capitalism and capitalist mode of production

capitalism and capitalist mode of production

That form of economy in which:
  1. the MEANS OF PRODUCTION (CAPITAL) are privately owned and privately controlled;
  2. LABOUR POWER is purchased by the payment of money wages by the owners of capital (capitalists);
  3. the goal of production is the making of profit by the sale of COMMODITIES in a competitive free market;
  4. profit is appropriated by the owners of capital (see SURPLUS VALUE);
  5. the system is inherently dynamic, given its basis in the competitive accumulation of capital (see ACCUMULATION OF CAPITAL).

Capitalism can also be described as ‘generalized commodity production’ (Mandel, 1962), in the important sense that ‘domestic consumption’, as well as ‘production’, issues in commodities, since human labour is also a commodity.

For MARX and for WEBER, whose work has exerted a profound influence on the conceptualization and understanding of capitalism, capitalism and the capitalist mode ofproduction (the latter term is the one most used by Marx) are IDEALTYPE concepts. Thus, in practice, no society or economy will be found which corresponds exactly to the pure type. Actual economies will usually be found to combine elements from several different theoretical forms of MODES OF PRODUCTION. For example, Western societies, though predominantly capitalist, are in actuality MIXED ECONOMIES, combining elements of socialist and capitalist economic arrangements, although they may still be seen as predominantly CAPITALIST SOCIETIES. Thus, capitalism takes varying forms which can often be expressed as involving systematic departures from the pure-type of competitive capitalism, e.g. MONOPOLY CAPITALISM and ADVANCED CAPITALISM.

While they agreed on many aspects of the definition of capitalism, Marx and Weber differed considerably in the details of their characterization of capitalism. For Marx, whilst the surface appearances of capitalist market relations suggest that this form of economy is ‘fair’, the underlying reality is that the central economic and social relations between capitalists and labour involve EXPLOITATION (see also CAPITALIST LABOUR CONTRACT, ALIENATION). For Weber, notwithstanding that capitalism has irrational features, the central feature of Western capitalism is its ‘rational’ character in contrast with earlier forms of economy (see RATIONALIZATION, TYPES OF SOCIAL ACTION).

As well as a concern to characterize capitalism as an economic and social system, interest in sociology has also focused on the origins of capitalism, its relations with other types of economic system, (see DEPENDENCY THEORY) and the forces tending to bring about its transformation or replacement.

Origins of capitalism. Whereas Marx emphasized the existence of inherent features within the economic relations of FEUDALISM as leading to the emergence of capitalism, many other sociologists, including Weber, have stressed the independent influence of ideas (see PROTESTANT ETHIC). A further, but disputed, theoretical approach explains the initial appearance of capitalism in Western rather than Asian societies in terms of the existence of decisive environmental and cultural differences between East and West (see ASIATIC MODE OF PRODUCTION AND ASIATIC SOCIETY, HYDRAULIC SOCIETY, ORIENTAL DESPOTISM). Significant debates also exist within Marxist theory and historiography between those who emphasize inherent features of feudalism in the TRANSITION FROM FEUDALISM TO CAPITALISM (e.g. Dobb, 1946) and those for whom more ‘incidental’ features are decisive (e.g. the influx of gold from the new world or demographic changes, including epidemics which change the balance of power within feudalism). Much hinges on such a division of view within Marxism. For whilst the former position makes it possible to sustain a model of inherent forces in social change in which capitalism can everywhere be expected to replace precapitalist social formations, a focus on more accidental features of change throws into doubt any such assumption.

Transformation of capitalism and transition to socialism. Extensive controversy also surrounds the factors which may lead to the transformation of capitalism. Within classical versions of Marxism, ADVANCED CAPITALISM was regarded as containing inherent contradictions (e.g. increasing cut-throat competition between capitalists, increasing tendency to crisis, increasing class divisions) expected to lead to proletarian revolution and the replacement of capitalism by socialism. Where actual replacement of capitalism has occurred, however, this has usually been politically engineered and taken place in more peripheral economies, without Marx's conditions for such transitions being wholly present. For Weber, and for many modern sociologists, no inherent tendency to final crisis in capitalism can be assumed (compare ORGANIC COMPOSITION OF CAPITAL, TENDENCY TO DECLINING RATE OF PROFIT). On the contrary, capitalism's capacity for self-adjustment is emphasized by many theorists, with recurrent economic crises seen as playing a role in this adjustment rather than sounding the death knell of capitalism (see also CRISES OF CAPITALISM).

Capitalism and postcapitalism. Claims that a separation of ownership and control has occurred in modern Western societies have led to the suggestion by some theorists that these societies might be better referred to as ‘managerialist’ or even ‘postcapitalist’ rather than capitalist societies (see MANAGERIAL REVOLUTION). For most theorists, however, the essential features of capitalist societies (e.g. private ownership of the means of production, production for profit, a managerial class which still functions as a capitalist class, the ecological unfriendliness of capitalism) remain, although changes in the form of capitalism, resulting from its inherently dynamic and unstable nature, are acknowledged (see also CULTURAL CONTRADICTIONS OF CAPITALISM, FISCAL CRISIS IN THE CAPITALIST STATE, LEGITIMATION CRISIS). Alternatives to capitalism, however, are seen as similarly problematic (see SOCIALISM, COMMUNISM).

At the turn of the millennium, the ascendancy of capitalism has never been so great. Although its problems and contradictions remain – see FOURTH WORLD, GLOBALIZATION – the dynamism and effectiveness of capitalism, plus its global power, make its continuation (albeit with continued adjustment) the most likely option for the foreseeable future (e.g. see W. Hutton and A. GIDDENS, eds, On the Edge – Living with Global Capitalism, 2000).