http://visitsteve.

com/made/capitalism-works-for-me-truefalse /

Week 2: Capitalism

Today
Introduction to political economy
approaches
Learn the vocabulary to talk about
capitalism
Introduction to dominant theories
about capitalism
Consider what is new about
contemporary forms of capitalism
Debate the consequences of global
capitalism

Is slavery a logical outcome of

global capitalism?

http://www.disposablepeople.org

Political economy
explanations
Rather than focus on the individual, they
focus on structural conditions and relations
Locate the causes of poverty not only with
the characteristics and structural
positioning of the poor, but also the
strategies of the elites
Politicizes development through concepts
of class, exploitation and capital. Explicitly
brings in power

Political economy is not a political

position (such as socialism or
communism). It is an explanatory
framework to understand the world.

How would you explain the structural

conditions that resulted in the
Marikana miners strike in South
Africa?
http://www.youtube.com/watch?v=BI
IFM07Wmss

Key Terms
Capitalism is a structure of production
where economic activity is oriented first and
foremost to the accumulation of surplus
Under capitalism surpluses are invested in
further production, with the aim of acquiring
additional surplus, which is then invested in
further production and so on (Aart Scholte
2000: 96)
In this way it differs from subsistence (no
surplus) and profligacy (in which all surplus is
spent)

Key terms
Capitalism is a set of relations between
particular classes in production
Class: are social categories that describe
peoples position in relations of production
Working class (or proletariat): people
without the means of production who must
sell their labour for survival.
Primitive accumulation (proleteraitization):
The process through which people lose the
means of production and self-sufficiency, who
must then / are free to sell their labour to
capital

Primitive
accumulatio
n "entailed
taking land,
say,
enclosing it,
and
expelling a
resident
population to
create a
landless
proletariat,
and then
releasing the
land into the
privatized
mainstream
of capital
accumulatio
n
(David
Harvey

Key terms - Class

Capitalist class (or bourgeoisie): the owners
of capital (this includes assets of production,
e.g. machines and wealth that can be
invested). Today, they include shareholders.
Professional / managerial class: the class
of people whose economic opportunities are
not derived primarily from property but rather
from other power-conferring resources such
as organizational authority or possession of
scarce occupational skills.

Relations between
classes
We need capital for investment, and
thereby growth. We also need labour as
an input for production (alongside
technology)
But as a result, capitalism involves
perpetual and pervasive contests (class
conflict) over the share of output (how
much of the income from production
should the owners of capital get, and how
much should be distributed in wages)

Distribution
Profit is needed for further investment and
hence employment
Profitability rests, in part, on keeping
production costs low, including labour
Profit is made through the difference
between what a worker costs (wage) and
what the value they add. This is their
surplus value.
But the working class also have claim to
the fruits of their labour

Relations between
classes
Capital-labour relation (or capitalist production
relations): For capitalist production to take place
there needs to be a class of people who have no
means of production of their own, such as land
with which to farm or tools and workshops with
which to produce for themselves. This is the
working class. And there needs to be a class of
people who have come into possession of these
means of production and in turn require a supply
of labor in order to work these means of
production so that commodities can be produced
and sold for a profit. This is the capitalist class
(Robinson 2004: 5).

How Capitalist Relations

Differ
Ancient slavery: all human and nonhuman material means and forces of
production are owned by the ruling class
Feudalism: serfs are bound to the
rulers land. They have control over
agricultural production, but the produce
is expropriated by the ruling class.
Capitalism: workers are free to sell
their labour. Labour is non-coercive.

Capitalism as
expansionary
Capitalism as the accumulation of surplus, is
by nature, expansionary
Extensive enlargement: the geographical
expansion of capitalist relations
Intensive enlargement: the
commodification of aspects of social life.
Commodifation: Human activity
previously not undertaken for profit (such as
health, dance, sport) become commodities
that can be sold for a profit.

Exchange Notes
Share your notes and understanding of
following terms with your neighbour
Capitalism:
Class:
Primitive accumulation:
Capital labour relation:
Class conflict:
surplus / investment:
Extensive / intensive enlargement:
Commodification:

Now explain the the structural

conditions that resulted in the
Marikana miners strike in South Africa
using these terms?

