Capitalism is not what you think it is by Grace Blakeley, June 2025

Capitalism is not what you think it is

Instead of viewing capitalism as a free market, we need to understand it as an overall system—one in which powerful companies, financial institutions, and states work together to determine who gets what in the global economy.

By Grace Blakeley

[This article posted in June 2025 is translated from the German on the Internet, https://zeitschrift-luxemburg.de/artikel/kapitalismus-ist-nicht-das-was-sie-denken/.]

In capitalist societies, we often hear stories of resourceful entrepreneurs who use brilliant new business ideas to prevail in fierce competition, delighting us with amazing new products and services – and making huge profits in the process. Mainstream economists view capitalist economies as spaces where companies compete to produce goods or provide services at the lowest cost before selling them to consumers at a price that reflects the market forces of supply and demand. All in the pursuit of profit.

Free markets and competition are supposedly the characteristics that make capitalism unique. But even though markets, prices, and competition have become increasingly important components of the global economy since the advent of capitalism, they all existed long before capitalism. Markets have existed since humans began trading goods and services with one another. Money is a political construct that is thousands of years old. And competition is something that has always defined humans and the organizations they have created since the dawn of human history.

Competition is so clearly important to humanity that it would seem completely irrational to deny its necessity. Free markets and competition are among the foundations of capitalism, but they do not define it. What defines capitalism is capital.

So what exactly is capital? Most people think of something tangible—a stack of cash or machinery. It is unambiguous what it means when you read in the fine print of an advertisement for a new investment: “Your capital may be at risk.” It means you could lose money. Economists have a slightly more complicated view of capital. They sometimes use the term to refer to money, sometimes to a company’s assets, and sometimes to a bank’s equity. You could say that mainstream economists don’t really have a coherent idea of what capital is.[1]

However, the “capital” in capitalism has a different meaning than the term is commonly used in economics. It refers to a relationship that exists between different groups and between the real things that make up that relationship. To understand this, you can compare the term capitalism with the term feudalism—the name given to the social system that preceded capitalism in much of the world. A key feature of feudalism was the relationship between peasants and aristocrats. The latter owned all the land, while the former worked it in exchange for basic necessities. The peasants had no real rights; politics was determined by the landowners. Land was the most valuable commodity in this system, and the term feudalism refers both to the importance of land or fiefdom (from Latin feudum) and to the dominance of landowners in feudal societies.

In capitalism, the wealth of a society is not expressed in terms of land ownership, but as “an immense collection of commodities.”[2] The term capital refers to the resources required for the production of these commodities (what Marx called the means of production). Capitalists are those who own all these resources, and workers are those who are forced to make their labor power available to the capitalists for their livelihood because they do not have these resources. The wages these workers receive are lower than the value of the goods they produce during the working day—this is the source of profit for the capitalist and the reason for the exploitation of the worker.

Capitalism is defined at its core by this divide: the divide between those who own all the means necessary for the production of goods and those who are forced to sell their labor to the capitalists in order to buy those very goods.[3] The interests of the two are diametrically opposed.

“This is what makes capitalism capitalism: not the central role of the market, but the domination of society by capital.”
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Similar to the term feudalism, capitalism describes both the central importance of commodities and the dominance of the capitalist class. This is what is meant when it is said that capital is a “social relation.”[4] The meaning of the term refers not only to the means of production, but also to the relationships underlying their production and use—just as feudalism does not refer only to the importance of land in general, but also to the way in which this land was controlled by the aristocracy.

The people and institutions that control the things we need to produce goods and the money earned from selling them are in charge. That is what makes capitalism capitalism: not the central role of the market, but the domination of society by capital.

A company with significant market power can do things that have far-reaching effects on the lives of workers, on consumer choices, and even on aspects such as the speed and nature of innovation or the state of the planet. All these decisions are made with little or no democratic accountability.

