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A little history:
In pre-capitalist America, most people worked for themselves. They didn’t have employees. They were artisans, small farmers, did their own small scale production at home. They weren’t capitalists. This changed after the Civil War. America changed. But most Americans today don’t even know this happened. All too many actually believe the Constitution endorsed the capitalist system and prevents us from using any other. Not in the slightest. The word never appears. And it wasn’t the dominant economic system in Europe or here at the time of the revolution. It was only edging toward dominance in its place of birth, Britain, which did everything it could to export it to its colonies, because this expanded the power of Capital and capitalists in the homeland.
Best two books I’ve ever read on the history:
The Origin of Capitalism, by Ellen Meiksins Wood
and
The Invention of Capitalism, by Michael PerelmanThe first one is incredibly concise, with no wasted words. It’s easily the single best definition of what makes capitalism different from all previous economic forms, and how it came to be what it is.
The second one is brilliant on historical grounds as well, but it concentrates mostly on “primitive accumulation” and uses the words of the earliest political economists to provide theoretical context. Adam Smith, Ricardo, etc. Their own words. It’s comprehensive, the notes and sourcing are extensive, and he supports what he writes throughout the book.
Also, neither work is polemical. Both are scholarly. They present the evidence and allow the reader to draw conclusions. And, for me, they also provoked a great deal of thought beyond those pages.
I highly recommend them.
I go back to this analogy a lot, when I talk about the difference between capitalism and other forms. But will repeat it here. All too often people, sometimes angrily, assume that an anticapitalist stance is anti-commerce, or anti-trade, or anti-business.
It’s not. And the vast majority of people who misunderstand the distinction do so because they’ve been trained to think of “capitalism” as the same thing as commerce, trade, business. That’s how they can also respond by saying we’ve always had “capitalism,” even though it’s only been dominant in parts of the world since the Industrial Revolution. It didn’t achieve dominance worldwide until after WWI. And it wasn’t even in existence until the late 17th century in Britain.
Okay, so the analogy:
You build chairs with your own two hands. You don’t have any employees. You haul them to your clients, exchange them for cash or another item you value. Or your clients come to your shop. You’re not a capitalist.
However, if you hire workers to build chairs for you, and then take the surplus value for yourself, as if you were still building all of the chairs and working all alone . . . . then you’re a capitalist. Being a capitalist essentially means you legally take the production of others for yourself, and then you decide how much to pay them for that labor. They don’t have any say or control over the fruits of their own labor. The employer/employee split makes you a capitalist. Taking all the revenues of everyone’s production makes you a capitalist. Deciding how much to redistribute back to your workers . . . etc.
And the only possible way to make a fortune from this set up is this: You can’t pay your workforce as much for their individual production as you would yourself for the same production. As in, if you charged your clients $500 per chair when you were on your own, and you kept all of that, minus your costs (say, $400 net), you have to pay your workers less than that $400 net or you won’t increase your own personal wealth in any significant way. The more you want for yourself, the less you can pay your workforce. And if you want to extract huge amounts of wealth, you need to collect as much of that unpaid labor as is possible, from as many of those unpaid laborers as you can keep. Or, go “public,” and massively increase your capital, which forces you to underpay your workers even more. Stock investors want a return on their investment, and the biggest source for underpayments is the workforce.
It always comes back to them. They’re the cash cow for any capitalists — not only because they produce the good or service in question, but because they’re the source for the owner’s own extraction of new wealth, and his or her dividends to his new investors. The bulk of that must come from the amount of unpaid labor hours, one way or another.
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