Anarchism

Anarchism is an oft misunderstood social system, probably because it claims to not be a system at all! This of course is not true. Anarchism is a system of practiced social principles based on self-organization, voluntary association, mutual aid, and a rejection of authority as well as all forms of structural violence, inequality, and domination (Graeber 2004:3). Anarchism is about individual actors coming together in mutually beneficial communities and structuring their lives based on notions of self-autonomy, freedom (so long as not infringe upon another’s freedom), and caring for one another. It recognizes the individual as the primary actor, but places them inherently within a cooperative community environment not based solely on self-interest, but rather individual autonomy within communal interests. This differs from Adam Smith and Friedrich Hayek who viewed the individual actor – acting in their own self-interest, their own localized setting, using their own expertise, for their own good, as the foundation for a better society. The society of self-interested actor they depicted fostered competition between individual actors, while anarchism tries to create a cooperative environment for autonomous actors to work in cooperation with each other.  In (neo)classical and neoliberal ideology the state is used to provide the most fruitful and secure environment for the market to regulate society and foster individual entrepreneurship, anarchism in turn rejects the state outright as authoritative, exploitative, stifling, oppressive, violent, and utopian (Graeber 2004, Shannon et al. 2012, Kropotkin 1970). It is the state regulations and violence that pushes the agendas of the powerful on the less powerful.  In short, “the economic function of the state” is to “protect private property and the accumulation of capital” (Shannon et al. 2012:21). And in totality, anarchism is a set of ideas that happen to be inherently anti-capitalist (Shannon et al. 2012).

So what does capitalism look like to an anarchist, and why don’t we hear much about it? Firstly, anarchism – much like Polanyian thought – does not separate the economy from the rest of society, and sees “forms of domination presenting themselves in society without the need to root them in the economy” (Shannon et al. 2012:15). Anarchist  philosophy or prescriptions for society are less visible for numerous reasons, but one is that while Marxism tended to be “a theoretical or analytical discourse about revolutionary strategy,” anarchism tended to be “an ethical discourse about revolutionary practice” (Graeber 2004:6, my emphasis). While anarchism has roots globally and throughout human history, it is not a planned system, rather a practiced system of human interaction based on individuals taking initiative and acting in real time within a caring community of equals. this is however, not a prescribed utopian vision, but “since anarchism is a prefigurative practice, part of what makes an anarchist economics distinctly anarchist is a focus on alternatives and resistance enacted in the here and now” (Shannon et al. 2012:35).

This being said, Anarchism’s critique of capitalism largely centers on the wage labor system (as slavery), property (as theft), markets (as exclusionary), the state (as oppressive), and the system itself as inherently exploitative, hierarchical, and exclusionary. Within anarchist thought, the capitalist and the worker were only equal “from the point of juridical fiction,” as their economic situation – their “real situation” – proved to be amazingly unequal as the capitalist could survive the day without work if need be, while the worker could not (Bakunin 1871:7). If the capitalist thought the workers wanted too much money, s/he could wait a few days or find another place.  For the “terrible threat of starvation” hung over the worker and their family, and forced them “to accept any conditions imposed by the gainful calculations of the capitalist, the industrialist, the employer” (Bakunin 1871:8). Within this, the capitalist and property owners were afforded (actually guaranteed) by the state, the power and the right “to live without working” (Bakunin 1871:2; van der Walt and Schmidt 2009:50). This was seen as “a system of exploitation, which the anarchists evidently understood as the transfer of resources from a productive class to a dominant but unproductive one” (van der Walt and Schmidt 2009:50). After all, in terms of output, the capitalists did not actually physically produce anything themselves. Capitalism is therefore seen inherently to not reward the actual producers of the goods, rather to position these laborers as serfs or – even worse – as slaves. “Instead of people selling us or renting us out, we rent out ourselves. But it’s basically the same sort of arrangement [as slavery].” (Graeber 2004:70-71)

“If I offer my labor at the lowest price, if I consent to have you live off my labor, it is certainly not because of devotion or brotherly love for you… I do it because my family and I would starve to death if I did not work for an employer. Thus I am forced to sell you my labor at the lowest possible price, and I am forced to do it by the threat of hunger” (Bakunin 1871:2).

Or as Bakunin quotes a fictitious capitalist: “Know it well, I will pay you a salary as small, and impose on you a working day as long, working conditions as severe, as despotic, as harsh as possible; not from wickedness — not from a motive of hatred towards you, nor an intent to do you harm — but from the love of wealth and to get rich quick; because the less I pay you and the more you work, the more I will gain” (Bakunin 1871:7) communities of producers and consumers.” (Kropotkin 1970[1887]:169-170). In short, “all requisites for production must… become the common property of society, and be managed in common by the producers of wealth” (Kropotkin 1970[1887]:46). Property was of course part of the market, therefore inherently unequally distributed and obtained as the market was inherently unequal and biased towards “private rather than public outcomes” and “antithetical to anarchism” (Spannos 2012:55), as only those that had money were able to engage with market. 

“Under capitalism, goods and services were distributed through the market; they were commodities that had to be bought before they could be used. Access was conditional on the ability to pay, rather than on actual need. An unemployed person without a wage had no specific right to the goods or services one needed to survive, while the wages of the employed workers were at best just able to cover ones basic needs” (van der Walt and Schmidt 2009:51).

This process excluded many from obtaining the goods they needed to survive and excel. The ability to participate is the key factor which determines an anarchist styled economy (Buck 2009:68).  This is one of the main critiques of capitalism by anarchist practitioners and scholars; that “the capitalist structuring of life excludes participation from so much of human existence. Some workplaces are worker-managed, some are even worker-owned, but the communities in which such workplaces are located have no say over the values, processes, and results of the workplace itself” (Buck 2009:68). Capitalism as such is seen as a non-participatory economy in which countless people are marginalized, ostracized, or outright denied entry. This creates multiple hierarchies that interact with each other in dangerous ways – i.e. colonization, white racism, patriarchy, and capitalist modes of production – all acting together in debilitating ways (Volcano and Shannon 2012:89).

Anarchists generally employed (actually were equally involved in creating) Marxist class analysis (Shannon et. al. 2012:14). However, anarchist theory points to the possibility of three classes rather than just two. There was the working class – the producers (or those that were or will be) – which included workers, unemployed, pensioners, etc. The ruling class – the owners of power, people who controlled investment decisions, determined policy, etc – which was comprised of owners, top managers, large land owners, top state officials, politicians, etc. And a third class, often referred to as “the middle class,” “the coordinator class,” or the “techno-managerial class,” which highlights “the existence of people with a high degree of social power—often directly over working people—such as high paid lawyers, tenured professors at elite institutions, and so on.” This group is seen to have “material interests in opposition to the ruling class and the working class,” though are placed above workers in capitalist society due to their social power (Shannon et al. 2012:19-20). The “oppressive hierarchies,” “pervasive social injustices,” and exploitation inherent in the class issue “was uppermost in the minds of the anarchist movement” (van der Walt and Schmidt 2009:50). As such, anarchists “viewed class struggle as a necessary part of social change, and saw in the victims of class domination and exploitation—the working class and peasantry—[as] the agents of that change” (van der Walt and Schmidt 2009:51-2). Within this class system, the free market, private property, and wage-labor was nothing “but a means to exploitation,” that could “be put aside whenever it suited the ruling class.” To this accord, the ruling elite would publically imbue the rhetoric of ‘non-interference,' by the state in economic and regulatory affairs while simultaneously using the state to directly support, help, and protect their interests (the interests of the exploiters), and bolster their positions of power” (i.e. protecting private property) (van der Walt and Schmidt 2009:52). Capitalism to anarchists was seen as using the state as a tool for the ruling class, to the detriment of the working and coordinator classes.

