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As a student of history, I find it instruc-tive to examine the seed from which capitalism sprang. How did it sprout? By what means did it supplant its predecessor-feudalism? Framing the question this way reveals that capitalism is wedded to republicanism (nationalism? democracy?) in much the same way that feudalism was wedded to monarchy (and the patronage of the Roman Catholic Church).
The feudal-monarchy economic/political system thrived and consolidated its power (mainly in Europe) for centuries. Capitalism did not spring out of nowhere-fully formed-and suddenly replace feudalism. Capitalism had very humble beginnings. Under feudalism, economic capital was monopolized by the landed Lords, Kings, or the Church. If one wanted or needed capital (for shipbuilding, exploring, roads, buildings, etc.) then one went to those who had the capital and hopefully made a good enough impression to have the necessary capital benevolently bestowed upon them. There was really no other source of serious capital to be found.
The Rise of the Merchant Class Then, by very small increments, there arose a "merchant class," who at first got their capital through traditional means (grants from Lords, Kings, or the Church), but gradually developed alternative means for accumulating and exchanging capital.
One of the innovations that sparked increased commerce was the development of currency. Transactions were traditionally handled by exchanging gold. This often proved to be quite slow and cumbersome, due in large part to the labor involved in transporting the gold from place to place. Somebody decided that rather than offer actual gold in trade, he would offer a "note" that said, "The bearer of this note is entitled to come and take actual possession of x amount of gold stored in my vault." This proved to be tremendously convenient! Not only could the "note" serve as a substitute for the physical transfer of gold in the initial transaction, but the bearer of the note could then pass it along to another merchant or trader. Thus what began as a form of "shorthand" for the single exchange of gold between two parties, evolved into a "currency" of exchange between any parties!
The second innovation that set the stage for capitalism-and in a way defines capitalism-was the practice of lending currency for interest. This practice was referred to as "usury" by the Church and strongly condemned as the vilest sin. Since the power of the feudal monarchies was consolidated under the Church, usury was uniformly condemned by the entire existing power structure. But it held a certain charm. Just as "currency" lubricated the commerce of the nascent merchant class, so the quick and easy access to capital offered by "usurers" made it possible to rapidly finance mercantilism. Of course, since the practice was widely condemned by the Catholic Church, most "money lenders" were of the Jewish faith, and thus beyond the direct authority of the Church.
At first, the feudal/monarchy/Church power structure scoffed at and pretty much ignored the merchant class. Thus mercantilism (capitalism) took root and sprouted with little or no resistance. Eventually the merchant class began to exercise capitalist commerce to the point where towns sprang up (and grew) and the merchants started employing workers (the first wage slaves) in sufficient numbers that they actually lured labor (serfs) away from the feudal landowners, bringing the two classes into conflict. Capitalism then began to be viewed as a serious threat.
By that time, however, it was too late to nip it in the bud. It had already flowered and proliferated. What ensued was basically a power struggle between the competing economic systems centered around which system would have access to exploiting the labor of workers. At first, feudalism held its own. It may not have been able to compete with capitalism on economic terms, but it still held a virtual monopoly in terms of political power. The Church exerted enormous power and condemned the "Jewish money lenders" to such a degree that its echoes still reverberate 500 years later in the vilification of international banking as a "Jewish Conspiracy." But I digress. Let's return to the 16th century and to the religious rebellion of the merchant class.
The Challenge to Church Authority The first serious challenge to Church authority was the Reformation. Remember, all political power flowed ultimately from the Church. The Reformation came about because the political and economic interests of the rising merchant (capitalist) class were being frustrated by the Church, which was firmly wedded to the feudal-monarchy power structure. The capitalists sensed they needed to break the Church's monopoly on "religious authority" in order to win the economic and political struggle ahead. Thus, the Reformation was less about religion than it was a "populist" movement to transfer power and authority from the Church to "The People."
Wresting Control From The State The Reformation began in the early 1500s and severely eroded the power of the Church in the ensuing years. Fast forward now to the late 1700s. Having successfully wrested the monopolistic hold the Church held on religious authority, it remained for the surging capitalist class to break the monopoly that monarchies held on state power. The opening shot was fired in the American Revolution, the first war wherein "The People" (i.e., the capitalist class) struggled to seize state power from the feudal/monarchist class. The rest, as they say, is history.
From this view of history, it becomes clear that capitalism evolved. It did so by slowly and steadily eroding the economic and political power base of feudalism to the point where it supplanted it. But remember, its humble beginnings were rooted in the innovation of currency and usury. And it is these two innovations that grew to become the heart and soul of capitalistic exploitation. They worked, and they worked well because they were superbly suited to the efficient organization and utilization of resources that move an economy: labor, capital, and "natural resources."
By now, however, we see the inherent flaws of capitalism-flaws that perhaps were not as apparent in its nascent stages.
