1

Advanced capitalism
Its promise and failings

Isn’t capitalism the best and only imaginable way of organising our economy? It may have a
few unfortunate but inevitable consequences and run into a few crises, but with a bit of fi ne-
tuning, we are told, it constitutes the apotheosis of human history. After all, hasn’t the fall of
the Berlin Wall clearly demonstrated that alternatives to capitalism are not viable? That we
have run out of alternatives? And with the unprecedented level of wealth, innovation and
individual freedom that capitalism has granted us in its short history, why should we want
anything else? Why is this book about ‘alternatives’ even necessary?
With what has been called advanced, corporate, consumer, neo-liberal or global capi-
talism, we seem to have reached a stage where it is easier to imagine the end of the world than
the end of capitalism (Fisher, 2009). Obviously in this book we disagree, and our aim is to
demonstrate that there are many alternative points of departure for imagining and practising
organisation.
But in order to make space for these alternatives, our aim in these fi rst three chapters is to
put capitalism in its place, to show that it is just one among many ways of organising. We need
to persuade you that there is a problem, and that there are alternatives. And we start this
journey by attempting to defi ne what capitalism is, and what consequences it has for our lives.

What is capitalism?
Capitalism is difficult to defi ne not only because it has taken and continues to take many
different forms, but also because it is not really a thing that one can point to, but more a set
of social and economic relations. At its most basic level, capitalism is an economic system
whereby capital is invested in order to make more capital; in other words, capitalism is a
process through which capital gets accumulated (Harvey, 2011). There are various ways of
accumulating capital, but since the fi rst industrial revolution of the late eighteenth century in
Europe, the dominant way has been through production. Here capital is put to work by
hiring labour to produce goods that are sold on the market for a profit.
In order to illustrate the various elements and sets of relations that go into the making of
capitalism, let’s take the example of this book. Ironically, this book is a capitalist product, but
what does this mean?

3
M. Parker et al.

This book has been produced by a private publishing company, Routledge, itself owned
by Taylor & Francis, itself merged with Informa plc. Informa plc is a multinational company
with operations in 40 countries and has developed through the acquisition of ‘brands’ in the
world of publishing, conferences and exhibitions. In 2010 the group reported a total turnover
of £1,226.5 million, an operating profit of £164 million and after-tax profits of £98.9
million (Informa plc, 2011: 9). On its website, Informa plc boasts its ‘strong track record of
creating value from organic growth and acquisitions’. But we need to be clear about what sort
of value we are talking about here. Value refers to profit that can be distributed to share-
holders in the form of dividends, or return on investment. On this count, Informa has indeed
created much value; in 2010, its academic publishing produced a net profit margin of 27.6 per
cent (Informa plc, 2011), well above the average for non-publishing sectors (Harvie et al.,
2012). In order to produce ‘value’ or profit, Routledge/Informa plc assembled sufficient
capital, in the forms of office space, computers, paper, desks and so on; it also hired labour
(maybe a lot of which was subcontracted) to manage the relations with the writers, proof
read, design, print and market the book. The aim of the whole process is to sell the book on
the market for a profit. Ironically, the authors of the book won’t get paid, because most of us
are paid by universities, and this will help Informa to make greater profits.
There are various points worthy of note about this process. First, the book, or copyright
on the book, is the property of Routledge/Informa (i.e. the owner of capital) rather than of
the people who worked on its production (be it the academics who wrote the chapters for
‘free’, or the people hired or subcontacted by Informa to format, print and distribute the
book). Second, the book is only of value to Routledge to the extent that it can be sold on the
market for a profit. So what matters here is what the book can be exchanged for in the market
(exchange value) rather the value the book may have to users (use value). Commodities such
as this book are only a means to the end of capital accumulation or the pursuit of profit. So
the content or quality of the book only matter to the extent that they confer exchange value.
This brief example serves to highlight some of the main principles of capitalism which we
will explore in the next section.

Principles of capitalism

Private appropriation of the means of production and

the division between capital and labour
One fundamental element of capitalism is the division between capital and labour, and the
private appropriation of the means of production (capital) by a particular class (capitalists).
The means of production refers to all the resources necessary for production: land, buildings,
machinery, raw material and so on. These means of production can only produce wealth if
they are put to work, and for this, capital requires a sufficient reserve of labour having the
requisite qualities in terms of skills or flexibility, and willing to work for a wage (Harvey,
2011). While we now tend to take waged labour for granted, this has not always been the case
(and is still not the case everywhere). The right conditions had to be created for the emer-
gence of this sort of work.
Before the emergence of capitalism in Western Europe, most people produced what they
consumed by possessing or having access to means of production (a small plot of land or access
to common land on which they could grow food, raise animals, gather wood and so on). This
was largely a rural subsistence economy where most people produced essentially for their own
needs, selling whatever surplus they made on the market to buy the commodities they couldn’t

