Socialism lands left hook on capitalism
Has capitalism had its day? Theresa May claims we can trust the free market, but Jeremy Corbyn declares that capitalism has “failed.” Some are calling for reform, others for a revolution.
In a speech yesterday, Theresa May called it the greatest thing “ever created,” and said that it “led societies out of darkness” and into “the light of the modern age”. So what is this revolutionary, world-changing invention? Capitalism.
But with inequality growing across the world, some think that capitalism is in crisis. In America the top 0.1% of people earn 198 times more than the bottom 90% combined.
On Thursday, Labour Party leader Jeremy Corbyn declared that capitalism had “failed.” He said the solution lies in “21st century socialism.”
Corbyn’s brand of socialism opposes the logic of capitalism in many ways. For example, his proposed cap on rent would force landlords to charge less. This contradicts free market economics which encourages people to make money and imposes as few rules as possible.
Bernie Sanders had similar policies during his 2016 run for the White House. He described the US economy as “rigged” and vowed to raise taxes on the wealthiest Americans. Donald Trump has very different ideas, recently announcing “massive” tax cuts.
UK Shadow Chancellor John McDonnell is even more radical than Sanders and Corbyn. When asked to name his greatest influence, he replied: “Marx” — the father of Communism who argued for the “the abolition of private property”.
Some thought that Marx’s ideas crumbled along with the Berlin Wall, but now they are making a comeback. After bankers tipped the world into a catastrophic recession in 2008, sales of The Communist Manifesto in Germany rose by 300%.
But some think that capitalism can be rescued. In Saving Capitalism, Robert Reich insists on one fundamental point: “Government does not ‘intrude’ on the ‘free market’. It creates the market.” Rather than destroying capitalism altogether, Reich argues that governments must make the rules on which economies are based fairer.
And maybe Theresa May was paying attention. She finished her speech with a vow to “take seriously” the faults of free markets, and create an economy which “operates with the right rules and regulations”.
But is it too late?
In the red corner
“Capitalism has had its day,” argue some. Poverty is increasing in the world’s most developed nations, and the super rich just get richer. The system is unfair and must be destroyed. Our politicians must think big, and think fast. Socialism is not a historical relic — it can solve some of society’s most urgent problems.
“Have faith in the markets,” others say. Capitalism has brought millions of people untold peace and prosperity. If there are some flaws in the system they can be fixed. Resurrecting extreme left-wing ideologies that have been proven to fail would be disastrous.
- Does money make the world go around?
- Is capitalism failing?
- Can you think of any situations in which being selfish would help other people at the same time?
- Using the links on “Become an Expert”, read the speeches given by Jeremy Corbyn and Theresa May. Make notes on what each say about the economy and summarise their views. Which person do you agree with and why?
Some People Say...
“Capitalism is war; socialism is peace.”Karl Liebknecht
What do you think?
Q & A
- What do we know?
- In the USA, income inequality has increased by every major statistical measure in the last 30 years. The top 10% of Americans currently get paid more than nine times the bottom 90%. In the UK the top 20% of earners receive 40% of society’s total income.
- What do we not know?
- Whether any of the policies suggested by Bernie Sanders and Jeremy Corbyn would reduce levels of inequality in the USA and the UK. We do not know if Theresa May will make precise economic reforms following her speech.
- According to a study by Inequality Org, a project of the Institute for Policy Studies, an American think tank.
- Under socialism, the government aims to redistribute wealth to benefit all citizens. This is the opposite of Capitalism, in which individuals are encouraged to acquire wealth by competing with each other.
- Private property
- By this, Marx means that “the means of production” cannot be owned privately. So a factory would be collectively owned by all those who work there, not just one individual.
- Berlin Wall
- After the Berlin Wall was torn down, communist East Germany united with capitalist West Germany. This is traditionally seen as the end of Communism in Europe.
- A period of economic decline, rather than growth. The 2008 crisis was caused by years of banks extending loans to people who were unable to repay them.
- Saving Capitalism
- Published by Knopf Publishing. Robert Reich worked in the administrations of US presidents Gerald Ford, Jimmy Carter, and Bill Clinton.