Overview of topic: Capitalism

Capitalism can be understood as a historical system, which means it is not natural or evitable but the result of actions taken and policies implemented over time (Fulcher, 2004). Karl Marx (1977) alluded to the idea the manmade dimensions of capitalism are rendered invisible when he argued that people typically cannot perceive their own exploitation (see further discussion of Marx in Chapter 9, section 9.2.1 Towards a definition of capitalism). Rather we see our own position within the economic structure of society through the lens of capitalist ideology, which encourages us to assume that capitalism works in our best interests. For working classes to recognize themselves in an ideology that constitutively privileged the bourgeoisie as the owners of production and reproduced the oppression of the workers, was a condition that theorists inspired by Marx referred to as “false consciousness”. It was a way of seeing that did not accurately reflect the reality of workers’ lives and their relation to labor or to the capitalists.

Michel Foucault’s (2008) writings on neoliberal capitalism introduced the concept of governmentality, which suggests that rather than apply control and power directly and explicitly, the state governs people in the contemporary period by inviting them through various mechanisms to govern themselves. This happens when people see themselves through capitalist ideology as economically rational and autonomous individuals who must take responsibility for their own wellbeing. We see this reflected in the gradual dismantling of the welfare state that was innovated in the aftermath of the Second World War and the poverty and destruction it produced.

This idea of individual rather than state responsibility for resources and issues like housing, education, health, and economic welfare was a central component of the politics of the New Right. The New Right that appeared during the 1980s, with the rise to power of Margaret Thatcher in Britain and Ronald Regan in the US, implemented via policy the ideological body of work associated with neoliberal thinkers, in particular that of Friedrich von Hayek (2001), whose work advocating for individual autonomy and enterprise, The Road to Serfdom, was composed in the context of fears of socialism in Europe (see discussion of Hayek in Chapter 9, section 9.4 Crises in/of capitalism). In his overview of neoliberalism, David Harvey defines the theoretical foundations that underpin this branch of thought.

Case Study Box 9.1

Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices. David Harvey (2005) A Brief History of Neoliberalism (Oxford: Oxford University Press) 2.

These strands of ideology claimed that society was really constituted by market forces that needed to be independent from interference from the state. A free market would bring the best possible solutions to social and economic problems. Though the state has intervened to facilitate a particular market environment, this assumption about the so-called free market came to be so embedded in political and economic thought that it formed part of government discourse as a matter of fact or beyond dispute. The dominance of neoliberal ideas in mainstream spheres of governance and policymaking came to reflect Marx’s concept of false consciousness – the benefits of the free market for all sectors of society, not just the already wealthy, were obvious and beyond questioning. In recent years, scholars have contested the monolithic character of the ideology per se, highlighting the political practices that have been implemented by governments to allow this form of political economy to become hegemonic (Cahill, 2018).

However, anti-capitalist ideologies remain salient today, taken up among left-wing political struggles. The ongoing Naxalite rebellion in India, for example, is grounded in Maoist ideology. Mao Zedong, a peasant organizer in China who came to power as leader of the Community Party, appropriated Marx’s ideas by arguing that in the Third World, it was landless peasants rather than the factory workers who constituted the real subjects of emancipatory change and revolution. The Naxalites contest the legitimacy of the capitalist state in India and have been engaged in armed struggle for the past seven decades. The group joined forces with indigenous tribes in forested regions of Central India, a population also under threat from the state’s desire to control the land and its resources. Indian author, Arundhati Roy (2011), spent time embedded with the communist rebels living in these forests, and argues that the government’s true motivation in fighting them is clearing this land to make profits from mining corporations who seek to exploit its natural resources.

Section 1: The Financial Crash


This section will expand on the concepts conveyed above by thinking more closely about how the global economic crash of 2008/2009 recharged debates about the nature and role of capitalism in the contemporary world. David McNally (2009) argues that neoliberalism is not a benign force for most people, whether in the Global North or South. With the advent of the economic crisis, governments moved to channel money into banks and financial institutions to prevent them from failing, in much vaster quantities than was directed to welfare for people struggling to survive financially. McNally argues that the profit logic on which capitalism operates cannot coexist with an equal society. For owners of production, he suggests, the only real motive is profit, which means they focus less on the usefulness of goods they produce than on the ability to sell them en masse. Objects and services are produced in order to be exchanged, regardless of their social value. This logic of cost-benefit analysis that is detached from regulation according to social goods cannot lay the foundation for an egalitarian society.

Jodi Melamed (2015) also highlights the growing inequality across the world, focusing on the intersections of different forms of power. Capital is only able to accumulate by producing unequal relations among peoples – in order to reproduce and expand, it relies on dispossession and displacement, as Melamed explains in the following quote.

