In the classical Weberian model of the rise of capitalism, one of the preconditions is that all three factors of production — land, labour, and capital — must be available in markets. (Capital, in this context, is not just money, but includes capital machinery and other non-labour/land inputs.)
If land can’t be bought, there is no capitalist takeoff. This was the case in most of Europe during the Early and High Middle ages: The vast majority of land was held by nobles, and most of the rest was handed down through families or as church property and not available for purchase.
If labour can’t be bought or rented, then you don’t have workers. For most of the Early and High Middle ages, the majority of people were serfs or otherwise tied to the land. There were some free cities, especially by the High Middle ages, but the people in them constituted a distinct minority.
And finally, for most of the Early and High Middle ages, lending money for interest was a sin. It happened anyway, but it was a very risky business, with huge margins.
Another necessity is calculable law and relative safety. When you can’t be sure if a noble will seize your land, if bandits or nobles will plunder your shipments, or suddenly raise tariffs and fees, or will repudiate loans, you can’t run a long-term business. In these situations, merchants (not shopkeepers, but the bigger ventures) were gambles, as in the old saying “my ship has come in.” High returns, very high risk, and a preference for high value luxury goods.
Because these are the pre-requisites for capitalism as a dominant and hegemonic system of production and a political ideology, ending any of these will also end capitalism.
If labour, capital, or land stops being widely available in the market, if people have other options to make a living for example, and don’t need or want wage labor, or if land cannot be bought, or if capital goods and money aren’t readily available, or law or banditry or taxation becomes too capricious, then capitalism will come screeching to a halt.
What scenarios can we imagine where this might happen? I’ll offer some in the future, but think it through a bit yourself.
spectator in the sand
Glad you met your funding goals toot sweet. Wish I could’ve helped, but I’m one of the poors, although I don’t feel that way. Unlikely to change before I pass, which given my age could happen any old time, but I’m not worried. Oddly enough I don’t feel old either aside from physical vagaries.
If lucky I’ll live long enough to see the death rattle of capitalism through whatever means. I think regional revolt in search of autonomy may be a catalyst however sloppy it will be in execution. I’m just a spectator at this stage of things.
Your topics, insights and speculations are provocative and penetrating. Thanks.
Eric F
Interesting.
I’m happy to see this equation stated so simply.
And I don’t think it very likely that enough of the population will wake up from collective hypnosis such that money ceases to function in any meaningful number of the important markets.
But “…law or banditry or taxation becomes too capricious…” that certainly sounds likely.
Especially the banditry part, though it would need to be at a (more) massive scale before it made a dent.
Thanks
someofparts
Well, okay. I would bet on the absence of capital being the most likely cause. Given the path we are already on, the eventual demise of the greenback and with it the U.S. economy seem like a good bet.
bruce wilder
if capital goods and money aren’t readily available
The ambiguity of language can confuse these issues in interesting ways.
If money is too readily available — at least to some people or classes — that, too, can be a poison to capitalism, as indeed it is at the moment in the U.S. In a healthy capitalism, people seek to make money from productive activity producing valuable services or commodities and innovative ways of producing more value pays off, leading to investment in expanding production or increasing efficiency.
This sort of rosy scenario leads capitalism’s (delusional) fans to imagine that capitalism is the natural order of a just economy where virtue is rewarded and sloth and foolishness punished.
Here in the real, messy world, we recognize that making money honestly in a well-regulated, “competitive” economy is, by design, very difficult. Which is why liars and cheats are perennially railing against laws and rules. And why people with access to “free” money and lots of it “invest” in forms of lying and cheating, aka in our present moment, “private equity”.
In much of the world, the prospect of gainful employment is constrained by a conspicuous lack of capital to assemble a viable, efficient business. One sees many people scraping by with pathetic attempts to sell junk. In the U.S. many ambitious people struggle to find a way out of poverty, the structures of corporate business and the professions and government simply do not niches for enough workers.
And yet we see money that is not scarce buying up resources, swallowing up real property, re-jiggering businesses to pay workers less or charge more for services, overwhelming in a corrupt politics any attempt to use government to pursue a public interest against ruthless greed.
Jerren Osmar
Dimitri Orlov describes a collapsed USSR that seems more Mad-Max than anything I remember from mainstream news. Shops and their staff minded their wares from inside cages. Bands if amed men relieved them at the end of each shift. I’ve always held that picture as a post-capitalism extreme.
PS: There should definitely be more discussion of non-capitalist possibilities. This was a great post. Thank you for all your work Ian.
Ché Pasa
Capitalism: Is it necessary?
The End of This or That Aspect of Contemporary Life has been predicted endlessly, The Final Collapse longed for by many thinkers, observers, and commenters, seemingly forever. But I think a lot of it comes from the nature of capitalism itself, for it depends on the doom, destruction, and ultimate end of myriad peoples, systems, ways of life, natural conditions and environments, resources and the exploitation of anything that remains for its existence and survival.
We’ve long been conditioned to believe there is no alternative (that British shopkeeper’s daughter did not invent the concept). The collapse (doom, destructruction) of the Soviet Union was the ultimate and final proof. The shame of Marxism, I’ve always felt, was that it was little more than a different class of people operating the same system that was causing all the problems and oppression in the first place.