This is the crux of anarchist thought, the state as a coercive, violent actor that limits individual autonomy and freedom. To anarchists, the role of the state within capitalist societies is clear: “the economic function of the state” is to “protect private property and the accumulation of capital.” (Shannon et al. 2012:21). These are things that obviously benefit the ruling classes, and most certainly act against the interests of the working class, as “the state is seen as a defender of the class system and a centralised body that necessarily concentrates power in the hands of the ruling classes; in both respects, it is the means through which a minority rules a majority” (van der Walt and Schmidt 2009:52). Hence the need for the state… 

“When a mother in search of food and shelter for her children must pass by shops filled with the most refined delicacies of refined gluttony; when gorgeous and insolent luxury is displayed side by side with the most execrable misery; when the dog and the horse of a rich man are far better cared for than millions of children whose mothers earn a pitiful salary in the pit or the manufactory; when each "modest" evening dress of a lady represents eight months, or one year of human labor; when enrichment at somebody else's expense is the avowed aim of the "upper classes," and no distinct boundary can be traced between honest and dishonest means of making money, then force is the only means for maintaining such a state of things. Then an army of policemen, judges, and hangmen becomes a necessary institution” (Kropotkin 1970[1887]:72).

Whether strong welfare, or a modern neoliberal, the state was designed to dictate social and economic terms (and structures) that affected individual and community capacities for self-determination. Capitalism and landlordism did not exist in some “invisible” vacuum, they relied on the state to enforce (or create) the optimum conditions for corporate rule and success. To Anarchists, capitalism could not exist without the state, if you wanted to abolish capitalism, and its inherent social inequality, you had to abolish the state. Or as Peter Kropotkin said: “The no-capitalist system implies the no-government system" (Kropotkin 1970[1887]:52).

While anarchism stresses that people can run their own affairs “without the need for experts or bureaucrats” (Shannon et al. 2012:13), it also differs from capitalism with an ideology that does not just focus on the self and self-autonomy, but on the individual’s place in society and communal life. Anarchists believe in mutual aid and a self-autonomy that does not willfully harm others. This tends to be the main distinction between anarchist autonomy and capitalist autonomy (or what some erroneously call “anarcho-capitalism”[1]); anarchism takes others into account and has “no legal possibility for coercive aggression against the person or the property of any individual” (Marshall 2012:561). This of course differs from the individualism of Rand and Hayek that posits that if one focuses on one’s self, acts in their own singular interests, and makes themselves the best they can be, that society as a larger whole will benefit – even if it may harm people within their direct contact in the shorter term. Again, calling upon Kropotikin:

“It is impossible to conceive a society in which the affairs of any one of its members would not concern many others members, if not all; still less a society in which a continual contact between its members would not have established an interest of every one towards all others, which would render it impossible to act without thinking of the effects which our actions may have on others” (Kropotkin 1970[1887]:173-4).

---

[1] see Marshall 2012:559-565

Feminism

Feminist interpretations of capitalist modes of production build upon those of Marxist and anarchist critiques. Specifically in conjunction with the Anarchist view that divisions within society – explicitly gender divisions – are socio-culturally constructed (Peter 2003; Gibson-Graham 1996, 2006). Feminism as a movement is “oriented towards more radically democratic societies” (Peter 2003: 107), and “feminist economists” bring to light difficulties in traditional gender roles, as well as racial, class, and national hierarchies, that create “biases and distortions in masculinist views of the economy” (Barker and Kuper 2003:3). The goal then of feminist economics is to recognize the notion of economics as a social institution that is an integral part of culture, power relations, and change which emerge from “diverse lifeworlds” that are “not simply manifestations of singular core logics” but rather “are generated by particular social and historical experiences” (Bear 2015:5; Barker and Kuper 2003:3). For example, class could not exist without gender, race, sexuality, and kinship structures (Bear 2015:3).

Economics (and the study of capitalism) has historically been done by men and under the guise of masculine world views and priorities for the economy, and as Joyce Jacobsen points out there are few females and minorities that have been widely read and respected in the field of economics (Jacobson 2003). As such, “Feminist economics is concerned with the many ways in which economic life is shaped by gender as well as other significant categories of identity,” and “its goal is to reveal the gender-blindness of existing economic analysis, and to bring into the debate issues which have previously been ignored” (Peter 2003:105).

To this end, feminist scholars J.K. Gibson-Graham have illuminated the “capitalocentricity” of both economics and the study of capitalism. Capitalocentricity means “that other forms of economy (not to mention noneconomic aspects of social life) are often understood primarily with reference to capitalism: as being fundamentally the same as (or modeled upon) capitalism, or as being deficient or substandard imitations; as being opposite to capitalism; as being the complement of capitalism; as existing in capitalism’s space or orbit… capitalism is both the negative and the positive precondition” (Gibson-Graham 1996:6-7). In short, we have become socialized into a world based on a capitalist system where virtually everything we know and understand of life is through the lens of capitalist production, markets, societies, and processes – processes feminists scholars see as gender, class, and racially biased (Barker and Kuper 2003). The most famous notion of this is “homo economicus,” a metaphor implying an innate (species level) and biologically rational, economic agent with “no necessary obligations or responsibilities” who “interact[s] contractually with others only when it is in their best interests to do so” (Barker and Kuper 2003:2-3). This rational, self-interested actor however, fails to adequately account for a multitude of important aspects to not only women and men’s lives (Barker and Kuper 2003:2-3), but also, by focusing on the “generative processes of production, distribution, and consumption” removes broader human and non-human relations” from our analysis of capitalism (Bear 2015:4). This level of analysis reflects a privileged, masculine world-view in economic and capitalist studies (Barker and Kuper 2003: 2-3). Capitalism is seen as ideologically hegemonic, and so deeply ingrained in our communal psyche that we are incapable of even questioning or rethinking notions of economics, society, and community.  Society, or communities more locally, become groups of individuals coming together to not question things – especially the primacy of individuality, markets, private property, and capitalist production. People seemingly become incapable of rethinking or reenvisioning what to do with the fruits of their production (Gibson-Graham 2006). 

“the virtually unquestioned dominance of capitalism can be seen as a complex product of a variety of discursive commitments, including but not limited to organicist social conceptions, heroic historical narratives, evolutionary scenarios of social development, and essentialist, phallocentric, or binary patterns of thinking… This we see as a first step toward theorizing capitalism without representing dominance as a natural and inevitable feature of its being. At the same time, we hope to foster conditions under which the economy might become less subject to definitional closure… heterogeneous… hegemonic… (Gibson-Graham 1996: 4)

This is socially constructed in a way that creates the appearance of a “totalizing and coherent” and all-consuming capitalism (Bear 2015:3) that is seen as “triumphant, encompassing, penetrating, expansive…” within which “other forms of economy are vanquished, marginalized, violated, restricted” (Gibson-Graham 1996:6) amidst presumption of them being subordinate and inferior (Safri and Graham 2010:103). This view becomes cyclical as we view the economy in a way that makes common practices appear inherent, and then recreates the same systems for lack of the ability to imagine another. Yet if we re-envisioning how we see “economy” and ourselves we can reimagine the possibilities of different economic relations for ourselves and our communities (Gibson-Graham 2006). To this extent much of feminist scholarship in the economy and capitalism is about “developing alternative ways of thinking economy outside of dominant capitalocentric conceptions” (Cameron and Gibson-Graham 2003:146) and “does not begin with markets and explicit economic practices. Rather it focuses instead on the diverse and wide-ranging practices of life and production that cross-cut social domains,” (Bear 2015:3), and approaches “class as a process” within which we can create “a language of economic diversity, highlighting the many different ways that enterprises organize the production, appropriation, and distribution of surplus labor” (Gibson-Graham 2006:66).

