What is Capitalism?

The word capitalism is now quite commonly used to describe the social system in which we now live. It is also often assumed that it has existed, if not forever, then for most of human history. In fact, capitalism is a relatively new social system.

[For a brief historical account of how capitalism came into existence a couple of hundred years ago, see Marx and Engels' Communist Manifesto]
But what exactly does 'capitalism' mean?
Class division
Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)
The working class are paid to produce goods and services which are then sold for a profit. The profit is gained by the capitalist class because they can make more money selling what we have produced than we cost to buy on the labour market. In this sense, the working class are exploited by the capitalist class. The capitalists live off the profits they obtain from exploiting the working class whilst reinvesting some of their profits for the further accumulation of wealth.
This is what we mean when we say there are two classes in society. It is a claim based upon simple facts about the society we live in today. This class division is the essential feature of capitalism. It may be popular to talk (usually vaguely) about various other 'classes' existing such as the 'middle class', but it is the two classes defined here that are the key to understanding capitalism.
It may not be exactly clear which class some relatively wealthy people are in. But there is no ambiguity about the status of the vast majority of the world's population. Members of the capitalist class certainly know who they are. And most members of the working class know that they need to work for a wage or salary in order to earn a living (or are dependent upon somebody who does, or depend on state benefits.)
The profit motive
In capitalism, the motive for producing goods and services is to sell them for a profit, not to satisfy people's needs. The products of capitalist production have to find a buyer, of course, but this is only incidental to the main aim of making a profit, of ending up with more money than was originally invested. This is not a theory that we have thought up but a fact you can easily confirm for yourself by reading the financial press. Production is started not by what consumers are prepared to pay for to satisfy their needs but by what the capitalists calculate can be sold at a profit. Those goods may satisfy human needs but those needs will not be met if people do not have sufficient money.
The profit motive is not just the result of greed on behalf of individual capitalists. They do not have a choice about it. The need to make a profit is imposed on capitalists as a condition for not losing their investments and their position as capitalists. Competition with other capitalists forces them to reinvest as much of their profits as they can afford to keep their means and methods of production up to date.
As you will see, we hold that it is the class division and profit motive of capitalism that is at the root of most of the world's problems today, from starvation to war, to alienation and crime. Every aspect of our lives is subordinated to the worst excesses of the drive to make profit. In capitalist society, our real needs will only ever come a poor second to the requirements of profit.
Capitalism = free market?
It is widely assumed that capitalism means a free market economy. But it is possible to have capitalism without a free market. The systems that existed in the U.S.S.R and exist in China and Cuba demonstrate this. These class-divided societies are widely called 'socialist'. A cursory glance at what in fact existed there reveals that these countries were simply 'state capitalist'. In supposedly 'socialist' Russia, for example, there still existed wage slavery, commodity production, buying, selling and exchange, with production only taking place when it was viable to do so. 'Socialist' Russia continued to trade according to the dictates of international capital and, like every other capitalist, state, was prepared to go to war to defend its economic interests. The role of the Soviet state became simply to act as the functionary of capital in the exploitation of wage labour, setting targets for production and largely controlling what could or could not be produced. We therefore feel justified in asserting that such countries had nothing to do with socialism as we define it. In fact, socialism as we define it could not exist in one country alone—like capitalism it must be a global system of society.
It is also possible (at least in theory) to have a free market economy that is not capitalist. Such a 'market economy' would involve farmers, artisans and shopkeepers each producing a particular product that they would exchange via the medium of money. There would be no profit-making and no class division—just independent producers exchanging goods for their mutual benefit. But it is doubtful whether such an economy has ever existed. The nearest that may have come to it would have been in some of the early colonial settlements in North America. Some Greens wish to see a return to this kind of economy. We do not think that it is a viable alternative for modern society. Such a system would almost inevitability lead to capital accumulation and profit making—the definitive features of capitalism.
[For more detailed accounts of what capitalism is, see Marx's Wage Labour and Capital, Marx's Value, Price and Profit, or Fredy Perlman's The Reproduction of Daily Life.]

What is Socialism?

