- Capitalism and Alternatives -

Notes on capitalist system

Posted by: Samuel Day Fassbinder ( Citizens for Mustard Greens, USA ) on July 20, 1999 at 18:17:52:

In Reply to: I suspect someone 'cooked' your statistics posted by DonS on July 20, 1999 at 10:45:06:

: (Don): In capitalism, production mirrors demand. The consumers determine production, in other words. This to me seems like the optimum system.

SDF: No it doesn't. Under capitalism, production gropes after EFFECTIVE DEMAND. Effective demand is the sum amount of money sent chasing after a product. It isn't the consumers who determine production, production begs the MONEY of the consumers. An important example: 800 million people on Planet Earth today may grope after food, and millions of US people too (in case we're all in for another incantation of the stalinist bogeyman), yet these people have no effect upon the production of food, even though they may have important nutritional demands that aren't being met, since they exhibit no sufficient EFFECTIVE DEMAND (i.e. they don't have enough money) to meet those needs.

What's more, capitalism suffers from periodic crises of overproduction -- since capitalist production is managed by businesses in constant competition, each business produces more than its clientele can possibly buy in order to undercut competing businesses -- a lower price can result in an increased market share and, eventually, in market domination. Thus businesses overproduce, and the problem of the insufficiency of effective demand that we can see in the world hunger situation exists in other commodities as well, as commodities decay in warehouses waiting for sufficient money to command their sale. This would explain, for instance, the replacement of the family farm in the US with the corporate farm -- family farms weren't producing sufficient amounts of the commodity, food, to command an adequate price to meet their overhead costs in a market characterized by overcompetition and glut, even though they may have been producing enough for everyone to eat.

Capitalism furthermore requires producers to CREATE all sorts of false needs, through the processes of product advertising, fraud, etc., so that everyone can make money selling something even though not everything that is made is really beneficial to consumers. The effective demand may cater to consumers by first making said consumers into suckers. Look for instance at the economy of cigarettes, a harmful and eventually fatal product that generated billions of dollars for their manufacturers through these very same mechanisms. Only by the most perverse standard, can we say this was done "for" consumers.

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