The worker is constantly in fear of losing his job.”18 Full employment rarely occurs in capitalist economies. After all, labor is just another commodity. When it’s in short supply, workers are able to demand better wages and working conditions, and that’s not good for business. The system functions best when there is a pool of workers who are normally excluded from full participation in the system—women, immigrants, and people of color—a reserve army of labor that can be called in when companies need more workers. Having a group of potential workers that can be mobilized if needed keeps a downward pressure on wages of the employed. Effective labor organizing is also undermined by the existence of a group of people always available to fill slots of employed workers.19
Workers and unions generally support economic growth because of the promise of the availability of jobs. A continuous supply of new jobs is needed to absorb labor displaced by automation (including robots and the algorithms that operate computers and robots), downsizing, and offshoring. The Great Recession officially ended in 2009, but since then layoffs and discharges from private-sector jobs in the United States have amounted to around 20 million workers per year.20 While most workers quickly find new jobs when the economy is healthy, a slowdown in growth makes it harder to replace those jobs that are lost through the normal functioning of the economic system.
Theoretically, a national government could function as the employer of last resort, providing jobs to those unable to find work.21 But this would go against the interests of capital in having easy-to-hire workers when needed. And it would mean raising taxes to pay for these government jobs, which is also against the interests of corporations as well as the “1 percent” of individual capitalists and other wealthy persons.
Growth of Monopoly Power
The trend within capitalism toward the centralization and concentration of capital into larger and larger units has reached a point where a few giant transnational corporations dominate most sectors of the economy. A handful of corporations—Monsanto, Dow-DuPont, Syngenta, BASF, and Bayer (which is trying to purchase Monsanto for $66 billion)—control over 75 percent of the global commercial seed markets.22 In 2007, in approximately 40 percent of industries, the four largest companies sold more than half of the goods. The four largest supermarket companies in the United States went from garnering 18 percent of sales in 1992 to 32 percent in 2007. This goes on for industry after industry and sector after sector. By 2014 the revenue of the 200 largest nonfinancial corporations in the United States was over one-third of the total revenue of all such corporations.23
In a 2015 article for the New York Review of Books titled “Challenging the Oligarchy,” economist Paul Krugman wrote:
It’s obvious to the naked eye that our economy consists much more of monopolies and oligopolists than it does of the atomistic, price-taking competitors economists often envision…. There’s also statistical evidence for a rising role of monopoly power. Recent work by Jason Furman, chairman of the Council of Economic Advisers, and Peter Orszag, former head of the Office of Management and Budget, shows a rising number of firms earning “super-normal” returns—that is, they have persistently high profit rates that don’t seem to be diminished by competition.24
Monopolies and oligopolies don’t compete by cutting prices; they compete primarily through advertising, continually bringing out new versions of a product, and other aspects of the sales effort. Less competition means profits above those normally expected, derived from dominating the particular market. “Today’s markets are characterized by the persistence of high monopoly profits,” says Joseph Stiglitz, former chief economist for the World Bank.25 “The real key to capitalist success,” says Stiglitz, “is to make sure there won’t ever be competition—or at least there won’t be competition for a long enough time that one can make a monopoly killing in the meanwhile.”26
Democracy Not Essential
The United States is a plutocracy; the wealthy elite—or ruling class—controls the government and its regulatory system. “Of the 1%, by the 1%, for the 1%,” is the way Stiglitz puts it.27 Capitalism does not require democracy in order to exist. It has functioned quite happily under dictatorships around the globe: under Franco in Spain, under Pinochet in Chile, and under the military juntas of Brazil and Argentina. Capitalism has thrived in contemporary Saudi Arabia, China, and so on. What capitalism requires is a state that sets rules, facilitates business success, and acts to protect and expand national business interests when domestic corporations operate in foreign countries.
In 2014, political scientists Martin Gilens of Princeton and Benjamin Page of Northwestern University conducted a study confirming that the economic elite, composed of superrich individuals and organizations representing business interests, “have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.”28
In other words, the United States is governed by a plutocracy instead of the democracy that many still believe exists. With Donald Trump as President and Congress and the majority of state governments under Republican Party control, the elite—especially the fossil fuel and financial industries—are becoming even more powerful.
The Rise and Growth of Capitalism
How did capitalism get started in the first place? What were the original sources of capital? How were free workers forced to sell their labor power to the capitalists? And why were colonialism and slavery such an integral part of capitalism’s development?
Capitalism requires pools of capital and labor as well as access to natural resources. When all are available, capitalists organize labor and obtain machinery, land, and other resources and put it all in motion to produce commodities. The accumulation of capital that began the process by providing large amounts of money that could be invested was based on theft: stolen labor, stolen people, and stolen natural resources. The colonial powers stole precious metals primarily from the Americas and brought them to Europe. Land was appropriated and indigenous peoples were compelled into forced labor. Millions of men and women were seized as slaves from Africa, decimating that continent while providing labor in its cheapest form to develop the resources of the New World as well as a source of wealth for traders and slave owners. In all of this, the nation-state was the organizing instrument that promoted, planned, and carried out the thefts or gave permission and made the resources available to do so.
While plunder in the colonies and slavery provided capital and labor for further investment, capitalism as it developed its modern form needed laborers in the “home” country to work in the factories. These workers were obtained through the enclosure process. The enclosures of land in Britain occurred over centuries, but accelerated as the British Parliament passed a series of Enclosure Acts, culminating in the nineteenth century. These laws incorporated the portion of land and water that had once been free to all—the commons—into the vast privately owned agricultural estates. With nowhere to pasture their animals or grow their crops, the peasants were forced off the land and, in order to live, were compelled to sell their labor to the nascent industrial market. In the New World, millions of native peoples were being driven from their homes, enslaved, slaughtered outright, or decimated by smallpox and other diseases for which they had no immunity. European settlers—mostly peasants forced off their land in the home country but not needed in the developing industries—seized their territories and privatized what had been communal resources of water and land.
The massive trade in human beings and later the colonial takeovers changed the economic and social trajectory of whole continents. Slaves were sources of labor and wealth—commodities to be bought and sold, rented out and used as collateral for