To combat this narrow view of the economy and capitalism, feminist inspired work on the economy focuses its attention on “diverse economies” (Gibson-Graham, J.K. 2006, 2008) or “multiple economies,” (Pavlovskaya: 329) that challenge the “boundlessness of the domain of “the economic” (Bear 2015:1) and draw attention to “non-capitalist” aspects of capitalist (and other) economies. These non-capitalist aspects of economic society include formal and informal economic practices (both within and beyond households) and “paid work, informal work for cash, unpaid domestic labor, and help in kind, labor, and cash from networks of extended family, friends, and neighbors” (Pavlovskaya: 329). This analysis focuses on nontradeables, measuring intrahousehold interactions and resource allocation, the effect of family-structures on labor-market outcomes, and caring work (Jacobson 2003). These aspects of life (found all over the world) do not readily fit into formal economic models, accounting practices, legalized boundaries, or market devices. They contradict the above notions of capitalism as “a priori… an already determining structure, logic, and trajectory,” and allow feminist scholars “to focus on the unstable, contingent networks of capitalism that surround us” and are more fragile and intimate than mainstream economics would lead us to believe (Bear 2015: 2).

Feminist scholars have been very successful illuminating diverse economies by including domestic work in economic studies. This combats the “gendered and raced division of labor” that “is explained in terms of the individual choices of rational agents,” as such, scholars focus on “the provision of nonmarket, caring labor (such as parenting, caring for the sick, housework, etc.),” that has either been ignored “or analyzed in the same terms as the provision of paid labor” (Barker and Kuper 2003: 2-3). Or as Safri and Graham enunciate it: “One of the major challenges confronting feminists has been the relative invisibility of women's unpaid labor as an economic contribution, particularly in wealthier nations where capitalism and markets are presumed to flourish unrivaled” (Safri and Graham: 101).  To this end the “household” is a key point of non-capitalist departure with incredible economic power, yet is largely ignored by both the capitalist remuneration system and mainstream capitalist economic analysis.  

“In the aggregate, the global household produces and distributes a large quantum of social wealth in the form of unpaid household labor, household-based business income, monetary and in-kind remittances, and gifts. It thus participates in international production, finance, and trade in addition to the coordination of international migration. Yet despite its potential to shape and alter economic indicators and processes such as gross domestic product (GDP), the balance of payments, the relative valuation of currencies, economic development, and the gender and social division of labor, the global household is seldom viewed as an economic actor. This is not only because those who recognize its existence generally see it as acted upon by other economic and governmental institutions; more fundamentally, it reflects the fact that the operations of the global household in the global economy are seldom accorded theoretical standing or empirical attention” (Safri and Graham: 100).

This notion is conceptualized by critiquing the economy “as a dualistic whole comprised of a masculinized realm of paid work and a feminized realm of unpaid domestic, child-based, nurture-oriented, voluntary and community work” (Cameron and Gibson-Graham 2003:147). It is a goal of feminist scholarship to “feminize the economy” by adding this sector to the economy or attributing a monetary value to women’s unpaid labor (Cameron and Gibson-Graham 2003:145). This type of labor is “as socially productive as industrial labor” (Bear 2015:7), for without the contribution of the reproductive sphere of life – which includes women’s unpaid domestic and community work, as well as their work at home for the market – there would be no social reproduction of labor power, and therefore eventually no production at all (Cameron and Gibson-Graham 2003:147).

Behind this feminist analysis and feminizing of the economy is a fundamental critique of capitalist modes of production that originates in and critiques Marxist analysis of capitalism. And while “Marxist approaches—however otherwise productive—used gendered, sexualized, and racialized figures in the making of even its earliest critical analyses” (Bear 2015: 3-4), the core to feminist critiques of capitalism rests in Marx’s notion of surplus. Which Gibson-Graham interpret as follows:

“The distinction between necessary and surplus labor cannot be seen as grounded in the ostensible reality of the body's "basic needs" for subsistence, but reflects a socially embedded ethical decision. What is necessary to survival and what is surplus is not predefined or given, in some humanist or culturally essentialist sense, but is established relationally at the moment of surplus appropriation itself. The boundary between necessary and surplus labor is an accounting device, inscribed on the body rather than emerging from within it, and the desire to move this boundary can be seen to have motivated political struggles historically and to this day” (Gibson-Graham 2006: 89).

In this regard, as other critiques of capitalism in this paper have (and will) show, anything above the capacity to sustain the social reproduction of labor power is considered excess. Whoever controls that excess – or the surplus labor – has much to gain. Throughout history it has often been “the capitalists, landlords, household heads, and slaveholders/leasers” that have made decisions on distributing the appropriated surplus (Gibson-Graham 2006:67). According to Marx, key to capitalist forms of production, a surplus labor is produced by a laborer and then distributed or exchanged by the capitalist rather than the producer themselves. As with capitalist enterprise, not all of this surplus is available for consumption or accumulation, but must be used to “pay for all the activities that support production” before it become surplus value (Gibson-Graham 2006: 67).

Gibson-Graham see surplus as a wide range of devises and material things that become the essence of possibility in societies and communities and in fact determine class structures and much of the shape of society (Gibson-Graham 2006). The person that has the power to distribute (or keep) the appropriated surplus carries greater power. Within the capitalist system Gibson-Graham (building upon Marx) claims that “many producers have no control over what happens to their surplus labor—it is appropriated by nonproducers who claim a right to the products produced on a variety of grounds. In capitalist firms, workers can be seen to have relinquished the right to their surplus as part of the wage contract and it is appropriated by their capitalist employers” (Gibson-Graham 2006:66). As such, within a capitalist system, neither the community nor the producers of the goods, services, and surpluses actually have control or power over what happens to the outcomes or rewards of their work – the surplus generated by their efforts (Gibson-Graham 2006).

Feminist scholarship points to this surplus as misappropriated within a capitalist system and should be put back into the community and individual’s generating it day in and day out using democratic and participatory decision making processes for allocation and investment. To Gibson-Graham, and as per feminist notions of the economy, capitalism is a social construct that cannot be separated from the rest of society – surplus is a political thing. The concept that a surplus should go to the capitalists, as opposed to the producers of it, is in fact foundationally a political project, not an economic one (Gibson-Graham 2006). As such, Feminists see the economy as an ethical space of decision making, rather than an entity of specific qualities, and as such would allow workers to make decisions about allocation of resources, surpluses, etc. (Gibson-Graham 2006).