4
 Advanced capitalism: its promise and failings

produce themselves. The dispossession of the mass from direct access to the means of
production was therefore essential to create a reserve of labour power that capitalists could
hire. Small peasants were expropriated from access to common land through processes of
enclosure, or driven off the land by more competitive and larger commercial farms, and
formed a landless proletariat who had no choice but to sell their labour for a wage. This
process of expropriation of the mass from access to the means of production (what is referred
to as primitive accumulation by Marxist theorists) is what made it possible for industrial
capitalism to develop in Britain in the late eighteenth century (Harvey, 2003). But it is still
ongoing in many parts of the world. In developing countries, peasants or small producers
are being deprived of the means through which they provided for themselves and are
being pushed into a global reserve of relatively cheap labour available for hire in capitalist
production (Harvey, 2011).
So capitalism is based on the division between the owners of the means of production, and
workers who, not having access to means of production, have to sell their labour to ensure
their livelihood.1 The relationships between these two classes are marked by confl ict and
power inequality. In order to maximise profit, capitalists will seek to maximise the surplus
value2 they can extract from labour by increasing its productivity or decreasing its cost
(Wright, 2010). Thus the relationship between capital and labour is hierarchical in the sense
not only that labour relinquishes the goods and services it produces for capitalists (e.g. this
book is the property of Routledge/Informa), but also in the sense that while in the hire of
capital, labour subjects itself to its rules. And as we’ll see later in this chapter, capitalist fi rms
have deployed various techniques to increase control over labour and lower its cost.
One fi nal point worth mentioning about labour is its changing composition. At least in
Western societies, contemporary capitalism relies less and less on the making of things, on
factory work, and increasingly on ‘immaterial labour’, i.e. the kind of labour that relies on
abilities such as language, creativity, knowledge or affect to produce the informational and
cultural content of commodities (Lazzarato, 1996; Weidner, 2009). Of course things are still
being made, but manufacturing has tended to be delocalised to developing economies, in
particular China and South East Asia, where labour is cheaper. And the value of these
commodities rests more on their branding, their symbolic value, than on their functionality.
For example, while Nike shoes are still being physically produced in China, most of their
surplus value is created by marketing teams in the West who, through branding, sell an image
or lifestyle rather than a pair of shoes (Klein, 2000).

Free market
A second feature of capitalism is its reliance on the market as the main coordinating mecha-
nism. A central motif of neo-liberal economics is the notion that the free market is the most
efficient way of allocating resources, of organising the economy, and of harmonising
competing interests. Adam Smith’s (1776) famous metaphor of the ‘invisible hand’3 has been
deployed to suggest that, in a free market, all individuals and fi rms freely and rationally
pursue their own interest in maximising their gain by engaging in voluntary exchange with
each other, and that, in this process, the interests of all parties are reconciled. For example, it
is in the interests of profit-seeking capitalists to produce what consumers want, at a price they
are willing to pay. If they start producing poor-quality products, or charging too much, then
they will be driven out of the market by better quality or cheaper producers.4 Similarly, if
labour collectively organise in a country or industry to demand high wages, producers will
delocalise somewhere with cheaper labour, bringing down wages (through unemployment)

5
M. Parker et al.

in the original place to levels that the market can bear. Another example is the trickle- down
effect where the market will eventually distribute the increasing wealth of a rich minority to
the majority: as the rich spend their wealth on new products and services, they create employ-
ment opportunities for the majority. On this view, it is only by opening themselves up to the
free market that developing countries will grow and the poor will prosper.
So free market competition channels the self-interests of buyers, consumers and workers
towards mutually desirable ends such as better products, lower costs, profitable enterprise or
job opportunities. If producers are left free to produce, consumers free to choose, and workers
free to sell their labour, the market will reach an equilibrium that will serve the interests of
all. As such, the market is supposedly self-regulating and should be left to its own devices, free
of government intervention. However, the issue of government (lack of ) intervention is a
moot point in the history and theory of capitalism. Even neo-liberal economists would agree
that, at a minimum, states need to create and enforce contract and private property law
(Wright, 2010). And, as we will see in Chapter 2, in many countries the state has played, and
continues to play, an important role in creating the right conditions for capitalist develop-
ment, or regulating the operation of the market and curbing its excesses. Indeed, all successful
capitalist economies, including the UK and the USA, the supposed champions of the free
market, have built their economic strengths on the back of government interventions,
including protectionism, subsidies to help their nascent industries, or investment in infra-
structure such as roads, rail or airports (Chang, 2010). States have also intervened, to different
degrees, in mediating the relationships between capital and labour, and in setting limits on
what can be bought and sold on the market (Chang, 2010). In many countries, the state bans
or at least restricts the trading of organs, weapons, drugs, pornography and so on. Finally, the
incapacity of markets to regulate themselves was vividly illustrated with the 2008 fi nancial
crisis where even the most neo-liberal governments had to bail out banks and industries ‘too
big to fail’ to the tune of hundreds of billions of dollars to save the economy from collapsing.
All this suggests that the notion of the free market is a rather elusive one and seems to
correspond more to a myth than a reality. Indeed, as Polanyi (1944) and many others since
have demonstrated (e.g. Callon, 1998; Patel, 2009) markets are socially constructed and have
no independent existence, therefore they cannot be set free. Nonetheless, the idea of the
market as some sort of natural force outside human control is a way of thinking which
informs a great deal of commentary, even when actual state and corporate policies indicate
precisely the opposite.

