Is capitalism dead?

Brenda Rosser

Though the ‘market’ never was the perfect allocator of resources nor a good adjudicator of social priorities the current paradigm is an illegitimate and far more dangerous form of global sovereignty. “Those who guide the nation-states are fearful that if the world economy is made more efficient and national borders are not allowed to impede the most efficient use of land, capital, labor, ideas, then the nation-state will have no reason to exist.”

CAPITALISM has been understood to be an economic system whereby the main forces of production are: (i) owned and controlled by an enterprising minority who (ii) produce and sell in competition with one another, (ii) on the basis of the exploitation of those who live by the sale of their labour power.

In other words, in capitalism, the market is understood to operate to fulfil certain crucial public functions that in other systems such as socialism are fulfilled by governmental institutions. The functions of the market may include the allocation and distribution of resources, the development of needed goods and services and the setting of social priorities. However, as far back as the early 1970s Richard Barnet and Ronald Muller presented compelling evidence in their book ‘Global Reach’ that “the intersecting and cumululative effect of mounting concentration and globalisation of the US economy [had] negated the market as a social institution in significant ways.” [1]

Critical problems are being experienced now in the realm of government policy because the market assumptions upon which they are based on are no longer realistic. The arms-length transactions between buyer and seller are rare. Multinational conglomerates currently negotiate directly with governments for vital resources such as forests, agricultural land and water. Or they cooperate and/or share ownership between themselves. Oligopoly concentration and other forms of stranglehold over whole industries and regional economies means (among other things) that higher interest rate costs to business doesn’t translate to the curtailment of output. Inflation is also likely to arise as any increase in costs are passed on to captive consumers. Conversely, tax credits don’t result in increases in production at anticipated rates.

Prices, generally, cannot be relied on as signals for allocating resources and market imperfections are no longer occasional nor correctable.

Moreover, labour doesn’t so much ‘sell’ it labour-power to employers. It would be more accurate to say that wages are far more a function of social expectations largely set by those that have levers in dominant media and influential institutions.

Though the ‘market’ never was the perfect allocator of resources nor a good adjudicator of social priorities the current paradigm is an illegitimate and far more dangerous form of global sovereignty.

“Those who guide the nation-states are fearful that if the world economy is made more efficient and national borders are not allowed to impede the most efficient use of land, capital, labor, ideas, then the nation-state will have no reason to exist.”

Conclusion of the ‘Chief Executive Officers Roundtable’, Business International gathering in Jamaica on 6th January 1971.

[1] ‘Global Reach’, Richard Barnet and Ronald Muller. Simon and Schuster, 1974. SBN 671-22104-3 Paperback. Page 268

Earlier: The Unholy Trinity – the IMF, the World Bank and the WTO. Part One.