Varieties of capitalism

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By FERNANDO NOGUEIRA DA COSTA*

Ironically, Marx and Engels invented capitalism. This term was not created by free market guru Adam Smith

Reading the book by Anthony Giddens and Philip W. Sutton, Essential concepts of sociology, helps the economist to define a widely known and used concept: capitalism. They define it as “an economic system, originating in the West, based on commercial exchange and profit generation, aimed at reinvestment and business growth”.

A system analysis requires a holistic view – of “holos” or the whole – to see how the complexity of its dynamic configurations emerges from time-varying interactions of multiple factors. The binary reductionism of the “us (poor) versus them (rich)” class struggle does not explain its transformations.

Ironically, Marx and Engels invented capitalism! This term was not created by the guru of free-market defenders, Adam Smith, but rather emerged in the mid-19th century, when they discussed the capitalist mode of production.

For Marxists, capitalism is an economic system that exploits free workers, whose alternative is simply to sell their only possession (labor power) to money capital. This would pay them just enough for their subsistence (and reproduction) and use them in the production of goods, generating greater value (surplus value) or profits for the owners: a bourgeoisie or the capitalist class.

An alternative conception to Karl Marx's grand historical scheme was presented by Max Weber when he placed the spirit of capitalism in Protestant ethics. For Max Weber, capitalism did not result from revolutionary change, nor would it result in a communist revolution in the future.

According to his line of argument, the future of the working class lies in development – ​​and not in the end of capitalism. In fact, robotization, automation and/or digitalization of work are saying “goodbye to the proletariat” and producing self-employed workers, in Brazil, called “pejotizados”: with CNPJ and without labor rights.

Max Weber, as well as Joseph Schumpeter, suggests capitalism encourages competition and innovation. They would mitigate the repressive effects of the domination of the old state of mercantilism, giving freedom to experiment with new ideas and transform the system.

For example, workers with technical education or university training provided technological innovations, in addition to creating business areas in services, advertising, creative economy, etc. With greater bargaining power, they reached out to high-income retailers to obtain additional benefits for their retirements.

Before Weber, Marx had outlined the progressive stages of modes of production. They began with the primitive communist societies of hunters and gatherers and passed through the ancient systems of slave ownership and feudal systems, based on the division between serfs and landowners.

The emergence of merchants and artisans marked the beginning of a capitalist class to produce and sell goods. It would replace the landed or tenant nobility as the new ruling class.

One problem is that many Marxists see Marx's teachings as inviolable dogmas and do not use his concepts in a way that is appropriate to changes in the capitalist system. For example, Marx identified two main elements in capitalism.

The first, capital, would be any asset, therefore, a form of wealth maintenance, including machines or even factories, but with the attribute of liquidity or conversion into money. It is not always used immediately, being left to be invested and produce future assets at the appropriate time. Dogmatists criticize this “financialization”.

The second, salaried labor, a group of workers without owning the means of production, who previously depended only on paid employment. Many, without finding them, have become successful self-employed microentrepreneurs to take care of themselves and their families.

Marx's predictions as historical determinism were not confirmed. Not all workers and capitalists are mutually dependent, general industry workers are a minority.

The majority of workers are engaged in commerce, repair of motor vehicles and motorcycles, transport, storage and mail, accommodation and food, information technology, communication and financial, real estate, professional and administrative activities, public administration, defense, social security, education , human health and social services. This is without mentioning other domestic services and services. The working class is dispersed and disunited!

The argument that class conflict would intensify because they have an exploitative relationship failed. Marx imagined, over time, all other classes would shrink, leaving only the two main classes, whose interests would be in direct conflict. His prediction of revolution failed in the totalitarian political practice of the few cases, in situations completely different from those imagined, that is, in backward countries.

It is not clear whether he was correct in another prediction: because capitalism is productive, it would free people from the unnecessary oppression of religious authority and the “stupidity of rural life”. In Brazil, this does not seem to have happened…

Nor has humanity had the power to shape its own future rather than being at the mercy of natural forces. Competitive social (and national) relations would become an obstacle to the cooperation necessary for people to control their own destiny.

It is necessary to recognize: there have been significant changes in the development of capitalism, from the industrial capitalism of Marx's time, through managerial capitalism, developed as companies grew to the point of making mergers and acquisitions, overcoming control by family members and achieving transnational mega-corporate capitalism. But the best variety is welfare capitalism with social achievements of universal citizenship rights.

The debate between Weberian and Marxist points of view involves moral judgments. For Marxists, capitalism is an economic system capable of thriving on inequality. For Weberians, capitalism, despite being exploitative, offers the possibility of democracy and the exercise of personal freedom, and can even reduce social inequality. This only happened between the wars and after the war.

Another public debate takes place between neoliberals and social democrats (in Europe) or social-developmentalists (in the Americas) about the varieties of capitalism. For the former, capitalist economies “work” more efficiently with minimal economic regulation, low taxation and a low welfare state.

The second counter-argument: the social democratic Nordic countries challenge this prescription. Their version of capitalism is based on relatively high taxes, a huge state budget, high levels of regulation and an economy open to the outside world. In this way, it competes with and surpasses the neoliberal model of low regulation.

Its companies take advantage of the country's institutions, which coordinate labor markets, manage vocational training and professional training, and adopt an industrial policy. This set of institutions proves that there is more than one way to succeed in global markets. Possession of natural resources, education, science and technology, in addition to a small population is key to success!

We must not forget: the division (local and international) of labor leads to the separation of work tasks and occupations in a process of production, circulation and “financialization” that creates comprehensive economic interdependence. Contrary to what Marxists expected, there was no complete destruction of social solidarity and the encouragement of individualism resulting in greater conflict.

An “organic solidarity” emerged as a result of the broad division of labor. Function specialization strengthened social solidarity in larger communities, creating bonds through mutual dependence. We all depend on people, on a global scale, to obtain products and services capable of sustaining our lives.

The international division of labor has resulted in global economic interdependence between countries. In this sense, the people of the world need commercial contact and peaceful cooperation in this new variety of globalized capitalism.

Changes in the labor market, on a planetary scale, have led to the growth of occupations in the service sector in developed countries for new generations in developing countries. There is also offshoring – the systematic movement of an increasing number of tasks abroad – and the home-office International. The higher level of wages and the exchange rate are favorable to this.

*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). [https://amzn.to/3r9xVNh]


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