Of What Is, and What Is Not, Criticism of Capitalism

There are numerous popular criticisms that get lobbed at the actually existing economic system that we call ‘capitalism’.  Some are wildly off-base, while others have a certain definite bite to them, but I am not interested (for present purposes) in whether or not capitalism is a good economic system (whether considered morally or pragmatically).  What I find interesting is how many critiques of capitalism are, in fact, not critiques of capitalism at all.  Take these two examples:

  1. Capitalism is bad because it does not appropriately allocate the benefits arising from productive activities – that is, profits accrue only to those who already are possessed of an excess of wealth (else they would not be the owners or shareholders of a business), rather than to those who are actually involved in the provision of the profitable product or service.
  2. Capitalism is bad because it encourages competitive consumption and ‘keeping-up-with-the-Joneses’, a game which only the relatively wealthy can play and which, consequently, causes the further social ostracization of the less well-to-do.

The difference can, admittedly, be hard to spot if one hasn’t spent much time or effort thinking about the matter – it is masked by the usage of ‘capitalism’ in both cases.  The first is obviously a critique of capitalism, since it addresses aspects of capitalist economics directly: e.g. the ownership of productive capital and the existence of the profit motive, labour relations, dividends.  The second, however, only appears to be a critique of capitalism – why do I say this?

Note that the actual problem in the second example is the social ostracization arising from the inability of the less well off to effectively engage in a form of status competition.  Granted, competitive consumption may be encouraged (or even necessitated) by a society’s utilization of a capitalist economic system.  And, of course, the critic of capitalism could argue that it is about capitalism, because the poor (who are poor as a result of capitalist economics) cannot compete against the rich (who are rich as a result of capitalist economics) in a contest to buy the biggest, newest, and best.  But the problem here isn’t actually the competing for status by way of material accumulation, it’s the fact of competition in itself – any sort of status competition will result in winners and losers, necessarily.  The poor feel the pain arising from low status, as denoted by their failure to accumulate material goods, just as keenly as do failed or unpopular musicians, actors, or intellectuals when these latter consider their more successful peers.  Capitalism does not create status competition – it merely channels it in a particular way.

So, only the first of this pair of common critiques is actually a critique of capitalism (should someone, after reading the preceding, still believe the second to be such a critique, then I now have learned a lot about that person and his motivations).

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3 Responses to Of What Is, and What Is Not, Criticism of Capitalism

  1. Orphan says:

    The capitalism=consumer culture nonsense drives me crazy.

    As do criticisms which include any mention of the word “corporations” – a word which after all refers to government designed institutions for the purpose of mitigating investor risk in order to encourage investment and growth, not natural features of the capitalist economic system.

  2. James says:

    “The capitalism=consumer culture nonsense drives me crazy.”
    Yes, it’s frustrating – they just aren’t the same thing at all.

    There is a lot of room for reform of corporations that dyed in the wool (ideological) capitalists could potentially get behind, if they could ever get past the fact that they’d be in agreement with those dirty hippies. 🙂

  3. Orphan says:

    Hm. You have a point. I’m not sure ideological purity is worth it if it means agreeing with dirty hippies. =P

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