Capitalism

by

Donald Robotham

• LAST REVIEWED: 21 March 2024
• LAST MODIFIED: 21 March 2024
• DOI: 10.1093/obo/9780199766567-0063

Introduction

The study of capitalism covers a wide range of issues from the economic to the civilizational, which can easily overwhelm the scholar. For the purposes of clarity, capitalism is best defined as an economic system based on private ownership of the means of production and in which goods and services are freely exchanged by means of the market mechanism. It can be contrasted to various models of “state socialism” in which the means of production are collectively owned either through the state or in a cooperative relationship at the plant level and in which economic production and exchange are centrally planned and controlled. It is also to be distinguished from “market socialism,” which is a hybrid economic system in which critical areas of the economy, especially finance and core production functions, are collectively owned by the state but a large range of consumer enterprises are privatized, allowing market exchange to play a major role in economic transactions albeit within a framework of selective central planning and administrative oversight and regulation. The outstanding case of a capitalist economy today is the United States; the classical case of “state socialism” was the Soviet Union; and the best current example of “market socialism” is the Chinese economy. Given the vital issues of human development, political freedom, and ideology that are involved, these distinctions are highly controversial and contested. For example, debate is ongoing as to whether China is to be understood as a market socialist economy or simply a capitalist economy with a veneer of socialist rhetoric and an authoritarian political structure. Notwithstanding these debates, which cannot be avoided, the distinctions made above offer a useful point of departure to embark on the study of capitalism in an organized and logically coherent fashion. While focusing on the core economic aspects, this article attempts to cover the central cultural issues that would most interest anthropologists. It discusses the critical “peasant question” that occupied anthropological debates in the 1970s; the relationship between capitalism, development, and neoliberal globalization as well as the problem of capitalism and alienation, race, and the increasingly important study of place and space. Finally, toward the end, selections of some of the main studies that address the critical issue of money and the alternatives to capitalism are brought to the reader’s attention.

General Theories

General theories of capitalist society are many but the main ones are the following: First there are the works of the classical economists of which Wealth of Nations (Smith 1977) is the most important and still highly relevant example. Second are the theories of capitalism that arise from the work of Karl Marx in Marx 1992. Marx develops his famous labor theory of value in which, in contrast to Smith, labor power rather than labor is the source of exchange value and its exploitation in the labor process is the source of surplus value. The third group of theories is those derived from marginal utility theory, which, influenced by Bentham’s utilitarianism, developed toward the latter part of the nineteenth century and which are best represented in the work of Alfred Marshall (Marshall 2009). This is the source of modern day microeconomics and neoclassical theory, which looks at the economy principally from the point of view of maximizing the interests of the individual consumer or firm. Fourth, there is Keynesianism (Keynes 2007). Influenced by Cambridge aestheticism, Keynes, in effect, transforms the individualist perspective of the marginalists into a social utility in which social consumption and aggregate demand play a pivotal role. The issue now is how to stabilize the capitalist system as a whole in such a manner that the cycles of boom and bust are evened out. The final group of works stress the cultural consequences of capitalism—of particular importance for anthropologists. The two preeminent books here are Durkheim 1997 (Division of Labor in Society) and Weber 1978 (Protestant Ethic). Durkheim, influenced by 19th-century thinkers like Herbert Spencer as well as by Henry Maine, argues that capitalism produces a potential for a new form of social solidarity (“organic”) that is based on the mutual interdependence of differentiated social institutions. Giddens 1971, drawing on the Durkheimian tradition, presents a synthetic summary of contemporary capitalism in which the potential for capitalism to be stabilized by normative reforms is emphasized. In contrast to this basically optimistic view of the political-cultural future of capitalism, Max Weber presents a pessimistic and ironic narrative of a system that, having been originally inspired by a deep-seated sense of individual ethical commitment, now finds itself descending into an iron cage of bureaucracy that threatens to stifle all liberal and human values. Here one can detect that tragic sense of resignation and alienation which some characterize as “modernist” and a hallmark of late capitalist culture—public, private, and aesthetic—in the twentieth and twenty-first centuries. A final issue to take note of is that of inequality and the rise of capitalism in the global system. With the rise of Asia and the shifts in global geopolitics, these questions have come increasingly to the fore. The works of Piketty 2017 and Milanovic 2019 take up these issues in depth.

• Durkheim, Émile. 1997. The division of labor in society. New York: Free Press.

  Originally published in 1893. The original analysis on the development of modern capitalist society and culture as a movement from “mechanical” to “organic” solidarity. Emphasis is on the normative changes produced by institutional differentiation and on the new possibilities created for social and cultural integration on a rationalistic basis. A basically optimistic view of the possibility of social reforms creating a stable capitalist society and an extremely influential work in the development of structural-functionalism in anthropology and “structuration” in sociological theory.

• Giddens, Anthony. 1971. Capitalism and modern social theory: An analysis of the writings of Marx, Durkheim, Weber. Cambridge, UK: Cambridge Univ. Press.

  DOI: 10.1017/CBO9780511803109

  The most thorough modern analysis of capitalism from a Durkheimian sociological viewpoint. This highly influential work laid the foundation for what went on to become “structuration theory” in sociology.

• Keynes, John Maynard. 2007. The general theory of employment, interest and money. London: Macmillan.

  Originally published in 1936. The basic economic theory of managing and stabilizing advanced capitalism in a period of economic crisis by judicious use of a publicly financed stimulus. The economic foundation of the social democratic welfare state and macroeconomic policy management. Somewhat technical but essential reading to understand debates on policy in contemporary capitalism.

• Marshall, Alfred. 2009. Principles of economics. New York: Cosimo Classics.

  Originally published in 1890. The fundamental work by one of the founders of neoclassical economics. Outlines key concepts of the “marginalist revolution” such as “opportunity cost.” Essential reading to understand contemporary neo-capitalist economics.

• Marx, Karl. 1992. Capital: A critique of political economy. Vol. 1. Translated by Ben Fowkes. London: Penguin.

  Originally published in 1867. The classic work on the structure/logic of capitalism and the labor process in capitalism, and one that has been used as the starting point for theorizing capitalism for Marxists since its publication in 1867.

• Piketty, Thomas. 2017. Capital in the twenty-first century. Cambridge, MA: Harvard University Press.

  DOI: 10.2307/j.ctvjnrvx9

  A major work with a strong empirical foundation critiquing the rise of global income and wealth inequality in the twenty-first century consequent on neoliberal globalization and changes in the ways in which top executives and shareholders are remunerated.

• Smith, Adam. 1977. An inquiry into the nature and causes of the wealth of nations. Chicago: Univ. of Chicago Press.

  DOI: 10.7208/chicago/9780226763750.001.0001

  Originally published in 1776. The classical account of the development of the division of labor and the market and the rise of capitalist society. Extremely readable and a much more complex argument about the importance of a role for the state, especially in education, than is often realized. The foundation for modern neoclassical economics. Essential reading.

• Weber, Max. 1978. The Protestant ethic and the spirit of capitalism. Los Angeles: Univ. of California Press.

  Originally published in 1905. Weber’s classic work that sets out his thesis of the origins of capitalism in the ethical orientations of particular status groups. A critique of the Marxist approach in which Weberian political sociology and market orientation are combined in a powerful work.