Capitalism and Artificial Scarcity

It is no secret that capitalism thrives off exploitation. It needs a large majority of people to be completely reliant on their labor power. It needs private property to be accessible to only a few, so that they may utilize it as a social relationship where the rented majority can labor and create value. It needs capital to be accessible to only a few, so that they may regenerate and reinvest said capital in a perpetual manner. And it needs a considerable population of the impoverished and unemployed – “a reserve army of labor,” as Marx put it – in order to create a “demand” for labor and thus make such exploitative positions “competitive” to those who need to partake in them to merely survive. It needs these things in order to stay intact – something that is desirable to the 85 richest people in the world who own more than half of the world’s entire population (3.6 billion people).

But wealth accumulation through alienation and exploitation is not enough in itself. The system also needs to create scarcity where it does not already exist. Even Marx admitted that capitalism has given us the productive capacity to provide all that is needed for the global population. In other words, capitalism has proven that scarcity does not exist. And, over the years, technology has confirmed this. But, in order for capitalism to survive, scarcity must exist, even if through artificial means. This is a necessary component on multiple fronts, including the pricing of commodities, the enhancement of wealth, and the need to inject a high degree of competition among people (who are naturally inclined to cooperation).

Since capitalism is based in the buying and selling of commodities, its lifeblood is production. And since production in a capitalist system is not based on need, but rather on demand, it has the tendency to produce more than it can sell. This is called overproduction. Michael Roberts explains:

Overproduction is when capitalists produce too much compared to the demand for things or services. Suddenly capitalists build up stocks of things they cannot sell, they have factories with too much capacity compared to demand and they have too many workers than they need. So they close down plant, slash the workforce and even just liquidate the whole business. That is a capitalist crisis.