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Are we in “late-stage capitalism”? Was capitalism always doomed to fail? What would replace capitalism if it died?
Some authors have argued recently that capitalism is a system destined to fail, while others argue that the system is resilient due to its system of checks and balances. In a more extreme view, some believe that capitalism will inevitably lead to a revolution.
Below we will discuss all these possible scenarios.
Late-Stage Capitalism Is Debatable
To decide whether or not we are in late-stage capitalism, we must first define the term. The term “late-stage capitalism” has become popular recently. The phrase describes the perceived evolution of capitalism into an advanced phase in which its inherent problems are so pronounced that it’s become unsustainable.
Advocates of the late-stage capitalism theory argue that the problems characteristic of this stage include: intensified wealth inequality, exploitation of labor, commodification of all aspects of life, environmental destruction, and excessive corporate influence over politics.
However, other experts argue that while capitalism certainly has some challenges to overcome, it’s a resilient system that can evolve and adapt to changing circumstances.
In this article, we’ll examine the arguments for why capitalism may be destined to fail, as well as some counterarguments that tout the resilience of the system. Then we’ll discuss some ideas about what other kinds of systems might replace capitalism.
The Stages of Capitalism
The stages of capitalism are not universally agreed upon, but they’re often discussed in terms of early, middle, and late stages. In the early stage, capitalism emerged and developed, driven by industrialization and the rise of private ownership of the means of production. The middle stage is characterized by economic growth, expansion, and the establishment of market economies. The late stage is believed to be a stage of heightened internal contradictions and strains on the system.
View 1: Capitalism Is Doomed to Fail
The idea that capitalism is inherently flawed and therefore destined to fail is often associated with Karl Marx, who first described the last stage of capitalism in the 19th century. Marx argued that the system would gradually concentrate wealth and power in the hands of a few who would essentially rule over a large impoverished class, ultimately causing a social breakdown.
In Capital in the Twenty-First Century, economist Thomas Piketty argues along similar lines that a highly capital-focused socioeconomic system is inherently incompatible with a dynamic, meritocratic, innovative society. Because ownership of capital reaps much greater rewards than labor, a capitalist system wherein the vast majority of the population is laboring to generate profit for a small minority provides little incentive to work hard.
Proponents of the theory that we’re in the end stage of capitalism cite several pieces of evidence:
- Growing wealth inequality: Statistics show an increasing concentration of wealth in the hands of a small number of billionaires and a stagnation or decline in real wages for other populations. The gap between rich and poor is growing wider in some countries, particularly in the US.
- The commodification of life: Because a capitalist system places so much emphasis on market value, it can contribute to the commodification of everything in life.
- Environmental degradation: The unchecked pursuit of profit above all is contributing to environmental issues such as climate change, pollution, and resource depletion.
- Corporatization of politics: Corporations have gained significant influence over political processes, resulting in policies that favor their interests and exacerbate inequalities.
View 2: Capitalism Will Survive
On the other hand, those who argue in favor of capitalism’s resilience say that the system has built-in checks and balances that ensure its inherent problems don’t lead to failure.
However, proponents of the late-stage theory counter that a major flaw of contemporary capitalism is that those checks and balances are being eroded.
Other counterpoints to the notion of late-stage capitalism include:
- It’s cyclical: Capitalism has historically experienced periods of crisis and transformation, followed by recoveries and adaptations. Critics contend that the challenges faced today aren’t necessarily indicative of the end of capitalism but rather, they reflect its cyclical nature.
- It adapts: Capitalism has shown an ability to adapt and incorporate new technologies, ideas, and reforms. It has undergone significant changes throughout history, responding to societal demands and challenges. There’s no reason to assume it can’t continue to evolve this way.
- It’s led to global improvements: While inequalities persist, proponents of capitalism argue that overall global poverty rates have been decreasing, life expectancy has increased, and standards of living have improved for many people worldwide.
So if even proponents of capitalism acknowledge it has inherent flaws, and if it can’t be sustained in its current form, how different can it become before it’s no longer capitalism? And what are some alternatives?
What Would Replace Capitalism?
In Marx’s view capitalism will inevitably result in revolution and the establishment of a communist society in which wealth is collectively owned and evenly distributed. As for what others think might replace capitalism, most agree that the new system would include a universal basic income and universal health care, as these would address some of the biggest perceived flaws of capitalism.
Some possibilities include:
- Socialism: Some believe that socialism, characterized by collective ownership of resources and the means of production, would be a more equitable and sustainable alternative to capitalism.
- Mixed economies: Others argue for a reformation of capitalism involving combining features of a market economy with features of other systems like socialism or communism.
- Something entirely new: Some propose the idea of a post-capitalist society that shifts away from traditional notions of work and private ownership. A network of thinkers, activists, and politicians has begun to envision new kinds of economic systems that would prioritize social goals over financial ones, revolve around local communities, and devalue profit and growth. These visions also tend to involve the idea of a universal basic income and a focus on communal and environmental well-being.
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