On Capitalism

At some point I realized that there is virtually no “outside” to capitalism. Many things that were once attainable only through other means were “monetized.” One can now buy academic or even athletic success, for example.

When asked about the economy of the Hawaiian Kingdom, Keanu Sai often responds “it’s capitalist.” It is capitalist. I made the point in my dissertation that fantasies of a communitarian society in the mid-nineteenth century are out of context and anachronistic. Like now, there was no alternative for Hawaiians entering the world system.

Capitalism, as I see it, has gone through three phases. More precisely, it is entering a third phase:

Capitalism 1.0

This is Charles Dickens’s exploitative factory system, a phase that many formerly “third world” countries are now going through – environmentally this is likely to be catastrophic. It brought gilded age opulence and child labor. Capitalism 1.0 is based heavily on the thought of the (interestingly) moral philosopher Adam Smith. But Smith is often misunderstood – the phrase “the invisible hand of the market” is often attributed to him, but apparently he never said it. The idea, though, is there – that the free market for goods and services self-regulates and controls prices in such a way as to provide the maximum profit for producers and the minimum price for consumers.

Smith’s example of the pin factory as a way of showing the increased productivity of the division of labor, is in fact in his book The Wealth of Nations, but so are statements about how such a division is alienating to the workers. This sounds quite similar to Marx’s notion of alienation from one’s labor (in contrast to a carpenter, who makes a product from start to finish and take immense pride in it even as it is sold off), and is never mentioned by advocate of free market capitalism.

If you’re unclear about what capitalism is: first of all, its an “ism” which means a way of thinking, second, it’s about capital or assets (money or things that can be traded for money). Capitalism is the way of thinking that holds that those with capital should drive the economy – so you get private provision of food, housing and other necessities, as opposed to government provision  as you would have in a Marxian (communist) state.

There’s also what’s called the “Adam Smith problem” – the fact that he was also a moral philosopher and wrote extensively on how to have a good, moral life in harmony with your neighbors. It is as if there are two Adam Smiths, one who believes in survival of the fittest in the marketplace, and the other who want social harmony – these are still being reconciled, in fact, there’s a new book on this called The Other Adam Smith.

Speaking of Marx, my friend’s conservative father-in-law saw Marx on his bookshelf and asked “What can you possibly learn from Marx? Isn’t he a Russian dictator?” He’s German, not a politician, much less a dictator, and I’d submit that we can learn quite a bit from him, as he provides one of the most thoughtful critiques of the Smithian capitalist model.

One more thing: Smith did not critique communism – it didn’t exist yet – he was critiquing mercantilism, which was based on royal monopolies rather than “free” markets for goods.

Capitalism 2.0

This is the post-WWII “golden age” of capitalism – Leave it to Beaver. It created rising living standards between 1945 and 1973 before entering a slow decline. It also created the mass conformity that the beatniks and hippies revolted against, and was based on a tacit white supremacy that caused racial upheavals at its late phase – the civil rights movement in particular. Interestingly, toward the end of his life, Martin Luther King said “there is something seriously wrong with capitalism,” causing Henry Louis Gates to claim that were he still alive, King would be a socialist.

Capitalism 3.0

The next phase of capitalism will not only reproduce some of the worst features of capitalism 1.0,  evading the protections of 2.0 labor regulations by taking advantage of sovereignty (sheltering itself in the most deregulated environments, where it’s trade uber alles). The trade agreements are set to protect corporations from any of the risks associated with doing business. (And this from the blustery business gurus who brazenly tell us as individual investors that risk equals manliness – in reality they hedge their bets, making money whatever the market does.) This new capitalism is so extreme Slavoj Zizek’s recent book Trouble in Paradise  portends a crisis in capitalism, on a scale that would dwarf the 2008 crisis.


Michael Hardt and Antonio Negri predicted this Empire of capital, but were criticized for neglecting the force of mass movements. They responded with Multitude, the force of which we’ve seen in Occupy and the Arab Spring. So doom and gloom prognostications must be balanced against “people power” as Corazon Aquino called it. Wearers of rose-colored glasses, on the other hand, must take into account Chris Hedges’s warning that with media poverty and monopolization democracy itself is on the brink, creating an Imperative of Revolt.

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