Analysis and Critique
The concept of capitalism began as a term expressing difference. It only made sense to the extent that it distinguished what it was describing from observable or imaginable alternatives. Over and over again, the concept has been filled with life by contrasting it with something else, usually with some kind of socialism. Today, it is frequently unclear which tangible or imaginable alternatives capitalism could or should be distinguished from. Perhaps this results in some difficulties attending the concept, especially its sometimes almost all-embracing character.
The concept emerged as an instrument of critique and analysis at one and the same time. Over and over again, it drew its power and attractiveness from this dual function, which continues to characterize the concept until today. But often the dual function resulted in ambiguity and partisanship that burdened the concept as an instrument of scholarly analysis.
On the one hand, more and more authors find the concept useful, including many historians, at least in some languages such as English and German and in some countries like the United States.1 Especially when it comes to discussing complex connections among economic, social, political, and cultural dimensions of historical reality, and to synthesizing or making broad comparisons across space and time, the concept has distinct advantages.
On the other hand, the concept continues to serve as an interpretive concept that invites fundamental debate about past, present, and future. It certainly plays a role in intellectual and political debates outside the scholarly world, too. As in its early period around 1900, the concept also opens up a view to the big questions of the time and to fundamental problems of contemporary civilization.
By no means does the concept always have a negative connotation. On the contrary, it can also be used with an emphatically positive valuation. As far as Milton Friedman was concerned, for example, there was no doubt about that. In 1962 he conceived of “competitive capitalism—the organization of the bulk of economic activity through private enterprise operating in a free market—as a system of economic freedom and a necessary condition for political freedom.” In 1997 Gary Becker concurred without any qualification: “Capitalism with free markets is the most effective system yet devised for raising both economic well-being and political freedom. ‘Chicago’ economics argued this for many decades, but it took the dramatic end of communism to show that what is true in theory and in the past also holds in the modern world.” Both economists were influential exponents of the “neoliberal” Chicago school and were awarded for their scholarly work with the Nobel Prize in Economic Sciences. In popular literature, too, the term capitalism is used in a positive sense.2
Anyone who takes a serious look at the history of capitalism and, moreover, knows something about life in centuries past that were either not capitalist or barely so, cannot but be impressed by the immense progress that has taken place in large parts of the world (although not in all!). There has been progress above all for the many people who are not members of a well-situated upper class, progress with respect to material living conditions and overcoming poverty, gains in life span and health, opportunities for choice, and freedom.3 It was progress of which one may say, in retrospect, that it would presumably not have happened without capitalism’s characteristic way of constantly stirring things up, pressing them forward, and reshaping them. And whoever would rather invoke different explanatory factors, like the growth of knowledge, technological change, or industrialization, as the real motors of progress should recall that, so far, any industrialization successful over the long run has everywhere presupposed capitalism. Capitalism’s principles, moreover, have also done much to disseminate knowledge, which can be seen from the history of the media, starting early with the printing of books, through the political press, to today’s Internet. Thus far, all alternatives to capitalism have proven inferior, both with respect to the creation of prosperity and the facilitation of freedom. The downfall of centrally administered Communist economies in the last third of the twentieth century was, in this respect, a key process for evaluating the historical balance sheet of capitalism.
Nevertheless, whoever talks or writes seriously about capitalism seldom ignores its dark sides, which are at least mentioned if not put at the forefront. The critique of capitalism, at least in the West, enjoys a long tradition. But it is also current. Interestingly, it is readily formulated in discussions about the possible or anticipated end of capitalism.4
Some themes in the critique of capitalism that were once at the center of attention have, however, moved to the margins. Catholic social teaching continues to warn against the “‘idolatry’ of the market” and “radical capitalistic ideology” (according to Centesimus Annus, the papal encyclical of 1991). Yet this is miles away from the fundamental critique of capitalism that had been promoted for centuries by the Roman Catholic Church. Although the current pope, undoubtedly against the background of his experiences with countries from the global South, has again intensified the tone of the Catholic critique.
The right-wing radical and racist critique of capitalism familiar since the 1870s, and reaching a high point under German National Socialism with its illiberal connotations and anti-Semitic thrust, is not currently much in vogue, at least not in Western societies. Still, it is alive and can easily be revitalized.