Capitalism:
Class:
Primitive accumulation:
Capital labour relation:
Class conflict:
surplus / investment:
Extensive / intensive enlargement:
Commodification:

http://www.bbc.com/news/world-africa-26014937

Marikana miners strike

The Marikana miners strike is a manifestation of class
conflict. The miners are proletariats, without their own
means to production (possibly because of a history of
primitive accumulation). They are therefore free /
compelled to sell their labour to the owners of capital. This
capitalist class needs labour and technology as factors of
production, which add value to capital. The miners want /
feel entitled to an increased share of the surplus for the
fruits of their labour (particularly as the managerial class
receives a much larger share). The capitalists want to keep
the wages of the working class low, in order to increase
profits (surplus) which they can then reinvest in further
production. This capital can be invested in other sectors, or
in other geographical areas (enlargement), thereby also
creating a demand for labour, and jobs.

Marikana Strike
Postscript
Two questions:
What is the role of the state?
What difference does it make that the
mining company is an MNC (London
registered with HQ in Johannesburg?
Who do you feel more sympathetic
towards: the miners or the capitalists?

Theories of Capitalism

Adam Smith, Wealth of Nations

(1776)

Equilibrium in the market

economy

http://int.danville.k12.pa.us/teacherweb/mmast/iWeb_publish/
Market_Economies.html

The Invisible Hand of the

Market
The market place is self-regulating. There is
no need for government intervention.
Individuals' efforts to maximize their own
gains in a free market may benefit society
Competition results in improved products
and at lower costs. Competition thereby
channels ambition toward socially desirable
ends
Laissez-faire model basis for neoclassical
economics
https://www.youtube.com/watch?v=ulyVXau4wE

The state
The state should be
limited to: defence of
territory; upholding
the rule of law,
particularly in
relation to property
rights, and; providing
public goods that
could never be
profitable.

Distribution
The invisible hand is neutral and
impersonal
Exchange value: the price paid in a
freely operating market
Natural price: cost of production
Competition ensures convergence
over the long run
Supply and demand in the labour
market determines wages

Smith Interpretation:
The Marikana Miners strike
The natural price was higher than the market
price. In order to meet the demands of
competition, the company kept wages low,
below the point at which labour could
reproduce itself, or that reflected the value that
labour added to production. Labourers then
withdrew from the labour force through a
strike, which then required an upwards
readjustment of the wages. This likely
increased the market price to reflect the
natural cost of production.

Marx 1818-1883

Marx
Capitalist relations not result of technological
determined division of labour, but of unequal
power relations
Instead of C-M-C1, [commodities- moneycommodities] capitalist relations are defined
by M-C-M1
Labourers not free, compelled to sell labour to
survive
Capitalism inherently exploitative as capitalists
appropriate the surplus value of workers

The State in Marxism

The state is not
neutral, but rather
supports the
capitalist class by
providing the
conditions
conducive to the
maximization of
profit
E.g. Marikana
mining strike?

Marx Evolution Modes of

Production
Each historical stage was beset by
contradictions in the relations of
production
Falling rate of profit
Profits drop as increasing reliance on
technology (constant capital) over
labour (variable capital)
Due to class conflict and eventual
revolution

 The development of Modern Industry, therefore,

cuts from the under its feet the very foundation on
which the bourgeoisie produces and appropriates
products. What the bourgeoisie therefore produces,
above all, are its own gravediggers. Its fall and the
victory of the proletariat are equally inevitable
(Marx 1948)

Marx Interpretation:
The Marikana Miners strike
The miners were compelled to sell their
labour as they have no means of production
and due to poverty. They negotiate wages on
uneven terms due to the inequality inherent
in relations between proletariats and
capitalists. The mining company exploits the
miners by appropriating their surplus value.
Eventually the miners have enough, and
they strike. The repressive mechanisms of
the state (initially) support capital.

Comparing Marx and

Smith
What is the nature of class relations?
How is surplus value distributed?
That is, how much goes to wages,
how much to profits?
What should be the role of the state?
What are the social outcomes of the
capitalist economy?

What is the nature of class

relations?
Smith
Classes mutually dependent. Labour
means of production. Capital funds
production and provides wages. Labour
spends wages on production, creates
profit, which capital then invests

Marx
Classes are antagonistic and unequal.

How is surplus value

distributed?
Smith
The relative shares of wages, rents on
land and profits determined by exchange
value: the price that is freely paid in
impersonal and neutral market relations.

Marx
Capitalists exploit labour. They use their
power to keep wages as low as possible
and retain surplus as profit.