Profit motive
If the idea of the ‘free’ market and the division between capital and labour constitute neces-
sary conditions for the development of capitalism, then the profit motive constitutes its
driving force. Indeed, what makes capitalism so creative and dynamic is the continuous search
for profitable opportunities (Harvey, 2003; Wright, 2010).
Of course, the pursuit of wealth is not new to capitalism; pharaohs, pirates, merchants and
kings all tried to accumulate wealth too. But what is new about capitalism is that the produc-
tion process is organised around this principle of wealth accumulation; so goods and services
are not produced for their intrinsic value or for their immediate consumption, but for their
ability to be exchanged for a profit (Harvey, 2011). The production of goods and services is a
means to an end. This, in turn, has several implications.
First, things which may have use value but cannot be traded on the market for a profit will
be of little interest to capitalists (e.g. providing food, medicine or education for people who

6
 Advanced capitalism: its promise and failings

have no money). However, capitalism has been particularly creative in transforming what
appear to be unprofitable activities into lucrative investment opportunities (e.g. education,
organic farming, fair trade and micro-fi nance, to mention only a few examples, some of
which we cover in this book).
A second implication of the profit motive is that in order to be traded for a profit, goods and
services need to be priced against each other, they need to be made commensurable. As De
Angelis and Harvie (2009) note, ‘Things, services, goods only become commodities if they
can be commensurated [. . .]. Otherwise they remain many tonnes of wheat or barrels of oils
[. . .]’, or this book just remains a book. To be sold, the book must have a price. Measures that
allow for commensuration are therefore essential to capitalism. Monetisation, attaching a price
tag or exchange value to materials or labour, enables the abstraction of all goods and services
into tradable equivalents. There are various theories about how this exchange value is set, from
Marxist theories stressing the abstract labour embodied in goods to neo-liberal economic
theories stressing the role of supply and demand. But what is important for our purpose is that
capitalism transforms everything it touches into a system of equivalence whereby commodi-
ties, goods or services, acquire a price, an exchange value, on the basis of which they can be
traded and profit can be realised (De Angelis and Harvie, 2009; Fisher, 2009).

Capitalist dynamics
These three principles of capitalism taken together – i.e. the search for profitable investment
in a competitive market through hiring waged labour – have certain implications for the
conduct of economic activities and point to particular dynamics of capital accumulation.

Efficiency
Since profits cannot (always) be obtained by simply charging more money for things, they
depend on producing more efficiently: on producing more (things, value) for less (inputs), or
maximising the output to input ratio. Capitalist fi rms will try to squeeze as much surplus
value out of labour and other resources as possible, through (for example) work intensification
or cost reduction. As Weber (1978) noted, this makes some forms of means/ends calculation
and rational accounting systems essential to capitalist enterprise and the pursuit of profit (see
Jayasinghe and Thomas, this volume).
Management knowledge and practice has developed around this question of rationalisa-
tion, and includes many efficiency-increasing technologies and innovations designed to
reduce the cost of labour and increase its productivity (Harvey, 2011; Wright, 2010). Among
the most notable of these rationalising technologies was Taylor’s ‘scientific management’ and
the subsequent development of the assembly line by Henry Ford. Through careful observa-
tion and measurement, a particular task can be divided into various components, timed,
formalised and standardised. As a result, jobs can be designed so as to require less skill and to
maximise productivity.
In contemporary capitalism, this process of rationalisation, or means/ends calculation, is
not confi ned to the assembly line and the production of things but has been extended to
knowledge or immaterial work. The figure of the call centre worker is emblematic here of
how the delivery or ‘knowledge’ work can be divided up, measured and controlled (Taylor
and Baynes, 2005). And a similar process of quantification and control has occurred with
professional labour. Doctors, teachers, probation officers fi nd their labour increasingly subject
to performance measures, standardisation and audit (de Angelis and Harvie, 2009).

7
M. Parker et al.

The deregulation and flexibilisation of labour markets has also provided more cost-
effective ways of hiring, fi ring and deploying labour according to needs (Cooper, 2008;
Felsted and Jewson, 1999; McDowell and Christopherson, 2009). Another strategy for
reducing labour cost is delocalisation. Over the last couple of decades at least, many Western
organisations have delocalised production to developing countries offering cheaper labour;
China has become the ‘workshop of the world’ and India the ‘office of the world’ on the
ground of their cheap labour and low levels of taxation and regulation (Chang, 2010). For
example, much of the labour used in the publishing industry to format, proofread, print,
market or distribute books and journals is increasingly outsourced to low-cost economies
(Dahlman and Huws, 2007).