The control that employers exercise over workers is a form of political power that is often the subject of fierce struggle. Managers have authority over employees—sometimes considerable powers—and the only thing a worker can bring to the table is the withdrawal of their labor. But in many countries around the world, this is illegal or strictly regulated.[5] Large companies can also wield considerable power within the state, through lobbying for the adoption of certain policies, through donations to parties to influence elections, or even through the development and enforcement of their own forms of private law and control.[6]

More crucially, as Thorstein Veblen noted, competition itself promotes “alliance” and “conspiracy” among individual capitalists.[7] It is precisely competitive pressure that encourages those affected to form alliances in order to strengthen their own position vis-à-vis their competitors. These alliances, in turn, are stronger in outmaneuvering their competitors and dominating their markets. This ultimately enables them to shape the rules of the competition in which they are supposed to participate.

Instead of viewing capitalism as a free market with only occasional state intervention, we must understand capitalism as a total system—one in which powerful companies, financial institutions, and states work together to determine who gets what in the global economy. Only this perspective reveals that capitalism is a system of ubiquitous, centralized planning.

So what exactly is planning? Planning involves the conscious design of a system. Anyone can make a plan, provided they have a clear picture of the world and an idea of how they want to change it. But what gives shape to planning is the exercise of power.

“Capitalism is a system of ubiquitous, centralized planning.”
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In capitalism, this happens in many ways, often invisible. The power of capital is not simply expressed through brute force (even if it does appear that way quite often). It is also a kind of economic power.[8] The class division of society means that some people are forced to look for work out of fear of starvation. The people who decide who gets a job therefore have enormous power over everyone else. This is not power exercised by a single person—after all, every employee is free to look for another job if they don’t like their boss. It is a power that unfolds through the structure of society itself: some people must work to ensure their survival, while others do not.

But the economic power of capital is not just the power of bosses over their employees. Large corporations, whose emergence, as we shall see, is inevitable in a capitalist order, can shape the economic conditions of all those involved. These companies are in a position to control entire sectors of the economy, wages, prices, and technological change, without any accountability to society as a whole. It has long been abundantly clear that the economic power of capital also has an impact on the environment. Large corporations are responsible for 71 percent of global CO2 emissions. They therefore determine the future of life on Earth.[9]

Capital can also work within the state to ensure that state power and bureaucratic regulation are used in its interests. When people have to prove that they are actively looking for work in order to receive unemployment benefits, this strengthens the power of capital owners over workers. When states turn a blind eye to anti-competitive practices, they facilitate monopolization. When central banks carry out bailouts or pump money into the financial markets, they protect certain powerful companies at the expense of others. Furthermore, the state also exercises real violence on behalf of capital through the police and the military. This power has been used very frequently in the past against trade unionists and demonstrators – from Margaret Thatcher’s violent suppression of striking miners to the imprisonment of “climate activists” today.

Physical and economic violence is reinforced by ideological power. The wealthy have the greatest influence on how we perceive the world and what meaning we give it. They influence school curricula, university research, media content, and many other instances of cultural production. Indeed, they even shape the way we see ourselves, our sense of responsibility toward each other as a society, and our relationship to the state.

Mainstream economists tend not to recognize these forms of domination as such. After all, in free market economies, such a large inequality in the distribution of power should not arise in the first place. Corporations should instead be limited by market forces, because as soon as they fail to achieve the necessary efficiency, they should be displaced by new, leaner competitors. In theory, corporate management would not really have the power to set wages and salaries, as employment conditions for workers would be determined by market forces. These abstract, impersonal forces of supply and demand would come into play in a free market economy—not the actions of a single person.

In capitalism, however, there are many actors who are powerful enough to override market laws.[10] The global economy is dominated by a few giant monopolists over whom the market has little influence. At the same time, these companies use the labor market as a means of exerting pressure on their employees: those who do not meet the requirements are always at risk of being replaced by others. Large companies have the ability to drive competitors out of business or buy them up before they can become a threat. The “free market” exerts brutal competitive pressure on some, namely those with the least power. At the same time, it is controlled and manipulated by others for private gain. Or, as Marxist theorist Fredric Jameson aptly put it: “The market is therefore a leviathan in sheep’s clothing.” Its function is not to promote and protect freedom, but to suppress it.[11]

However, the power of capital is never all-encompassing. Capitalist societies and the global economy are immensely complex systems that can never be completely controlled by a single actor or group. Nevertheless, some individuals and institutions are more privileged than others in deciding who gets what. This observation even applies to those capitalist economies where competition works best, albeit to a lesser extent. Capitalism is therefore a hybrid system of competitive pressure and centralized control—of competition and planned economy.

