Capitalism is an exploitative socio-economic system where the capitalists (the owners of the means of production) extract surplus value by exploiting the labour of workers and reinvest part of it. Under capitalism, capitalists purchase the labour-power of workers, and production takes place solely for the purpose of sale and to make profit.
Historical Emergence of Capitalism
Capitalism is not eternal. Like all the previous modes of production, it had a beginning, and it will decay. It is not the final stage of human society as bourgeois economists say. In the different periods of historical development, production took different forms: primitive communism, slavery, feudalism, and capitalism.
In both the ancient and the medieval periods, production was overwhelmingly agricultural. Manufacturing was of secondary importance and was centred in artisan workshops. Work was not carried on to supply an outside market, production for need was dominant. Production was carried on by independent guild masters or master craftsmen, employing a small number of helpers. The workers owned the tools and sometimes the raw materials. They were not selling their labour power rather the product of their labour.
Early capitalism grew out of the collapse of the feudal system in Europe, followed by the enclosure of the commons beginning in the 16th century (primarily for grazing by sheep to profit from the wool) which drove poor peasants off the land and into the towns (From 1770 to 1841, the rural population of England dropped from 40% to 26%). Poor peasants were compelled to become “free workers,” with nothing but their own labour power to sell, leading to the early development of the working class ready to go into industry as a wage-worker. The towns became centres of handicraft industry and trade, and thus became the growing centres of power for the rising mercantile bourgeoisie against the feudal estates in the countryside. Early mercantile capitalists began to build their wealth through the production and trade, along with colonial plunder. With the development of trade, the appearance of the world market and the development of money circulation, a new class arose within feudal society – the capitalist class. The 16th-19th centuries were characterised by bourgeois democratic revolutions that established capitalism in Europe, abolishing feudalism.
Primitive Accumulation: The “Original Sin”
- The discovery of gold and silver in America, the extirpation*, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of blackskins, are all things which characterise the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation.
-Marx (Capital, Vol. I)
Primitive accumulation is the historical process that transformed feudal mode of production into capitalist mode of production. Proposing the idea of primitive accumulation Marx exposed the lie that the capitalists and bourgeois economists tell: There were always two sorts of people; the diligent, intelligent, and frugal elite (who accumulated wealth), and lazy rascals (who spent it all in riotous living and were left with nothing but their skins). Marx showed that the vast wealth of the capitalists was originally accumulated by loot, forcible seizure of properties of small producers, expropriation of people from land, slave-trading, plunder of colonies, genocide, and enslavement. This precedes the exploitation of wage-labour as a process in industry. This primitive accumulation of capital paved the way for large-scale capitalist production and accumulation, and the Industrial Revolution.
Capitalism: A New System of Exploitation
When feudalism was overthrown and “free” capitalist society appeared in the world, it at once became apparent that this freedom meant a new system of oppression and exploitation of the working people.
-Lenin (The Three Sources and Three Component Parts of Marxism)
Capitalism was a progressive historical force despite the new horrors of exploitation and oppression. Historical progress is a scientific idea, not a moral one. Capitalism led to the advancement of productive forces qualitatively by freeing them from the fetters of feudal relations. This allowed for the development of modern industry and a more advanced division of labour. Capitalism overthrew feudalism and gave rise to bourgeois democracy, it took power from the class of hereditary lords and put it into the hands of the bourgeoisie.
Despite being a progress, capitalism has a reactionary and oppressive side. It is the dictatorship of the bourgeoisie. The owners of capital, land, and factories constitute an insignificant minority of the population who have complete command over the labour of the whole people, the majority of whom are proletarians or wage-workers. They live only so long as they can sell their labour-power to capitalists in return for barely enough to sustain themselves and create the next generation of labourers.
Socialism: Democracy for the majority
The dictatorship of the proletariat, the period of transition to communism, will for the first time create democracy for the people, for the majority, along with the necessary suppression of the exploiters of the minority.
-Lenin (State and Revolution)
In capitalism, production is social, but exchange and appropriation continue to be private. The social product is appropriated by the individual capitalist. Capitalism contains an internal contradiction. The fundamental contradiction of capitalism is the contradiction between the proletariat (the vast majority) and the bourgeoisie (an insignificant minority). The exploiting classes (i.e., bourgeoisie) need political rule to maintain exploitation, the exploited classes (i.e., proletariat) need political rule in order to completely abolish all exploitation. This contradiction will lead to future development of the mode of production, to socialism. Capitalism is the negation of feudalism, and socialism is the negation of capitalism. Socialist revolution will remove the fetters of capitalist relations of production from the productive forces to create a democracy for the majority by taking power from the capitalist minority and putting it into the hands of the working class for the benefit of the people.
