Capital is scarcity

Our lives are dominated by difficult financial choices but capitalism has produced immense wealth for a tiny minority of people. Simon Hannah examines the role that scarcity plays in capitalism.

 

It can sound strange to accuse capitalism of scarcity; after all, in many ways, it has produced a huge abundance. Food is thrown away, too many cars are built, and carbon is pumped into the atmosphere at an accelerated rate. Even in the 1840s, Marx was writing that the crisis of capitalism was essentially one of overproduction, “an epidemic that, in all earlier epochs, would have seemed an absurdity—the epidemic of overproduction… and why? Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce.” 1

What is clear is that living under the regime of capital means living in a condition of artificial scarcity that has a definite negative impact on our lives and on our psychologies. Scarcity structures the way we think about society and our fellow humans. It is the basis of a great deal of reactionary thought.

“What is clear is that living under the regime of capital means living in a condition of artificial scarcity that has a definite negative impact on our lives and on our psychologies.”

The battle over resources—over what exists and what is produced—over who gets what and in what way is the driving force of all class struggle.

Scarcity as the origin of capitalism

Historically, capitalism was born out of creating scarcity—often violently. From the Middle Ages on, in Britain, peasants had an open field system that served their communities perfectly well. Over time, they were systematically thrown off their commonly held land (the Commons) by various statutes or acts of enclosures when parliament or a local authority privatised large tracts of land and handed them over to some landowner (usually also a Member of Parliament). An act of enclosing previously commonly held land was often violent; people were evicted by force as the fences went up.

“Capitalism was born out of creating scarcity—often violently.”

The enclosures between the 13th century and the 19th century were justified by the powers-that-be because they claimed the open field system was inefficient. They forced scarcity in land to ensure they emerged as unrivalled powers and could enrich themselves as much as they desired. Peasant revolts against the legalised theft of land were brutally repressed.

This allowed early capitalism to start in the countryside as landowners employed waged labourers to grow crops on enclosed land for sale to towns and cities. Depriving people of their own land forced the creation of the modern working class; people were left with nothing to live on but their ability to sell their labour power and time to someone in exchange for wages.

As modern capitalism developed, wages were set incredibly low compared to the richness that our work was creating. These low wages forced entire families, including children, into pits, cotton fields, and factories. The wages were set at just the right level to sustain us, forcing us back to work the next week. The rapacious need for capital to acquire new labour led to chattel slavery and the brutalisation of entire ethnic groups.

The scarcity of land forcing people into waged labour saw people being confronted with a scarcity of jobs. Even when they did find work, their employment was predicated on profitability, and workers would be sacked with regularity with almost no social security safety net. Even though capital required huge amounts of labour, it could never guarantee (nor want) full employment. It meant some people were working thirteen-hour days while others languished in absolute poverty, slumping into criminality, or relying on the church for charity. Capital deprived people of being self-sustaining, then condemned them for being ‘surplus population’ because it did provide sufficient productive work for everyone.

As capital developed, the economy and some people were enriching themselves hugely from the profits, and the abstinence theory of profits began to circulate, arguing that the capitalists were making profits because they led abstemious lives. You still see this today: Bill Gates using a voucher to get money off his burger or steel magnate Ratan Tata flying economy class. It is, of course, a myth. Capitalists are incredibly rich and are so because of their exploitation of workers, not because they buy second-hand T-shirts. This myth serves an ideological function: be thrifty, save the pennies, and you too can be rich. Many people don’t have pennies to save.

Enforced scarcity

What are some of the examples of scarcity that capital encourages and enforces?

Before we look at specific examples, we need to think about the entire structure of capital and the waged labour economy. The entire structure of capital as private property, owned only by a small fraction of all of humanity, means that the capitalists get most of the wealth generated through the economic activity of the overwhelming majority of people. Of course, this is meant to be ‘fair’ because they own the economy, so they should clearly get the rewards, but this is totally at odds with a socialist approach. This structural disproportion of income and wealth is the bedrock of modern scarcity.

“The entire structure of capital as private property, owned only by a small fraction of all of humanity, means that the capitalists get most of the wealth generated through the economic activity of the overwhelming majority of people.”

