INTERNAL CONFLICTS

Production and its control

Capitalism is a system in which competition among firms produces an "anarchy of production".

No one firm controls the process as a whole and all are locked into a competitive struggle for
market share and profits with rival firms. The result is that the machinations of the market
produce instability, uncertainty, heightened risk and bad outcomes that no particular capitalist
wills. But, of course, in order for capitalism to be viable it requires the constant, conscious
intervention of certain groups (corporate administrators, central bankers, regulators, state
officials, etc.) who buck the blind compulsion of market competition to try to steer the process to
do their bidding. Both elements of the contradiction are unavoidable within capitalism. It can't be
market forces and competition all the way down, because within every capitalist firm there has to
be some degree of planning and attempts to control the production process to meet certain
conscious goals. Moreover, all capitalists states however neoliberal simply cannot avoid
"interference" in the economy. But any attempts to bring the production process under control in
capitalism however "necessary", even from a ruling class perspective will find itself at odds with
the problems created by the "anarchy of production", whether at the national or the global level.

Production and consumption

Referring to the fact that capitalism has to continually create new markets (and manufacture new
"needs") to satisfy its endless expansionary requirements while, at the same time, rubbing up
against the problem that working-class purchasing power can't justify the expansion. In other
words could be referring to the classic tendency of capitalist expansion to overheat and generate
over-accumulation a situation in which capitalists accumulate more productive capacity (e.g.
more factories, materials, machines, capital, etc.) than they can profitably utilize.

Production and circulation

The interests of firms dedicated to circulation and those dedicated to production are at odds with
one another and produce macro-level irrationalities. It could also mean that there are
contradictions between what's produced, on the one hand, and how things need to be distributed,
on the other.

Competition and monopoly

Capitalism is premised upon market competition, but competition naturally leads to concentration
and monopolization as the winners get bigger and absorb the losers. Monopolization also serves
other functions from a capitalist point of view: it realizes the goal of capturing maximum market
share, it enables the monopolist to reduce risk and stabilize profit flows, the domination of a
market generates big profits, etc. Left unchecked, "free competition" tends inevitably toward the
concentration of capital in fewer hands by bigger and bigger firms. Yet, in other ways,
monopolization threatens the very stability of capitalism as a whole. Also, from an inter-
imperialist standpoint monopolization can lead to a reduced incentive to innovate the productive
forces thereby allowing rival imperialist powers to gain an industrial/military advantage.
Development and underdevelopment

The combined and uneven development of countries in the north and south creates tensions and
problems economic as well as political at the global level. I don't know enough about dependency
theory to say anything interesting here.

Expansion pregnant with the seeds of crisis-producing contraction

The idea is that booms pave the way for deep slumps and vice versa.

Production and destruction

Capitalism thrives on destruction. An excellent example is the rash of urban arsons that occurred
in US cities in the 1970s. From the perspective of capitalism this made perfect sense even though
it meant destroying use-values, homes, and entire neighborhoodseven human lives in many cases.
But capitalism cannot ceaselessly destroy surplus value, it needs to continually extract it from
workers in order to be viable. This conjunction of endless expansion of production coupled with a
functional need for destruction is, it seems to me, another way of getting at the contradictions.

Capital's structural domination of labor and its insurmountable dependence on

living labor

Capitalists have a need to dominate labor the better to keep wages low and productivity high. But,
no matter what they do to discipline workers, to keep them divided and docile, capitalists are
inescapably dependent on them because they produce the goods that make profits possible. So
capitalists are attached at the hip to a social class with diametrically opposed interests. Capitalism
produces its own gravediggers. This is perhaps the most well-known contradiction of capitalism.
We could add to it the contradiction between the growing socialization of the labor process
coupled with the growing privatization of its appropriation by the capitalist class.

The production of free time and its crippling negation through the imperative to
reproduce and exploit necessary labor

Free time is shackled to its opposite, but both need one another in a certain way. No matter how
much capitalism attempts to colonize and commercialize leisure time, it is impossible to stamp
out the feeling that one's free time is fundamentally at odds with the time spent on the clock.

Authoritarian decision-making in the productive enterprises and the need for their
"consensual" implementation

Capitalism requires authoritarian decision-making processes within firms for the simple reason
that democratic decision-making power would mean bringing to the fore contradiction. But, of
course, naked authoritarianism naturally produces resentment and resistance. So, the bosses have
an interest in management techniques that attempt to secure the "consent" of employees so as to
keep conflict latent. This takes many forms from outright manipulation and lies, to divide and
conquer techniques, to paternalism and kickbacks, to quasi-nationalistic narratives about "team-
building" and community. Apple, through slick ideological means, performs this last technique
remarkably well, although the contradiction remains.