Within capitalist – especially neoliberal capitalist – systems, there are two sides to surplus, the appropriation – producers make a surplus that is taken from them – and the other distribution; gifts, allocation, services, etc. A distinction is then made “between labor engaged in capitalist commodity production that is productive of surplus value, and labor that is unproductive of surplus value,” and could include workers in advertising and marketing departments, the financial sector, upper-level management, or domestic servants, who sell their labor power but are not involved in the actual production of capitalist commodities (Gibson-Graham 2006: 91). Every society is also made up of numerous “unproductive” (in material terms) people such as infants, young children, the elderly, disabled, etc. Therefore a “social surplus” may be used to support nonproducing members of the community, as well as “to build and sustain the material and cultural infrastructure of the social order,” and as such, has the potential for ethical decisions and political contestation (Gibson-Graham 2006: 91). If the surplus is politically appropriated by only a few, class divisions arise and society becomes differentiated. Gibson-Graham see this happening within decentered and differentiated capitalist enterprises, “where the process of exploitation (the production and appropriation of surplus value) can be seen as producing a “condensation” of wealth” (Gibson-Graham 1996:22).

To Gibson-Graham this is the problem with capitalist societies, both past and present; and the political project (especially of a feminist economics) should be to reappropriate the surplus back towards communities and producers for the betterment of all rather than for the “unproductive” capitalists (Gibson-Graham 2006: 91). For “whether or not we acknowledge it, our own existence at every level can be seen as the effect of the labor of others” (Gibson-Graham 2006:88). Within this notion lies the key to a feminist critique of capitalism, we all live off each other; working, producing, reproducing; laughing, smiling; male, female; young, old; black, white, we are all working together, living off the fruits of everyone else’s endeavors. So why should a small group of capitalists keep all the rewards? And monopolize even our notions of society to such an extent as to keep us thinking we shouldn’t share the rewards of our own labor.

Polanyi

Karl Polanyi (1886-1964), was a Hungarian lawyer, economic historian, and by some measures an economic anthropologist. He is considered to be the first original theoretician within the field of economic anthropology (Sarkany 1990:186) as “virtually all present-day anthropological analyses of prehistoric or non-Westem economies that self-consciously avoid imposing market (capitalist or microeconomic) concepts and categories are carrying on the Polanyi tradition” and some of his “most basic concepts, especially reciprocity and redistribution, have become anthropological stock in trade” (Isaac 2005:22). His influence stretches beyond anthropology as well, as his book The Great Transformation (1944) “remains the most powerful indictment of what he considered to be the utopian and ultimately destructive attempt to build society on the basis of self-regulating markets” (Hart and Hann 2009:1).

His main contributions were his theories of the “embedded” nature of the economy within society, and of the “double movement” when capitalist logic separated the economy from society in the 19^th and early 20^th centuries, and then (partially) reembedded it through countermeasures that created social welfare and state socialist societal models in the 20^th century (Isaac 2005:14-15). Another contribution of his was “a flexible theoretical framework” that afforded the opportunity to include non-capitalist; tribal, kinship, and reciprocity based societies in economic analysis as they were exposed to the effects of the market economy (Sarkany 1990:186). In short, he included a multitude of societies in his work, and saw society and the economy as a social whole – in which one could not see or study one aspect of it (e.g. the economy) as a separate institution devoid of influence from other parts of society.

He saw the economy as an “instituted process of interaction between man and his environment, which results in a continuous supply of want satisfying material means” (Polanyi 1957:248). This meant the economy was always in motion, but also contained institutions were this constant movement was concentrated (Polanyi 1957:248-9). These institutions, processes, and in turn the economy “as a rule, is submerged in his social relationships;” and thus “a mere function of social organization” (Polanyi 2001 [1944]:48, 52). He labeled his notion of the economy as “the human economy,” and believed it was “embedded and enmeshed in institutions, economic and noneconomic” (Polanyi 1957:250). He believed that including the noneconomic in economic analysis was vital, “for religion or government may be as important for the structure and functioning of the economy as monetary institutions or the availability of tools and machines themselves that lighten the toil of labor” (Polanyi 1957:250). As such he thought individuals in tribal societies were “motivated to act by the requirements of social status, and not by individual material interests” (Sarkany 1990:183-4). Or, in Polanyi’s words: “Custom and law, magic and religion cooperated in inducing the individual to comply with rules of behavior which, eventually, ensured his functioning in the economic system” (Polanyi 2001 [1944]:57).

This concept is at odds with (neo)classical economist’s interpretations of economic society. But to Polanyi, reciprocity and redistribution were as important to an economy as marketplace exchange as “these forms of behaviour were tied to the existence of determined social structures” (Sarkany 1990:184-5). He also recognized that markets and barter “coexisted with reciprocity, redistribution, and householding,” and which he believed were the “primary principles of economic behavior’’ (Polanyi 2001 [1944]:59; Hart and Hann 2009:3).

Key to this analysis, and the heart of the Great Transformation is his analysis of the emergence of capitalism and the “self-regulating market.” The great transformation described the rise of market society as new to human history, even a “radical break” from previous societies (Hart and Hann 2009:5, Polanyi 1957:256). While there had always been markets (or marketplaces) for exchange, the market as a way to self-regulate all of society using supply-and-demand market economies and capitalists modes of labor and production was new (Isaac 2005:14, Hart and Hann 2009:2). “Price-making markets… were to all accounts non-existent before the first millennium of antiquity, and then only to be eclipsed by other forms of integration” (Polanyi 1957:257).

“In short, the mere presence of marketplaces does not necessarily signal a market (capitalist) economy, nor does the mere presence of money. Many pre or non-capitalist economies had ‘moneystuff’, but it was special-purpose money, rather than the general-purpose money that serves as a uniform standard throughout market economies” (Isaac 2005:16).

Throughout human history, markets had generally been a subservient part of economic interaction, secondary to kinship, religious, and other social relations in economic matters, and subject to regulation by the agents of dominant social institutions (Isaac 2005:14; Hart and Hann 2009:2; Polanyi 1957, 2001). As such, the capitalist market economy was seen as just one of many possible economies (Sarkany 1990:184).

“The whole of history apart from those last centuries, had economies the organization of which differed from anything assumed by the economist. And the difference, we now begin to infer, can be reduced to one single point—they possessed no system of pricemaking markets.” (Polanyi 1957:241)

He believed that price-making markets were an institutional setup which were never “created by mere random acts of exchange” on a personal level (Polanyi 1957:251). This was new with capitalist society as while “all economies have mechanisms of distribution… only market (capitalist) economies are integrated (primarily) through ‘exchange’ on price-setting markets (Isaac 2005:16). This countered mainstream neoclassical market logics that claimed “market economy could be self-regulating as long as everything was bought and sold without restriction” (Hart and Hann 2009:4-5).

In the Great Transformation he analyzed the emergence and disastrous consequences of market capitalism, first in England and then in the rest of the world. He saw a shift towards urban commerce that forced “vast new populations of wage labourers” to rely on market mechanisms “for food, housing, and all their basic needs,” within which “society itself seemed to retreat from view, being replaced by an ‘economy’ characterized this time by market contracts instead of domestic self-sufficiency” (Hart and Hann 2009:3). Polanyi criticized the propensity to shift “nature, society, and humanity” into the market as “land, money, and labor;” creating what he called “the fictitious commodities’’ that included a newly marketized “human labor” (Hart and Hann 2009:4-6). “Political power was used to ensure that capital was free to move where it wanted,” and other principles of labor exploitation described by Marx and others became dominant (Hart and Hann 2009:4-5). Old traditions that ensured material provisioning for broad swaths of society faded away just as many “freedoms, such as the right to work, were sacrificed in order to achieve this” (Hart and Hann 2009:4-5). To Keith Hart and Chris Hann: “Unregulated markets are engines of inequality,” and the notion of “markets as a natural force beyond social regulation” also served to “legitimize wealth” and “make poverty seem deserved” (Hart and Hann 2009:3).

