Opportunities for economic gain foster antisocial and dangerous practices, such as bribery, workplace hazards and legislation to protect monopolies. When profits and corporate survival become the prime concern, all sorts of abuses occur. Corporations bribe government officials (legally or illegally) for special favours. To save money, unsafe working conditions are allowed to persist and injured workers fired and given as little compensation as possible. Lobbying and pay-offs are used to encourage politicians to pass legislation to benefit the most powerful corporations, by giving them trade concessions, preferential treatment, government contracts, and guaranteed monopolies.
Selfishness is encouraged and cooperation discouraged. Since wealth and income are acquired primarily by individuals, capitalism fosters individualism and encourages selfishness. Sharing of ideas and labour is discouraged when only a few reap the benefits.
Men use positions of economic power to maintain male domination. It is well known that most of the wealthiest owners and powerful executives are men. Capitalism obviously is quite compatible with patriarchy. Similarly, dominant ethnic groups can use economic power to maintain their domination.
Military and police systems, which are needed to protect the system of private property, are also used for war and repression. This will be discussed further later.
The profit motive encourages production and promotion of products with consequences harmful to human health and the environment, such as cigarettes, pesticides and greenhouse gases. It is common for products such as pharmaceuticals to be sold even though they have not been adequately tested or are known to have dangerous side-effects, and for efforts to be made to boost sales and avoid paying compensation to victims. Most environmental impacts are treated as “externalities”: their cost to society is not incorporated in the price. Consequently, there is no built-in market incentive to eliminate environmental impacts that are borne by others, and a strong profit incentive to oppose attempts by governments or others to incorporate these costs in prices of goods. An example is the strenuous efforts by soft drink manufacturers against legislation to require a refundable deposit for bottles. In contrast, there is little or no profit incentive to promote certain options that are healthy and environmentally sound, such as walking to work or sharing goods.
As noted before, this is a stark presentation of the case against capitalism. Obviously not every generalisation applies universally. For example, though work is often unsatisfying, for some workers it is satisfying much or all of the time. The problem is that providing satisfying work is not a goal or design principle of capitalism. Similarly, some owners and managers make decisions for the public interest at the expense of profits. But although individuals can do good things, the capitalist system has no built-in method of encouraging this. The key problems with capitalism are predictable consequences of the way it is organised.
Strengths of capitalism
It is possible to get carried away with the problems of capitalism. Problems always need to be taken in context; especially important is comparison with alternatives. Capitalism may have problems but some other systems have worse ones.
As well as countering one-sided anticapitalist critiques, examination of capitalism’s strengths is also important in order to formulate better strategy. By understanding what capitalism does well, it may be possible to avoid unrealistic hopes and plans — such as the expectation that capitalism is on the verge of collapse.
Capitalism has repeatedly demonstrated the capacity to promote great increases in the productive capacities of societies, harnessing individual and social drives for improved living standards.[4] This is not guaranteed, as periodic recessions, depressions and collapses have demonstrated; also, increased economic productivity is possible in other systems such as state socialism. However, capitalism has an impressive record, with economic growth in numerous countries being far greater globally than in the days of feudalism. Comparisons between North and South Korea and between East and West Germany suggest that capitalism fosters economic growth far more effectively than state socialism. This can be attributed to the harnessing of self-interest, competition and the search for profits, compared to the bureaucratic constraints of state socialism. True, rampant capitalism growth is responsible for many problems, from inequality to environmental destruction, but the positive side is dramatically increased productivity.
Although capitalism is compatible with dictatorship, it also thrives in societies with representative government in which certain civil liberties are maintained, at least for most people most of the time. The “creative destruction” by which new products and new markets supersede old ones is facilitated by a moderately flexible society in which there is a degree of open dialogue and adaptation to new conditions. Furthermore, representative government provides social supports and opportunities for some citizen participation that can mitigate some of the worse excesses of capitalism, thus protecting the system against itself. For example, a free press and freedom of assembly together can operate to expose harmful products and damaging policies, thus protecting workers and consumers and ultimately ensuring a greater productive capacity.
Although many harmful and wasteful products are produced, capitalist markets are responsive enough to produce and distribute many largely beneficial products, such as vegetables, bricks, beds and recorded music. Indeed, the amazing range of consumer choice is one of the most enticing features of the capitalist system. In buying screws, breakfast cereals, travel packages or building materials, there are options for nearly every taste and requirement. Obviously there are limits to choice: taxpayers are de facto consumers of “defence services” but do not have a choice between military troops, conflict resolution services and peace brigades. But where choice is catered for by markets, even a small market segment can attract entrepreneurs, such as book publishers or cleaning services for tiny niche markets.
Capitalism judged by principles for a nonviolent alternative
Any challenge to capitalism needs to have some alternative in mind. In chapter 5, some nonviolent alternatives to capitalism are assessed against five principles, which themselves can be viewed as features of an expansive interpretation of nonviolence. Here is an evaluation of how capitalism rates.
Principle 1: Cooperation, rather than competition, should be the foundation for activity.
Contrary to this principle, capitalism is founded on competition between firms and between workers, and discourages cooperation, except for the purposes of competition. It appeals to people’s worst impulses with the claim that pursuing self-interest serves the greater good. However, all available evidence from every field suggests that cooperation works better than competition.[5]
Principle 2: People with the greatest needs should have priority in the distribution of social production.
Capitalism does not operate according to this principle. Instead, the standard idea is that allocation of the economic product is through jobs: people get rewarded for doing the work to keep society going. This is a sort of meritocracy. However, although jobs do some of the allocation, there’s far more to the story. What actually determines a large proportion of the allocation of goods and services are:
4.
See for example David S. Landes,