Case Study Box 9.2

“With the top 10 percent taking 50 percent of total U.S. income in 2012, and the top 1 percent taking a striking 95 percent of all post-Recession income gains, it has become increasingly plain that accumulation for financial asset owning classes requires violence toward others and seeks to expropriate for capital the entire field of social provision (land, work, education, health).” Jodi Melamed (2015) Racial Capitalism. Critical Ethnic Studies 1(1): 76.

1) The New Optimists

Based on the insights outlined above, it could be argued the widening gaps between rich and poor exist because the global economy is formulated to benefit the Global North at the expense of the majority of the world’s population. Evidence of this can be seen, for example, in how states representing the Global North have the greatest voting power within the World Bank and the IMF, institutions through which the global economic order is maintained (Hickel, 2019).

Against these critiques, there are other voices claiming capitalism is in fact working to improve conditions globally, based on the reduction in poverty in parts of the developing world. Bill Gates, for example, is part of a trend that is known as “New Optimism”, which posits that capitalism has made the world a better place (Aguilera, 2020). New Optimists cite data about improvements in life expectancy, infant mortality, and poverty levels around the world. Such claims are contested by critics who argue that proponents of this argument use data very selectively to portray an image of the world that glosses over persistent and growing inequality. Jason Hickel (2019), for example, argues that figures like Gates base their claims about progress on outdated or inaccurate measures for the poverty line, which significantly inflates the scale of progress.

2) Capitalism in the Global South

The Global South was brought into the global economic order during the 1980s and 1990s, based on structural adjustment programmes led by the IMF and World Bank based on the privatization of public resources and removing or reducing tariffs. The countries facing these adjustments were therefore forced to adhere to free market capitalism. Hickel (2019) notes that whereas China and countries in East Asia were able to enter the global economy through state regulation, including protectionism, these countries in the Global South did not have such control over their economies and levels of poverty increased during the period in which structural adjustment was implemented. For critics of capitalism, this constitutes compelling evidence that neoliberalism has failed to improve the lives of the majority of people. From this perspective, the measures to bring the Global South into the global capitalist system can be understood as motivated by a desire to open up new markets and investments abroad for economically advanced states – in other words, it was a project designed to prop up western capitalism.

Economist Dambisa Moyo (2009) offers a different reading of this global inequality. Rather than rejecting capitalism as the cause, Moyo argues, focusing on African states struggling to eradicate poverty, that the best solution for lifting them up economically and reducing poverty is to allow for and encourage their entry to the market economy. For Moyo, capitalism becomes the solution rather than the problem. The fallout from the 2008/2009 crash, and the evidence from the experience of poverty in parts of the Global South lead some to conclude, however, that there is a class structure functioning at the global level which is reproduced by neoliberal capital (Hall et al., 2013; Harvey, 2005).


Aguilera, Rodrigo (2020) The Glass Half-Empty Debunking the Myth of Progress in the Twenty-First Century. London: Watkins Media.

Cahill, Damien, Cooper, Melinda, Konings, Martijn & David Primrose (2018) Introduction: Approaches to Neoliberalism. In: Cahill, Damien, Cooper, Melinda, Konings, Martijn & David Primrose (Eds.) The SAGE Handbook of Neoliberalism. London: SAGE Publishing.

Fulcher, James (2004) Capitalism: A Very Short Introduction. Oxford: Oxford University Press.

Foucault, Michel (2008) The Birth of Biopolitics: Lectures at the College de France, 1978-9. Basingstoke and New York: Palgrave Macmillan.

Hall, Stuart, Massey, Doreen, and Michael Rustin (2013) After neoliberalism: analysing the present. Soundings: A journal of politics and culture 53: 8-22.

Harvey, David (2005) A Brief History of Neoliberalism. Oxford: Oxford University Press.

Hayek, Friedrich von (2001) The Road to Serfdom. Abingdon and New York: Routledge.

Hickel, Jason (2019) Progress and its Discontents. The New Internationalist. Available online: https://newint.org/features/2019/07/01/long-read-progress-and-its-discontents.

Marx, Karl (1977) Capital: Volume 1. New York: Vintage.

McNally, David (2009) Inequality, the Profit System and Global Crisis. In: Guard, Julie and Wayne Antony (Eds.) Bankruptcies and Bailouts. Halifax and Winnipeg: Fernwood Publishing, pp. 32-45.

Moyo, Dambisa (2009) Dead Aid. Why Aid Makes Things Worse and How There is Another Way for Africa. London: Penguin Books.

Roy, Arundhati (2011) Walking with Comrades. London: Penguin Books.

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