Concentration of Wealth Capitalism concentrates wealth, i.e., it extracts it from the less wealthy (working class) and redistributes it to the wealthy (capitalist class). This is largely due to the very nature of "usury." In some instances the mechanism is readily and dramatically apparent, such as when a person takes out a mortgage to buy a $l00,000 home; by the time the loan is paid off, he/she has given the holder of the mortgage $300,000, yet the value of the home (in most cases) has not appreciated threefold. But this transfer of wealth to the capitalist class is a part of almost every transaction, no matter how trivial. The mechanism is often subtle and quite hidden. For example, you buy a soda pop for 35¢. Part of the 35¢ is to pay for the sugar, caramel coloring, etc.; part is to pay for the labor that went into making it; part is for the transportation and distribution costs, etc. But part of the 35¢ you pay for the soda is used to service debt. The factory where it was canned was financed by debt. The truck that delivered it was financed by debt. The store where it was sold is mortgaged, and so on, ad infinitum. Would it surprise you to learn that as much as 30 to 40 percent of the money you pay for a 35¢ soda pop is used to service some kind of debt? This debt service is a significant part of every commercial transaction and serves as the mechanism to transfer wealth upward. The inescapable prevalence of this mechanism gives credence to the cliché "The rich get richer and the poor get (poorer?/prison?)."
Degradation of the Environment Another inherent flaw of capitalism is that it "externalizes" the exploitation of natural resources and the environment. For instance, oil companies "internalize" the cost of exploration and drilling, but the oil itself literally costs nothing-even though it required eons to "produce" in geologic processes that are not completely understood. There is no "cost accounting" for the value of the oil's production-only for its extraction.
There is also no place on the oil companies' spreadsheets accounting for the cost to the environment. Refining and burning oil products pollutes the environment. This "cost" to the environment is reflected neither in the oil companies' selling price, nor in the consumers' purchasing price. The waste products are simply dumped into the environment, and the price is then paid by society at large.
Externalized Social Costs Just as the degradation of the environment is not reflected on corporate accounting sheets, neither is the cost-in social terms-resulting from mass layoffs. Ironically, the opposite is nearly true. Corporations like AT&T lay off tens of thousands of workers in a year when the corporation is reaping record profits. The price of their stock actually rises in reaction to news of the layoffs. In this instance the corporation is "dumping" tens of thousands of unemployed workers into the economy, yet the "cost" of doing so is paid neither by them nor by their customers. Just like the pernicious dumping of pollution into the environment, the corporation has no direct financial accountability for creating this kind of "social pollution."
The Corporate Citizen Corporations are fictitious "persons." They were created by passing laws that gave them most of the rights of real persons, but with few of the responsibilities. They were created to protect the owners of companies from legal and financial liability for the actions of the company. They have evolved into "super citizens," who are in essence outlaws.
Just as the development of currency and banking (lending for interest) lubricated the capitalist style of doing business, so the creation of corporations increased the pace and scope of business. In the last century, corporations have grown in size and power to the point where many of the larger corporations have "gross domestic products" greater than most countries! Taken together, the largest 500 corporations are more powerful than any mere nation. Why? Because money is power.
Corporatizing Democracy In this century, the corporate/wealthy elite have learned that the only sure-fire way to maintain control over a "democracy" is to control the most powerful force within it-public opinion. So they bought that, too. If you don't understand how, get your hands on the book Manufacturing Consent, by Noam Chomsky. This groundbreaking book explains with superior lucidity how corporate America bought and paid for public opinion. They own democracy lock, stock and barrel. It is because of the corporate/wealthy elite's hold over democracy itself in these closing years of the 20th century that democracies are subservient to, and serve under the patronage of, corporations. Does this sound familiar?
The existing power structure is strikingly similar to the Church/Feudal-Monarchy power structure. Corporations today play the same role that the Church did 500 years ago. National governments, and particularly "democracies,"serve under the patronage of corporate power. If Karl Marx were alive today, he might very well comment that "media is the opiate of the masses." Just as the Church controlled the beliefs of the masses centuries ago, the beliefs and opinions of the masses are now scrupulously shaped by the media-wholly under the control of mega-corporations.
And so, after this extended historical overview, we come to the point: What are the lessons from history that can take us beyond capitalism?
The Evolution of the Alternative Capitalism, just like feudalism, will not fall in a day, a month, or even a year. Like the birth of capitalism itself, the next step in the social/economic evolution of humankind should be incremental. The reason is simple. Though the vast majority of the world's people are being exploited by capitalism, they are at the same time dependent upon it. The masses could strike out at the capitalist economy and bring it down rather swiftly, but the ensuing economic chaos would injure them in far greater numbers than many would be willing to sacrifice.
But what if there were an "alternative economy" already in place, ready to fall back on if and when the capitalist economy collapsed? This is what needs to be implemented and it will be discussed in Part II in the next issue of NCX.
-Dan Pens, 279308, Twin Rivers Corr. Ctr., P. O. Box 888, Monroe, WA 98272-0888. Dan Pens is co-editor of Prison Legal News.