Within Polanyi’s view, “the tradition of the classical economists, who attempted to base the law of the market on the alleged propensities of man in the state of nature, was replaced by an abandonment of all interest in the cultures of “uncivilized” man as irrelevant to an understanding of the problems of our age” (Polanyi 2001 [1944]:47). Or as Hart and Hann claim, people “play almost no part in the calculations of economists and they find no particular reflection of themselves in the quantitative analyses published by the media” (Hart and Hann 2009:10). Or in short, “the last two centuries saw a universal experiment in impersonal society” (Hart and Hann 2009:10).

Polanyi also sought change through his analysis. He believed that “modern societies should be built on the ancient mechanisms evolved for managing distribution in primitive societies and agrarian civilizations, with the market relegated to a supplementary and marginal role” (Hart and Hann 2009:5). He saw an opportunity to build such a society out of the rubble of World War II, and was undoubtedly disappointed that his work was not headed to a greater degree. Yet, with the advent of neoliberal deregulation, and “the revival of market capitalism and dismantling of state provision[s],” their was a possibility “for another round of disasters such as those Polanyi attributed to reliance on ‘free’ markets for social organization,” and which offered the possibility for political backlash and “a retreat from market fundamentalism” (Hart and Hann 2009:9). Especially as the “absolute dominance of market logic” is now more flawed than in recent decades (Hart and Hann 2009). As such, increased interest in Polanyi's ideas is not surprising, especially as he “would probably sympathize with all those currently seeking to develop new and more radical forms of democracy” (Hart and Hann 2009:9).

Neoliberalism

According to David Harvey, “Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade… [and] …holds that the social good will be maximized by maximizing the reach and frequency of market transactions, and it seeks to bring all human action into the domain of the market” (Harvey 2006:2-3). But what does this mean?  What could be wrong with “liberating individual entrepreneurial freedoms,” owning property, engaging freely in markets and trade? Why would people want to be regulated and ‘controlled,’ as opposed to having the universality of “the market” effortlessly decide (or guide) things for us?  Much of modern – and especially Western society sees these buzzwords as positive things that allow people to work hard and create their own lives.  However, this narrative is only a very small part of what neoliberalism entails.

According to Anthropologist Tejaswini Ganti, neoliberalism is highly complex and has many meanings, but she claims that “the concept has four main referents: (a) a set of economic reform policies that some political scientists characterize as the “D-L-P formula,” which are concerned with the deregulation of the economy, the liberalization of trade and industry, and the privatization of state-owned enterprises; (b) a prescriptive development model that defines very different political roles for labor, capital, and the state compared with prior models, with tremendous economic, social, and political implications; (c) an ideology that values market exchange as “an ethic in itself, capable of acting as a guide to all human action and substituting for all previously held ethical beliefs;” and (d) a mode of governance that embraces the idea of the self-regulating free market, with its associated values of competition and self-interest, as the model for effective and efficient government (Ganti 2014:91).

But what does this mean in real-life terms today? For this I take a historical approach using David Harvey’s Conditions of Postmodernity (1990) where he keenly examines how neoliberalism develops throughout the twentieth century. Harvey starts his narrative in 1914 with Henry Ford’s car assembly line where he pays a very high wage of $5 for an 8-hour workday. According to Harvey, it was not this process that was so revolutionary, rather it was Ford’s “vision.” Ford seemingly understood that mass production meant mass consumption, which ushered in a new “politics of labour control and management… a new kind of rationalized, modernist, and populist democratic society” (Harvey 1990:125-6).  Ford believed that this wage would offer him the best and most committed workers, and also provide them with the money and leisure time to consume both his and other goods (Harvey 1990:126). This ideology ushered in a period of general progress in advanced industrial societies. Using Keynesian economic policies and theories, the power of the state had increased in conjunction with the development of the social welfare state; and within which labor rights were protected and advanced by strong unions and the structural aspects of Fordist production practices helped foster community involvement and cohesive and organized labor groups (Harvey 1990).

According to Harvey, this process changed greatly in the early to mid-1970s.  Following the oil and economic crises during that decade, there was a massive push for deregulation and more flexible modes of production. Fordist-era production had been based on building single factories where companies could produce an entire line of goods from start to finish in one place. As per the nascent neoliberal ideology, this rigidity did not allow businesses to react nimbly to shocks in the market, recessions, supply chain problems, and labor issues. Any problems the economy faced were also said to be exacerbated by increasingly inadequate Fordist methods of macroeconomic management (Harvey 1990).  During this time, Harvey points to a political economic shift that he labels “flexible accumulation,” and is “marked by a direct confrontation with the rigidities of Fordism. [Flexible accumulation] rests on flexibility with respect to labour processes, labour markets, products, and patterns of consumption. It is characterized by the emergence of entirely new sectors of production, new ways of providing financial services, new markets, and, above all, greatly intensified rates of commercial, technological, and organizational innovation” (Harvey 1990:147).

The key component that Harvey points to within this process is an acceleration of the “time-space compression” modern society experienced over the last several centuries. With technological advances in communications, satellites, transportation, etcetera, the world had “shrunk” and it became easier to communicate, ship to, or even be in, faraway places quickly (Harvey 1990). This meant that the era of a fixed factory with local workers producing an entire product, morphed into a process where companies simply rented production facilities in cheap locations (such as China) for a month, produced a product or part of a product, continued or finished the production in a separate facility, and then sold it in whatever market they could make the most money. This principle started what has been called the “race to the bottom,” in which developing countries offer the most “business friendly” incentives (such as tax breaks, deregulation, decreased labor power and oversight, etc.) to companies that locate production within their borders. This heightened global competition between states as companies evaluated entire supply and production chains from raw materials to market to find the cheapest places to procure and produce each individual component and product. Companies started locating their production where they had the lowest costs to market, specifically the lowest overhead costs per worker (basically less pay, less benefits, less safety at work, etc). Countries started deregulating their labor industries to attract more businesses. This weakened labor power and unions, and ushered in higher levels of structural un/underemployment and an expansion of part-time contract work. According to Harvey, all of this led to an incredible fragmenting of society and social connections, severing community ties, creating more individualized populations, and decreasing the capacity for workers and individuals to organize politically and economically (Harvey 1990:153). 

Building upon Harvey’s discussion of the shift to flexible modes of accumulation, this ideology is also traced to the Mont Pelerin Society (Ganti 2014) founded in 1947, and the “Chicago school” (of economic thought) led by Fredrich Hayek and Milton Friedman in the 1960s and 1970s and built upon neoclassical economic theory. The new form of this ideology was then instituted politically by Ronald Reagan and Margaret Thatcher in the 1980s, and globalized by technocratic regimes such as the figurative “Washington Consensus” in the 1990s. It is during these decades that John Gledhill (2006:332) believes neoliberalism as an ideology and global capitalism become intertwined, and spread throughout the world economy.