Central to the meaning of socialism is common ownership. This means the resources of the world being owned in common by the entire global population.
But does it really make sense for everybody to own everything in common? Of course, some goods tend to be for personal consumption, rather than to share—clothes, for example. People 'owning' certain personal possessions does not contradict the principle of a society based upon common ownership.
In practice, common ownership will mean everybody having the right to participate in decisions on how global resources will be used. It means nobody being able to take personal control of resources, beyond their own personal possessions.
Democratic control is therefore also essential to the meaning of socialism. Socialism will be a society in which everybody will have the right to participate in the social decisions that affect them. These decisions could be on a wide range of issues—one of the most important kinds of decision, for example, would be how to organise the production of goods and services.
Production under socialism would be directly and solely for use. With the natural and technical resources of the world held in common and controlled democratically, the sole object of production would be to meet human needs. This would entail an end to buying, selling and money. Instead, we would take freely what we had communally produced. The old slogan of "from each according to ability, to each according to needs" would apply.
So how would we decide what human needs are? This question takes us back to the concept of democracy, for the choices of society will reflect their needs. These needs will, of course, vary among different cultures and with individual preferences—but the democratic system could easily be designed to provide for this variety.
We cannot, of course, predict the exact form that would be taken by this future global democracy. The democratic system will itself be the outcome of future democratic decisions. We can however say that it is likely that decisions will need to be taken at a number of different levels—from local to global. This would help to streamline the democratic participation of every individual towards the issues that concern them.
In socialism, everybody would have free access to the goods and services designed to directly meet their needs and there need be no system of payment for the work that each individual contributes to producing them. All work would be on a voluntary basis. Producing for needs means that people would engage in work that has a direct usefulness. The satisfaction that this would provide, along with the increased opportunity to shape working patterns and conditions, would bring about new attitudes to work.

How will problems be handled in socialism?

Many of today's problems, such as poverty, will not even exist in a socialist society. Of course, no human society will ever be without problems. A socialist society will have to deal, democratically and cooperatively, with the problems as they arise.
An example of a major problem: even under capitalism, natural disasters generate tremendous volunteer effort and people donate huge amounts of goods, services, and money to help those who are suffering. It is not conceivable that this human response will decrease in socialism. Without the profit constraints of capitalism, such major problems can be dealt with quickly and satisfactorily.

How will people who disagree be treated in socialism?

Those who disagree will be treated like anyone else. If a person or group decided to start promoting a return to capitalism, or some other class-divided social form, they would be free to do so. If however, a person or group, was damaging society (beating people up, or blowing up buildings, etc.) then society will take appropriate action against them.
Freedom must include allowing disagreement with the status quo and spreading unpopular ideas, but freedom does not include hurting people or destroying the common wealth of humanity. Exactly what methods a future socialist society will democratically choose to use, if people need to protect themselves, are beyond the ability of the World Socialist Movement to predict, but one can expect that those methods will be more humane and less dictated by blanket policies than the methods used today.

What about the environment?

The environment that is pleasant for human beings is being destroyed because of economic factors inherent in capitalism. At best, with the best intentions of everybody, capitalism can only do too little, too late. Government cannot stop the destruction, it can only slow down the worst of it for a while. If environmental protection rules make production less profitable, then production may move out, the economy will take a nosedive and the environmental rules will be relaxed.
The solution is to change the economic system. In a socialist world, there will be no profit. Production will be democratically decided. The human need for a livable eco-system will be considered as a normal part of all decision making.

What if people want too much?

In a socialist society "too much" can only mean "more than is sustainably produced." If people decide that they (individually and as a society) need to over-consume then socialism cannot possibly work.
Under capitalism, there is a very large industry devoted to creating needs. It tells us we need toilet seat warmers, nifty gadgets (that don't work), new this and that, and attempts to convince us that our human worth is dependent upon our material wealth. Capitalism requires consumption, whether it improves our lives or not, and drives us to consume up to, and past, our ability to pay for that consumption. On top of that, goods are not built to last because that would interfere with profit making.
Socialism will be a very different society. Goods will be built to last. The buy-buy-buy advertising industry will no longer exist. People may decide that they have better things to do rather than produce goods that are widely seen to be extravagances. And people may discover that more material goods don't make them happier.
Society already has the knowledge and technology to satisfy all of our basic needs sustainably. There is every reason to believe that socialist society will supply every human being with all the material goods that they need for a comfortable, pleasant, enjoyable life.

Does socialism mean equal shares for everyone?

No. People are different and have different needs. Some needs will be more expensive (in terms of resources and labour needed to satisfy them) than others.

But why will people work if they don't have to?

People will have to work, but it will be voluntary. If people didn't work society would obviously fall apart. To establish socialism the vast majority must consciously decide that they want socialism and that they are prepared to work in socialist society.

