Q: Capitalism/competition generates wealth for everyone and promotes improved quality of goods, better prices and advancement of technology to improve the quality of life. How is this evil? Why is capitalism a failure? Does a communist or socialist society mean that no one can be rich — that no matter how hard I work, I’ll never be able to buy a nice house or have nice things?
A: The gap between the richest and the poorest is growing rapidly in the U.S. and reaching greater extremes than ever before. How is this generating wealth for the tens of millions who are homeless, jobless, employed at part-time jobs when they need full-time jobs, have to work two and three jobs just to make ends meet, or work for a minimum wage that can’t cover reasonable living expenses? Capitalism uses technological improvements to lay off workers and keep all the benefits for the companies’ top brass and major shareholders, rather than sharing the benefits among all through reduced working hours, raising pay when productivity increases and investing in socially useful production.
This creates a basic problem for capitalism: the mass of workers that capitalists strive to pay less to are the same as the mass of consumers the capitalists try to sell more to.
This is why U.S. industry consistently runs at less than 70 percent of capacity, because technology enables the production of many more goods than workers can actually afford to buy (at prices that satisfy the capitalist drive for ever-greater profits). It is not that there is any dearth of demand or need for more goods, more food, or more infrastructure, it is that there is a limit to how much of this can be done profitably enough for the capitalists. This is one of the reasons for the relentless capitalist search for new markets around the world.
A related problem of capitalism is that within each industry, the major producers each seek to expand their share of the market, but they can’t all succeed at the same time — somebody will lose. Marxists call this the “anarchy of production.” This leads to speed-up on the job, layoffs and “overproduction” of goods. With fewer workers employed, fewer workers have money to buy things, so effective demand goes down, leading to more layoffs, plant closings, etc. Eventually enough goods and production capacity are destroyed that industries begin to hire again, and the build-up of the economy starts over. Marxists call this a “crisis of overproduction.” Capitalist economists call this the “business cycle.” While stimulus policies advocated by economists like John Maynard Keynes can delay or mute this cycle, they have proven unable to eliminate it, which leads to misery for laid-off workers and their families and to various efforts to get workers (through taxes, fees and other schemes) to pay for the capitalists’ crisis.
Capitalism has had successes, but we believe it has outlived its usefulness and has become a detrimental system. Socialism builds on the successes of capitalism — the ever-increasing productive capacity, the development of new technology, development of economies of scale in production and distribution, among others. Socialism harnesses these strengths, but for the social good and the good of our planet, rather than for the greedy few. As well, fixing worldwide problems like global warming requires cooperation on a massive scale, not competition or wasteful production.
Capitalism socializes production. Socialism will use that production and the profit that comes from it to provide a better life for the workers who, using the precious resources of our natural environment, produce all value in society.
To address your question about personal wealth, there is a difference between working hard versus exploiting others to become filthy rich — like the obscenely wealthy top 1 percent in our country. In a socialist society you wouldn’t be able to become a billionaire by exploiting the labor of other people. But you could certainly work hard, and probably be more inspired to do so, and earn enough to have a comfortable home and lifestyle, and basics like education and health care would be available to all at no or minimal cost. In socialist countries, there is a wage differential, providing incentive to work harder, but the differences between the highest paid and lowest paid are far smaller (on the order of 8 to 1) than the vast gap we have in the U.S. today. So incentives for hard work, certainly. Incentives to exploit others, not at all.
We invite readers to submit questions about the Communist Party USA, its basic policies, and a Marxist viewpoint on current social issues. The answers are provided by Marc Brodine, chair of the Washington State Communist Party. Questions can be sent to cpusa @ cpusa.org.