If we go back to Ganti’s four common themes we can see the outcomes of these policies on the ground, and that the state is still very much involved. Neoliberal policy initiatives deregulate, liberalize, and privatize economies; redefine political roles for labor, capital, and the state in marked ways; believe that an ethic of market exchange is capable of guiding all human action; and that a self-regulating free market (based on competition and self-interest) becomes the model for effective and efficient government. However, this was not in the traditional welfarist and Keynesian tradition, for the State loosens (or alters) its control by actively deregulating business climates, extricating itself from the market as much as possible, yet wholly redirecting state power toward allowing a “friendly business and regulatory climate” and within markets (Gledhill 2006:333). Neoliberal ideology is not about simply providing free markets as neoclassical ideology prescribed, but rather pushed for a “concerted political effort and organization” of society that was the most advantageous for businesses (Ganti 2014:92).

State services became the domain of non-profit actors, previously state-owned companies were privatized to allow for individual ownership and control, and labor practices and subsidies actually aided businesses beyond simply freeing up markets. The core tenets of economic society still involved individuals acting as rational actors working toward maximizing individual and corporate gains, but now businesses interests were placed above the interests of states, communities, and individuals (think of Harvey’s flexible accumulation and a more fragmented, individualist society as per Hayek and Rand’s positions, but that actively incentivized business interests above individual people’s interests). This was a decided divergence from Adam Smith’s belief that business leaders should not be listened to in matters of politics for this would be taking advice “from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it” (Smith 1991:220).

This shift towards business interests led to increased competition among some individuals, groups, and companies, but not those companies with close ties to neoliberal and Western governments (think World-Systems and Accumulation by Dispossession). This process of neoliberalization lead to increased inequality locally among individuals, but also globally among people and countries, and – while said to be aimed at empowering individuals – predominantly empowered the wealthy and “well situated” by increasing their economic and political power (as well as their profits). To Gledhill, neoliberalism is “the ideology of the period in which capitalism deepened to embrace the production of social life itself, seeking to commoditize the most intimate of human relations and the production of identity and personhood” (Gledhill 2006:340). It is within neoliberalism that human interactions cease to be human interactions and (as every component of human interaction is brought within the scope of the market) are institutionalized as market interactions. 

However, there are some complexities within this process. The work of Andrea Meuhlebach (2012) shows that despite David Harvey and John Gledhill’s observations positing the fragmentation of neoliberalizing societies as wholly negative, this fragmentation also creates (or forefronts) individual subjects’ longing for (and enactments of) a human morality that is intent on caring for others (Meuhlebach 2012). Her work shows that people in northern Italy volunteered and cared for less fortunate people both in spite of, and buttressed by, neoliberal policies. Meuhlebach’s analysis however, based on ethnographic work with caregivers, focuses primarily on everyday individuals and the elderly. As a result she seemingly ignores the obvious critique of the very divisive neoliberal ideology used by elites and capitalists that causes the need for this voluntary human caring in the first place. Still, her research complicates our analysis of neoliberal societies by showing a connectivity and caring that others claim is minimized in neoliberal society. 

Neoliberalism is further complicated by Jamie Peck and Adam Tickell’s work showing the localization of experiences with neoliberalism, which illuminate “local neoliberalisms [that] are embedded within larger within larger networks and structures of neoliberalism” (Peck and Tickell 2002).  Kingfisher and Maskovsky critique neoliberalism for its use as a thing that is often wielded to singularly explain or explore anywhere in the world or any type of experience. They see neoliberalism as an experiential and contextualized moment that happens in a multitude of ways in a multitude of places, and that each experience should be seen as singular, even if patterns can be recognized (Kingfisher and Maskovsky 2008). Within this synthesis, Kingfisher and Maskovsky attempt to:

“move beyond the view of neoliberalism as a unitary external structural force — conceived either as a set of economic policies or discourses — that bears down on states, civil society institutions, populations or individuals, whose agency is conceived narrowly in terms of either accommodation or resistance. This structure/agency binary, while oft-times noble in its emphasis on resistance, nonetheless risks describing neoliberalism ‘as something that is perhaps more powerful and all-encompassing than it really is, ignoring in the process its contradictions, fractures, partialities, contingencies, and both dialectics with and determinations by other social forces.’” They seek specifically to “interrogate, situate and problematize (rather than overstate) neoliberalism’s power to reshape the world” (Kingfisher and Maskovsky 2008:119).

As if that does not disjoint our understandings enough, Simon Springer (2014) believes that we are actually moving into a postneoliberal world.  He claims that since the economic crisis of 2008 there has been great pushback and protest surrounding neoliberal institutions and politics, and that many of the major industrialized countries in the world reinstituted Keynsian economic practices, and therefore increased state intervention (Springer 2014:2). His analysis points toward a global society moving towards something new, though he is not willing to say this explicitly, as amid the multitudes of non neoliberal practices, neoliberal patterns still dominate global political economic ideologies.  This is especially true at the level of governance and business decisions – places where capitalism carries profound power. Hence, while in the streets, neoliberalism may be seen as a disaster; but to those in positions of power – those who are making decisions about shaping our political, economic, and social futures (and are being rewarded by the status quo) – neoliberalism is very beneficial and therefore worth continuing.  Yet still, the fact that there is discussion of other ways of organizing society shows that communities and individuals who are not wealthy (or “successful”) are fighting against this version of capitalism and a greater rule of their own lives.

Classical, Neoclassical, and Keynesian

In direct contravention to Marxian theories of capitalism are those of (Neo)Classical Economics. This is a broad topical group and difficult to summarize in such limited space due, especially due to the depth of its infiltration into our lives and the seaming conflation of economics and capitalism that pervades Western notions of economic life. Much of this tradition starts with what Robert Heilbronner (1996) calls the “Commercial Revolution” and centers on mercantile systems of trade and economic interaction. During this time period (c. 17^th C), an intellectual shift began as Thomas Mun theorized money as more than a means of exchange (Heilbronner 1996:25). Richard Cantillon also conceptualized “market driven society as constituting a ‘system’ with a spontaneous mechanism of self-adjustment and a coherent relationship between the supply of money and the prosperity of the society as a whole” (Heilbronner 1996:30), and a study of the economy became more systematized and focused on the increasingly expansive commercial aspects of society (Heilbronner 1996). 

This intellectual foundation lay ground work for the rise of classical economic theorists that began with the publication of Adam Smith’s Wealth of Nations in 1776, and who’s theories were systematically tightened and expanded upon by David Ricardo in On the Principles of Political Economy and Taxation in 1817. These two works became known as classical political economy and “with many additions and changes, it dominated European thought about economics from 1780 to 1880” (Wolff and Resnik 2012: 15).

Smith ultimately believed that for society as a whole to achieve its greatest levels of economic and social success, there should no interference in a “free market” for goods and services (Smith 1991:322). He believed in the private ownership of property, and that each individual should become an “expert in his own peculiar branch” of the economy or market, and that through diversifying labor – and becoming experts – “more work is done upon the whole, and the quantity of science is considerably increased” (Smith 1991:16). This was founded upon a belief that “the difference between the most dissimilar characters, between a philosopher and a common street porter… seems to arise not so much from nature as from habit, custom, and education,” and that as each person acted in their own self-interest, developed their own niche and differentiated themselves and their expertise from others, unique skillsets and expertise would develop and help lift society as a whole (Smith 1991:20-1). In other words, Smith believed that we were not born unequal per say, but through education and diversifying our labor we created differentiation that he thought was good for society and created a stimulating and competitive environment “where every man may purchase whatever part of the produce of other men’s talents he has occasion for” (Smith 1991: 23, 151).

