Myths About Capitalism

MYTH 1

That in all societies wealth must take the form of commodities.

It is argued that all goods and services must be produced for sale, as if the different values of various goods and services are inherent. Need-fulfilling wealth is seen in a fetishised way, as if its expression in terms of exchange value is a manifestation of its natural essence. In fact, value is a social relationship between people. wealth only takes the form of commodities when the system of production and distribution is based upon the class ownership and control of productive machinery. Buying and selling is only possible when there is privately possessed wealth to be exchanged. In a socialist society, where there will be common ownership and democratic control of the means and instruments of wealth production and distribution, goods and services will be the property of the whole community, and it is obvious that the community will not be able to sell back to itself that which it already owns. So, in socialism there will be use value (the production of wealth to provide for human needs), but no more exchange value (the sale of commodities with a view to profit).

MYTH 2

That the capitalists’ profit is made in the market place.

It is a popular fallacy that workers are paid a price for their labour power which is equivalent to the value of what they produce. Then, the capitalist takes the commodity to the market place (any retail or wholesale outlet) and sells it at a price which is above what it had cost him to produce the commodity. According to this explanation of how profits arise, profit is the difference between the cost of production and the market price. Now, it is true that under special circumstances capitalists do sell their commodities for prices which are considerably above their value, but the Marxist case is that, on average, commodities sell at around their value. So how is the profit made? The profit is taken from the surplus labour of the workers at the point of production, the workers are paid less than the value of what they produce. Profit arises, therefore, from the exploitation of the working class, although it can only be realised when commodities are sold. So, the capitalist can still make a profit by selling his wares at their value.

MYTH 3

That prices reflect demand.

Prices reflect market demand—the money available to back up a need, but not real demand, or human needs. Supply and demand do affect price (which is the monetary expression of value), but do not determine it. A homeless family may demand that society give them a house, but in terms of capitalist economics, if their need cannot be backed up with money (‘effective demand’) they will remain homeless. Under capitalism, if you are rich you can afford to fulfil needs that you never knew you had; if you are poor you are limited in your access to the necessities of life.

MYTH 4

That capitalism causes problems because the capitalists want it to.

The operation of the capitalist economy overrides the wills of individuals within it. However wicked or altruistic, intelligent or stupid the capitalists may be, they must exploit their employees of they will not get their profit and will have to join the working class. Governments may have fine ideas—or nasty ideas—about how the economy should be run, but the capitalist economy will obey its own laws, not their. Workers can be as militant and radical as they wish, but unless they abolish the system they must be its slaves. Capitalists and workers may dance round the May Pole with each other every night after work, but still the class war will not cease, for the material interests of the two classes must always be antagonistic.

MYTH 5

That in a socialist society profits will be for the benefit of all.

This is the standard justification for the economies of the state capitalist countries, such as the Russian Empire, China, Albania, Cuba. It is based on the pernicious lie that the interests of the state bureaucracies who control the productive machinery in these countries are the same as the toilers who must work for wages. Profits can only result from the exploitation of the majority by the minority. When production is for use there will be no value, price or profit.

Steve Coleman