Capital cannot exist without waged labour. Workers must be hired and paid wages in order for the economy to function. Capitalists try to keep wages as low as possible while richly rewarding those that help manage their business affairs (the CEOs, the lawyers, and so on). Because workers are not paid anywhere near the value of their labour, most of us live an existence defined as much by what we cannot afford as by what we can. For many workers, their pay packets last hardly any time; the scarcity begins almost immediately once the money for rent, mortgage, and bills have gone out. You spend the rest of the month rationing your remaining money (or credit), something the capitalist class has no concept of.

“Because workers are not paid anywhere near the value of their labour, most of us live an existence defined as much by what we cannot afford as by what we can.”

Even in the USA, the richest country on earth, almost half the population can be classified as either poor or only a $400 emergency away from falling into poverty. In the UK, 30% of us have no savings at all; living pay packet to pay packet.2 The inflationary crisis in recent times has squeezed people’s wages even more.

There are the commonly referred-to examples of poverty amid plenty: the homeless person begging for food outside the corporate skyscraper or the billionaires on their private jets flying over slums to get to their holiday destinations.

Additionally, there are concrete examples of scarcity that we can use to demonstrate how a capitalist economy is irrational for us even though it is rational for the capitalists.

  • Destroying perfectly good products to prevent them from being used for free. Businesses, especially retail, regularly destroy or deliberately damage excess stock rather than give it away. Bed Bath and Beyond in the USA was caught covering discarded end-of-line clothes in spray paint to make them unwearable. The American luxury handbag brand Coach was caught slashing unsold bags before discarding them. In August 2023, it was announced that the French government was spending €200 million on destroying ‘excess wine’ in order to ‘shore up prices’. In 2018, Burberry was reported to have burned unsold clothes, accessories, and perfumes worth £26.6 million. There are countless examples: all products are destroyed to not ‘saturate’ the market and to protect market prices. A well-known example is the EU Common Agricultural Policy, which saw a huge destruction of food to ensure prices remained stable for fruit and vegetables; 60% of withdrawn food was destroyed at huge cost to the environment.
  • Planned obsolesce. We could make incredibly durable electronic devices that could last a lifetime, but companies, notably Apple, have been caught introducing back-end software into smart phones purposefully designed to run down the battery on older models to force consumers to buy newer versions.3 Another example is to deny crucial software updates on supposedly ‘outdated’ laptops or smartphones, forcing people to upgrade to new hardware.
  • Public funding restrictions. Austerity and cutbacks in public provision in areas like health care force people into the private sector. If you have to wait 6 months for a cancer scan and then another 3 months for treatment to start due to cuts in publicly available provision, then you are far more likely to go private to save your own life. Free at the point of use, healthcare on the NHS in the UK is a public good, but to make money from it, the capitalists must find ways to limit access, for instance by starving the NHS of funds and then forcing people into private health care to meet their needs. This also has the result of turning people against each other, blaming people out of work for not contributing to dwindling resources instead of blaming billionaires, big businesses, and their politicians for not paying taxes and adequately funding public services.
  • Housing. Governments and private sector house builders never create enough housing for everyone’s needs, which drives up prices for both private owners and tenants.
  • Environmental destruction. One of the clearest examples of artificial scarcity is how capital is significantly damaging the environment, for instance by polluting fresh water, which creates investment opportunities for capital to come in and clean up the mess, rebuild water infrastructure, and so on.
  • Time. Despite all the new technology and labour-saving devices in our lives, we still work long hours, spending more time working than a mediaeval peasant. The scarcity of time is a major factor in many people’s lives. Bosses demand longer and longer time at work, leading to huge mental health issues as well as a general loss of leisure time for the lives we actually want to live. A scarcity of time is a crucial issue for women working jobs and still doing the majority of household chores.

“Destroying perfectly good products to prevent them from being used for free…is a concrete example of artificial scarcity that we can use to demonstrate how a capitalist economy is irrational for us even though it is rational for the capitalists.”