Market expansion and growth

Another obvious way to increase profit is to sell more things. Finding new markets has been
central to capitalist expansion. As local or national markets get saturated, capitalist fi rms have
to expand further afield. So, for example, nineteenth-century cotton mill owners in
Manchester sold their fabric to India, US farmers sell corn to Mexico, Nestlé sells its infant
formula in developing countries and so on.
But selling more things is not just about fi nding new markets for a particular product, fi rst
because the market might eventually become saturated, and second because a profitable
market will attract competitors which in turn will make the rate of profit fall (Wright, 2010).
It also requires constantly inventing or fi nding more things to sell. This may be through
making improvements in existing products (producing safer, faster or greener cars, healthier
burgers . . .), inventing new products (televisions, phones, anti- depressants, e-book readers
. . .), or selling things that previously were not for sale but were common property (e.g.
drinking water, health, education, genes . . .). In its search for more and more things that can
be exchanged on the market for profit, capitalism has managed to transform goods that were
outside market relations into commodities that can be sold for a profit (Fisher, 2009; Harvey,
2003, 2011; Patel, 2009), a point we will explore later.
The relentless innovation of capitalist firms in designing and selling new products goes
hand in hand with relentless consumption. It has become a truism to claim that we live in an
increasingly commodified world, that more and more of our lives is mediated by the market
(Patel, 2009). An increasing proportion of the goods and services we rely on for survival or
pleasure (e.g. food, water, child care, sports and leisure, and so on) are acquired on the market
for a price, rather than through self-provisioning or a mutual network of exchange with
friends or family.
In order to pay our way through all this consumption, we are increasingly reliant on
waged labour, and debt. If mass consumption is essential to capital accumulation, so is the
provision of credit to sustain consumption (Harvey, 2011). Indeed, there is a whole credit
industry which since the 1980s has been able to develop with fewer and fewer regulatory
restrictions to provide consumer credit for everything from cars to education, toys, houses or
holidays, including to poorer and poorer sections of society as we saw recently with sub-
prime mortgages (Potts, 2011). The provision of credit is not only essential to underwrite
consumption, it also provides another avenue for profitable capital investment as capital
invests in capital itself (Harvey, 2011).5
In short, capitalism and its quest for accumulation rests on producing, selling and consuming
ever more. It relies on and requires endless growth. The centrality of growth to capitalist
economies is evident both at fi rm and national levels. Growth in GDP is considered as the holy

8
 Advanced capitalism: its promise and failings

grail of economic policy by most national governments and international institutions from the
World Bank to the European Central Bank (Harvie et al., 2009; Wright, 2010). Growth has
become the fetish of capitalism and is supposed not only to deliver increased profit for capitalist
fi rms, but also jobs, prosperity and better lives for all (Hamilton, 2003).
The growth imperative is also evident at the level of fi rms where the profit motive encour-
ages expansion. The continuous need to accumulate capital means that capitalist fi rms have a
tendency to grow larger and larger, both through internal growth and through acquisition (to
paraphrase Informa). For example, through the sorts of mergers and acquisitions Informa has
engaged in, the global market for academic publishing has become dominated by just a few
key players (Beverungen et al., 2012). More generally, the history of capitalism since the
nineteenth century has been the history of the increasing concentration of capital around a
decreasing number of multinational corporations that have acquired enormous power not
only within their particular industries but also over governments (Barnet and Muller, 1974;
Foster et al., 2011). Some corporations have become so large that their sales far exceed the
GDP of some countries. Of the 100 largest economies in the world in 2000, 51 were corpora-
tions and 49 were countries (based on comparison of corporate sales and countries’ GDPs)
(Anderson and Cavanagh, 2000).

Producing capitalist subjects

Capitalism not only signals a great transformation in the mode of production, but also in
individuals’ subjectivity: the way people understand themselves, and relate to each other.
Capitalism requires and produces certain types of human beings: ‘free’ autonomous agents
maximising their own utility through both work and consumption, or homo economicus.
Indeed, the two figures of the freely choosing consumer and the self-investing flexible worker
are central motifs of contemporary capitalism (Burkitt, 2008).
As mentioned earlier, increased labour flexibility is an important cost-reduction strategy
for contemporary organisations. Individual workers may be redeployed across different jobs
or functions of an organisation, across different locations, or simply dismissed. Demand for
ever-increasing flexibility in the labour market means that individual workers constantly have
to restyle, retrain themselves, to invest in themselves to remain employable (Burkitt, 2008).
These investment decisions do not take place solely in the workplace or even in education,
but embrace all of social life (Grey, 1994; Rose; 1989; Weidner, 2009, Cremin, 2011). For
example, Grey (1994) illustrates how accountants invest in their appearance or in building
appropriate social networks in order to advance their career. Similarly, students may take on
extra- curricular activities to build their CV. The self becomes an enterprise, a project to be
managed in order to maximise returns (in terms of salary, career prospects and so on).
In short, modern capitalism constitutes subjects as free autonomous, rational, utility-
maximising agents in at least two ways: as consumers freely choosing on the market, and as
workers personally managing their employment prospects (Burkitt, 2008; Du Gay, 1995).
Both contribute to the individualisation of selves living more and more isolated from each
other. As Margaret Thatcher famously proclaimed, ‘there is no such thing as society’, only
free individuals responsible for their own success and failures.
And indeed, who wouldn’t like to think of themselves as ‘free’, as able to do what they
wanted free of interference from government, bureaucracy, trade unions, god, or the force of
tradition? The market leaves us free to choose between all sorts of products and services to
consume, job opportunities to apply for, or even better, free to set up our own business, to
become the next Mark Zuckerberg or Richard Branson. This freedom to become what we

