Capitalism: the Greatest Threat to the Market Economy

[Note: I'm still in this ongoing project of uploading things I've written years before.  I'm not sure when I wrote this, but at first I printed it out as a standalone pamphlet, and then it was one of several pieces that I put together into a zine in 2006.  I'm guessing that I wrote it somewhere between 2003 and 2005, but I had been thinking in these directions even earlier than that.  Anyway, some of my opinions have evolved since then.]


Capitalism: the Greatest Threat to the Market Economy

By Ian Downey

    We, who fight for democracy, must always be on our guard against propaganda, the rhetoric of demagogues who seek to beguile and seduce us into serving their own power.  But how can we know propaganda when we see it?  People who create propaganda are attempting to quickly inspire others to action.  Thus they will scarcely ever write anything that is nuanced, complex, or precise – anything that may contain details that go against the main thrust of their argument. Usually, there will be a clear boundary demarcating a polar dichotomy: Us versus Them.  As a painting in Black and white, with no grey, and no other colors, propaganda contains no fine points and no subtle distinctions.  As Goebbels, the propaganda minister for Hitler, put it, the two-part formula for propaganda is to choose a “simple message” and “repeat it endlessly.”

Could our own educational system be an organ for producing propaganda, a vestige of the bygone days of the Cold War?  When you are an American child in school these days, chances are, some teacher of Social Studies (or whatever name they give the class these days) will tell you about the difference between “capitalism” and “socialism.”  And yet there will be another term in there, the “market economy.”  Where does the market economy fit in?  Is it exactly the same as capitalism?  If so, then why are there two different terms? 

If pressed, an economics professor may relent and admit that there is a “subtle” distinction between capitalism and the free market economy, but unless she is an insurgent, cleverly staging a tiny revolt within academia, she will most likely brush off this distinction as unimportant or trivial.  The capitalist propagandist paints human life with a broad brush, using “capitalism” and the “market economy” interchangeably, in order to sharpen the opposition between these two systems and socialism.  If this propagandist allows for the existence of a third way, beyond capitalism and socialism, and if the propagandist recognizes that a free market is indeed a third way, she will most likely dismiss the market economy as “primitive,” without giving details or explaining why.  Worse, she may try to divert the conversation into irrelevancy, pushing it away from the real issue into a debate about the value of technology (which has nothing to do with the distinction between capitalism and the market economy).

All of this begs the question:

What is the difference between capitalism and the market economy?

Market economies exist everywhere and have existed since well before the beginning of recorded history.  Archaeological evidence shows the existence of market economies that date back tens or even hundreds of thousands of years.  A market economy is a society of workers.  In a market economy, people work, creating value (either in the form of a valued service, or in the creation of a valued good), and then reap the benefit of that work, through exchange with other workers.  Exchange is beneficial for all, since it allows each to specialize on one specific form of work, creating an interdependent society in which each receives goods and services of a more expert craft than that which she could most likely have produced herself.  Thus a market economy is fundamentally progressive, as each actor in the market follows a learning curve whereby she becomes more expert at producing better work more easily and efficiently.

Capitalism, on the other hand, is a specific mode of social organization that appeared fairly recently within the hundreds of thousands of years that humans have existed on earth.  Capitalism is nearly the opposite of the market economy, for in capitalism, there exists a class of people, known as “capitalists,” who do not work, maintaining their existence by siphoning away the value of the labor of the other people in society, without contributing any value themselves.  This class can in some instances be very small, very exclusive, and very rich - far, far richer than those who actually do work for a living.  What is pernicious about capitalism is that the parasitic relationship of a capitalist to her society is so powerful that she winds up not only grabbing the excess and leftovers of the workers, but controlling the vast majority of all wealth.

Capitalists are those who survive and thrive through the ownership of capital, which is a specific form of investment requiring a highly complex - and tightly regulated - social structure in order to operate.  All capital is investment, but not all investment is capital – for instance, all people invest time, energy, and resources into various activities, and these are all real investments, but capital includes things like stocks, bonds, and so forth.  Also, even within a capitalist society, not all people who invest capital are members of the capitalist class – for instance, in America today, many workers have 401k plans and the like.  But these are not enough to live on alone, and so the workers must still work.  A true member of the capitalist class makes enough money through her investments alone that she does not need to work.  Indeed, the members of the tiny class that controls nearly all of the wealth in the world do not even need to do the work of investing – they hire investment strategists to do this for them.

The Corporation

Market economies tend to promote individualism and personal responsibility.  The opposite of individualist values are communal values, and the most extreme example of communalism is the corporation, an essential element of capitalist society.  It is interesting to note that in many capitalist societies, the vast majority of people, as victims of capitalist propaganda, do not even know what a corporation is, and think that this term is synonymous with “company” or “business,” which is very far from the truth.  What is a corporation?

Corporations are inventions of the state.  Corporations are people, who, to the extent that they exist at all, exist by government fiat.  A corporation, to be specific, is a system of limited liability.  According to law, (or in many states, not even law, but a very shaky precedent, based on a tortured reading of the Fourteenth Amendment, which was intended to recognize the full humanity of former slaves) a corporation is a “fictive person,” a person who does not actually exist, but who is recognized by the law as existing, so that when the actual human beings who are capitalists (in this case, stock-holders in the corporation), do something that injures another real human being, these capitalists are magically made not accountable for their actions, and all of the blame is placed on this fictional legal entity known as the corporation.  If this fictional person called the corporation gets into enough trouble, the people who created him can simply cause him to cease to exist, and create a new “person” to replace him.

