CHAPTER XII.
THE CAPITALIST AND PROFIT.
********
Every trade and profession performs a definite task within a society. A tradesman, for example, by working with tools and different materials produces all sorts of objects; he knows how to make things, and in this way he earns his living. A merchant or a banker works with money, they know how to manage money and make money with money; it is a trade like any other, it is a way of life, a way of earning one's keep. In practice, no section of society is more important than another and can stand completely on its own; and it is more likely that a 'maker of things' will survive on its own by somehow continuing to produce, than a middleman or non producer.
Every tradesman, businessman, professional person, etc. acquires particular attitudes of mind, which are partly related to and influenced by the trades and activities which provide them with the means of their subsistence.
They see life and the world around them in relation to themselves and, therefore, also in relation to their occupations. Often, these attitudes are reinforced by living in a closed environment and in close contact with people of the same profession and trade; often, as attitudes are handed down through many generations, they are reinforced and become strong traditions, especially if the trades are materially successful.
Generally speaking, these different groups of people, with their different incomes, levels of education and attitudes, form the various classes within the socioeconomic organism; some may be related and have similar interests, some may have conflicting interests. The capitalists are one of such groups in the society. From ancient times until the Middle Ages, within the slave and feudal economies, artisans, merchants and money lenders formed the lower classes of society, below the priests, the warriors and the patrician nobles; often they were slaves or emancipated serfs trading for their masters.
The land and the force of arms, not money, were the main sources of wealth and power.
During the later stage of the Middle Ages with the discovery of new markets and new methods of production the class of traders and money lenders began to assume an importance that they never had before.
In an expanding world, trade and finance became very important. Merchants, bankers and manufacturers became the nucleus around which Capitalism grew and expanded. By handling everybody's money they became financiers to all kind of enterprises, lenders to Kings and Kingdoms, for peace and for war. They dealt with capital in the form of money, they earned their profits and fees not by hoarding it but by lending it away.
The dream of the bankers, therefore, is to have the whole world indebted to them. Today they have very well succeeded and, it seems, they may have gone too far.
During the last two centuries, they gave the imprint of their merchant class mentality and attitudes to the growing capitalist society. They influenced and supported the ideal of freedom, especially their own freedom, equality, especially their own equality, and their form of democracy, capitalist democracy. They promoted and financed the struggle against the nobility and the feudal establishment.
The way of thinking and attitudes of the merchant class, the old traders and money lenders, became the philosophy of capitalism.
It is by the law of the merchant that nothing can be produced, moved or consumed without a capitalist making a profit. Every aspect of life, even the most natural and intimate, must be subject to the law of the merchant, to a contract, to a sale or purchase, to some deal for a profit.
The merchant has transformed the world and has molded it to his own image. Production for simple convenience, benefit or usefulness is not possible any more unless there is a profit to be made by a capitalist or a dealer. As they are in charge of an important function in the life of the capitalist organism, they have done what any other section would have done in their place: they naturally took advantage, and now they hold the rest of society to ransom, if there is no profit for them the rest can go to hell. It is a big bluff, but few people understand it.
As long as there is profit the most miserable and destructive activities can take place; and if there is no profit the most Humane and beneficial things will never be done, even if the materials and manpower are available and are being wasted.
Important things need to be done for the survival of Mankind on this planet, there is ample wealth of materials, and millions of people with great potential are rotting in idleness. Yet nothing may be done if there is no profit for the capitalists in these things.
Moreover most people, having been brainwashed into idiocy by the influence of merchant logic during the last two centuries, are prepared to accept the concept that a war of destruction may be necessary and beneficial; there are profits to be made, and capitalist economy can function again. How many people today, faced with the problems of the saturation of capitalist economy, think of war as a solution to the problem of overproduction?
The law of the merchant has been imposed on Humanity. It is now deeply established and it is not even questioned any more. Madness has become normality, it has become normal to be mad.
Capitalists are Human beings and they cannot be blamed entirely for the faults of the system; in the words of Adam Smith, "...... the evils come from the system, not from the character of the men who administer it...." They did not invent Capitalism; as Western society evolved, they evolved with it. In a new environment, they found themselves in a commanding position and, naturally, they took advantage.
They become dangerous when, out of self preservation, they go to extremes to maintain alive an economic system which, having become obsolete has become also regressive. But it is in the nature of things that, within any society in our history, people who are in command seldom will relinquish their power and privileges without a struggle. Amongst them there are always some extremists who would risk total destruction rather than accept change.
Social classes have more to do with the way people earn their living and the size of their incomes than with any other factor. Only a small percentage of people in our society are businessmen, and anybody with the right attitude could try to become one. But to succeed and stay in business one must assume the mentality and logic of the capitalist merchant. His motto must be 'business is business' or business come first; a capitalist businessman not only must never do anything for nothing, but he must always try to get in return more value than he gives out.
Most people, at one time or another must have observed a gradual change of attitude and behaviour in a friend or an acquaintance that has just started a business. Sometimes the change can be quite rapid, like when a tradesman who has been working for wages starts to work on a contract or subcontract basis and becomes self employed.
It could be said that many capitalist businessmen have a dual nature: one when they are away from business, and one which they must wear when they are involved in the competition and hassle of the market.
It is a natural feature of the system that, while the capitalists are forced to be stingy with the productive Human and material forces which they employ, they can be lavish with themselves and with those who provide services for their pleasures.
