- by Jo Dunleavy
- The Guardian
- Issue #2167
Abolition of feudalism, 4 August 1789 (Monument to the Republic). Photo: Teofilo – wikimedia.org (BY-SA 2.0)
The prime characteristic of any social system is the way it produces and exchanges goods and services. In primitive communal systems with no class divisions, land was held in common by the tribe. Goods were produced through social production of tribal members as a whole. The food needs of the members of the tribe were partly satisfied by gathering edible roots and plants and the collection of fibrous vegetation. Extra food and clothing was supplied by hunting other animals.
The predominance of women in the production cycle led to these societies being often of a matriarchal nature. Apart from occasional disputes over tribal boundaries, practically no organised warfare occurred between them.
As the production of food and clothing became more sophisticated, a small surplus was produced beyond the community’s immediate daily use. Excess items were exchanged for other items from neighbouring tribes. This more or less coincided with the domestication of certain animals.
About 10,000 years ago, societies began to produce staple grain crops and to settle in one place and build permanent dwellings. It is in this period that recorded history began.
It was mostly the men who became responsible for the care of the animals, to exchange excess products, and who eventually claimed ownership of these products. These men thereby materially benefited from their exchange.
This growth in production, in turn, created the need for a larger workforce to care for larger groups of domesticated animals and to satisfy the growing needs of the community.
This led to warfare between tribes and villages – usually conducted by the men – to acquire an increased workforce who were initially slaves. This led to the creation of a small slave-owning section of society: This was the first division of society into classes. From that time on, the history of societies is associated with a division into classes and the conflict between the different interests of these classes – the class struggle.
Slave and slave owning societies grew into powerful hierarchies, as in ancient Egypt which was dominated for thousands of years by Pharaohs, the priests who held sway over the artisans and tradesmen and, beneath them, the slaves, who were considered not as human beings, but as property.
In ancient Roman society, certain families of the privileged senatorial upper class, and knights who were members of the equestrian order, became the ruling class, as against the plebeians or common people and slave classes.
The revolt of the slaves in Rome, led by Spartacus, was one of the early demonstrations of class struggle.
By this time, the direct exchange of goods and services was mainly achieved by the use of money which had an agreed value for the purchase of goods. Money arose from the elementary or accidental form of value, in which a given quantity of one product is exchanged for a given quantity of another and ending with the money form of value when gold becomes the universal equivalent of all products.
By the Middle Ages, the development of production required new classes and a workforce with greater freedoms, that is, a labourer “free” to sell his labour power (slaves were not paid) in the more complex manufacture of goods. Even at this time, the production of goods was very limited and primitive, and took place mainly in households. Agriculture remained the predominant form of work.
Vassals – the holders of land by rental from the feudal lords – made payments to their masters in grain or money as payment of rent. There were also guild masters, journeymen apprentices and serfs. The latter were little better than slaves who worked on the land of the feudal lords.
The feudal system brought the first monopolisation of production skills in the form of closed guilds. But this did not satisfy the growing wants of new markets. As Marx wrote:
“The small holding of the peasant is now only the pretext that allows the capitalist to draw profits, interest, and rent from the soil, while leaving it to the tiller of the soil itself to see how he can extract his wages.”
The manufacturing system of the rising middle class – the future capitalist class, the bourgeoisie – with its division of labour, gradually became predominant.
England, France, Spain, and Portugal in the first place, built large merchant fleets and warships to open up new colonies for exploitation. Markets grew and demand kept rising until the then existing production processes no longer sufficed. The invention of the steam engine to drive machinery revolutionised industry, initially in the textile mills of England.
By the 18th century, the new capitalist class had all but triumphed over the feudal classes in a struggle mirroring previous historical clashes, which have ended in either a revolutionary reconstitution of society, or the common ruin of contending classes.
Manufacturing was converted into modern industry, and the industrial middle class evolved into the dominant industrial class. This dominant industrial class partly makes up the modern bourgeoisie, or capitalist class, of today.
PRODUCTION AND MONOPOLIES
The capitalists, who are small in number compared to the general population, own the means of production, (the machines, warehouses and the sources of raw materials), while employing and exploiting wage labour – the working class – which does not own any part of the means of production nor the finished goods that their labour creates.
Production had become social – most goods are produced in enterprises which employ perhaps hundreds, even thousands of workers.
This created the contradiction between the social nature of production involving the masses of workers, and the private ownership of the means of production and the goods produced.
To accumulate the necessary capital to construct the huge assembly of machines now needed to manufacture goods, a stock market was created. The buying and selling of shares by which capital is channelled to the most profitable areas of development became a feature of capitalism.
The development of huge monopolies which today span many countries (globalisation) also saw a shift from the small-scale production of commodities to financial speculation by banks, insurance companies and the buying and selling of stocks and shares on stock exchanges.
Finance capital now predominates over industrial capital. Speculative “futures” markets and “derivatives” markets were developed while enormous scientific and technological changes took place.
FINANCE
The meaning of the term ‘financial capitalism’ goes beyond the importance of financial intermediation in the modern capitalist economy. It also encompasses the significant influence of the wealth holders on the political process and the aims of economic policy.
The 21st century predominance of finance capital has led to a preference for speculation – Casino Capitalism – over investment for entrepreneurial growth in the global economy, and the transformation of competitive and pluralistic ‘liberal capitalism’ into monopolistic ‘finance capital.’
Lenin concluded of the banks at that time that they were “the chief nerve centres of the whole capitalist system of national economy”: The Comintern in 1934, characterised fascism in power as “the open terrorist dictatorship of the most reactionary, chauvinistic and militaristic elements of finance capital.”
The gulf between the rich minority and huge numbers of the world’s poor grew ever wider.
Capitalism periodically spawns recessions and depressions. During production slumps, industries are bankrupted and workers sacked. While these events and prolonged falls on the stock market are affected by such factors as “consumer confidence,” wars, the confidence or otherwise of business leaders, these are not the prime cause of depressions.
BOOM AND BUST
Recessions and depressions have occurred fairly regularly since the 1840s. Australia suffered severe recessions in the 1890s, while a world-wide depression occurred in the 1930s. There were recessions in the 1970s and 1980s, right up to today’s crisis.
With the emergence of the transnational corporations over the last 50 years the major capitalist powers have organised themselves into several global organisations; the G8 made up of the largest industrial countries, World Trade Organisation (WTO), the International Monetary Fund (IMF), the World Bank and the Organisation for Economic Cooperation and Development (OECD) all implement the policies demanded by the big industrial countries.
Capitalism, rather than solving the problems facing the people of the world, is intensifying them.
As Marx noted – “Capitalist production … develops technology, and the combining together of various processes into a social whole, only by sapping the original sources of all wealth – the soil and the labourer.”
