Capitalism-One of many Economic Models

In his Economics for Everyone: A short guide to the Economics of Capitalism, Jim Stanford argues that capitalism is just one form of economy, one that is likely to be replaced by another, but that is, for the meantime, considered so ubiquitious that it is rarely named. Synonyms for capitalism include “the economy” or “market economy” (34). The first term effaces the historic nature of capitalism; the second links capitalism solely to the market, as if markets don’t exist in any other time of economy. They do.

In short order, Stanford defines an economy as capitalist if:

1. Most production of goods and services is undertaken by privately-owned companies, which produce and sell their output in hopes of making a profit. This is called PRODUCTION FOR PROFIT.

2. Most work in the economy is performed by people who do not own their company or their output, but are hired by someone else to work in return for a money wage or salary. This is called WAGE LABOUR. (34)

These two factors, production for profit and wage labour, produce certain outcomes we’ve come to see as natural. They aren’t. They are the products of this particular type of economy; they are the products of capitalism. Again, according to Stanford, typical trends and patterns in capitalist society include:

  • Fierce competition between private companies over markets and profit
  • Innovation, as companies constantly experiment with new technologies, new products, and new forms of organization–in order to succeed in that competition.
  • An inherent tendency to growth, resulting from the desire of each individual company to make more profit.
  • Deep inequality between those who own successful companies, and the rest of society who do not own companies.
  • A general conflict of interest between those who work for wages, and the employers who hire them.
  • Economic cycles or “rollercoasters,” with periods of strong growth followed by periods of stagnation or depression; sometimes these cycles even produce dramatic economic and social crises.

How do the above trends and patterns relate to our previous discussion of the superstructure?

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