Amongst all capitalist businessmen, the bankers and the merchants of the corporations are the most powerful; they handle the deposited profits and savings of capitalist society, including their own capital. Today, the big banking corporations and the International Monetary Fund, which they indirectly control, hold the purse strings of most countries in the world, and they dictate economic and social policies to those Nations that are indebted to them; Thus far have evolved the bankers, usurers, merchants and manufacturers of the Middle-Ages.
What is profit? The capitalist insists that it is not a recompense for his work of organising and supervising the employment of his capital; for this work he draws a salary like his employees. Besides, if profit was the recompense for their labour, some capitalists would get nothing because some do not work at all.
The capitalist maintains that profit is the remuneration for the risk he is taking by investing his capital. Some say also for the service they are doing to society by providing work. They are so convinced of their importance that they believe they are never repaid enough for their merits.
But, whether there is risk in their investment of capital or not, it is a risk which they must take in order to get anything out of it.
They know very well that if their capital is not invested and brought to life by labour, it would produce no profit. They know that if all their capitals were deposited in the banks and were not lent out and put to work, they would not get one cent of interest out of it. Nobody is forcing them to invest their capital; it is their desire and their necessity, it is the way they earn their living.
It is immaterial to try to define the abstract concept of profit, or whether it is right or wrong. It should be enough to understand that the merchant, generally, makes his profit by buying commodities and selling them on the market for more that he has paid for them. The manufacturer makes his profit by employing the labour of other people to produce more value that he gives out in wages. The capitalists can do this because they own most of the land and the other means of production; therefore they have a commanding position in the society and the economy. The workforce is their captive: it depends on them for employment, as we have seen earlier in the essay.
It is natural that they take full advantage of the situation, and they go to extremes to preserve the system which provides them with power, even when it has become obsolete, an impediment to further real progress and a danger to Human existence.
The trouble is that they have succeeded in convincing the majority of the public that the interest of the capitalists is the same as the interest of society.
This capitalist assumption is contrary to the facts.
Adam Smith already over two centuries ago, in his analysis of the system, explained this divergence of interests. Regarding the capitalists, "those who live by profit", he clearly exposes that they are a class of people whose interest seldom coincides with the interest of the rest of the public and the society as a whole. Their interests are often the opposite of those of the society and, therefore, we should be very suspicious of all their proposals and their advice because these come "...from an order of men, whose interest is never exactly the same with that of the publick, and who accordingly have, upon many occasions, both deceived and oppressed it."
From book I to book IV of his analysis Adam Smith often criticizes the early capitalists, and blames them for the negative features of the system; so much that a reader may easily form the opinion that the system could have been better without them or, at least, without their interference.
Naturally, this is a contradiction; how could Capitalism have developed without the capitalists?
In his analysis, Adam Smith even states that merchants and manufacturers should never be allowed to become the "masters of mankind "; this was the wish of a great optimist. It was inevitable that they would eventually control capitalist society. Today, the worst of their kind are in power, the money merchants, those who profess the philosophy of Ayn Rand and the economic theories of Milton Friedman.
It would be absurd to accept the proposition that for the continuation of a socio economic system the majority of people should sacrifice and suffer most of the time to promote the interest of a minority. We could not say that a society was prosperous and progressive if the majority of its citizens were living in material and spiritual misery: a society means the majority of its members.
One of the flaws of Capitalism is that because of its nature, that is the pressure of competition, the instability produced by fast change, and because of narrow individual selfishness, nothing can be of long term; turnover must be accelerated, profits must be maximized, nothing can be left still, there is no time to think further than the next financial report. As intelligent and as educated the capitalists may be, Capitalism and long term wisdom do not mix. It is this short sighted, short term, sectional interest of the capitalists that clashes with the real long term interest of Human society.
There is another source of conflict of interests between the capitalists and the public, which is at the core of the system: competition eventually drives the capitalist to become a monopolist, despite his professed belief in free enterprise.
Monopolies may suit some businesses and raise their profits, but they are not in the interest of the public, and it is the public which constitutes the society.
As we have seen before, another divergence between the interest of the capitalist and the rest of society is the antagonistic nature of the relation between profit, the reward of capital, and wages, the reward of labour. As both the capitalist and the labourer always try to maximise their rewards, they come into conflict with each other. In this respect they have conflicting interests. Therefore, as wage and salary earners are by far the majority in relation to those who live by profit, it is evident that they constitute the majority of the society, and, in the words of Adam Smith, "....what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. ......The liberal reward of labour, therefore, as is the effect of increasing wealth, so it is the cause of increasing population. To complain of it is to lament over the necessary effect and cause of the greatest publick prosperity....."
The most striking evidence of conflict of interest is shown by the early colonial trade. When the merchants' greed was not restrained by religious, racial or national considerations, their exploitation was ruthless and naked: it produced large profits for the companies, but ruin and slavery for the colonial societies.
Most capitalists naturally try to make us believe that it is their interest which closely coincides with the interest of the entire society. They promote the assumption that it is only as a consequence of their profits that society will eventually benefit and prosper. Therefore, they propose that all section of society but themselves may be called to make sacrifices in order to produce an economic environment in which the investment of their capital is most profitable.
This is the reason why, while they are in a controlling position, they are forcing the rest of society to accept as condition for its survival the 'economic necessity' of mass unemployment, the dumping of young generations, the waste and contamination of irreplaceable natural assets; in short, the submission of everything to capitalist economic necessity, that is the requirements of the capitalist merchant.