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The Weekly paper of the New Communist Party of Britain

What’s wrong with capitalism?

by Ray Jones

Well, capitalism dominates and perpetuates a world in which millions live in poverty and disease.

Capitalism leads to wars in which millions have died and continue to die.

In the leading capitalist country and the one that is considered among the richest in the world – the USA – 34 million live below the poverty line. Over 10 per cent of American workers work more hours than in most industrialised countries with only two weeks paid holiday per year. Wages are only worth as much now as they were 40 years ago. Thirty-million non-elderly people are without health insurance. Over half a million are homeless.

Capitalism arose from feudalism, in which most people were peasants who worked on the land and were tied to the land.

King and nobility owned and controlled all the land and the produce of the land and the peasants themselves.

But a small middle class of merchants, adventurers and younger sons of gentry amassed vast wealth from trade and plunder around the world – the slave trade becoming central.

Developments in agricultural techniques and machinery also produced much more profit. The enclosure of common land and the introduction of sheep farming instead of arable also increased profit and drove the workers no longer needed into the towns, just when the new factories needed labour.

This wealth was invested in scientific and engineering development until a whole new system and class appeared and came to dominate the old ruling class of landowners.

These capitalists found that with the industrial revolution they could employ people in factories producing goods to be sold on the market and at the end of the process be left with huge amounts of money.

Where did this surplus, this profit, come from?

Karl Marx had an answer. Value is added to the materials by the labour of the workers. The goods could be sold over and above all the costs of producing them because of the work, the labour power, expended on them.

But workers only spend part of their time producing enough goods to cover, when sold, enough money for their own wages. The rest of the time they are in fact producing profit for the owners.

Because the owner, the capitalist, controls the process, they are in the position of being able to cream off for themselves the profit produced by the workers. They ensure that wages are less than the extra value put into the goods and they pocket the difference.

You often hear of manufacturers “adding value” to their goods by making them more complex. They are adding more labour time to the product, which adds value and means they can put up the price.

A T-shirt with a design on is worth more, all other things being equal, than a plain one. What is difference? The extra work gone into it (plus some extra costs but these tend to be small).

If the capitalist passed on this value where it is due, to the workers, the capitalists would be no better off – so they try not to! There are limits to this exploitation of workers, however.

The work force must be able to maintain itself – they wouldn’t want workers dying of starvation on the job, would they?

Beyond that, there are also limits set by the social conditions of the time, such as the demand for labour on the labour market – because workers’ labour becomes a commodity too.

Limits are also set by the strength of the workers themselves – because workers are not like pieces of cloth or sewing machines. They are capable of understanding the situation and they are forced into collective defence of their living standards in unions and eventually for their broader rights in political parties.

You therefore have the essential and continual conflict within capitalism between bosses and workers over the value added by labour power.

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The increase in machinery and technology by itself actually decreases the profit of the capitalist because there is less labour power needed, and less labour power means less value and less surplus value – that is profit.

To escape this problem the capitalist must increase the scale of the whole production process so that the number of workers is increased. Although each individual worker produces less profit, over-all there is more profit produced, which helps in the short term; and/or the capitalist can decrease the workers’ share to maintain or increase their own.

But then the next improvement in technology, spurred on by competition, sets the process in motion again, and so on, in a vicious circle.

The profit must come from somewhere, if not from their workers at home then from workers overseas, where wages are lower. Call centres abroad are only one modern example of this. Wars are fought to establish influence over areas of the world and enable capitalists, joined together in nation states, to control resources.

Wars also destroy commodities, weapons as well as everything else, and therefore counteract over-production – which is the bane of capitalism.

Capitalism struggles to produce more profit, and in the process more goods are produced. Prices fall because less value is going into the goods, and because of competition between the capitalists and the tendency to flood the market.

But wages also fall because there are fewer jobs on the labour market and competition for jobs increases. There is also de-skilling on a large scale and therefore lower wages. So, the workers, the majority of the population, still cannot afford to buy the goods.

The system therefore goes into a nose-dive, as in the 1930s, until enough goods are destroyed in war or wasted, or a new technology comes along and helps them to squeeze more profit from the workers.

So, millions die in the service of capitalism.

These problems are not brought into the system by militant workers or commies but are part of it. Part of the nature of capitalism.

This means that the system cannot go on forever. If we do not do something about it, if we do not guide its death throws into a revolution that produces a collective, planned, rational society that is not based on exploitation, then the end result will be melt-down and barbarism.

That is why we need a party that understands this and acts accordingly. We in the New Communist Party (NCP) are trying to build that party.

This party must fight for the good of the working class as a whole – not just a section of it.

It must work to unite the class around demands that advance and benefit all workers, because only a united working class can ultimately win against a capitalist class that, history has shown, will fight desperately to keep what it has.

It must do so for both shortterm and long-term aims. Both for immediate reforms such as: better wages and conditions, better education, better health services, better housing, a better environment, against war, against authoritarianism and injustice and for more democracy (workers power), against racism, sexism and homophobia, which can divide the workers, and for revolutionary objectives.

Short-term victories are possible. They are good in themselves and act as schools of struggle, but in the longer term a revolution, the over-throwing of capitalism and the building of a workers’ state, socialism, is necessary to right the wrongs in our society.