9
M. Parker et al.

want constitutes one of the greatest appeals of capitalism. The strength of market capitalism
is not only its supposed economic superiority or ‘efficiency’, but also as Hayek (1944),
Friedman (1962) or Nozick (1974) have argued (albeit in different ways) its close association
with individual freedom, at least a certain kind of freedom. But as we shall see in
the next section, efficiency, growth and freedom, the hallmarks of capitalism, are all
contested ideas.

The dark side of capitalism

There is no doubt that capitalism, in its short history, has produced unprecedented levels of
growth and wealth. Some of us have standards of living which are higher than ever. We can
buy an ever-growing range of products and services, we are free to roam the world in search
of better jobs, better holidays, we can live longer, and we have access to ever-increasing
knowledge (Harvey, 2011; Wright, 2010). But the increased wealth, freedom and choice that
some of us have acquired have come at a cost: environmental degradation, spiralling poverty
among many, a crisis in public health, violence, alienation, anxieties and insecurity. The aim
of the last section of this chapter is to examine the cost of capitalism by questioning the
conceptions of freedom, efficiency and growth it relies on.

Freedom and atomisation

Flexible labour markets and boundaryless careers may create new opportunities to free oneself
from the shackles and routines of predictable careers in bureaucratic organisations, but as
Sennett (1998, 2008) has argued, it can also have ravaging effects on psychological well-
being. The demand for flexibility in working lives, and consequently social lives, leads to the
erosion of stable social networks and coherent life narratives. Individuals become atomised,
uprooted from networks of social relations and solidarity, and their life experience reduced to
a succession of present moments (Fisher, 2009).
And insofar as we take solace from alienating work in consumption, this only exacerbates
feelings of insecurity and anxiety. Consumption leaves us with an insatiable desire for more.
But beyond a certain level of material wealth, more does not equate to happiness but to rising
rates of depression and anxiety (Wilkinson and Pickett, 2010). The notion of Affluenza
suggests that increasing consumption and wealth leave us with feelings of emptiness ( James,
2007; Layard, 2005). The competitive drive for money, status and material things leads to
anomie, alienation and addiction, while undermining our capacity to build connections
with others. For example, James (2008) reports spiralling levels of mental disorders in
Anglo-Saxon societies which he attributes to the more advanced forms of neo-liberal
forms of capitalism, or ‘selfish capitalism’, prevalent in these countries. So capitalist subjects
may be free, but this freedom comes at the cost of atomisation, alienation and increased
psychological disorders.
In addition, we can question the way in which freedom is constituted and distributed by
capitalism. The neo-liberal conceptualisation of freedom in terms of individuals’ ability to
compete freely on the labour market, and to exercise consumer choice, provides a very partial
and restrictive vision of freedom. As we will show in Chapter 3, this is a negative conception
that defi nes freedom in terms of the absence of interference or coercion in our actions (Berlin,
1969; Macpherson, 1973). And, of course, in this sense the market leaves us free, within legal
constraints. But as many feminists (Hirschmann, 2003) and others (Macpherson, 1973) have
argued, this negative view of freedom means very little if we do not consider the unequal