The immiseration of the working class is not laid at the doorstep of capitalism any longer, even by the political left in countries like Germany. The “labor question” has ceased to divide society in the more affluent parts of the world, even if it can (and should) be rediscovered at the global level. Things have also become downright quiet around the critique of alienated labor in capitalism. That critique has lost its edge now that individualized production by work groups, with some scope for workers to design the workplace, is promoted by capitalist enterprises in the post-Fordist era, and creativity is not only upheld as an attribute of skill but also demanded on the market. It seems as if capitalism, by using accommodation to evade much of the criticism once directed against it, is capable of just enough change, so that a good bit of the critique comes to naught.5
It is impossible to overlook the way that economic interests, and especially the sales and profits interests of the armaments industry, play an important role in charging international tensions and preparing for wars. Yet scholarship today is a long way from explaining the outbreak of wars primarily by economic factors and attributing armed conflicts mainly to the contradictions of capitalism. Instead, scholarship repeatedly refers to the interest capitalists have in peace—as a precondition for doing business successfully.6 Imperialism theories in the tradition of Luxemburg or Lenin are not currently in great demand. Here is another example: it has become rare to chalk up the rise and triumph of German and Italian fascism to the supporters of a monopolistic bourgeoisie helping Mussolini and Hitler into the saddle of power, or to the internal contradictions of capitalism. Certainly, the support of major portions of the conservative elites (including many industrialists) for Hitler in the final crisis of the Weimar Republic does stick in one’s memory, along with the profitable cooperation of “big business” with the Nazi war economy. Yet it has since become not only well known, but also better recollected, how resolute and diverse were the very large sections of German society who “worked towards the Führer” (in Ian Kershaw’s memorable phrase). That wide spectrum of society identifying with the regime makes it is easy to see through the exculpatory simplification ascribing liability for the triumph of National Socialism and its catastrophic consequences entirely to the account of the capitalists. This leaves undisturbed the insight that the victory of German National Socialism would have been unlikely without the great crisis of capitalism at the beginning of the 1930s.7
The contemporary critique of capitalism is multifaceted. Concrete abuses are denounced, such as “structured irresponsibility” in the financial sector.8 That lack of accountability has led to a widening gap—incidentally, in violation of one of capitalism’s central premises—between deciding, on the one hand, and answering for the consequences of decisions, on the other. As a result, exorbitant profits for money managers are facilitated by public budgets that take on gigantic losses (“too big to fail”). The contemporary critique of growing inequality as a consequence of capitalism is, moreover, becoming ever more urgent. Here, public discussion has focused on the kind of income and wealth inequality that since the 1970s has become much more severe inside most individual countries; there has been less interest in the much more serious inequality that exists between countries and regions of the globe. The latter grew exorbitantly between 1800 and 1950, but no more since then.9 Lamenting growing inequality blends into protest against infringements on distributive justice, which is how the critique becomes systemically relevant. Also lamented are the perennial insecurity, unrelenting acceleration pressures, and extreme individualization that are inherent in capitalism and that may lead, absent countermeasures, to the erosion of social welfare and neglect of the public interest. This raises the question of just what it is that holds societies together.
Similar in the way it poses fundamental questions is the critique of capitalism’s constitutive dependence on permanent growth and constant expansion beyond the attained status quo, a dependence that threatens to destroy natural resources (environment, climate) and cultural resources (solidarity, meaning), resources that, by the way, capitalism also presupposes in order to survive.10 This, in turn, raises the anxious question of where the limits of the market and venality lie or where—on moral or practical grounds—they should be drawn.11 Strong arguments for the case that there is a need for such boundaries—that capitalism, in other words, cannot be allowed to permeate everything, but that it needs noncapitalist abutments in society, culture, and the state—may be elicited from the history of capitalism. At the most fundamental level, the discrepancy between the claim of democratic politics to shape and communicate universalized values, on the one hand, and the dynamic of capitalism that evades democratic politics, on the other, remains an enduring problem. Finally, one cannot overlook a form of totalizing critique that rejects “capitalism” as the symbolic epitome of (Western) modernity or as the outright embodiment of evil.12
The historical overview presented here shows the immense mutability of capitalism across the centuries. The critique of capitalism, in tandem with social and political movements, has been an important motor driving its changes, as was shown above, especially in the section on work in capitalism and the one on market and state. Criticism can also be a motor of change in the future. For capitalism does not get to decide about the sociopolitical conditions under which it develops. It can flourish in different political systems, even under dictatorial rule—at least for a time; the affinity between capitalism and democracy is less pronounced than was long hoped and assumed. Capitalism does not set its own goals from its own resources. It can be useful for different social and political goals. Among these goals, presumably, is the aim of rerouting the economy in the direction of greater renewability and sustainability. But this can only happen if enough political pressure, and political decisions to match, are mobilized in favor of such goals. That does not seem to be on the horizon, either in the prosperous societies of the global North or worldwide, at this time. Capitalism lives off its social, cultural, and political embedding, as much as it simultaneously threatens and corrodes these moorings. It can be influenced by political means and those of civil society when and if these are strong and decisive enough.
Seen from this perspective, one could say that, every era, every region, and every civilization gets the capitalism it deserves. Currently, considered alternatives to capitalism are hard to identify. But within capitalism, very different variants and alternatives can be observed, and even more of them can be imagined. It is their development that matters. The reform of capitalism is a permanent task. In this, the critique of capitalism plays a central role.