What is economics, what is capitalism


Economics is supposed to be the study of how limited resources can be used to meet unlimited needs. We’re well on the way to shredding the ecosystem with our frenzied excess, so we need it to be that more than ever.    

But modern economics isn’t that at all. For a lot of people, that definition doesn’t have anything to do with the E-word as they understand it.

The way economics is presented to us, you’d think it was all about money, banks or business – and those things are definitely hugely important to the type of economics that we’re stuck with at moment. But it would be equally possible to have economics that didn’t involve any of those things.

The reason that suggestion strikes most ordinary modern people as insane is because, in the mainstream, the E-word has been reduced to unsubtle cheerleading for an incredibly specific, biased and ethically dubious way of conducting human affairs. Economics has basically become the study and practice of capitalism. And so, if you’re looking to explain modern economics, that’s where you need to start.

Capitalism is a system in which the most important parts of the economy are owned privately – by individuals, usually very rich ones, rather than society as a whole.

We call them capitalists because they’ve got capital – income left over after they’ve paid for their food, housing and other life essentials. And the entire capitalist system is geared around those capitalists using that capital to make even more capital – investing and manipulating money to make a profit, in other words, and to keep making more profit month-on-month, year-on-year, until the end of time.

Capitalists use their economic resources to provide goods and services, which other people then buy. Because they’re motivated by the desire to make money, to some extent capitalists have to respond to ordinary people’s wants and needs – if people don’t want the thing you’re selling, you’re not going to make any money out of it. In that sense, pro-capitalists argue, capitalism is democratic, it’s responsive to the public’s needs, and it’s fundamentally a force for good in the world.

In fact, capitalism forces people to sell themselves in order to survive. It’s what has been over-charitably called wage labour, and more accurately labelled wage slavery.

Every single human being enters the world the same way – miraculously finding themselves on a planet where nature provides food to eat, water to drink and resources that can be used to build tools and shelter and other things human beings want and need.

That stuff doesn’t really belong to anyone. It’s just there. No one human being or group of human beings has more right to claim ownership of it than anyone else. But that’s exactly what a minority of people do – seize control of it, and then restrict who has access to it.

All people have to eat and drink and find somewhere to live. And the only way they can do that – assuming they’re not in the tiniest of tiny minorities who still have the skills to grow their own food, purify their own water and build their own houses – is by selling their ability to do certain tasks to the capitalists, in exchange for the money they need to buy resources back from the capitalists. We call it work.

That’s capitalism in a nutshell. But there are different types – and once upon a time, for a while at least, mainstream economics had room for a variety that actually made an attempt at maximising the general wellbeing and satisfying genuine human needs, alongside ensuring capitalists got as rich as possible.

But over the past fifty years, that already restricted economic tunnel vision has been narrowed even further – the tunnel has turned into a drinking straw. Now, mainstream economics is about pushing the most red-blooded, cut-throat, extreme and elitist capitalism imaginable, with no consideration for the environment or the wellbeing of anyone who isn’t obscenely rich. It exists to churn out increasingly flimsy justifications for letting a parasitic super-elite leech wealth out of the vast majority through activities that are completely socially useless. It’s been completely morally compromised, and has essentially become a sort of elite-serving religion – refusing to compute any evidence of the inherent unsustainability of the system in the same way fundamentalist Christians deride evolution.

A proper economics would to go straight back to the original definition – getting food, wealth and resources where they need to go for the benefit of the species. To be precise, food (50% of which currently gets wasted) needs to go in the bellies of the starving. Wealth needs to be wrenched back from the rich and used to guarantee a comfortable standard of living for everyone alive. And resources need to be controlled by society, and used for the benefit of everyone in society. Most of all, though, economics needs to be about achieving all that within strict environmental limits, while vastly reducing our catastrophic negative impact on the ecosystem that sustains all life on earth.

Click here for other posts in the Economics for Non-Sociopaths series.