10
 Advanced capitalism: its promise and failings

power relations that prevent some of us from exercising ‘choice’ in the market; so women may
be free to participate in the labour market, but this ignores the social and power relations that
place them in the position of the ‘carer’ or homemaker and severely constrain their choice (see
Dale’s chapter in this volume). Similarly, deregulated, flexible, free labour markets may make
workers free to move between jobs, but for many this freedom may be limited to poorly paid,
casual employment. Freedom within the world of work is also severely restricted; an impor-
tant part of the employment contract is that employees agree to do what they are told (even
though this may leave room for various degrees of self- determination) (Wright, 2010). And
as Macpherson (1973) argued, in a capitalist society, most of us are coerced to get into waged
labour to survive. All of these examples suggest that the negative conception of freedom
might be very restrictive, and undermine our ability to make autonomous choices. A positive
conception of freedom would instead emphasise our capacity to be self- directed, not only to
choose between existing options, but to exercise choice about the ends we want to pursue
(Berlin, 1969). The difference between these two conceptions of freedom can be illustrated
with consumer choice. The free market, by removing trade barriers, has made us freer as
consumers to choose between different products from different parts of the world. However,
the wide range of products we can buy tends to be based on a restricted number of key ingre-
dients, and is produced and distributed by a decreasing number of powerful multinational
companies and retail chains that control what we can – and cannot – consume (Gabriel and
Lang, 1995; Klein, 2000; Schor, 1998). While we may be free to buy strawberries at
Christmas in the UK, our freedom to buy more local food products, or to have some autonomy
in the kind of food we put in our mouth, not to mention to have access to some affordable
land to grow our own food, is far more limited.
So the extension of the free market and negative freedom has to be set against the erosion
of positive freedom, and in particular the freedom to participate in the decisions affecting our
lives (Bauman, 1988, 2007). The increasing power of multinational corporations is seriously
eroding democracy, placing decision-making further and further away from the communities
affected by these decisions, or from democratically elected governments. As we saw earlier,
the largest multinational corporations have annual sales that exceed the budgets of many
states, giving them enormous powers over countries with little resources. Under pressure
from institutions promoting free trade globally (i.e. the World Bank, World Trade
Organization, International Monetary Fund), national states have had to abdicate their power
to regulate (the labour market, environmental protection, financial markets) to multinational
corporations (Korton, 1995; Sklair, 2002). This corporate takeover is not confi ned to small
and weak economies; through lobbying and close alliances between governments and corpo-
rate representatives, corporations have been able to buy government in the global North too
(Korten, 1995; Monbiot, 2000; Stiglitz, 2011).

Efficiency and externality

As we saw earlier, one way to accumulate capital is to increase efficiency; that is, to maximise
the output to input ratio. But efficiency depends very much on what we have decided to
count as output and input. In a capitalist economy, what counts as cost or input is what we
have to pay for in the market. But the market fails to take into account all the actual costs of
producing things. It misses what has no exchange value; for example, the pollution created in
producing things that the producers don’t have to clean. These ‘hidden’ costs are referred to
as externalities; they are costs that neither the producer nor the consumer has to bear, but are
pushed to another party (Patel, 2009).

11
M. Parker et al.

Environmental damage constitutes one of the main externalities of capitalism, a cost

passed on to local communities having, for example, to live in despoiled environments, or to
humanity as a whole, including future generations. Indeed, it seems perfectly rational for
profit-maximising companies to dump the cost of waste or pollution somewhere else if they
are allowed to do so (Wright, 2010). But this continuous search for profitable opportunities
is rapidly destroying the environment on which we (and corporations) rely for survival (see
Cato, this volume).
Ever-increasing levels of production and consumption are leaving ever-larger ecological
footprints in the forms of waste and pollution. As production is delocalised in search of
cheaper costs, goods have to travel further and further away, generating (mostly uncounted)
environmental costs in the forms of CO2 emission ( Jackson, 2009). The increasing consump-
tion of packaged food, electrical goods, mobile phones, holidays, cars and so on also produces
increasingly unmanageable amounts of waste (Ferrell, this volume and 2005; Rogers 2005).
Much of the (toxic) waste and pollution generated by consumption in Western societies is
exported to developing countries in the global South (Lazaroff, 2002; Weber et al., 2008).
To sum up, capitalism may be producing lots of cheap goods, but it can only do so because
it fails to account for much of the cost of production and consumption on the environment,
cost that has to be borne mostly by the most disenfranchised, and will have to be borne by
future generations.
Another way of increasing efficiency and externalising cost is to appropriate resources for
free. Capitalist fi rms seeking to maximise profits have a strong incentive to appropriate
resources that are ‘free’ in the sense that they stand outside the market and hence have no
price tag (Wright, 2010). This process of appropriation, the enclosure of common or public
resources, or what Harvey (2003) refers to as accumulation by dispossession, has been central
to the accumulation of wealth (in the hands of a few) and has taken various forms throughout
the history of capitalism.
We have already seen that the enclosure of common land was essential to the early stage of
capitalist development. But this process of enclosure is ongoing; all over the world, peasants
and indigenous populations continue to be expelled from land and deprived of access to
natural resources through legal and illegal means (Harvey, 2011). As a result, the increasing
mass of the dispossessed have to rely on market exchange and sell their labour to capitalist
fi rms, often working for less than subsistence wages in sweatshop conditions (Bakan, 2004;
Klein, 2000; New Internationalist, 2004).
In its neo-liberal phase, global capitalism has sought to appropriate more and more of our
common wealth (see De Angelis and Harvie, this volume). To mention just a few examples,
in urban centres throughout the world, the most disadvantaged are being expropriated
(through, for example, rising property taxes and rents, or violence) to make space for real
estate developments (Harvey, 2011). Free public spaces in cities are sold to private developers
and transformed into spaces of consumption such as corporate coffee chains, bars and restau-
rants, shopping malls or executive flats (Minton, 2009). Corporations have been engaged in
a relentless plunder of collectively owned resources, from publicly funded medical know-
ledge, to software innovation, the airwaves, the public domain of creative works, biodiver-
sity, genetic commons or indigenous people’s knowledge (Bollier, 2003; Nonini, 2006;
Scharper and Cunningham, 2006; Shiva, 1997).
The publishing industry with which we started this chapter has also been particularly
adept at appropriating public resources for private profits. Academic publishers have been able
to reap well-above-average profits of 30 to 40 per cent through a process of double appropria-
tion: they appropriate the intellectual property rights for the knowledge produced by writers