• Work is part of human life. Today rich people work when they don't have to, because they, like many of the rest of us, enjoy working. Many people work harder at their hobbies than they do at work. It is the nature of employment that makes it "work" instead of pleasure. Work needn't be a part of the day that we wish would end.
• People enjoy creating useful things. Instead of producing junk that people only buy because they can't afford quality, every worker will be able to produce quality products for themselves and others, and know that other workers will be doing the same.
• The workday will be shortened. Many jobs (such as those dealing with money, or war, or poverty) will not be required at all. The people doing those jobs now, will perform work that actually produces goods and services that people want.
• People will gain respect for doing jobs that others might find unpleasant, or the unpleasant jobs might be shared around. Many of the unpleasant jobs could be made more pleasant and some could be done away with.

What about human nature?

Humans behave differently depending upon the conditions that they live in. Even very short term changes in those conditions can change the way people behave. Most of what people refer to as "human nature" is actually human behaviour: reactions to the world around them.
Human behaviour reflects society. In a society such as capitalism, people's needs are not met and reasonable people feel insecure. People tend to acquire and hoard goods because possession provides some security. People have a tendency to distrust others because the world is organized in such a dog-eat-dog manner.
Under capitalism, and the previous systems, people have good reason to worry about tomorrow—they can lose their jobs, or be injured, or grow old, and need a cushion of wealth to fall back on. In a socialist society, everyone is entitled to have their needs met. They won't be kicked out onto the street, or forced to give up the pleasures of life. There will be no poverty. The "cushion" will be cooperatively provided by all.

The World Socialist Movement talks of a moneyless society; does that mean we'll use the barter system?

In a socialist society, there will be no money and no barter. Goods will be voluntarily produced, and services voluntarily supplied to meet people's needs. People will freely take the things they need.

What will socialism be like, how will it be administered?

The World Socialist Movement does not offer a blueprint for administering a socialist society. For a small group of socialists to do so would be undemocratic. It would also be dumb. Socialists don't have crystal balls to determine what the conditions will be when socialism is established. As the socialist majority grows, when socialism is within the grasp of the working class, then will be the proper time for making such important decisions.
The only thing socialists can say now, about administration, is that socialism is only socialism if it is democratic.

What if one country establishes socialism and others don't?

One country cannot establish socialism. No country is completely self-sufficient in the resources people need to satisfy their needs. No country can really isolate itself from the rest of the world in a peaceful manner, so a peaceful "socialist nation" would be easy prey for the outside capitalist world. Just as capitalism is a world system, socialism will have to be a world system.
Socialism will be a world without countries. Borders are just artificial barriers that belong to a past and present that is best left behind.

How will socialism be established?

Socialism can only be established by a vast majority of people deciding it wants to establish socialism. Therefore, the World Socialist Movement puts forward the socialist case so that people can decide for themselves.
Once the vast majority makes the decision in favour of socialism, then it will elect socialist representatives or delegates to prove its majority, and to serve as a temporary focal point to administer the elimination of capitalism and the creation of socialism. But it won't be, and could not be, the elected representatives or delegates who create socialism, it will be the people of the world as a whole.
The vast majority of the people of the world are working class, so socialism will be established by the working class. It also means that ordinary people will have to do all of the work required. The capitalist class isn't going to do it, and professional socialists (whatever they might be) aren't going to do it. The only way to establish socialism is for people to work for it.

Wouldn't everyone have to be altruistic for socialism to work?

No. Socialism isn't based upon altruism. Socialism will work even if everyone suddenly decides that they dislike everyone else. Supporting socialism involves recognizing the fact that the current system just doesn't work for most people. Socialism will be a society in which satisfying an individual's self interest is the result of satisfying everyone's needs. It is enlightened self-interest that will work for the majority.

Isn't socialism what they had in Russia, or in China or Cuba, or in Sweden?

No. Socialism, as understood by the World Socialist Movement, was never established in any country. A short definition of what we understand to be socialism:
a system of society based upon the common ownership and democratic control of the means and instruments for producing and distributing wealth by and in the interest of society as a whole.

• If there are wages and salaries, it is not socialism.
• State ownership is not socialism.
• Social programs are not socialism.
• Socialism means democracy at all levels of society, including the workplace.
• Socialism means a wageless, moneyless society.
• Socialism means voluntary labour.
• Socialism means free access to the goods produced by society.

With this understanding of socialism, the Socialist Party of Great Britain noted in its journal, the Socialist Standard (August 1918, page 87), that the supposedly "Marxist" Russian Revolution of November 1917 was not socialist.