I'm a Socialist, yet there are things I do not understand

I'm a Socialist, yet there are things I do not understand.
In what way does capitalism require increasing growth? In what way is capitalism unsustainable (ignoring the very obvious environmental aspect)?

I hear these things said a lot, but I have not had a good explanation for them as yet. I hope someone can help me understand why capitalism must ultimately collapse under its own system of operation.

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It doesn't. Social security requires eternal growth but social security isn't inherent to capitalism.

The idea that capitalism is unsustainable comes from the wrong notion that it needs eternal growth.

When Marxism critiques capitalism, it starts at with commodification. From there we can read that commodification serves the purpose of exchange, and then a web of inter-women commodifying firms brings rise to an economy dominated by what is called the law of value. This law of value then brings forth a social average of labor, and this social average must be met in production. The economy is then slave to the forces of exchange, and over time (as we now have it), the basis of our economy lies in this process of exchange. This means that in this competitive process, if we can not maintain the social average due to e.g. over-production, which allocates commodities that both cannot be exchanged because there is no demand for supply nor be purposed directly for use at risk of long term lack of supply, we get an economic crisis. Capitalism thus being dependent on human labor is also dependent on the wellbeing of this same labor, and the consequence of crisis directly impacts the health of capitalism as a system.

The imperative of infinite compound growth; should we assume capitalism wants to remain forever, and this infinite compound growht in a finite world, is lunacy, and this is without even looking at the direct consequences of explosive growth upon our environment and the qualities of goods are consequence of capitalist need to accumulate, all things which threaten our lives under capitalism itself, much less the system.

Capitalist markets don't need constant growth, but capitalist actors do.

If companies do not keep growing they will die. If national economies do not keep growing, they will collapse.

This is complete nonsense from a person who haven't read Capital nor anything relating to socialism. Social security growth would rise and fall with population.

Capitalism requires growth because of the profit motive, where interest has to be always generated on credit invested in the production process. (usually denoted as the M-C-M' relation in marxist jargon, money-commodity-money-with-interest).

Capitalism is unsustainable because of it's tendency to create crises. There are a number of ways it can generate crises, like financial liquidity, employment, demand and supply side. One of the famous examples given in Vol 1 of Capital is the "tendency of the rate of profit to fall", where both competition within industry and immiseration of labor would create a crises.

Most of the aspects in which is unsustainable has to do with systems inherent within capitalism. Ironically free market advocates such as libertarians will argue these things are a result of "crony capitalism" (or government interference in the market), but Marx said it best 150 years ago that most of these things are symptoms or result of capitalism itself.

One issue is the accumulation of capital within the hands of the few. Gotta have money to make money, and the more you have, the easier it is to invest in the right market and win out. Eventually it results in monopoly left unchecked.

This creates a contradiction, capitalism in the form of the free market in which monopoly exists is not free, there is no choice.

But also, in regard to capital circulation, companies naturally try to find the cheapest labor. It is a commodity, a cost to the capitalist. Capitalists move their factories to where ever labor is cheapest. However as this continues, the market they were originally selling in becomes barren because people there are no longer employed, and no longer have money to buy their products. Creates a catch-22 of sorts.

Production keeps going up, yet real wages have remained stagnant for decades. Capital accumulates at the top (evidenced by increasing wealth of the richest of us), yet the lower classes get poorer. Plus automation puts more people out of work as well. But as I stated now nobody has the money to buy products they need, and the government doles out money to keep the economy floating. Rinse and repeat ad nauseum. But for how long.

I forgot to add, "tendency of profit rate to fall" leading to crisis is an observable pattern.

Thank you very much.

I would also like to ask how, in a Communistic or Anarchist society, if it is moneyless, how is this acheived? Will not some kind of money-like item arise out of the need to mediate exchange of items, even if you don't pay wages with the money?

Is that a fucking joke or what? Capitalism is built on growth. You have to have a positive rate of profit for it to even function. Enterprises that can't make a profit will fail because they can't sustain themselves in the short term. Fuck econ 101, this is econ 101 first lecture shit.

I'm sorry if there has been a misunderstanding. Would a constant rate of profit not be sufficient? You continually get the same amount of money, with which you buy the same amount of capital, which you produce the same number of goods with, while producing the same rate of profit.

You make a profit, it's just that the amount of profit does not continue to increase.

a constant *rate* of profit is still growth.

a profit that is growing by 3% every year, is still growth.

No because you aren't the only firm/factory working in the economy. You are competing with other terms in order to make a profit and accumulate capital; hence you're dictated to constantly reduce the socially necessary labor time in order to produce a larger super-profit so you can maintain your business.

…I'm starting to question your understanding of basic math at this point tbh.

"Constant" just means "doesn't change." A "constant" rate of profit could be literally any number. What matters is that the rate of profit is positive i.e. above zero. This means that for a capitalist enterprise to function it has to get back more money than it puts in. This only works if the operation is efficient enough and there is exploitation (workers get paid less value than they produce). An enterprise with a negative rate of profit or even just a zero rate won't survive because it fails to benefit the owner. Owning an enterprise is an investment. It's only worthwhile if it pays off (as in beats the rate of inflation and ideally does better than the alternative options for the capitalist). Since the enterprise is only of interest to the capitalist(s) insofar as it generates profit, an enterprise that fails to generate profit will not get past the capitalists, who function as gatekeepers in capitalism (allowing people to use their means of production if and only if it will give them more money than they put into the project).

I'm not trying to be an asshole but I'm struggling to see how someone can be a socialist without understanding this stuff.