12
 Advanced capitalism: its promise and failings

paid by public funds, and sell this knowledge back to universities. Thus publishers don’t bear
the cost of the work that goes into publishing but rely on ‘free work’; the work of writing,
editing and peer-reviewing is done by academics often paid for by public funding (Beverungen
et al., 2012).
As the above examples suggest, capitalist fi rms’ ability to reduce costs does not mean that
costs disappear, but mainly that they have been externalised, placed outside the market (Patel,
2010). Costs are pushed down through some people being dispossessed: of land, knowledge,
seeds, access to free drinking water, dwelling, health or subsistence wages. The logic of
capital is simple. If profits aren’t being made because something is cheap, free or unneeded,
then there is an opportunity for profits to be made.

Inequality
Unsurprisingly, considering that wealth is at least partly accumulated through dispossession,
global capitalism has led to increased inequality (Harvey, 2011; Wilkinson and Pickett, 2010;
Wright, 2010). Far from the trickle- down effects that would have supposedly lifted the poor
out of poverty, it has created a trickling-up effect leading to the increased concentration of
wealth in the hands of a few, a trend aptly captured by the slogan of the Occupy movement
‘We are the 99%’.
There is plenty of evidence suggesting that developmental programmes designed to bring
the benefits of global capitalism to the poor by extending free trade and deregulating global
markets have mainly benefited Northern multinational corporations (de la Barra, 2006;
Klein, 2000; Korten, 1995; New Internationalist, 2004; Sklair, 2002). For example, a report
from the United Nation Development Programme (UNDP) (2006) showed that the poorest
20 per cent of the planet accounted for 1.1 per cent of world income in 2006 against 2.3 per
cent in 1970; the richest 20 per cent (mainly living in the North) accounted for 86 per cent
of the world income against 70 per cent in 1970.
And growing inequalities are also evident within ‘advanced’ economies in the global
North. For example, the wealthiest 1 per cent of US citizens controlled 40 per cent of
American wealth in 2011, and took in nearly a quarter of the nation’s yearly income; 25 years
earlier, the corresponding figures were 33 per cent and 12 per cent (Stiglitz, 2011). These
increasing inequalities are not only a worrying trend in themselves, but are also associated
with a wide range of heath, psychological and social problems (Wilkinson and Pickett, 2010).
Growing inequalities increase the importance of social status and competition in the way
people assess themselves and each other; this in turn creates the conditions for divisive social
relations, the erosion of community life, and trust; it makes for poor mental and physical
health, educational performance and social mobility, as well as increased violence. And, as
Wilkinson and Pickett’s (2010) study of health inequalities in different countries demon-
strates, it is not just those at the bottom who suffer, but the vast majority of the population.

‘Uneconomic’ growth
Considering the environmental, health and social costs of contemporary capitalism, it seems
sensible to question the rationality of its endless pursuit of growth, or growth fetish (Hamilton,
2003, 2010). As we saw earlier, growth in production and consumption is essential to capi-
talism; growth (in GDP, GDP per capita, or in companies’ turnover) is taken as the main
indicator of economic wealth and the main target of economic and business policies (Harvie
et al., 2009). But this equates commodity production with well-being and fails to take into

