Capitalism Can Self-repair and Economic Determinism be Too Extreme.

Baosheng Guo

Poverty threatens the survival and dignity of human beings, but human beings cannot eliminate it until now. Every country has the problem of poverty including the U.S. In well-known essay “A Loaf of Bread” uncovered the poverty in a poor community in the U.S. that even occurred conflict just because of the price increase of a loaf of bread (McPherson). Poverty also could lead to a vicious circle even in the U.S.  In an article in Washington Post, the author stated, “The poorer you are, the more things cost. More in money, time, hassle, exhaustion, and menace. This is a fact of life that reality television and magazines don't often explain. Consider this a primer on the economics of poverty” (Brown). Thus, we must solve poverty. But what reasons caused poverty?

In American politics, there are two extreme opinions regarding the reasons for poverty. From the perspective of the extreme right-line theory, the government intervening leads to poverty. For instance, some Republicans are against taxes on rich people and wealthy enterprises and reject any social welfare and relief policies such as eliminating the loan of students. They think the tax will reduce the positive motivation of enterprises and social welfare leads to the laziness of the poor people. On the other hand, an extreme left-line theory like Economic Determinism thinks that the reason for poverty is the right to private property and the mode of production of capitalism, and the only way to eliminate poverty is by nationalizing enterprises and terminating capitalism. Both two extreme opinions are incorrect and the radical left theory like Economic Determinism which was created by Karl Marx deserves more serious research and criticism.  

Karl Marx was the most remarkable economist and philosopher for the study of poverty, and his Economic Determinism explained the reason for poverty and offered a solution. In Karl Marx’s Economic Determinism, poverty was the result of capitalist institutions, the right to private property, and the control of the means of production by the bourgeois. The solution to change poverty and improve the status of proletarians is the violent revolutionary that totally overturned the system of democracy and capitalist economy and the dictatorship of proletarians. In my opinion, Economic Determinism is not correct for the explanation of poverty. Many reasons, such as education, the status of immigration, the power of the Union, political institutions, and the policy of social welfare led to poverty, not only economic reasons. Although Economic Determinism focused on and took care of the poverty and working class, the practice of Economic Determinism in human history indicated that it has led to social disaster and famine, poverty, bloody suppression, and arbitrarily deprive any human rights including the right to private property which is the fundament right. On the contrary, the capitalist system has the function of self-repairs and doesn’t need to be overthrown, and poverty can solve and improve in democratic capitalist countries.   

First of all, Economic Determinism cannot explain and solve the social problem of poverty and it leads to social disaster; we must look for new approaches. In "Manifesto of the Communist Party", Karl Marx and Frederick Engels declared that poverty and injustice come from the capitalist mode of production and the exploitation relationship between the proletariat class and the bourgeois class. In order to eliminate poverty and inequity, the proletariat class must conduct class struggle, replace the capitalist system with a communist system through violent revolution, and Marx and Engels call for a "forcible overthrow of all existing social conditions", which served as a call for communist revolutions around the world (Marx). However, the results of the revolution were horrible, and that only brought tyranny and poverty. As a successful revolutionary, the new proletarian dictatorship implemented a government control planning economy; because the planning economy lost the motivation to produce and trade, it not only declined finally but also caused enormous poverty. That is illustrated by the famine of communist China in the 1960s and of communist North Korea constantly till now. As a review named “Rethinking Poverty: Class and Ethical Dimensions of Poverty Eradication” in Rethinking Marxism journal stated, “Marxism and poverty have always lived a contradictory existence... An exploitation-free world does not necessarily mean the eradication of poverty, while the eradication of poverty does not automatically entail the erasure of exploitative relations” (Chakrabarti). Thus, Capitalism, the hired contract, the mode of production, and so-called exploitative relations are not the key reasons for poverty.

Another result of the revolution of the proletarian is new totalism. Djilas, a top betrayed communist Yugoslavia leader, in his remarkable book The New Class: An Analysis of the Communist System argued that the revolution of proletarians led to the birth of a new class that enjoyed material benefits from their positions and suppressed all classes including the proletary class, and the new class enhances the poverty, disparity, and corruption (Djilas). Obviously, the solution of Economic Determinism for poverty is fictional and terrible, and that is the blind alley to remove capitalism by communism. According to this truth, Brzezinski, a well-known Polish American diplomat and political scientist, in his significant book Grand Failure: The Birth and Death of Communism in the Twentieth Century, successfully predicted the collapse of the Soviet Union and asserted the communist institution could not eliminate poverty, but also caused poverty, inequality, and anti-liberty. Therefore, Marxism and its Economic Determinism not only eliminate poverty instead of enhancing poverty, inequality, and autocracies.    

In addition, history has already proved that capitalism could self-repair and gradually solve the problem of poverty without the communist revolution. Along with the collapse of the Soviet Union and the end of the Cold War, Capitalism achieved a comprehensive victory in the West. Capitalism in E.U. and U.S. both have conducted reform to improve the situation of proletarians and avoid breaking out of the communist revolution. Class negotiations replaced violent class struggle, unions replaced the communist party, adjusting wealth distribution replaced depriving property, all reformation got a significant achievement.  

