This essay arose at the prompt of someone asking, in an academic-based on-line discussion group:
"Collapse of Capitalism? Do you think it's possible? If so, what do you think will trigger it? And, what will replace it? Just curious - it's good to think outside of the square!" May 22 08 12:28 a.m. Golden Key Society.
When I decided to add my comment to the list of 20+ it was supposed to be short and quippy. But over the last few days it grew beyond anything even resembling a comment. I did put a truncated form of it in the Golden Key comment chain. Below is my complete response, which has elements that are outside the box of our popularly acceptable economic ideology.
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Collapse of Capitalism? Curious question.
Some of the answers posted to date are also interesting, but for the most part they are little more than bobble headed quips supporting the currently accepted socio-economic ideology glossed in our media and business schools as 'capitalism'. For those who don't like the word 'ideology' you may perhaps substitute 'zeitgeist' or 'weltanschauung', but I've supplied a few definitions of 'ideology' at the end of this essay that confirm 'capitalism' as an ideology.
[In light of the comments to this question, another interesting question, one of self-discovery, is 'How do I know that I am not imprisoned by an ideology?' I propose an answer to that in an essay I wrote called 'Death by Freezing,' which is posted here in this blog.]
There is a need for definitions, as has been commented, because the capitalism being discussed here is a kind of 'secularized-protestant' version that has evolved from the industrial revolution and been modified by the selective mis-application of some of Adam Smith's and David Hume's economic theories and a completely circumscribed understanding of history. The evolution of Christ's Mass to today's xmas epitomizes that process. (And for anyone seriously interested in this issue I strongly suggest that Smith, Hume, JS Mill be actually read, instead of the 'MacDonaldized' versions that have been propagated throughout the departments of economics and journalism via the Chicago School of Economics and their derivatives. Those who take the plunge will be surprised what they say about money and labour, for example.)
Could capitalism, even by definition, collapse? First, what, exactly, is capitalism? Capitalism is …
… an economic system, dominant in the Western world since the breakup of feudalism, in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets (Encyclopædia Britannica Online).
... a system in which the central institutions of society are in principle under autocratic control. Thus, a corporation or an industry is, if we were to think in political terms, fascist; that is, it has tight control at the top and strict obedience has to be established at every level — there's little bargaining, little give and take, but the line of authority is perfectly straight forward (Chomsky, Noam Chomsky: Language and Politics, p162).
… an economic system in which land, labor, capital and other resources, are owned, operated and traded by private individuals or corporations for the purpose of profit, and where investments, distribution, income, production, pricing and supply of goods, commodities and services are determined by private decision in a market economy rather than through government control or central economic planning by the state. A distinguishing feature of capitalism, in contrast to other market economies, is the prevalence of wage labor sold to corporations for the purpose of shareholder profits (Wikipedia).
… a system in which private capital or wealth is used in production or distribution of goods; the dominance of private owners of capital and of production for profit (Oxford Shorter, 1993).
… the organized pooling of capital by private citizens in order to create, through ventures of various sorts independent of the government, additional wealth (Guy A. Duperreault).
… an economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market (Answers.com).
… an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state (Apple Dictionary).
And so, by these definitions, capitalism could in theory collapse. But only by these definitions, because the pragmatics of human ingenuity and requirement will see to it that capitalistic enterprise is never squelched. Throughout history banks have come and gone, but the spirit of capitalism has never been extinguished. Capitalism existed in the USSR and Communist China, even if it wasn't official or legal. And the ingenuity of capitalism is demonstrated by the unstoppable development of underground capitalistic economies within prisoner populations, which was entertainingly described in the Japanese PoW setting of the novel King Rat by James Clavell.
And while this is a kind of answer to the question, I think that the nature of the query warrants a more extensive analysis. Here goes…
John Ralston Saul, in looking at the functioning of capitalism in recent history, wrote that "Capitalism was reasonably happy under Hitler, happy under Mussolini, very happy under Franco, and delirious under General Pinochet" (The Doubters Companion: A Dictionary of Aggressive Common Sense, p.56). He then adds that "What these experiences indicate is that democracy and capitalism are not natural friends. That doesn't mean that they have to be enemies. But if allowed free run of the social system, capitalism will attempt to corrupt and undermine democracy, which after all is not a natural sate. Democracy was a gradual and difficult creation against the stated desires of the natural sectors of power (authoritarian, military, class)" (p.57).
Is this not what has been happening to North American democracies, as the corporate 'free market' takes greater and greater control of the political systems? And has not that control been perfectly demonstrated in 2008 with the banker and auto maker bailouts?
And these bailouts allude to a common confusion in our age that 'economy' equals 'society.' This confusion has arisen, in large part, because of the media's propagation of that conflation and their adulation of greed as an economic benefactor of society. For example, when the media argues that this or that is good or bad for the economy it is commonly understood that that means good or bad for society. And while there is a connection between them, their being equal is false, and that falsity is easily proved. Man-made or natural disasters wreak havoc on societies, but always create massive bursts of economic activity. For example, the Exxon Valdez, Katrina, 9/11 and war. And, perversely, sickness is better than health for an economy because protracted illness, especially when it includes medical malpractice, generates more economic activity than does well being. Thus what is good for the economy does not unequivocally equal good for society. However, economic collapse has the power to collapse a society, and has done so throughout history. Which is why, in part, the financial bailouts. But societies can and do exist with very little of what we call an economy capitalistic or otherwise, such as (the now almost nonexistent) hunter-gatherer tribes and in the world's 'backwater' communities.
