Much of the world’s population struggles for basic necessities. Adequately paid jobs, housing, food, clean drinking water, and health-care are not reaching many who need it. However, the world’s economy and that of many of its constituent countries already have enough supply to meet the needs of the human population. Despite that, distress as a result of financial strain, and inadequate material and social provisions are common.
Enough food was produced in the world to feed 10 billion people in 2012, but the world’s 7.6 billion people have grown hungrier and a third of them are malnourished while 30% of food is wasted (2016).
Canadians produce more than ever before: they produced US$50 per hour worked in 2017 compared to US$38.46 in 1995 (pegged to 2010 dollar valuation). However their household debt was 178% of net disposable income in 2017 compared to 104% in 1995.
The number of people employed has recently grown, yet there’s a “trend of wageless growth in the face of a rise in employment”, according to OECD Secretary-General Ángel Gurría. Contrast this to recent findings indicating that globally the “top 1% of adults own 51% of the world’s wealth; [the] top 10% own 89%; and [the] bottom 50% own only 1%”, or that the world’s 42 richest individuals have as much wealth as 3.7 billion of the poorest.
At its most extreme concentrations, poor men in the US die 15 years earlier than their rich equivalents, a gap of 10 years for women.
In the United Kingdom, more than one in five people live in poverty. Prices for essential goods are rising fastest for the poorest in that country, forcing them to take on debt to make ends meet. Of the poorest fifth of the population, 70% do not contribute to a pension, increasing old-age insecurity. Meanwhile, the country’s extremely wealthy indulge themselves with gross excesses such as constructing massive underground compounds beneath their homes in order to house servants, fit carousels for their numerous cars, enjoy artificial subterranean beaches, fit Turkish baths, and much more.
There’s enough stuff to generally go around, but scarcity is still a problem
The matter of production, supply, and distribution of goods to meet the needs of people, to support productive activity, and to cover the costs of managing the entire affair are now and have ever been one of the central questions of statecraft. How this is done is a matter of both moral principles and political economy.
The moral question encompasses the notion of what class of people have a right to what sort of resources and powers over distribution and the productive process. Essentially, who has the right to decide what is made, how it’s made, and how wealth is used to supply needs and wants. Morally, the ruling ideology manifests and reproduces its notion of what class divisions should exist and what norms are barred from existence.
Moral principles and class power are expressed via the mechanisms of the political economy. The economic question takes the moral principles as an axiomatic starting point from which to proceed. Simultaneously, the economy generates and reproduces the same moral fundament.
For example, capitalism has a set of moral assumptions that are embodied within it while its preceding European feudalism embodied a different constellation of assumptions about the nature of individuals, society, and the legitimation of rule.
Currently, we’re faced with a paradox. People lack access to the basics for a healthy and dignified life, yet the productive economic output has never been higher. The existing system is doing a bad job of distributing resources to the majority of people, just as it has locked up power over decisions of what and how things are produced and distributed. This is not a system failure, class division is at the structural heart of capitalism. The magnitude of this division and its concrete manifestations are the only things that can be reformed one way or another. The underlying necessity of inequality, however, cannot be done away with from within capitalism.
Adam Smith, one of capitalism’s most famous theorists, had this to say on the nature of inequality within that system:
Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days’ labour, civil government is not so necessary.
Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. (Adam Smith, An Inquiry into the Nature and Causes of The Wealth of Nations, Book 5, Part 2)
In other words, concentrations of wealth necessitate a mass of people who don’t control the social machinery of wealth generation. These people are always enormously poor relative to the major propertied classes who do control the means of production. This gross inequality upsets the majority of people, and their lack of goods and services will prompt them to hold a grudge against the wealthiest in society. This inequality can only be maintained by way of laws cementing private property rights, and enforced by judicial and police power, using violence to uphold these laws when required. This economic, juridical, and political system forcibly subordinates the majority. As concentrated wealth grows, so must the subordination of the greatest share of the population on behalf of the class that owns the means of producing society’s wealth, the same class that holds the greatest share of strategic property under its rule.
The moral economy
Every economic system is a reflection of, actualisation of, as well as generative source of moral principles. In that sense, we always have a moral economy. The decision we must make is what set of morals do we ascribe to as fundamental to our lived reality and its accompanying economy. The political economy proceeds to build the seemingly natural laws of its functioning processes based upon these principles.
