The current presidential campaign and the Occupy movement have many Americans discussing the character and causes of grossly unequal distributions of income, wealth and political power. But most of the dialogue I hear suffers from a faulty understanding of "capitalism."
Capitalism is not a structure or a system, but a logic capable of transforming the world and itself. Capitalist logic is not natural, but rather is a product of history, a human invention, not a set of natural laws discovered by men like Adam Smith and David Ricardo.
No society has ever organized all its human relationships and institutions according to the logic of capitalism. Therefore, there is a great variety of capitalist societies. Canada, Norway, France, Japan and the United States are all called "capitalist societies," but they differ greatly in the extent to which capitalist logic organizes economic activity, social institutions and human relationships.
Capitalist logic is amoral. All attempts to extend the sway of capitalist logic provoke resistance from social groups who employ moral logics in their everyday lives. Thus, capitalists need control of governments to establish and maintain capitalist practices and to suppress those groups opposed to these practices.
Historically, groups committed to religious, paternalistic, ethnic/communal and socialist logics have formed the most important resistances to capitalism. Of course, each oppositional logic has its own history. Many predate the emergence of capitalism. Most importantly, unlike capitalist logic, they all construct human beings as social beings who have moral obligations to each other.
The first principle of capitalist logic is that anything real or imagined can be constructed as a commodity. Commodification precedes market exchange. Commodities include such things as clean water, air pollution, body parts, slaves, murder and weapons of mass destruction as well as human activities including labor, leisure and sexual intercourse. Capitalist logic does not permit the assignation of intrinsic moral values to commodities. Regulation or suppression of markets in the name of fairness, human rights, human health and environmental protection cannot spring from capitalist logic. Political society regulates capitalism by imposing a moral logic on the production and exchange of commodities that exploit, endanger or degrade human beings and the natural environment. Capitalist logic establishes the value of commodities in markets where sellers and buyers set prices, the money measure of that value. Buy low and sell high is the first rule in capitalist markets. As capitalists see it, commodities that find no buyers have no value; production and exchange of commodities are good if profits result, and bad when losses result. Here, the terms good and bad have no moral content.
Private ownership and profit maximization are also essential elements of capitalist logic. In capitalism, we own ourselves as property. Capitalism defines human beings as individuals motivated by self-interest who are essentially alienated from each other. For example, asking the question, "Am I profiting from this relationship?" turns love and affection into an investment and cost/benefit calculation that relies on capitalist logic for its answer.
In capitalism, true liberty means full ownership of ourselves. Yet in capitalist societies most people must sell parts of their lives by the hour, the day, the week, the month, etc. These transactions make those who sell their labor power even if it is enriched "human capital" less free than those who do not have to sell parts of their lifetime to live. Since the rich possess more liberty than most people, they evoke a variety of responses among the non-rich including anger, resentment, envy, adulation and attempts (through unwise borrowing) at emulation.
Business history is primarily the history of changes in capitalism itself that stem from the imaginative use of capitalist logic. The invention and sale of new kinds of financial commodities in the past, securities like bonds and stocks, and most recently derivatives, collateralized mortgage debt and credit swap defaults creates opportunity and instability. Great financial crises occur when understanding of the implications recently invented financial commodities lags far behind the rapid growth of markets for these commodities. This is what happened in the 1830s, 1930s and since 2007.
Crises in capitalist markets and the insecurity, unemployment and poverty they create always promote resistance to capitalism. In crises, a Left committed to socialist and progressive logics that demands fairness forms. At the same time, a Right committed to the logic of fundamentalist religions and/or ethnic communalism will insist on restoration of "traditional" values. Understanding the amoral logic of today's global capitalists, and moral logics of their current opponents in the Occupy movements and among social and religious conservatives helps to clarify what's really at stake in the current political campaigns.