Public goods, private wealth

If scarcity is a necessary precondition for making profit (since things that are abundant cannot properly embody much exchange value), this has profound implications for economics. We can introduce a crucial distinction between public good and private wealth. For socialists, our entire vision of the future is based on expanding public goods to encompass all aspects of life, from food to housing to entertainment and science. For the modern capitalist class, their vision is of a world in which private wealth (capital) structures our entire lives—a world of austerity, privatisation, and systemic violence.

An early economist, James Maitland (the Earl of Lauderdale!) wrote a book called Inquiry into the Nature and Origin of Public Wealth (first published in 1804) where he explored an obvious contradiction between public wealth and private riches. [4]4 In essence, private riches can only really come about because of scarcity; if something is abundant, then you cannot really make money from it. In order for something to have an exchange value with anything else, there must be a degree of scarcity in its availability. If you have a well in the middle of a village that everyone can use, that is public wealth, a public good. But if a man comes and puts a grate on it and charges people to get the water, he can get rich. Getting rich under capitalism is a good thing, right? But it happens at the expense of public goods, which is bad? This is the paradox.

This is at the heart of one of the basic contradictions of the capitalist system: that what appears irrational to us is completely rational from the point of view of the capitalist class. What is good for us is not what is good for the ruling class. This is why so much energy and effort have to be put into complex regimes of propaganda and social control to ensure compliance with a system that is fundamentally against the interests of the majority. It is why workers formed trade unions, cooperatives, and credit unions, because from our standpoint, what is rational is collective solidarity in the face of rapacious capital.

The psychological impact of scarcity—fear

US socialist Eugene Debbs described the fear that most of us struggle with:

“In this system absolutely no man is secure, and you instinctively know it. You have $10,000, but you have not the slightest assurance that you will not die in an alms house and sleep at last in a potter’s field. You do not know; you cannot tell. It is impossible to draw aside the curtain of the future. You are straining every nerve to educate your son and give him some advantages. Over whom? Over the son of your neighbour.” 5

Too frequently, worries and insecurities about housing, money, future employment, and general financial difficulties dominate conversations between people. We live with low-grade anxiety about the precariousness of our lives; even when we have a little money and security, we wonder what our lives could be like if we were totally ‘comfortable’, able to live the life we dreamed of without ‘money worries’.

Because scarcity is synonymous with capital and therefore capitalism, we can begin to understand where one of the primary motivating impulses for many people comes from. In a world with fewer or no safety nets, social security, or guarantees against homelessness, people are scared that they will lose what little they have. This insecurity drives people in several directions politically.

It can inspire them to form trade unions or become socialists to overcome this system that makes us live so precariously. Or it can drive them, for example, into a nationalist and racist frenzy, blaming foreigners for their problems and hating immigrants and refugees because they are seen as threatening to take what little existing citizens have. This is the essential difference between socialist solutions to scarcity and Conservative or fascist ‘solutions’. Socialists want to socialise resources to ensure a good standard of living for all; the right wants to divide people between worth and unworthy poor and turn people against each other.

Capitalists discipline workers into accepting lower pay or worse terms and conditions by using the fear of losing their jobs or falling into poverty. It encourages workers to identify with their bosses, being grateful for giving them work. It turns workers against each other, condemning the so-called benefit scrounger or the welfare queen because they aren’t ‘pulling their weight’. How many tabloid newspaper front pages invite us to laugh, ridicule, and hate a single mother with five children living on benefits?

The arguments around immigration are almost entirely rooted in the language of scarcity. ‘Taking our jobs’, ‘leaching off benefits’, ‘driving down wages’ (even ‘taking our women’ as if women were also a scarce resource like other ‘commodities’).

These are the standard concerns that many people raise, based on the world view that scarcity is inevitable. But because the obscene riches of the capitalist class are also inevitable, it leaves working people reduced to fighting over the scraps. Even the basic idea of wealth redistribution is stigmatised or seen as impossible in the post-neoliberal age. The idea that there is an iron law of wages that declines towards the lowest point because of too many immigrants (people) is demonstrably false, yet it exists in the scarcity mindset fantasies of Malthusians, mainstream politicians electioneering, as well as in the popular press.