The expansion of employment and the generation of unemployment

It is a condition of employing workers in capitalism that it can be done profitably. But it can only
be profitable as long as wages are kept below a certain threshold above which profits would be
squeezed down to nothing. The bosses have innumerable ways of pushing wages down, but their
most potent weapon remains the threat that "we can always hire someone else if you don't like it,
since there are plenty of unemployed people willing to take your place". This is why Marx called
unemployed workers in capitalist societies the "industrial reserve army". But although it is
necessary to keep wages low enough for profit to be made, unemployment is also a source of
social instability and it pushes effective demand down, especially when the ranks of the
unemployed swell during recessions. Capitalism both needs unemployment but also faces
problems if there is too much of it for the simple reasons that it produces social unrest and drives
down demand for the goods capitalists need to sell for a profit.

The drive for economizing with material and human resources wedded to the most
absurd wastefulness of these resources

To be sure, capitalism is a system in which, right now, huge masses of labor, unemployed, sit side
by side huge masses of capital, amidst a world of unmet human needs. That is absurd, unjust and
irrational from a socialist perspective. But is it an internal contradiction of capitalism? Capitalists
need not recognize any contradiction here, since they care nothing for human needs as such.
Profitability is the bottom line and from this perspective material resources are not wasted if they
are destroyed or hoarded--even if human beings desperately need them.To be sure, capitalism can
only legitimate itself ideologically if people think it is a system that meets human needs. So,
perhaps that's the contradiction--between the useful ideological image of capitalism as "delivering
the goods" and the wasteful, irrational reality of how it actually functions.

Growth of output at all costs and the concomitant environmental destruction

This is certainly a contradiction, but the temporal dimensions of it are different from others on the
list. In the short-run scramble for profits this quarter, there is no contradiction. But in the long-
run, to the extent that environmental catastrophe threatens the accumulation process there is a
massive contradiction. Perhaps there are short-run examples e.g. over-fishing, etc.

The globalizing tendency of transnational enterprises and the necessary constraints

exercised by the national states against their rivals

Theory of imperialism worth its salt must capture this contradiction. But it shouldn't do so--as
Callinicos and Harvey propose by attributing to imperialism two separate "logics". Rather, the
contradiction should be seen as a basic feature of global capitalism itself.

Control over the particular productive units and the failure to control their
comprehensive setting (hence the extremely problematical character of all attempts
at planning in all conceivable forms of the capital system)
The contradiction between the economically and the politically regulated extraction of surplus
labor. But it could refer to one massive contradiction that doesn't make the list explicitly the
contradiction between legitimation and accumulation. Capitalist states have to secure the
conditions for accumulation, otherwise they get a bad economy with rising unemployment and
declining tax revenues. No matter how progressive the goals of the State officials, a stagnant
capitalist economy thwarts the realization of those goals. So no matter who's in charge of
capitalist State, it is shackled to the need to "create a good business climate" and underwrite
profitability. But, of course, doing what's necessary to ensure the accumulation of profits almost
always brushes against the grain of the interests of the vast majority of the population. Yet,
capitalist States have a need to secure legitimation for what it does by convincing the population
that it pursues general interests rather than the particular interests of the ruling class
(profitability). But there is a contradiction here. Securing legitimation becomes increasingly
difficult when the demands of the accumulation process which tend to trump all else, for reasons
we just saw require measures that punish the mass of the population. Austerity in Greece is a
perfect example.

DISADVANTAGES
Concentration of Power

One of the downsides of a capitalistic economic system is that private ownership of capital allows
firms to maintain monopolistic control over resources and therefore, charge higher prices. In a
similar vein, capitalism allows for monopsonies to develop, where there is one employer and
many employees. Firms wielding such power can pay lower wages when workers need jobs and
other alternatives are scarce, leading to a large disparity of means between the owners of capital
and laborers.

Wealth and Social Inequality

Concomitant with the lopsided gains produced by capitalism are inequalities of social standing
and wealth. Because capitalism is based on a system of inherited wealth, where people pass down
their property over the generations, the wealth that is produced by capitalism is not shared
equally. By the same token, the opportunity to advance is not equal among society's members.
The differences between rich and poor in capitalism are more pronounced than in other economic
systems. Socially, these disparities give rise to discord and the stratification of members of
society.

Externalities Ignored

A further disadvantage of the capitalistic system stems from how externalities, or consequences to
others that are not related to producing or consuming a good, are handled. Capitalism tends to
ignore negative externalities such as pollution, so long as the profit motive is satisfied. At the
same time, a capitalist-based system tends to downplay positive externalities by not providing
sufficient health and education services, leading to unmet needs and inefficient allocation of
resources.
Cyclical Downturns

For all the boom periods that capitalism is known for, major recessions, too, come with the
package. When an economic system is based on a producer-consumer culture, periods of
economic expansion tend to eventually give way to periods of contraction or recession. With
these declines comes unemployment on a large scale, which in turn takes its toll on people's
livelihood and future outlook. In socialist regimes, these business fluctuations are curbed, because
a socialist economy coordinates production to make full use of resources, rather than
discriminating between savings and investment.