Much of today's discussion has been predicated on this moment in time as if all history but ours is irrelevant, and as if 'our' capitalism is an acme of not only economic, but of democratic, societal organization. And some have overweeningly cited wealth generated as a sign of capitalism unimpeachable 'goodness'. That's been said by every wealthy nation of itself, and that specious argument conveys poor understanding of just how wealthy and capitalistic were the Persians, Egyptians, Romans, Chinese, Indians, British, throughout history and despite the various forms of government extant within them. However, capitalism is not some blessed event into which we have been lucky enough to have been born. It is simply a method, albeit a very important one, of economic organization that has existed within various societies under various political systems in various forms to various extents since humanoids began exchanging goods and services.
There is, however, one distinctive difference between most past capitalistic experiments and ours, which is the absence of the slave labour that up until relatively recently was an important element of societal economies. And that is a challenging economic twist, because our slave-free 'democratic' version requires that there is extant a readily available pool of labour large enough to supply, and poor enough to need to supply, their labour to the capitalists at a price. Which is why our business news media obsessively express grave concern over workers being paid too much, when one would logically think that high wages would be a key component of a wealthy democratic society. Adam Smith and JS Mill both thought so too – see (Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, Bk. I, Ch. 8, “Of the Wages of Labour," and John Stuart Mill, Principles of Political Economy with some of their Applications to Social Philosophy, Bk. V, Ch. 10 par 32.) So it is odd that our creative capitalists have chosen to combat high wages without slave labour while keeping an adequate supply of needy workers in their media lauded Export Processing Zones. EPZs are designed specifically to circumvent any vestiges of social-democratic responsibility to their host nations and perhaps epitomize the form of capitalism extolled in this forum by minimizing or removing taxes, minimal labour hours and pay, worker health and safety, and pollution requirements.
Please read Aristotle's The Politics! In it Aristotle gives an excellent analyses of the various form political forms that societies can take. For example, he cites the 'proper' forms of government as being
(1) Royalty, or the rule of one.
(2) Aristocracy, the rule of a few.
(3) Polity, or the rule of the citizens at large.
He elaborates that these forms can be perverted [his word, not mine] in the following manner:
(1) tyranny
(2) oligarchy
(3) democracy,
... "for tyranny is a kind of monarchy which has in view the interest of the monarch only; oligarchy has in view the interest of the wealthy; democracy, of the needy: none of them the common good of all' (The Politics Vol. 1, book 3). By these definitions America's political right-left argument, currently masked as an economic one, is really an argument about extending their oligarchy or moving towards a democracy or polity.
Collapse of Capitalism? That is the wrong question, because capitalism will always exist in one form or another.
The more interesting question is whether or not these most recent social consequences of self-serving oligarchic practices will awaken a population from its unconscious complacency with greed as a social good.
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Definitions of Ideology:
1: visionary theorizing
2 a: a systematic body of concepts especially about human life or culture b: a manner or the content of thinking characteristic of an individual, group, or culture c: the integrated assertions, theories and aims that constitute a sociopolitical program (Merriam-Webster Online).
A system of ideas or way of thinking pertaining to a class or to individual, esp. as a basis of some economic or political theory or system, regarded as justifying actions and esp. to be maintained irrespective of events (Oxford Shorter, 1993).
A system of ideas and ideals, esp. one that forms the basis of economic or political theory and policy (Apple Dictionary).
Tendentious arguments which advance a world view as absolute truth in order to win and hold political power. … Followers are caught up in the naïve obsession of these movements. This combination ensures failure and is prone to violence. That's why the decent intentions of the Communist Manifesto end up in gulags and murder. Or the market-place's promise of prosperity in the exploitation of cheap, often child, labour (John Ralston Saul, The Doubter's Companion: A Dictionary of Aggressive Common Sense, 169).
A set of beliefs, aims and ideas, especially in politics. An ideology can be thought of as a comprehensive vision, as a way of looking at things (compare Weltanschauung), as in common sense (see Ideology in everyday society…) and several philosophical tendencies (see Political ideologies), or a set of ideas proposed by the dominant class of a society to all members of this society. The main purpose behind an ideology is to offer change in society through a normative thought process. Ideologies are systems of abstract thought (as opposed to mere ideation) applied to public matters and thus make this concept central to politics. Implicitly every political tendency entails an ideology whether or not it is propounded as an explicit system of thought (Wikipedia).
1) The body of ideas reflecting the social needs and aspirations of an individual, group, class, or culture.
2) A set of doctrines or beliefs that form the basis of a political, economic, or other system (Answers.com).
1. the body of doctrine, myth, belief, etc., that guides an individual, social movement, institution, class, or large group.
2. such a body of doctrine, myth, etc., with reference to some political and social plan, as that of fascism, along with the devices for putting it into operation (Dictionary.com).
Any wide-ranging system of beliefs, ways of thought, and categories that provide the foundation of programmes of political and social action: an ideology is a conceptual scheme with a practical application (philosophers dictionary).
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