(Weekly Organ of the Communist Party of India (Marxist)
July 03, 2011
THE MYTHS OF CAPITALISM
is a pervasive view that growth under capitalism, though it may worsen poverty, even absolute poverty, to start
with, eventually leads to a lowering of poverty. The experience of the
Industrial Revolution is invoked in this context. There has been a huge
among economic historians about the impact of the Industrial Revolution
absolute poverty in
Clearly however this situation did not persist, and later on there was a significant improvement in the condition of the English working class, whence the conclusion is drawn that any initial worsening or non-improvement in the living condition of the people that accompanies the growth process under capitalism, subsequently reverses itself, that capitalist growth, even though it may be initially harsh, is not intrinsically non-humane.
This conclusion is also theoretically supported along the following lines. In the initial stages of capitalist growth there is a dispossession of pre-capitalist producers who swell what Marx had called the “reserve army of labour”. The English Industrial Revolution for instance had dispossessed pre-capitalist textile producers by out-competing them through its cheaper machine-made products and they had no choice except to seek employment in capitalist factories as wage labourers. By its very nature however the amount of employment that could be offered was less than those dispossessed (because the whole point of capitalist production was to reduce labour requirements and hence labour costs). The result was a swelling of the reserve army, and hence an increase in destitution and absolute poverty.
But over time as accumulation proceeds, and the capitalist sector grows increasingly on its own steam, on the basis of demand generated within itself and not through the sheer displacement of pre-capitalist producers, more and more of the reserve army gets absorbed into the capitalist sector (as long as the population growth is not too rapid). And as the magnitude of the reserve army falls relative to the active army of labour, the magnitude of absolute poverty also declines, even if the real wage rate of the active army of workers continues to remain at some historically determined subsistence level. Once the magnitude of the reserve army relative to the active army has declined to a sufficiently low level, workers can organise themselves into trade unions and even raise the real wage rate above this historical subsistence level, which further curtails absolute poverty. Capitalist growth thus spontaneously reduces whatever initial increase in absolute poverty it may have generated, and goes on to reduce the absolute level of poverty.
entire view however is a myth.
No doubt in the case of England and other European economies poverty
declined as growth continued to take place,
but this was not as a consequence of the growth itself. There were
crucial factors in
scale of outmigration was simply enormous. In 1820 there were 12
was a second factor at work as well, and this consisted in the fact
that the bulk of the displacement of
pre-capitalist producers owing to competition from capitalist products
consequence of the Industrial Revolution occurred in the colonies.
these displaced producers in countries like
question may arise: even if we can explain
the “new world” itself of course there were hardly any pre-capitalist
to be displaced through competition from capitalist products. The
were displaced were the traditional inhabitants, like the Amerindians,
who had occupied
the land earlier. And they were kept in “reservations” where many of
live, a dejected, isolated and dispirited people. In the case of
If we examine the matter in terms of the theoretical argument advanced above, it looks as follows. The capacity of the capitalist growth process to make a dent on the relative magnitude of the reserve army depends upon three factors: the overall growth rate (taking the capitalist and pre-capitalist sectors together), the growth rate of labour productivity (again taking the two sectors together), and the rate of work-force growth (taking into account migration as well). The excess of the overall growth rate over the growth rate of labour productivity is the rate of growth of labour demand in the two sectors taken together; if this happens to be less than the rate of growth of the work-force, then the relative size of the reserve army of labour, and with it the extent of absolute of poverty, will keep increasing. There is nothing in the operation of the capitalist economy that can spontaneously prevent this. Hence the entire claim that capitalist growth must eventually reduce absolute poverty is completely baseless. It is a myth spread by capitalism. A phenomenon that arose historically through a process of pauperisation of traditional inhabitants in the “new world” and of pre-capitalist producers in colonies (namely, the reduction in the magnitude of domestic poverty) is passed off as an intrinsic property of capitalism, as something it achieves spontaneously through its own inner operation even when it operates in complete isolation (ie without colonies). This is a dishonest claim, and unfortunately the entire discipline of economics is harnessed to serve the interests of capital by supporting this claim.
foregoing has extremely important implications for third world