13
M. Parker et al.

account the conditions of production (e.g. working hours, dangerous work, poverty wages),
its hidden costs (e.g. stress, anxiety, environmental destruction) or the distribution of wealth
(Chang, 2010; Harvie et al., 2009).
As early as 1972, a Club of Rome report recognised that there were natural ‘Limits to
Growth’ (Meadows et al., 1972): the earth has fi nite resources and a limited ability to support
growth and absorb pollution. It seems that we have already exceeded these ecological limits.
According to the Global Footprint Network’s calculations, in 2012 the demands we made on
the Earth’s biocapacity (to absorb waste and regenerate renewable resources) was the equiva-
lent of 1.5 planets. This means that it took the Earth one year and six months to regenerate
what we used in a year. The calculations also suggest that if current population and consump-
tion trends continue, by the 2030s we will need the equivalent of two Earths (Global Footprint
Network website, 2012).
So the demand for growth starts to appear ‘uneconomic’ (Daly, 2007). It makes us worse
off by using up our natural capital and resources, while providing no benefits to human well-
being and welfare. Not only do measures of growth fail to take into account the damaging
effects of production and consumption (e.g. on the environment, our health or quality of
life), but they also count as positive the whole industries that have emerged to deal with these
effects (e.g. pharmaceutical industry, waste management). Thus we arrive at the absurd situ-
ation where, for example, the more ill, obese, diabetic or depressed we get, the more remedies
the pharmaceutical industry can sell us, and the more the economy will grow. Similarly, a
whole industry has sprung up to clean up our waste and pollution, again contributing to
economic growth (The Economist, 2009; Porter, 2002; Rogers, 2005; Royle, 2005).
Recent books such as The Spirit Level (Wilkinson and Pickett, 2010), Prosperity without
Growth ( Jackson, 2009) or Mismeasuring our Lives: Why the GDP Doesn’t Add Up (Stiglitz et al.,
2010) have all denounced this focus on growth as the ultimate end. And many have proposed
alternative measures of economic well-being that would take a variety of additional factors
into account, such as literacy, average life expectancy, equality, working time or pollution
(see Harvie et al. (2009) or Jackson (2009) for an overview). Behind these alternative
proposals lies a fundamental question about what counts as prosperity or well-being, and
whether capitalism and its obsessive pursuit of economic growth provides the best answer. We
think it doesn’t, hence this book of alternatives.

Conclusion
From this inevitably brief discussion, capitalism emerges as an enormously powerful force
that extends its tentacles to more and more of the globe, and more and more of our lives. It
produces not only goods and services but also the sorts of subjects who will buy these goods
(the desiring consumers), the sorts of subjects who will produce these goods and services (free
labour), and the credit necessary for their purchase. Capitalism has become so powerful that
it has colonised our imagination, leading to a monoculture where capitalism appears as the
only realistic option (Fisher, 2009; Michaels, 2011), as if there were no alternatives. Indeed,
following one of its deepest crises in 2008, many people seem to assume that we should be
working our way back to business as usual. Shortly after being bailed out with public funds,
banks resumed paying gigantic bonuses; and government leaders across Europe have been
busy placing their economies under increased market discipline, squeezing public services
and further liberalising labour markets.
Yet there are many cracks. As illustrated in this chapter, capitalism is in many ways
dysfunctional and produces many irrationalities; it makes some of us sicker, some of us

14
 Advanced capitalism: its promise and failings

poorer, and it relies on natural resources which, through its own plundering, are rapidly
being eroded.
Moreover, capitalism relies on our own complicity (Fisher, 2009); it relies on us getting into
debt, buying things, working for a wage. But what happens when some of us stop behaving like
homo economicus, when some us stop buying so much, or labouring for a wage, and if instead we
start collectively re-appropriating various means of production, if we start producing for
ourselves rather than for capitalist enterprises, if we start sharing or giving our labour, goods,
services outside of the ‘free market’? As we explore in the next chapter of this book, many
throughout history have expressed their discontent with capitalism, and have forged relations
of production and exchange that do not follow the logic of capital accumulation. It is by
looking at the cracks and gaps within capitalism that we begin to see that alternatives already
exist, and that many of the resources and ideas we need are already available to us.

Notes
1 In contemporary capitalism, class relations have become more complex, through both the develop-
ment of the ‘middle classes’ and the democratisation of shareholding through, for example, pension
funds. However, the division between capital and labour remains fundamental to the understanding
of class relations (see e.g. Wright (2005) for a discussion of contemporary class structure).
2 Surplus value refers to the value created by labour that exceeds the cost of hiring it.
3 The significance of the ‘invisible hand’ in the work of Adam Smith is more the making of
twentieth-century neo-liberal economists than of Smith himself, since the famous metaphor appears
only once in the Wealth of the Nations, and three times altogether in all of Smith’s work (Werhane, 1991).
4 This reasoning of course ignores the fact that producers may collude and agree on price that they
can force on consumers; it also ignores the fact that consumers do not always have perfect informa-
tion to compare prices or services across producers, or that producers may acquire monopoly over
particular markets.
5 As Marx predicted, if rates of profit fall in the productive sphere, capital will look to fi nancial
investment for better returns:
More capital is accumulated than can be invested in production, and for example lies fallow in
the form of money in the bank. This results in loans abroad, etc, in short speculative investment.
(Marx, 1969: 484 )
And just as capitalism has been particularly creative in the productive sphere, so it has in the
fi nancial spheres. Debt has become a commodity; for example, with Collateral Debt Obligations
(CDOs), mortgages are bundled together and securitised to be traded on fi nancial markets
(Lanchester, 2010). The same thing could be said of micro-fi nance, initially created by not-for-
profit organisations as a means to help the poor but increasingly becoming a way through which
commercial banks can squeeze profits out of the poor (e.g. Bateman, 2010; and see Chapter 3, this
volume). Indeed, in its search for profitable investment, capital has increasingly looked to usurious
lending, fuelling housing bubbles, and creating growing levels of debt among consumers and
governments in the process (Harvey, 2011; Potts, 2011).

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