Let us recall the example of Boeing. The aerospace company is a huge corporation operating in a highly concentrated, one might even say oligopolistic, market. The prices and processes we see in the aerospace market are less the result of impersonal market forces than of active decisions, i.e., plans made by Boeing’s executives. Boeing’s agreements with Southwest and other airlines, as well as its close relationships with other large companies and financial institutions, are more central to its success than its pricing structure. It is competitive pressure that tempts large companies like Boeing to bend the rules to their advantage.[12] Boeing’s management can afford to ignore short-term changes in the market environment because the company is so large and so well connected – and the ability to ignore market signals is market power.

However, Boeing still operates in a market environment. In fact, the desire to beat its competitor Airbus is one reason for the cost-cutting measures that have shaped the development of the 737 MAX. But even if market forces make themselves felt, for example in the form of a stock market crash, the company can rely on its political connections to save it from bankruptcy.

As we have seen, the US is very interested in ensuring the survival of companies like Boeing, almost regardless of their competitiveness. In the unlikely event that all of the company’s closest allies in the corporate and financial world were to abandon it, the state would still be there to step in and pick up the pieces.

The freedom of the free market has never been particularly great—but today’s large corporations are only minimally influenced by market and competitive pressures. Markets are, of course, still central to the functioning of capitalism, but competitive pressures are often exerted on those who are least able to counter them. These markets are far from free—they are, in fact, “clearly ‘unfree.’”[13] Instead of living in the freedom promised by free markets, we live in a global world consisting of a few large corporations, financial institutions, states, and supranational associations. A world characterized by ubiquitous, centralized planning.

The question we should be asking ourselves is therefore not whether a planned economy is possible under capitalism. Instead, we should ask where this planning takes place, how it is implemented, and whose interests it serves. We will explore these questions in the next chapter.

This article is taken from: Grace Blakeley. The Birth of Freedom from the Spirit of Socialism. How Capital Destroys Democracy. Translated from English by Alexander Krützfeldt, Christian Alexander Herschmann, and Tom Müller. © 2024 by Grace Blakeley. Tropen – J.G. Cotta’sche Buchhandlung Nachfolger GmbH, Stuttgart 2025

[1] Hancox, The Village against the World.

[2] Ibid.

[3] Hancox, “Spain’s Communist Model Village.”

[4] Hancox, The Village against the World.

[5] Jade Spencer, “A Plan for a People’s London,” Tribune, May 16, 2022, https://tribunemag.co.uk/2022/05/peoples-plan-royal-docks-london-thatcherism-glcneoliberalism (last accessed on October 23, 2024).

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Jade Spencer, “The People’s Plan for the Royal Docks,” ERA Magazine, March 4,

2021, https://cspace.org.uk/wp-content/uploads/2021/03/The-Peoples-Plan-forthe-Royal-Docks-%E2%80%A2-ERA-Magazine.pdf (last accessed on October 23, 2024).

[10] “Participatory Budgeting in Porto Alegre 1989-present,” Participedia, https://participedia.net/case/5524 (last accessed on October 23, 2024).

[11] ≫Case Study: Porto Alegre, Brazil≪, Local Government Association, December 12, 2016, https://www.local.gov.uk/case-studies/case-study-porto-alegre-brazil (last accessed on October 23, 2024).

[12] Ibid.

[13] Ibid.

### Grace Blakeley

Grace Blakeley is an author, journalist, and commentator. She is one of the most prominent critics of capitalism of her generation and editor of Futures of Socialism. Her book Die Geburt der Freiheit aus dem Geist des Sozialismus. Wie das Kapital die Demokratie zerstört (The Birth of Freedom from the Spirit of Socialism: How Capital is Destroying Democracy) was published in German by Tropen Verlag in 2025.