Smith believed that “whatever part of his stock a man employs as a capital, he always expects it to be replaced to him with a profit” (Smith 1991:272), and that they should always work for more than they put in. This wage based diversity of labor, with everyone industriously and competitively seeking to create their own comparative advantage, would lead to ever more “revenue and stock” and ever more demand for wage laborers. This pattern would ultimately and continually lead to an increase in “the revenue and stock of every country,” something that “cannot possibly increase without [this process]” (Smith 1991:73). In other words, people innately seek growth and to profit from their work, and this is the only way society and countries will develop. Yet, in a departure from neoclassical and neoliberal principles Smith did not believe in overworking people, he believed they’d be more productive without being overworked (Smith 1991:86). He believed that the improvement of those “of the lower ranks” (the majority of society) should not be seen as an inconvenience to society, but rather an advantage, and that society can only flourish if “the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged” (Smith 1991:83).

What Smith and his adherents brought to “classical economics” was a focus on production and larger macro levels of analysis. However, around the time that Karl Marx published Capital (1867), classical economics shifted towards more detailed “micro” level studies of the economy that theoretically centered on the decision-making processes of individuals and individual enterprises. This focus lasted through the 1930’s and became labeled as neoclassical or micro-economics (Wolff and Resnik 2012:14-15). These principles have seen a resurgence since the 1970’s and is based on the:

“claim that the result of individuals' self-interested buying, selling, working, saving, and so on, is, in effect, an economic utopia: a perfect economic harmony among all individuals and between them and nature. For this utopia to be achieved, according to neoclassical theory, society must (1) endow and protect each individual with the full freedom to act in his or her own self-interest and (2) establish the institutional framework (competitive markets and private property) that guarantees that freedom” (Wolff and Resnik:15).

By the 1930’s, this focus on deregulating markets and minimized state intervention, led to a global economic crisis, and many people to question both neoclassical economic theory and the very merits of capitalism itself. In response to these crisis, John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1937. Keynes believed the chief reason for the collapse of the economy was a huge drop in private spending which plunged the economy into depression. He thought that the only way to be able to guard against the ups and downs of the capitalist economy’s “business cycle” was to have the state act to intervene in the economy in order to regulate lending, money supplies, and the “macro” part of the economy on the whole. His overarching theory “analyzes and presents (1) the rules and laws that give the economy its overall structure and (2) the ways in which that structure essentially governs the activities of producers, consumers, and other individual economic actors” (Wolff and Resnik 2012:19). This prescription was very different from (neo)classical economics which focused on individual human beings acting and making decisions, and aimed to remove all structural hindrances to free markets.  Keynes believe that there were economic structures surrounding us, governing us, and that we needed to understand and control them with greater efficacy if we were to keep better control of the ups and downs of capitalist cycles (Wolff and Resnik 2012:19). 

While Keynesian ideas are often still turned to in times of crisis (the recent Great Recession and its “bank bailouts”), starting in the 1970’s there was a very propitious decline in the favor of Keynesian principles as neoclassical and (soon to be labeled) neoliberal economics began to increase in popularity and eventually seemingly monopolize political debates (Harvey 1994). As we can see in Adam Smith’s work, the individual is the main actor in a larger social structure.  However, this notion of the individual – central to any understanding of capitalism – was expounded upon by both Friedrich Hayek and Ayn Rand in the 20^th century, and encapsulates the role of the rational individual in capitalist life. In both of their works the individual is primary not just as an actor, but as an ideological notion for the primary object and origins of any social analysis. As Hayek states:

“there is no other way toward an understanding of social phenomena but through our understanding of individual actions directed toward other people and guided by their expected behavior. This argument is directed primarily against the properly collectivist theories of society which pretend to be able directly to comprehend social wholes like society, etc., as entities sui generis which exist independently of the individuals which compose them… It is the contention that, by tracing the combined effects of individual actions, we discover that many of the institutions on which human achievements rest have arisen and are functioning without a designing and directing mind” (Hayek 1948:6)

The logic that Hayek is espousing – and largely attributes to individualist thinkers such as Adam Smith – is that we has human beings can only know so much. We could never portend to understand or know everything about our immediate surroundings, nevermind a larger society; nationally, globally, etc. He believed that within this framework, and knowing what we know of ourselves and those around us, we should act within our local knowledge sphere and do what we can and know. Hayek saw the market as a perfect mechanism for individuals to engage with a larger – incomprehensible – social society, and where we would be treated equally; or more so, “be rewarded, not according to the goodness or badness of his intentions, but solely on the basis of the value of the results to others (Hayek 1948:21-22). In short, while the market may be harsh, it is equally harsh to everyone that engages with it.

In terms of navigating the difficulties of the market, Ayn Rand contradicts Hayek to some extent.  While she sees “the free market [as] a continuous process that cannot be held still, an upward process that demands the best (the most rational) of every man and rewards him accordingly” (Rand 1967:25), she also believed that “man’s most valuable attribute [is] the creative mind” (Rand 1967:19). She sees the genius of humans as the key aspect to our existence, and where as Hayek thinks our intellect is limiting to its surroundings and that we should focus on the here and the now, Rand see’s this genius as the foundation for rational thought – what she considers the key to navigating the market successfully – and seemingly not limited by locale or knowledge. The also differed slightly on the emancipatory possibilities of the rational individual acting within the market. While they both believed this individual freedom could afford opportunity for all, Hayek also felt that “the preservation of individual freedom [was] incompatible with a full satisfaction of our views of distributive justice” (Hayek: 21-22). Yet regardless of their differences, they both see the individual as primary and the market as the only pathway toward individual freedom, regardless of possible outcomes. 

Marxism

This processes created a capitalist mode of production, in which “the capitalist” claimed the “surplus labor” of a worker (the output of the worker’s labor output beyond what they need to sustain themselves), and after paying the costs of production, retains the “surplus value” (or profit) of the production process as their own to distribute as they please. In short, capitalists retain ownership and the right to the distribution and income of the produce of the workers labor. This creates a division that polarizes individuals, communities, and societies, and leads to class based societies of the rich bourgeoisie and the working class proletariat (Marx (1992[1867]; Marx and Engels; Wolf 1982).

To Karl Marx, capitalism began when precapitalist modes of exchange that used money as a medium to exchange two commodities (Commodity à Money à Commodity, C-M-C), transitioned to capitalist modes of exchange where money was exchanged for more money using commodities as a medium of exchange (Money à Commodity à Money, M-C-M) (1992[1867]).  According to Marx, within the capitalist process, money is not spent but rather “advanced,” as commodities are no longer exchanged based on their “use-value,” but on their “exchange value” within monetary terms (Marx 1992[1867]:249). Within capitalist modes of production, money is advanced into the market through a commodity that is then sold for an additional amount that adds on “surplus value” through a valorization process, better understood today as profit. The valorization of this surplus value happens when the capitalist transforms a use-value into an exchange value by producing a good “greater in value than the sum of the values of the commodities used to produce it and usually equates to labor value” (Marx 1992[1867]:293). To Marx, capitalist modes of production begin with this desire to exchange money for more money (M-C-M’), and charging more for the end product than the cost of the material and labor inputs needed to create it – the investment of capital to create even more capital.