What is the role of the

state?
Smith
States role in market counterproductive. Should be limited to
defense, law and provision of public
goods

Marx
The state is not neutral, but rather
supports capital
Argued for a different form of state a
proletariat democracy

Social outcomes of a capitalist

economy
Smith
By each person pursuing their interest,
produce social goods that are beneficial
to society

Marx
Inequality, with deteriorating conditions
for the working class
Eventually the destruction of capitalism
and the formation of new social forms.

Structural Violence
Write
A definition of structural violence
An example of structural violence

Share with your peers

How do they compare?
What can you learn from their
definition / example?

Academic notes
We will share with others how we
write academic notes in next weeks
tutorial
My summary notes
Summary of main argument
Other interesting and relevant points
My response to these arguments: do I
agree, why, why not, what would I add
How I might use this article (for the
lecture, for an article I am writing, or

Academic Notes
Annotating the text
I highlight the main questions that they raise
and key arguments
I highlight sections that are good quotes I can
use later
Underline key terms to increase vocabulary
Summarize main points to make it easier when
I return to the text, and to write my summary
I make a note of anything I dont understand,
but which I think is important
[Square brackets] for my initial responses and
any connections I make to other texts or
debates

Capitalism in the era of

globalization

What happens when

capitalism goes global?
What difference does it make that the
mining company in the Marikana Miners
strike is an MNC (London registered with HQ
in Johannesburg?

Robinson (2004)
Transnationalisation
Globalization as a 4th epoch of
capitalism in which production and
accumulation circuits are now
transnational
Compared to the past when
production and accumulation
occurred within national borders and
traded outside, all circuits are now
transnational

Fragmentation and decentralization of

production

concentration of management and

Flexible Accumulation
New capital labour relationship
(contrast primitive accumulation)
Workers no longer permanent fixture
of capitalist production, but rather
treated as a subcontracted
component.
Global casualization and
informalization
Extra power over labour >
deteriorating conditions

Absentee Landlords
Zygmunt Bauman argues that rather than
globalization in a truly global sense, we have
glocalization, entailing freedom of mobility,
tourist lifestyles and accumulation for some,
while others remain trapped in space, localised,
or cast out into inhospitable lands (2004)
Absentee landlords can exploit localities
without having to bear the cost
Space war, shareholders and capital can come
and go, but the people must stay get stuck

What is the impact of the

transnationalization of circuits
of production and
accumulation for the working
class?

 The international division of labour,

results in more efficient production
and a higher standard of living
through consumer choice
Capital provides employment
opportunities, including for people
dispossessed from their land
http://video.ft.com/2697417263001/
Women-power-Bangladesh-garment-tra
de/
World (only to 1.30)

Rana Plaza Collapse

Rana Plaza collapse in Bangladesh, 24 April 2013

http://www.youtube.com/watch?v=AlXnQ6ADcTI (1st 2 minutes)

Fig. 1 Labor standards, practices and laws over time.

Ronald B. Davies , Krishna Chaitanya Vadlamannati

A race to the bottom in labor standards? An empirical investigation
Journal of Development Economics, Volume 103, 2013, 1 - 14
http://dx.doi.org/10.1016/j.jdeveco.2013.01.003

Sweatshops

Slaves to Fashion: Poverty and Abuse in the New Sweatshops. - See more
at:

 Returning to our earlier question (18

mins):
Is slavery a logical outcome of global
capitalism?
http://www.theguardian.com/global-dev
elopment/video/2014/jun/10/slavery-su
permarket-supply-trail-prawns-video

Is slavery a logical outcome of

global capitalism?

http://www.disposablepeople.org

New Slavery
Introduction on
Moodle
Podcast from
Guardian about
slavery
http://www.theguar
dian.com/global-de
velopment/audio/20
13/apr/18/global-d
evelopment-podcast
-modern-day-slaver
y

Reflective Markers
Marikana mine strike
Capitalism and slavery
Is capitalism good for
me?
Pikettys thesis
Critical reflection on
the Robinson reading
Apply concepts to
other issue
Interpretation of film,
story etc. using
concepts

If it doesnt, why does it persist

see week 6

Next Week
For tutorials
Lecture
neoliberalism
Re-read Robinson
We will understand
pp. 1-22. Prepare
to share your
the importance of
notes
neoliberalism for
the global spread of
Read the
capitalism
Guardian story
about slavery
Explore the
consequences of
Be prepared to
neoliberalism
debate both
issues