CAPITALISM, AN EXERCISE IN HOPE
“People are very angry,” said Ben McGowan, the first-year politics and sociology student who conducted the interview for the Tab. “It doesn’t feel like it’s done for accessibility reasons, it feels profit-driven, a way to cut corners without cutting tuition fees.”
While a pandemic killed millions worldwide in 2020 into 2021, universities have figured out how to keep the cash flow alive by moving lectures online and keeping tuition prices the same. Some schools like Manchester University have recently said they will keep their lectures online while maintaining the same cost of tuition even after the world moves past Covid. Students are in an outrage, but why? Manchester University is only doing what capitalism does best, pursuing profit. It’s not that it just “feels profit-driven”, it is that profit is capitalism’s end and only goal.
Capitalism asks you to exercise hope while leaving the door wide open for exploitation.
The thing with capitalism is that it is a theory that believes the self-interested desire for profit will drive everyone to do what is best for themselves, and this self-interest will prove to be mutually beneficial. Adam Smith famously said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”
He assumed the butcher would have to provide a reasonable price and a good product because the consumer would go where they could get the best product for their money. The market was a competition, and the butcher who was providing a poor product or an over-priced an item would naturally go out of business because the consumer would go elsewhere. Each party had an incentive, the buyer to get the best deal and the seller to make the most money. The better butcher would naturally come out the winner. He believed self-interest by both the butcher and the consumer was the fair invisible hand of the market, and meritocracy was the measuring stick. Those who deserved to win would.
Inherent in Smith’s overly quoted line is an assumption of agrarian equity, that the butcher, brewer and baker are experiencing the same need for the consumer to buy in the context of a local community. Smith’s butcher is not a wealthy person who can afford to keep prices low enough for long enough to drive out the other butchers who need daily profits. Smith’s butcher has not figured out they can lower the cost of the meat by cramming the most animals possible into tiny, dark spaces and generating greater profit. Smith’s butcher doesn’t own millions of animals on a small piece of land that creates run-off that poisons the local water and the local community. Smith’s butcher has not figured out they can sell lesser quality meat as better than it is through advertising and branding. Smith’s butcher does not also own the processing plant, the land, the farm, the animals, and the farmers. Smith’s butcher has not driven all the other butchers out of business. Smith’s butcher has not figured out they can pay the most desperate, illegal immigrants less than a local citizen. Smith’s butcher has not figured out they can make much more money by making the potential of their profit into a commodity via the stock market, pursuing profit via growth and investments. Smith’s butcher has not created a lobbying group or befriended a senator or created legislation to protect their industry and fight corporate taxes.
Capitalism believes the market is a fair contest to see who can figure out how to earn more while spending as little as possible. Whoever profits the most wins.
So let’s say a retail company employs 500 workers to box up products produced overseas for slave wages to be sold to the local market. They want the workers to be at the factory 12 hours a day, only taking two 15 minute breaks a day so the company can extract 11.5 hours of productive work from each employee. The faster the workers works, the more money the company makes. The company does not want the government involved, curbing their freedom to pay less than the minimum wage if someone will take the job for that amount, or curbing their freedom to self-regulate their safety level in the warehouse, or curbing their freedom to make as much profit as possible from the workers. If a single worker says that’s too many hours for too little money, the company can just fire them and replace them with someone who needs the job more.
But let’s say all 500 workers consolidate their labour power. This unity or union negotiates pay rises and better working conditions for the workers and can collectively withhold labour if the conditions are not met. It’s an agreement that all members of the union are in solidarity with each other and an understanding that they are more powerful together than alone. The workers can collectively agree that they work too many hours and make too little pay. They understand that it is the workers’ productivity that makes the company money. The cost of firing all 500 workers, the cost of losing the profit of productivity of 500 workers, the cost of finding and training 500 more workers is greater than the cost of meeting their demands and giving them a raise or lowering their working hours.
Understanding this, the company discourages workers from joining a union. If the worker’s need for immediate money is greater than the long-term capacity to fight for better working conditions, pay, and pensions, they probably won’t join. If the worker has been brought up in a culture that has historically demonised collective action as unpatriotic or dangerous or morally evil, they might not join.
The wage given to the workers is significantly less than the profit made by the company, and not having to provide pension, security, or safety while extracting the maximum hours of work means greater profit still. Every cent not spent on an employee is capital saved by the company. The company can invest that capital into research and development, invest into cloud infrastructure, take tax deductions and save millions. More and more consumers are using this company, impressed with their fast delivery time and low prices. The ability to keep employee pay low and retail prices low has generated greater growth so the stock prices go up. Investors love this model of growth. The cloud infrastructure is now so massive that it hosts other billion dollar industries. The company is also part of a powerful business interest lobbying group, to ensure tax rates are favourable to their continued growth. This company is able to take over other retailers, buying out stores that are not as profitable.
Many companies aspire to this, but perhaps the recent poster child is Amazon. Amazon is famous for 2 day delivery on low priced items, for refusing to pay a living wage, for the dangerous working conditions of their warehouses, and for saving millions by not paying corporate taxes. According to Fox, thousands of full-time workers at Amazon cannot afford to eat without relying on welfare. Meanwhile, Amazon’s cloud infrastructure AWS now dominates the tech world, providing cloud services for some of the largest online companies today like Netflix, Tinder, and Air BNB, dominating over 30% of the market. With a market cap of $1.63 Trillion, Amazon is worth more than South Korea’s, Australia’s or Spain’s GDP.
Amazon has beaten all the other butchers. Amazon won at capitalism.
Capitalism is a theory that pursues profit and assumes it will work out for everyone. But regulations like a 40 hour work week, a minimum wage, paid over-time, and child labour laws are legal protections put in place to protect people from capitalism’s blunt pursuit of of profit because it has proven capitalism never works out for everyone. We think they are normal parts of capitalism but these protections and regulations were fought for by labour unions. Capitalism without regulation or federal oversight looks like the Capitalist (the people with money, land and resources) offering the lowest possible payment with the least amount of protection to the most vulnerable, for the greatest amount of profit. Like coal mines employing children, parents and their children going on strike at manufacturing plants, the police beating children for trying to leave work. These stories may seem like old barbaric tales of long ago, and we can all agree we have progressed from then, but it does not mean capitalism, the driving economic theory of profit has changed. Not even mentioned in all of this is the role capitalism plays in exploiting systemic racism, systemic oppression, systemic poverty.
Capitalism asks you to exercise hope while leaving the door wide open for exploitation.
And these schools like Manchester University are doing exactly what capitalism does best, pursuing what is in their best financial interest, profit. When it comes to education, the harsh reality of capitalism becomes even more stark.
The UK has one of the highest rates of education inequality and economic inequality in Europe.
Wealth inequality is a barrier to education and economic mobility.
Research shows a family’s wealth makes education and higher education more accessible, while statistics also show there is a correlation between higher education and increased median income.
This is not to say higher education is the only or even best option. Rather, it is about how the relentless pursuit of capital has only one agenda, profit, and it is evident in every sector, from retail to education, from private to public. As long as profit is the driving force behind a society’s economic model, then outrage, shock, and disappointment over any institution’s decision to put profit over people will be a vain exercise in hope.
MAKING MEMORIES