposition from capitalists. Likewise, the "Lifting All Boats" fallacy, the idea that "a rising tide lifts all boats" is absurd, prima facia. While GDP may occasionally grow, wealth increasingly concentrates at the top, leaving billions of workers without a living wage.
The "Voluntary Exchange" and "Free Market" Paradigm
Coerced Participation: Capitalist defense often rests on the idea of "voluntary exchange" between consenting parties. However, this is a paradigm of coercion, as workers who do not own the means of production are forced to sell their labor simply to survive, making the "choice" to work for a capitalist system anything but voluntary. The evidence of this concept is supported by existing laws that prohibit people from "un-plugging" themselves from systemic society. In many states in the US it is illegal to generate power independently of a public grid system, or collect rainwater, or exchange goods and services in a system of barter without registering as a corporation with limited liability - and is heavily regulated by tax authorities. (The IRS considers bartering to be a taxable event, meaning the fair market value of goods or services received must be reported as "income" which is diametrically opposed to the legal definition of income.) US Legal frameworks are designed to keep individuals as active participants in the capitalist economy, through mandatory and forced participation in unfair taxation.
The Illusion of the "Free" Market: There is a common belief that capitalism is synonymous with free markets. However, critics argue that truly "free" markets don't exist; because all markets have rules and boundaries, and many "capitalist" successes actually relied on state intervention or protectionism. Seemingly unregulated markets rely on complex, enforced rules that benefit dominant players. A prime example is the financial sector, where "too-big-to-fail" banks receive implicit government guarantees, creating a rigged system rather than a truly competitive one.
The "Entrepreneurial Risk" Myth
Asymmetric Risk: Apologists justify high profits as a reward for the "risk" taken by entrepreneurs; but this paradigm is easily proven false because the primary "risk" faced by an aspiring capitalist is merely falling back into the working class. Furthermore, when systemic risks lead to failure (e.g., the 2008 financial crisis), the public bears the cost through bailouts while the capitalists retain previous profits. It is also a misconception that the business owner carries all the risk. In reality, so-called risk is spread across an ecosystem of investors, lenders, suppliers, and employees. "Risk" functions as a moral shield for the appropriation of surplus value. From this perspective, the claim that entrepreneurs deserve profit because they take risks is actually circular logic, because it assumes the right to own the means of production and the products of labor in the first place.
Defensive Fallacies and Historical Revisionism
"No True Capitalism": When faced with the failures of modern economies (like inequality or instability), apologists often use the *No True Scotsman fallacy, claiming that current systems are "crony capitalism" or "mixed economies" rather than "true" capitalism, effectively insulating the theory from any real-world criticism. The reality is, all capitalism is crony capitalism, based on the inseparable driving mechanisms of planned obsolescence, the fractional reserve system and systemic exploitation.
*The "No True Scotsman" fallacy is an informal logical fallacy where someone attempts to protect a universal generalization from a counterexample by arbitrarily redefining the group’s criteria. Instead of acknowledging the flaw, they shift the goalposts, excluding the counterexample by asserting that "no true [etc.] would behave that way"The "Zero-Sum" Mischaracterization: Defenders of capitalism claim its critics view wealth as a finite pie (a zero-sum game) and ignore wealth creation. Critics generally respond that they do not ignore wealth creation but focus on who creates it (labor vs. capital) and how it is distributed. Banks, for example, only keep a minimum fraction (e.g., 10%) of deposits, often set by the central bank, to meet withdrawal demands (when you make a deposit, you are actually lending the bank YOUR money, which is why they pay YOU interest). "Money Creation" is supposedly when banks lend out the remaining 90%. Those loans are deposited back into other banks, allowing for further lending and expanding the total money in the economy, known as the "money multiplier effect". The problem is, this practice leads to artificial credit expansion; an increase in the money supply and bank credit created "out of thin air" by central banks, rather than through genuine savings, which causes constant and consistent instability. "Wealth Creation" is the misconception that all wealth generation is positive-sum (creating new value), ignoring that significant wealth is acquired through "extraction" (monopolizing, renting, or transferring existing resources) which does not create new value.
The Exploitation of Capitalism
Richard Wolff discusses how capitalism is exploiting the working class in favor of corporate profit
via cyclical consumption, wage slavery and planned obsolesce.
While capitalism is seen by some as an engine for economic development and innovation, these so-called benefits are rarely if ever weighed against the inevitable inequality, exploitation, and environmental harm. Just as Feudalism, Imperialism and Slavery, the days of Capitalism were numbered from it's inception. All of those systems share a commonality in that were intentionally designed to be unsustainable, unequal, unstable and sometimes even volatile, because that particular design is the only assurance of constant growth and expansion. On the flip-side of that coin, as capitalism decays, the difficulty of exploring alternatives increases, almost exponentially. The empirical and logical observation that a system cannot be changed from within (through internal conflict or otherwise) was most recently articulated by Dr. Martin Luther King Jr., in the months preceding his murder at the hands of the State Dept. and FBI in 1968. Ironically, prior to that, it had been most clearly articulated in Europe, by Adolf Hitler (whom I am not necessarily defending), when he realized in the mid 1930's that Wall Street was building the 3rd Reich as fascist experiment of reverse engineering. Wall St. financiers and industrialists knew perfectly well that capitalism will always devolve into fascism, so they wanted to see what would happen if they "started from the bottom" as it were.
the mid-21st century will be multiple tons of irradiated TNT.
Skip Pulley
Editor in Chief
*Babylon is the Israeli-influenced Anglosphere; built by chattel slavery, genocide, colonialism & apartheid.
The paradigm of Babylon is when the language of liberation (Zion) is co-opted to justify subjugation (zionist colonialism). The meta-physical and cultural refuge of the spiritual "Zion" can only be reached by allowing Babylon to destroy itself -
by using apathy as a functional anesthesia or hibernation while reserving empathy for indomitability - Skip Pulley
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