Maintaining the mode of production of capitalism and enhancing the function of government and Unions that so-called democratic capitalism are the appropriate tools for solving poverty. The government has a key role in adjusting wealth distribution and eliminating poverty through tax, social relief, etc. Government can relieve poor people by taxing the rich people and can protect labor rights to reduce the exploitation by capitalists. Also, absorbing some advantages of socialism, the capitalist government can be the biggest investor in developing industry and increase the employment rate and redistribute social wealth. In the 1930s, President Franklin D. Roosevelt implemented the New Deal economic policy, which relieved the unemployed, recovered the economy through federal spending and job creation, and ultimately defeated the Great Depression. Recently, President Biden's administration's plan to cancel student loans is an appropriate policy to help poor people and redistribute social wealth. As a result, under capitalist institutions, poverty can be peacefully solved without violent revolution and changing the hired contract and mode of production.  

          Finally, to deal with poverty, we should use a balanced and moderation approach, and avoid both the extreme left-line theory like Economic Determinism and the extreme right-line theory like fundamentalism free-marketing economics. In terms of the right to property, the extreme left line thinks this right is the key reason for poverty and it must be eliminated, but the extreme right-line theory thinks it is sacred and inalienable, and any kind of government must not use Eminent Domain and nationalize. Actually, this is the balanced and moderation approach that protects the right to private property which is the fundament right is the premise of the economy, but the government can apply Eminent Domain for public profits.  

Jean-Jacques Rousseau, the originator of socialism, in his Discourse on the Origin of Inequality (1755), Rousseau argues that private property is the original source and basis of inequality. private property begins to develop as soon as men form societies. Neighbors started to compare their Possession of Property with one another. For Rousseau, it “marked the first step towards inequality and at the same time towards vice” (Rousseau). Economic Determinism inherited the thought of Rousseau, and the communist government arbitrarily deprived private property rights, such as all private companies were nationalized in the Soviet Union, all private land was nationalized, and the landowners were even physically eliminated in China in the 1950s. The right to private property is the corner stone of marketing economics, if not for this right, people cannot trade and develop the economy which certainly cause poverty and slavery.

           John Locke whose thoughts have significantly influenced the U.S. Constitution, in his book The Two Treatises of Civil Government, asserted that the right to property is a fundamental right of human beings and people need the government to protect their property and defend their liberty (Locke). So, protecting the right to property is the premise of the development of the economy, and the view of property in Economic Determinism should be prohibited.

          On the other hand, fundamentalist free-marketing economics are against the government intervening in the market and rejecting the government’s Eminent Domain. This is another form of extreme opinion. To develop the public economic profit, like building up highways and bullet trains, and constructing huge buildings, the government has to apply Eminent Domain to meet the public profits. As we all know, President Roosevelt's New Deal economic policy came from the thought of the economist Keynes. Keynesianism changed the direction of the classic economy and emphasized the impact of the government on the market economy. Keynes, in his book The General Theory of Employment, Interest, and Money, justified government intervention through public policies that aim to achieve the development of the economy and full employment (Keynes). Therefore, based on respecting property rights and permissions from the landlord, the capitalist government can practice Eminent Domain.

         But some people still think many kinds of economic phenomena especially the vicious circle of poverty only could be explained by Economic Determinism, such as poor people’s transportation and facility cost more than the middle class(Fellowes), the stores in poorer neighborhoods charging their patrons more for comparable goods in the same stores in better economically established neighborhoods, and the poorer communities independent mom-and-pop stores were excluded by the big box stores like Wal-Mart and Costco. They thought the capitalist system has not solved these problems, so they thought poverty is based on economic structure, the mode of production, and classes' struggle. In the book “Inequality and Poverty: A Marxist-Geographic Theory”, the author summarizes, “Marxists theorize that inequality and poverty are functional components of the capitalist mode of production...The social geography of the city is made up of a hierarchy of community environments reproducing the hierarchical class structure... Inequality and poverty cannot be eradicated without fundamental changes in the mode of production”(Peet). “Correcting the injustice of poverty is not simply a distributional question, as most discourses on poverty tend to emphasize. Not only is it also a question of production, but it is very much a class question as well” (Chakrabarti).   

         However, capitalist society is efficient in dealing with poverty. First, eliminating poverty is a long- period process in the West, the problems like a vicious circle of poverty could be solved by the government, unions, and social welfare policy in the long process. The Trade Unions of the U.S. have conducted several centuries of struggle movements and achieved significant achievements such as minimum wages, health and safety conditions, discrimination, benefits, job security, and strikes are addressed (Organizing America). Second, poverty is a relative concept, an American poor’s condition is better than the middle class in a Third World country. In the essay "Poor" is a Relative Term.", the author asserts, “the Census poverty report contributes to these misguided policies by inflating the population of the poor, giving liberals ammunition to push for more social spending” (Feulner). Third, communist China has conducted economic capitalist reform and has successfully partly solved the problem of poverty, which indicated only capitalism can eliminate poverty, not communism and Economic Determinism.  

        In conclusion, Economic Determinism is too extreme to afford an appropriate solution regarding poverty and the capitalist system could self-repair and grandly solve poverty with comprehensive approaches. Economic Determinism is an extreme left-line theory, and fundamental free capitalism is the extreme right-line opinion. Both sides should be given up, and we should keep balance and moderation between two sides and learn from the way of democratic capitalism. To eliminate poverty, we should abandon Economic Determinism and fundamental free capitalism. Meanwhile, we should enhance the function of government and the Unions if necessary and ought to spare no effort to support democratic capitalism policies.

Works Cited

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