(We
reproduce an article from Britain relevant to the situation in NZ. To
read full article go to
http://www.marxist.com/monopoly-capitalism.htm)
Capitalist
economists constantly argue that privately run industry driven by
pursuit of profit is the best way for an economy to function. But,
even a cursory look at the world around us tells a very different
story. Far from being efficient, capitalism is riddled with
contradictions and crisis. You could write multiple volumes, as Karl
Marx did, on the inadequacies of capitalism, but here, in this
limited space, we shall deal with just a few.
Unemployment
One
of the greatest resources that capitalism squanders is human labour.
Unemployment has become a permanent feature of capitalism, but it
swells to epic proportions during a crisis. Official figures show
that unemployment in the case of Britain today increased to 2.5
million, 8% of working people. If you factor in the 40% of unemployed
who have resorted to part-time or temporary jobs or education to
avoid the dole queues, and the unemployed who don’t claim benefits,
that figure is probably nearer 5 million. The International Labour
Organisation (ILO) has estimated that global unemployment is about
239 million, 8% of the world’s workers, an increase of 59 million
since 2007. What a tremendous waste of human resources. If the
working population of Britain is about 33m, and GDP is £1.6
trillion, then GDP per worker is £48,500. Britain’s 2.8 million
unemployed could be costing the economy £121 billion in lost
production. Every man, woman and child could be £2,000 better off if
we eliminated unemployment, but this is virtually impossible under
capitalism.
Industry
lies idle too, especially during recession. The IMF thinks the output
gap, the gap between actual and potential GDP, in advanced economies
is up to 5%. Around 30% of the U.S. manufacturing sector is idle. Yet
there are shortages of essential amenities. In Britain, large brick,
plaster and glass producing monopolies are stock piling materials.
Hundreds of thousands of construction workers are without jobs. Yet
thousands of homeless wander the streets, millions more live in
sub-standard accommodation due to a lack of quality affordable
housing. But the market economy does not link these resources to the
needs of society unless it’s profitable.
Poverty
In
2008, 13 million people in the UK were living in households below the
60% low-income threshold after deducting housing costs. This is
around a fifth (22%) of the population. This 13 million figure is an
increase of one million compared with three years previously.
The
World Bank’s statistics state that over half the global population
lives on less than US$2.50 per day. 800 million people go hungry
every day. Far from reducing poverty, capitalism has increased
inequality. The UN has reported that, in 2005, the richest 500 people
in the world earned more than the poorest 416 million.
Waste
Big
business has developed all sorts of desperate and wasteful ways to
increase profit. One of the most despicable tactics is ‘planned
obsolescence’, a concept popularised by Vance Packard. There are
three different types. The first is ‘obsolescence of function’,
where a product becomes superseded by next year’s model. This is
justifiable when better technology is introduced but it’s often
exploited. Computer manufacturers deliberately change the design of
processors to stop us from updating our old computers, forcing us to
buy new ones. New software is frequently introduced that is not
compatible with older versions, forcing users to purchase new
software. In 2004 about 315 million working PCs were retired in North
America. Most go straight to the scrap heap.
The
second, and by far the most wasteful, is ‘obsolescence of quality’.
Here the product is designed to break after a certain amount of
usage. Low quality materials are used on key components in order to
create ‘death dates’, ensuring repeat sales and huge profits –
what madness! This practice is thought to have become mainstream
during the 1930s, when the American company General Electric reduced
the life span of their light bulbs from 1000 hours down to 750 hours
to increase their sales. The practice quickly spread to the
auto-mobile industry. Companies like General Motors began to use
metals that rust, fan belts that constantly break, and plastics that
snap off in your hand. Washing machines, refrigerators, toasters &
vacuum cleaners are all designed to breakdown within just a few
years. A famous recent case is the ‘Click Wheel’ on Apple iPods,
which many consumers found to fail within 18 months of purchase.
The
third method is ‘obsolescence of desirability’. Here the product,
still sound in terms of performance becomes ‘worn out’ in the
mind of the consumer because marketing deems it ‘out of fashion’.