So this is actually the subject of debate among the different camps of leftists. Some think it is simply efficient to abolish private property. Not your home, bed, toothbrush, but things like factories where goods are made would no longer be private.

I personally don't think you can get away without some form of currency, be it gold coins or electronic credit or whatever. But if you take away the ability to own "means of production" it takes away the ability to employ people, which ends the issues of exploitation and alienation inherent in capitalism.

Yes, but why can't that amount per sale remain constant?

Why can't I just continue getting 10 dollars profit per item forever? Sorry if I'm being dense here, but if you invest the same amount in capital, and you sell for the same amount, you would continue getting the same amount of money, and there's no external factor causing that amount to drop, because there's a market for the items.

I'm the owner and I continue collecting $10 profit, because there's nothing stopping me. Nothing is making me invest more in production, nothing is making my products sell for less, etc.

I keep getting $10 per item until I die, no?



Here OP let me give you a quick rundown

It can, but you need to keep externalities and losses in check

If it did capitalism could function, but it can't. "Growth" doesn't mean "the rate of profit increases." It means "the rate of profit is positive." To illustrate this, think of "rate of profit" as "rate of growth." Do you happen to know calculus?

On paper that would work under capitalism but in practice it's impossible for a number of reasons, not limited to finite raw materials or demand.

Only if the following conditions are met:
The main point is that externalities (which is a fancy word for "not on paper") bring the system down. Capitalism is ultimately a naive abstraction that fails to take most of the important economic factors into account. The reason it continues to function for now is that the flaws of the system haven't magnified overtime to become insurmountable yet. That happened with ancient slave societies and feudalism, and it will happen to capitalism.

I think I am having trouble understanding between these 2 things:

That's how I took to understand it anyway.. I thought that people have been telling me that capitalism, inherently MUST have the second (increasing profit), which is why capitalism would be unsustainable

I assume you are saying that neither constant profit nor ever-increasing profit are possible, becuse of the factors that you listed.

I'm not OP but I'll add this.

Capitalism must generate increasing revenue to even sustain the same profit, let alone increasing profit.

You have to see the system in its totality. Banks play a huge role in this dynamic, since they have to generate interest for savings they lend at interest.

Factories basically have to pay back 2 different groups, their lenders, and their shareholders.

They have to payback dividends for shareholders who expect their dividends to grow.

Because factories need constant capital (to buy machinery, updates and repairs etc), they have to get credit from banks with interest. Hence, they have to keep growing their revenue base to payback this interest. If you look at a typical loan payback schedule, you'll see how interest keeps increasing every year.

A business needs to grow. To grow it needs money. The money can either be acquired from your own capital, investors, shareholders or banks. If we assume that the only incentive to start a company is to earn money. You will need to make a positive income. Here in lies the first problem. This means exploitation of workers. They have will have to get paid less than what they make in value. If you don't want to partake in this practice, it means that you will be shut down by your investors. They will find someone else who is more cruel and willing. Or you will lose your own capital until you can't afford to run your company. So a real capitalist doesn't care and exploits his workers.

Since it is a free market, that means you will have competitors in the same branch. People will usually buy the best quality for the cheapest price since they only have a limited budget. If your price isn't at or below the socially necessary labour time. You can't make an even income or super profit. Investors will push you to create super profit. You can decrease the price of your products if you are able to decrease the socially necessary labour time through new technology or by exploiting the workers more. Since technology spreads quickly, the socially necessary labour time isn't affected significantly by technology (except if it is first world vs third world), this means that exploitation of workers is more common. You could argue that unions stop this. But globalization has shown that companies can start up in countries without unions. Again investors will find someone to do it.

Another problem lies in that increased production means increased use of resources. This means the destruction of the environment. Unless if some state entity stops this. But if they do so, investors will just shut down the company and go to a country where they don't have regulations. The workers lose their job, but to investors, they are expendable anyway. If there is no growth people lose their jobs, and lose their wages. If they lose their wages, they can't buy products. They will focus on basic necessities and ignore luxury products. Which means the production of those isn't profitable and it will cease to be produced. People in that sector lose their jobs and wages and the cycle continues. Growth can only continue if wages are suppressed, technology advances and resources remain.

As sectors start to decay and profits start to dwindle, investors will find new markets to exploit. This is what has led to the war economy, which can be started at will. The rise of global warming conspiracy theorists to combat CO2 regulations. Modern day slave owners. Modern day imperialism. Absurd immigration policies. Modern day sex trafficking. There are probably even more instances.
I have read articles claiming that Marx was wrong because of muh wages and muh work hours which have improved significantly since the birth of capitalism. They do however not keeping into account that productivity had increased, while unions haven't demanded more since the 50's and both parents have to work in many poor households. And even then, this was nothing more than keeping the people content to avoid communism. Exploitation keeps increasing while capitalism requires more growth. The exploitation does, however, happen in different places, places we don't see.

Some speculate that steady-state capitalism would work. But this would be the same as state-capitalism controlled by the UN. And it would lead to the creation of a corrupt class who is in control of all the resources. The only positive would be if this would lead to communism through revolution.

Correct me if I am wrong.

Forgot to mention that everytime a company reduces the socially necessary labour time. Other companies how to follow, otherwise the first company will gain a monopoly. This means the others go out of business. So investors will pressure the other companies to also increase their productivity to match the newly set necessary labour time. This is the endless competition. Not to mention that this sometimes leads to a race to the bottom. Which always ends with, who can spend the least money on producing already cheap products this will often lead to dangerous methods. Where either worker safety or consumer safety is disregarded.

Note that the y-axis is 15% to 45%
Things better speed up once it approaches zero.