What drives the capitalist overclass nuts is that the capitalist underclass actually does it better when they’re in charge. China being the current shining example; China, which must be destroyed like the Soviet Union was. For the same reasons.
But what if capitalism is done away with altogether?
Neither an overclass or an underclass running the system; the system itself goes away.
What happens then?
Ian has some ideas of how to kick the props out from under it, but I don’t see anybody who will do it. Instead I see greater and greater contention over who wield the power and what will be done to the losers. Pure capitalist behavior.
We’ve been hanging over the precipice for decades. And still, there’s no alternative…
Dan Lynch
What would it take to end capitalism? War.
During WWII the U.S. had a planned economy, with govt. ownership of many manufacturing industries, and strict regulation of private industries that did business with government.
Since then the U.S. “defense” industry has been privatized, and it’s a colossal failure — not only do the weapons cost too much, they simply don’t work! There’s no accountablity because the politicians take bribes from the “defense” industry. If a real war ever comes to the U.S.,, we’ll have to relearn those lessons from WWII very quickly, or else we’re going to get our butts kicked. (most likely the latter).
At the end of WWII, there was nothing left of German cities but rubble, so they had to rebuild from scratch, and government took control. Private debts were forgiven. There was a dire housing shortage, so much of the housing and undeveloped land was nationalized, and the remainder was tightly regulated.
Plus, the WWII generation had learned its lesson from the failure of laissez-faire capitalism that led to the Great Depression and the rise of fascism.
So yeah, war, or some huge calamity that capitalism can’t deal with. For a while I thought Covid might do the trick, but no, we have simply normalized death and suffering.
marku52
In the US…
Labor is disappearing due to long covid disability and vaccine injury. Land is disappearing because climate change makes large part of the west waterless and unlivable. And working for a living is a mugs game because the system is run by, and for, looters.
The wheels are already coming off.
Thanks Ian, for this thought provoking post.
someofparts
Maybe the problem is not entirely capitalism. Maybe the problem is a perverted, fascist (i.e. corporate controlled) version of capitalism that destroys government so that it can loot the commons.
I read recently that the reason a lot of Russian oil is making it into China despite sanctions and lack of sufficient pipeline capacity is because there are a multitude of private companies in China too small to be concerned with sanctions but plenty big enough to bring in oil. So it sounds to me like China has capitalism, but a version of it that government keeps on a tight leash. Sounds like maybe Russia is the same way.
For that matter, even here, back before government got hollowed out and the military budget consumed everything else and the secret police became so powerful, capitalism was not as awful as it is now. Maybe if we had a strong government that could enforce regulations we might be in decent shape too.
Joan
On alternatives to capitalism:
The next 200 years or so will be decades of decline consisting of various lurches down a staircase, wherein for a bit it feels like constant crisis and contraction, then things will level off for a few years, then another step down. I brainstorm from this assumption.
At the end of this 200 years (or whatever), things will level off into some kind of feudalism and dark age, with conditions varying widely depending on the place. That seems to be what history tells us happens after a civilization.
What is born after some more centuries of dark age is something we can only imagine, since it will be born in conditions very different from now.
Back to the present: what to do about capitalism? Identify what is poisonous about it, and leave it on the side of the road. Walk away from it as best you can. Let it fly on past, to absurdity and oblivion. Don’t let me get in your way! Maybe give it a kick to help it along.
To me, that involves resisting greed. In any opportunity, choose to leave greed by the wayside and take only what you need to be secure and maybe help others. Let nature live for its own sake. Things like that.
Next would be to identify the things that already exist in our society that go unnoticed by capitalist greed and operate under the radar, in a sense. Support those things. Some of them are older than capitalism, and some of them are things people started who were noticing the terrible effects of capitalist greed on their societies. Anytime you notice a refreshing lack of greed, an actual protection of the commons despite human nature, support that thing. Just my two cents!
StewartM
About land as a requirement….
Given that family farms are becoming corporate farms, and that private equity is buying up property and becoming landlords, so that it become less and less easy to buy land, aren’t we in essence reverting to feudalism?
Diefenbaker
On the way to Feudalism Version 100.0, no stone will be left unturned. Even trailer parks are not too low and off limits. Everything under the sun and including the sun must be monetized, including the crumbs and the refuse. Everything means EVERYTHING.
https://www.newyorker.com/magazine/2021/03/15/what-happens-when-investment-firms-acquire-trailer-parks
Ché Pasa
We’ve been separating into bullies and their toadies on one side and everyone else on the other.
That can easily become quasi-feudal, more or less fascist, even Nazi. The bullies and their toadies are intent on power; everyone else, not so much. They mostly just want to be left alone to do their thing, whatever it might be. Often it’s little more than maintaining a routine that enables “comfortable subsistence.”
But as we’ve seen with the development of capitalism, that is often not a viable option. The will to power on the part of a small faction can easily supersede the majority’s need for routine and relative comfort.
What’s the point of having power over others if not to cause harm to some or many? Those times of having and using power to do good for the many are few and far between, no?
The idea that war or major natural calamities can change systems enough to encourage goodness rather than harm is demonstrable, yet all the calamities and wars of late haven’t done so. Something, I guess, is missing from the equation.