Anyone who goes along with concerns over immigration (or people on social security) because these ‘are working class concerns’ is accepting the rationality of capital as a system of organised scarcity and deprivation that divides us and not challenging the essential logic behind these reactionary arguments. Anyone supposedly on the left who goes along with this narrative is playing a dangerous game, themselves trapped in the scarcity logic of capital. They will always end up endorsing pro-capitalist policies or even outright reactionary demands.

The anger around ‘diversity hires’ in workplaces also comes from scarcity as a conditioning factor in our thinking. There are only so many jobs to go around; why should a black woman get a job just because of her gender and ethnicity? We need to challenge the entire notion around a limited number of jobs and how people are fighting and competing with each other in a market place of labour where the buyers (the bosses) get to decide everything. But these important, but admittedly crude, attempts to deal with systemic racism and sexism.

Scarcity around resources, as determined by capital, is also the basis for the constant reactionary fear around overpopulation. From Thomas Malthus onwards, the fear of ‘too many poor people’ is a habitual one that has guided mainstream thinking around international development policy. It has led to disgusting eugenics programmes of mass sterilisation of the poor or socially disadvantaged minority groups. In 1960s Puerto Rico, more than one-third of women were forcibly sterilised to reduce the ‘excess’ population, a time when only 2% of people owned 80% of the land. Forced sterilisation is still allowed in the USA in 31 states. Prime Minister Indira Gandhi in India forcibly sterilised 6.2 million working class and poor men (more than the Nazis did) after loans from the World Bank and UN Population Fund. Sterilisation programmes occurred recently—four million in 2013-14.6

Because the problem stems from capitalism as a system that cannot provide meaningful and paid work for everyone, the reactionary ideology of overpopulation fears paints the poor as just useless hungry mouths to feed, supposedly surplus people that contribute nothing to society—a profoundly reactionary and alienating view of other human beings.

Scarcity versus universalism

One of the central transitional arguments to make against a society of scarcity is the importance under capitalism of public goods (or public wealth) and universal services. Universal services are crucial to imagining a new kind of future free from scarcity.

One of the greatest achievements of post-war British social democracy was the NHS. The founding belief of the NHS, advocated by Labour leftists like Anuerin Bevan, was the universal provision of healthcare. It didn’t matter if you were the richest person in Britain or the poorest; you would receive the same healthcare free of charge at the point of delivery. This universalism was hard fought for, but it is an essential philosophy of healthcare, which even the most visionary neoliberal Tory government has struggled to shift.

However, this principle of universalism hasn’t extended to other areas of public provision. One of the most contested and argued over is social security and welfare. It was a principle of the left in the 1920s that social security should not be means-tested. If you were unemployed, then you should get the same state welfare payments, whether you had no money in your bank account or £10,000 in your bank account.

This was based on two core principles. First, it was wrong for the poor to have to beg and plead for money by proving how poor they were, showing bank statements, and letting the state intrude in their lives to ascertain whether they were impoverished enough to get the state security payments. Such an approach is degrading and dehumanising. The second core principle was that universal provision established a basis for equality and being treated the same. Everyone had access to it because it was a right and a good thing to have.

There is a further important argument that where a provision is means tested, many people who would actually meet the means test do not apply because they don’t see it as a right—as they would if it were universal—but as a ‘hand out’. That actually results in means-testing, excluding many of the people who most desperately need that service.

Under a regime of scarcity, even some people on the left succumb to the idea that people with a bit more money should not access such ‘generous’ state provision. Such a position initially seems like common sense—why should a millionaire be able to access social security or welfare? Should a millionaire get state-funded childcare? But to accept that logic means to accept a scarcity model (there is only so much welfare to go around), and to accept that also requires testing and proving your poverty (grovelling before the state-sanctioned arbiters of your future existence) is the right approach. No, under capitalism, the rich should pay their taxes in progressive and steep increments to fund welfare. If they then want to access welfare, which their taxes contribute towards, then it is a principle that they should be allowed to do so.

