L'internationalisation

Ferron Baptiste

The concept of capitalism should not be confused with that of liberalism. Capitalism is a system based, according to Marx, on the means of production and private property. Liberalism is a mode of operation of the economy and regulation based on the law of the market. The last major retreat of capitalism dates from the post-war period of the Second World War. A set of historical factors at the center of which the East-West rivalry played a role, led to the establishment of a compromise between capital and labor. The establishment of a social protection system that guarantees everyone a secure livelihood, a better sharing of surplus value that provides better wages, and a future thanks to the social elevator formed the basis of this compromise. But capital kept its characteristics: the ownership of capital and the aims of the organization. This compromise lasted as long as capital was satisfied: the increase in wages supported economic expansion and profits (30 glorious years). But the mechanism gradually seized up during the 1980s and 1990s with the implementation of various government measures (privatization, disintermediation, deregulation). The various crises of the 2000s and the current economic crisis caused by the health crisis and the war in Ukraine make us wonder about the reliability of the economic system. We can therefore ask ourselves if capitalism is destined to collapse. We will first identify the main authors who assert this postulate and then we will show that this assertion is not unanimous.

I – Capitalism is doomed to collapse according to Marx and Ricardo

A – Marx’s postulate

One of Marx's fundamental economic discoveries is the tendency of the rate of profit in capitalism to fall. Capitalists, driven by competition, invest in more and more productive machines, accumulate material means of production that cost them more and more. The surplus-value extracted becomes smaller and smaller in relation to the totality of the capital advanced. The capitalist producers, competing on the market, try to oust each other. Each wants to secure outlets for its production in order to achieve the highest possible profit rate. There is an increase in capital intensity: more and more means of production are used in relation to live labor. The capitalist spends proportionally more and more on material means of production compared to wages. As only living labor generates surplus-value, according to Marx, he puts forward the idea that the rate of profit tends to fall over time in capitalism: "The tendency of the rate of profit to fall".

B – Ricardo’s postulate

For Ricardo, an obvious way to increase the rate of profit is to accentuate the exploitation of wage earners: by making them work harder, longer or by lowering wages. Capitalism pushes each individual capitalist to reduce wages and to degrade the working conditions of employees. As wages are reduced, demand will fall, and this tendency will be transmitted to supply, which will adjust with demand. Either the supply will adjust with the price, the company to maintain its level of profit will have to either lower the cost of production (which means lowering the wage costs) or lower its margin (eating into its margin). Either the supply will be adjusted by the quantity and in this situation the global profit of the company will be decreased by the decrease of the quantity sale. In both cases, a vicious loop is created where, in order to maintain their profit rate, the company will have to reduce their costs, which means lowering their salaries.

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