Therefore, any criticism of the political economy and its social relations requires that the critic include a judgment: are the existing moral precepts and consequences of the system desired and should the system be chucked?
Essentially, how should decisions be made regarding the distribution of wealth that is produced, who should own such wealth, should things be made with the primary purpose of salability or utility, what wants and necessities should be deemed as basic, who should make such decisions and how should such decisions be made, and in the case of capitalism should profit for profit’s sake be the driving engine of productive and labour activity?
In order to judge one way or another, the critic must have a fair understanding of the political economy and the social relations that it structurally reproduces and relies upon.
Judgments of historically or geographically distant systems are relatively easy to make. For example, it’s clear to most people that a return to feudalism is a horrible idea. Since we’re not already invested in such a system, we can make such a call without much consequence: our existing prejudices and life choices are not called into question. Nor do we have to stand up against the great weight of contemporary mechanisms of power, morality, or culture. We risk little and our lived reality already resides outside the conservational cultural and social forces of feudalism. That makes it easy to critique feudalism.
A further problem: to imagine a break with a system we’re already a part of means to imagine a new world. This new world would require new moral foundations along with a different set of political, economic, social, and cultural frameworks. Following that, we would need to do the difficult work of putting these notions into practice, which means the painstaking and diligent labour of building new processes: a new economic model, a new state structure, new traditions, new forms of expression, etc.
Inheritance, novelty, and inevitability
Clearly, we’ve inherited a lived reality that’s pumped with and weighed down by the forces of the past. We’re faced with these objective conditions regardless of what we may wish or imagine. This inheritance affects our thoughts and actions. This is the boundary of the possible. But this framework is constructed by people, and people can redefine it. A radical transformation brings about a new set of options, and what was once impossible can become inevitable and natural.
So what, very briefly, have we inherited?
Capitalism is framed by the market and motivated by a drive for profit. Measured by money, profit means that the capitalist owners should get more than they invest. The workers, meanwhile, do not invest anything in return for greater returns: they lease out their bodies and minds in return for wages. The capitalist goes to the market to get what’s needed to run the profit system: buying commodities, the machines and enterprises, as well as labour power. Finally, the capitalist returns to the market to sell the goods or services produced in exchange for money. The surplus acquired via market exchange is pocketed as profit.
From the capitalist’s perspective, they take profits as a portion of the remainder left after subtracting productions costs from the sale price of a product. Cost in this case combines commodities used in the production process, machines and long-term investments, as well as the cost of paying the worker whose labour is embodied in the final product.
The labour cost is not calculated according to market sale price divided by total hours of labour in the product. A portion of the time and effort of labour must not be accounted as cost, or there would be no profit left for the capitalist. Essentially, a share of effort made by workers and the market sale price of its output is appropriated by the capitalist.
Workers must work to make the product. This is why they are paid wages. They must pay for the necessities of life, such as food and shelter. For that, they need wages, so they must work. The capitalist, takes a portion of the surplus as profit because they already own a concentration of wealth, giving them the power to organise labour and the production process, as well as empowering them to compel workers to work and give away a share of the value they generate to the owners of capital.
It’s important to repeat and be clear that this compulsion works thanks to the fact that much of the necessities of life are only available via the market, for which workers need to pay with money acquired via the lease of their minds and bodies to capitalists in exchange for wages.
Forbes magazine published the following insight on the topic: “greed will push […] companies to expand their markets, sell in new locations, sell new products, and grow their empires.” Greed is the competition over profits that is a core feature of capitalism. This greed is the motivating factor behind continued activity in a capitalist economy, and therefore, it can be dangerous to block it up without careful consideration because, within capitalism, such a prohibition may actually lead to reduced profits for owners which means reduced incentive for them to organise productive activity, leading to recessions, and so on. The answer, however, should not be to embed greed within our relations and then let it run its course, but rather to replace the system that requires greed with one that doesn’t.
This simplified representation of the capitalist system illustrates the limits, bounds, opportunities, possibilities, and seeming inevitabilities that are (re)produced by such a structure. The tendencies inherent to this particular system are what we might claim as part of the ‘nature’ of our social reality.
However, it’s still historically and socially constructed. It can be replaced. The new system that replaces it will provide us with its own ‘nature’, its own tendencies and principle necessities. The conscious act of creating a new system has its own challenges, but the most pressing question may be to identify the social purpose that we want to achieve with it.