The word corporation, from the Latin corpus, (“body”) means to make into a body.  It would be strange if there were some religion in which people believed they could make other human beings, who would then be responsible for all of the real humans’ actions.  But for this bizarre belief to be recognized as true by the law is beyond madness.  It is a calculated stratagem, used to avoid all individuality and personal responsibility, the cornerstone upon which a true market economy is built.  In the eyes of any rational human being, it is fraud.  It is a crime.

The Free Market versus Class Monopoly

How does a market economy become a capitalist economy?  We can analyze this question historically with a great deal of precision.  Space does not allow a full history of the centuries of conflict involved in the answer to this question, but suffice it to say:  Without exception, the transition from a market economy to a capitalist economy involves the use of force.  In many cases, there is also a good deal of fraud.  But to better analyze the way in which this process occurs, it may be more fruitful to use terms more accurate than “capitalism” and “socialism”.  I would suggest the terms “free market” and “class monopoly” to address a more meaningful distinction.  Although all societies may have, at least within a hidden, marginalized field, a free market to some degree, we may still distinguish between the pure free market and class monopoly, which includes capitalism and state socialism.

A free market is marked by multiplicity, difference, diversity, change, and competition of interests.  If some player in the field of relations involved in a free market becomes too powerful, threatening the sovereignty of her competitors, it will be in each of their own self-interests to band together, temporarily and tactically, to defeat their common foe.  Thus each of the competitors acts as a kind of check and balance on each others’ power, and through constant negotiation and experimentation, complex relations may form and dissolve in a freely flowing manner, very quickly.  Also, of course, people die, and thus they cease to be players.  (Note: advocates of a free market are often accused of being “primitivists” or “against technology”.  Actually, the reverse is true.  The free market, being free, allows for new ideas, and being competitive, encourages innovation.  Capitalism, by contrast, concentrating the power of investment into the hands of a few, limits other peoples’ energy, free time, and resources which they might otherwise invest into creating new ideas.  Capitalism is fundamentally opposed to progress and innovation.)

But perhaps it is the very openness, mutability, and necessary instability of such societies that allows for the possibility that one class of people will begin monopolizing the marketplace, effectively shutting it down by eliminating all competition.  If this occurs, then the resulting class monopoly will be characterized by unity and conformity, every vector in society becoming realigned in the direction of the ruling class.  In addition, the class monopoly is characterized by permanence: the social structures put in place will far outlive their creators, and innovation and difference will be discouraged – thus society will come to live in the institutions of the dead.  One can distinguish between a free market and class monopoly very easily by virtue of some tell-tale signs:

The State: In class monopolies, the state will serve the interests of the ruling class.  To transfer from a free market to class monopoly, the ruling class must come to command a powerful state, in order to consistently, violently put down any rebellions from the other players until they are rendered docile.  The class-run government will institute a system of “privilege”: literally, “private law,” laws created for the private interests of the ruling class.

Culture: While the free market is a wilderness of new, different, and changing ideas, the class monopoly tends toward sameness, convention, and in particular the impossibility of imagining any other form of social structure.  We may see any example of this in the distinction between, on the one hand, independent media outlets, small presses, ‘zines, independent record labels, community access television, small clubs, independent film, and the myriads of ‘blogs and other websites, and on the other hand, any form of media that must answer to a board of directors that represents the stockholders, and which are quickly being consolidated into the hands of fewer and fewer giant media conglomerates (at last count, 6).  In an Orwellian fashion, language itself (under the rule of the class monopoly) will be so contrived as to make alternatives seem evil, absurd, or simply non-existent.  An example of this is the phrase “free market” itself – do not allow the capitalists to twist the meaning of this phrase to signify their own dominance.  We, the people, must reclaim the “free market”!

The family, the Church, mental hospitals, and a myriad of other institutions will be used as a tool for the entrenchment of the class monopoly’s power relations.

In modern times, the state socialism of Stalinist Russia is a clear example of class monopoly, in which the same, relatively small group of people controlled all of the investment of capital, all the factories and other means of production, as well as the state.  But now that this so-called “communism” has “collapsed,” there is very little real competition to the globalization of capitalism, and therefore we may see the emerging “New World Order” as perhaps the most dangerous and virulent class monopoly yet.  And yet, just as the “black market” thrived in the Soviet Republics, there are always market economies slipping through the cracks of the modern system, forever creating new possibilities of insurgency.


    The propagandists of global capitalism may tell you that there is no difference between capitalism and the free market.  If so, then why were and are imperialist wars of conquest required to convert the world’s markets to the capitalist states that exist today?  By telling you that this distinction is unimportant, they are asking you to forget the blood of your husband, your wife, your children, your parents, or your grandparents – most importantly, the blood of your ancestors.  For no matter who you are, unless you are living in one of the tiny free spaces that dot the globe, your family at one time was conquered by the Capitalists.  The invading armies in Latin America, Africa, the Middle East, Southeast Asia, and everywhere else all claim to be liberators.  And they have indeed liberated a great deal of wealth from the hands of the people they have conquered.  The deforestation planes that wipe out all the crops according to Plan Columbia, so that the people there will starve to death, have an insidious kind of logic.  They know that they must destroy all free markets that compete with their rule.  Who will defend the tribal people of New Guinea, who carry on their ancient traditions of exchange?  But we, the people, are not ignorant.  We know that standing up for a free market means absolute unflinching opposition to capitalism.

(This pamphlet is intended as the beginning of a discussion, not its end.  I would not want “capitalism” and “the market economy” to become a simplistic “us vs. them” any more than “capitalism” vs. “socialism”.  If you have even more subtle distinctions, by all means, let’s hear them. -ID)


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