A specific example. When the tabloid press found out that RMT trade union leader Bob Crow was living in a council flat, despite being on quite a considerable trade union general secretary salary, they lambasted him in the press for taking a council flat when other much poorer people were on a waiting list. Leaving aside the argument about whether union leaders should have such high wages compared to their members, Crow’s argument was a simple one: that council housing was originally meant to be for everyone—a decent house for workers and middle class professionals to live in side by side.7

But when council homes started to be sold off from the 1970s onwards and very few new ones were built due to government restrictions, a scarcity argument was used that council homes should only be for the very poor, the low-paid, or the unemployed. But why turn council estates into ghettos for the poor? That wasn’t the universal model of housing provision that was originally raised. Politicians said that Crow had a moral duty to leave the council property; in fact, society has a moral duty to provide housing for every human. Again, scarcity determines who we think should get what on a council estate, while the super rich buy entire islands just for holiday homes.

Of course, this is putting to one side the wider socialist argument that there should be no rich and poor people. An important way of getting to that world is by arguing for the universal provision of public services, social welfare, and public goods that are accessible to all. That is a socialist future.

A future of abundance and public goods

Capital can thrive because it controls the production and distribution of goods. Scarcity is essential for it to make a profit.  If there was an abundance of anything, then the price would collapse or the argument to make certain goods free would be strengthened.

In a world where global warming is going to cause even more scarcity in terms of food and inhabitable areas, the danger is that far right arguments have gained more of a hearing. The onus is on socialists to explain how socialism will be different, and it isn’t as simple as just saying ‘nationalise everything’. To what end? State-run companies aren’t necessarily better than ones run by private shareholders. We have to point to the end goal: a society without class and without social divisions, one where human needs are met through democratic social planning of our resources.

Of course, a socialist, democratically planned economy cannot abolish all scarcity. But what it will do is remove the scarcity that is imposed by the logic of capital and leave us only with the scarcity imposed by the reality of the natural environment. Socialism will allow us to better meet our needs and wants within a framework that is sustainable and direct, not mediated through the market or whether someone can make a profit out of it. Socialism would allow for a proper distribution of work among the population to ensure meaningful work for everyone, but only for a few hours a day.

We have to make the case for a society where there will be abundance to meet our needs. That doesn’t mean mountains of consumer goods and piles of plastic everywhere. Socialism will ensure proper food, housing, good transport, and an abundance of common wealth—sports, museums, art galleries, music, parks, and much more free time to enjoy it—because we will reduce the working week to the bare minimum required. As a socialised economy grows, it will allow us to decommodify the economy, abolish money, and replace it with production for need, not what the market determines. It will allow a rational distribution of resources to democratically decide the balance between consumption and investment, between present needs and future development. It will abolish the social division of labour between intellectual and manual work, men and women, black and white, and the global north and south.

Socialism is a world where we can have an abundance of public goods to meet human needs and wants within planetary limits. But to get there, we have to overthrow the capitalist class and the ideology of scarcity that props up their system.

“Socialism is a world where we can have an abundance of public goods to meet human needs and wants within planetary limits. But to get there, we have to overthrow the capitalist class and the ideology of scarcity that props up their system.”

Footnotes

  1. Marx and Engels, The Communist Manifesto ↩︎
  2. Financial Conduct Authority,  July 2023 https://www.fca.org.uk/publication/multi-firm-reviews/cash-savings-market-review-2023.pdf ↩︎
  3. Planned obsolescence: the outrage of our electronic waste mountain The Guardian 15 April 2020 ↩︎
  4. John Bellamy Foster and Brett Clark, The Paradox of Wealth: Capitalism and Ecological Destruction, Monthly Review 1 November 2009 ↩︎
  5. It Ought Not Be Difficult to Decide: Campaign Speech at Chicago Auditorium, October 17, 1904 ↩︎
  6. India’s dark history of sterilisation Published, BBC News, 14 November 2014 ↩︎
  7. Bob Crow: ‘I have no moral duty’ to move out of council house despite receiving six-figure salary as RMT boss, The Independent, 26 November 2013 ↩︎

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Simon Hannah is a socialist, a union activist, and the author of A Party with Socialists in it: a history of the Labour Left, Can’t Pay, Won’t Pay: the fight to stop the poll tax, and System Crash: an activist guide to making revolution.

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