This ability to charge more for the end product comes through surplus labor, the output of the worker’s labor beyond what they need to sustain themselves. Upon the sale of goods, the capitalist pays the laborer, but retains the value of the surplus labor to pay the cost of production, and then is left with a surplus value (i.e. profit) to distribute as they please. In short, the capitalist retains ownership of the produce of the workers labor, and the right to distribute all its proceeds as they see fit (e.g. capital). This creates a division that polarizes individuals, communities, and societies, and leads to class based societies of rich bourgeoisie and a working class proletariat (Marx (1992[1867]; Marx and Engels 1848; Wolf 1982).

“By turning his money into commodities which serve as the building materials for a new product, and as factors in the labour process, by incorporating living labour into their lifeless objectivity, the capitalist simultaneously transforms value, i.e. past labour in its objectified and lifeless form, into capital, value which can perform its own valorization process, an animated monster which begins to ‘work’ as if its body were by love possessed’” (Marx 1992[1867]: 302).

Marx, writing earlier with Freidrich Engels, saw the outcome of this capitalist transformation as creating “[t]he need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere” (Marx and Engels 1948: 83). This is a process we now call globalization, but which has transformed over time.

Marxist scholar, activist, and communist leader, Vladimir Lenin (writing in 1916-17), believed that commodity production was key to capitalism, but it was being undermined by big profits going to “the ‘genius’ of financial manipulation” (Lenin 1918:187). Lenin claimed that in the early 1900’s that “the old capitalism, the capitalism of free competition with its indispensable regulator, the Stock Exchange, is passing away. A new capitalism has come to take its place, bearing obvious features of something transient, a mixture of free competition and monopoly,” (Lenin 1918:197-8) which is reminiscent of today’s capitalism. Lenin calls this “financial capitalism,” or “monopoly capitalism” in which large companies and banks inbreed with each other (and the government), and all work towards one goal – one monopoly of capital (Lenin 1918:199-200)! Within this form of capitalism, capital is consolidated amidst a small number of “financially powerful” people and states, in which “profits of production” are replaced by “profits of commissions” as capitalism (especially today) shifts from a “system of production into a system of financial speculation” (Harvey 2005:142). This consolidation of capital and power in the hands of only a few, allows those individuals to control a majority of global trade (and economies more generally) with little impetus to share – unless it makes them more money. This is perhaps one of the most poignant critiques of capitalist production; that “surplus capital will never be utilized for the purpose of raising the standard of living of the masses in a given country, for this would mean a decline in profits for the capitalists, but for the purpose of increasing profits by exporting capital abroad to the backward countries” (Lenin).

While we may not use descriptors such as “backward countries” today, Lenin’s point is still relevant; and been used by David Harvey within his discussions of accumulation by dispossession, and within World-Systems analysis’ notion of core and peripheral states. In both of these theories there is a capitalist elite (be they countries, people, corporations, or organizations) that have or are accumulating wealth from other states that must (perhaps forcibly) stay in a subservient – or periphery – position to those within the core areas (Arrighi 2000, Harvey 2005). It is those core states and areas that bringing in more money than they are investing elsewhere (Arrighi 2000:138).  For it would not be capitalism if MàCàM brought back less money! Within this calculation, capitalism must use financial capital (and money) to invest in commodities to make the invested money back plus a surplus, or profit. As we will see later in the section of (neo)classical interpretations, mainstream capitalist economics is based on growth that Marx (1992[1867]:762-772) calls capital accumulation and which he envisions inevitably leading to a “chronic crisis of over accumulation” (Harvey 2005:144). To Harvey, this accumulation is done by dispossessing the working classes and periphery countries of their capital and wealth. This begins by “forcing” non-capitalist territories open their economies, “not only to trade (which could be helpful) but also to permit capital to invest in profitable ventures using cheaper labor power, raw materials, low-cost land, and the like” (Harvey 2005: 139). This can be seen from colonial expansion, to imperial expansion, to the “new” imperialism of today; and to Harvey is simply a new name for accumulation “based upon predation, fraud, and violence” and which was labeled as ‘primitive’ or ‘original’ accumulation by Marx, but claimed to no longer be relevant in today’s capitalist systems (Harvey 2005). It is Harvey’s contention that this accumulation by dispossession is in fact the essence of capitalist production, that capital creates and maintains disproportionate systems of power in which countries and people in high capital positions subordinate and disposes countries and people in lesser capital positions, and that capitalism is about accumulating capital by dispossessing it from others – using markets, coercion, or force – that inherently “creates its’ own ‘other’” and then positions them beneath those with the capital (Harvey 2005: 141; chapter 4).

World-Systems Theory is another Marxist inspired theory of global accumulation and differentiation.  Largely penned by Immanuel Wallerstein and Ferdinand Braudel, World-Systems Theory sees a world economy not bound by one political force, but based upon a division of labor leading to “significant internal exchange of basic or essential goods as well as flows of capital and labor” (Wallerstein 2004:23).  Within World-Systems Theory the world-economy and capitalism are symbiotic, with the modern world-system is seen as “the only world-economy to have survived for a long time… and that is because the capitalist system took root and became consolidated as its defining feature.” This is a framework that Wallerstein claims the capitalist system cannot exist outside of.  To Wallerstein “capitalism is not the mere existence of persons or firms producing for sale on the market with the intention of obtaining a profit. Rather, such persons or firms have existed for thousands of years all across the world. Nor is the existence of persons working for wages sufficient as a definition. Wage-labor has also been known for thousands of years. We are in a capitalist system only when the system gives priority to the endless accumulation of capital… [and] that people and firms are accumulating capital in order to accumulate still more capital, a process that is continual and endless” (Wallerstein 2004:24, my emphasis). 

This process of accumulation leads to an unequal relationship between a capital intensive core and a weaker periphery that lacks the same capacity to generate profit. This relationship creates similar types of monopolization and consolidation as Lenin and Harvey speak of; and amalgamates the higher capital core into less and less political units; therefore pushing semi-peripheral political units into a growing periphery and semi-periphery that compete against each other.

“Core-periphery is a relational concept. What we mean by core-periphery is the degree of profitability of the production processes. Since profitability is directly related to the degree of monopolization, what we essentially mean by core-like production processes is those that are controlled by quasi-monopolies. Peripheral processes are then those that are truly competitive. When exchange occurs, competitive products are in a weak position and quasi-monopolized products are in a strong position. As a result, there is a constant flow of surplus-value from the producers of peripheral products to the producers of core-like products. This has been called unequal exchange” (Wallerstein 2004: 28).

And this inequality is the cornerstone of Marxist inspired interpretations of capitalism. There is always a creation – or expansion – of “new classes, new conditions of oppression, new forms of struggle in the place of old ones” that are splitting society more and more “into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat” (Marx and Engels 1848:80). Within Marxist interpretations of capitalism, society is about capital exploiting both labor and society in general – political, economic, and social – in ways to maximize surplus values through maximizing labor hours worked in exchange for the minimum pay at the expense of individual and groups of labors. This therefore creates two classes of individuals, the bourgeoisie (those with control of capital), and the Proletariat (the workers that control only their own labor). And with this division of people, also the division of capital and wealth.