Most of you will have seen TV adverts trying to convince you that if
your mobile is more than a year old then you’re are uncool. About
250,000 tons of discarded but still usable mobiles, containing toxic
materials, sit in stockpiles in America awaiting dismantling or
disposal. Goods could be designed to last for much longer, which
would be better for us, and better for the environment, but it’s no
good for capitalism.
The
role of advertising in promoting demand has become crucial to
monopoly capitalism. Corporations blow fortunes on marketing,
branding, junk mail, wasteful packaging, product placement, and
advertising. The more similar the products are, the more resources
are wasted on trying to convince you that they’re different!
Colgate spends 12% of its total dishwasher soap sales on advertising;
Levi-Strauss spends 11% on their jeans; and Proctor and Gamble spend
11% on their toothpaste.
It
gets worse. As advertising creates clutter, greater and greater
volumes of advertising is required to be effective. Total ad revenue
in the U.S. has swelled from around $25bn in 1920, to a staggering
$300bn in 2000 (Monthly Review, April 2009). What a stupendous waste
of money!
With
the expansion of the financial sector, greater proportions of this ad
money are being used to encourage us to borrow money and get into
debt! This was 12% in 2005, compared to 2% in1945. Also worrying is
that greater amounts of advertising is being targeted at children;
$100m in 1983, compared to $17bn in 2007. Evidence shows that this is
linked to the current epidemic in childhood obesity. In short, the
sales effort is a deeply dubious enterprise which inflicts great
damage on our societies.
Food
When
it comes to food, never before has so much been controlled by so few.
Ten companies control two-thirds of global seed sales. Monsanto is
the biggest of the big. The firm makes its fortune by genetically
engineering crops so they don’t reproduce, forcing farmers to
repurchase seed every year.
Capitalism
is also poisoning our food. In the 1990s, Monsanto came up with the
controversial idea of injecting cows with growth hormones to increase
milk yields. This became a scandal when tests showed that this milk
could cause cancer in humans. Despite being banned in Europe, this
milk continues to be sold in other countries, including the U.S.
Monsanto also exploited last year’s global food crisis to increase
its profits. As rice stocks hit their lowest levels in 30 years, the
corporation raised prices. Maise went up by 35% and soya bean by 50%.
As the world’s poorest people went hungry, Monsanto celebrated a
120% rise in profits.
The
case for socialism
Far
from being efficient, capitalism creates waste, destruction and
shortages that are completely unnecessary. Socialists argue that the
best alternative is for working people to take control over their
workplaces, for major industries to be nationalised, and for the
economy to be planned by workers’ and community councils, along
with a socialist government. Industries that effect us all, such as
the banks, transport, land, utilities, construction, healthcare and
food, would be planned to provide us with what is needed, but to do
that we need to collectively own and control them. That means
expropriating the capitalists.
Paradoxically,
the monopolisation of the capitalist system creates more favourable
circumstances for the building of a planned economy. The commanding
heights rest in fewer hands. Back in the 1800s, you would have had to
take over thousands of companies in order to plan the economy. That
would have been impossible. Today, the top 150 companies would
probably suffice to plan the economy. For example, 99% of Britain’s
electricity is supplied by six giant firms. Britain’s supermarkets
are dominated by just four firms. Six giant companies control about
80% of Britain’s mobile phone industry. There has been huge
monopolisation of the financial sector. In 1990, the ten largest U.S.
financial institutions held only 10% of total financial assets. Today
they own 50%. The largest five U.S. banks now hold $9trn in assets.
(Monthly Review, Oct 2009). So taking over the banks would be easier
today than ever before.
Scientific
planning, which already takes place inside these giant privately
owned capitalist enterprises, could be lifted out of the individual
factory and applied to the entire publicly owned economy. The results
would be stupendous. There would be full employment with decent
wages. The cost of production could be cut dramatically reducing the
price of goods. And, affordable housing, free healthcare and
education could be provided for all.
Building
a socialist economy out of a modern capitalist economy would present
far fewer challenges than attempts of the past. By putting to work
the nationalised commanding heights of the economy with a democratic
workers’ plan, we could quickly develop a highly flexible system
for serving the needs of our population, creating greater individual
liberty and shared abundance.