Capitalism is 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. The central characteristics of capitalism include capital accumulation, competitive markets, a price system, private property and the recognition of property rights, voluntary exchange and wage labour. In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in capital and financial markets, whereas prices and the distribution of goods and services are mainly determined by competition in the goods and services markets. Whereby, concentrating power in the hands of a minority capitalist class that exists through the exploitation of the majority working class and their labour, prioritizing profit over social good, natural resources and the environment. being an engine of inequality, corruption and economic instabilities and which many are not able to access its purported benefits and freedoms, such as freely investing.
Capitalism in its modern form can be traced to the emergence of agrarian capitalism and mercantilism in the early Renaissance
Period. In the present climate of austerity in the UK, between 1 April 2020 and 31 March 2021, food banks in the Trussell Trust’s UK wide network distributed 2.5 million emergency food parcels to people in crisis, a 33% increase on the previous year. 980,000 of these went to children. A total of 14.5 million individuals were estimated to be in relatively low income – below 60% of average household income – in the year to March 2020. There were 4.3 million children living in poverty in the UK in 2019 – 20. That is 31% of children, or nine in a classroom of 30. Overall, Crisis estimated that around 200,000 people were experiencing core homelessness – the most severe and immediate forms of homelessness – in England in 2020.
We have seen that Trickle-down economics generally does not work because: – cutting taxes for the wealthy often does not translate to increased rates of employment, consumer spending and government revenues in the long term. Although good in theory – benefits from tax cuts, capital gains, dividends and even looser regulations on corporations and wealthy individuals would eventually flow down to benefit middle- and low-income earners. When the rich get richer, benefits do not trickle down.
Corruption, sleaze and lies are hard-wired into Johnson and the Tories and by Starmer and Labour attacking on this point alone it will not win them the next General Election. Labour needs to take the Tories apart at every turn to win voters back. But then, perhaps the public are happy with the way the Tories are behaving and like Trickle-down economics they hope that the corruption and sleaze will fall their way too. Good luck with that way of thinking. ‘Repeat a lie often enough and it becomes the truth’, is a law of propaganda often attributed to the Nazi Goebbels. This shows something fundamental about how we update our beliefs – repetition has a power to make things sound more true, even when we know differently, but it does not override that knowledge. The ‘illusion of truth’. To be elected, Labour will need to set out a fair, egalitarian and compassionate alternative that resounds with the hopes and ambitions of ordinary people.
But, what economic and political system can replace Capitalism?
By changing it into a Democratic Socialist system that will be able to provide the structures for maintaining democratic substance and resolving the challenges of a difficult future. An economy and society that is politically democratic, allows private enterprise to generate surpluses and uses government controls to assure profits are optimally re-assigned for both business (profit reinvestment) and public needs (taxation). Government policies, such as subsidising, regulating and distributing, help shape the economy. Social ownership of businesses would be encouraged. These include worker-owned co-operatives, publicly owned enterprises managed by workers and consumer representatives and workplace democracy, where workers sit on corporation boards. Some inefficient and vital industries necessitate some form of state ownership, but most industries are best run as private enterprises.
Would a Democratic Socialist system work?
It will have to be fought for by a mass movement of ordinary people coming together – workers, students, trade unions, etc: – who want to challenge capitalism and fight for something better. This would mean ordinary people using their collective power to change society in a fundamental way. But the establishment will fight any major reforms to their system and in that situation people can look back at the lessons of the past to see what should be done next – and avoid repeating mistakes, bringing a better world tomorrow.