By What Standards? – “Efficiency” and the Market Economy

Capitalism, and market economies in general, but especially capitalism, are guilty of terrible crimes against humanity. They are guilty of poverty and  war, of inequality and competition, nationalism and hatred, of subjugation, oppression, domination, and thought-control. One of the ways in which capitalism has inflicted horrible thought-control on humanity is by an utter bastardization of the definition of the word “efficiency”. Under capitalism, “efficiency” is said to mean that the least amount of resources are expended in the production of a good or carrying out of a service. But, thanks to the structure of capitalism, the definition of “efficiency” that comes to mind is by all means not efficient. When somebody tells you that capitalism is efficient, the first thing out of your mouth should be “by what standards?”

The first problem is the question of “resources”: What are the resources being expended and who is expending them? Well, this depends on your perspective. Some may say that the resources expended are the money of investors, spent in hopes of making a profit. Another person may say that the resource being spent is human labor power, spent by the laborer in hopes of earning enough money to survive. Or perhaps, it is the wealthy investor spending the labor power of the worker in order to gain a profit.

In the case of capitalism, all employment may be seen as a transaction just as one buys a car or groceries, except for a few differing factors. The first of these factors is that the number of people hiring and the number of people looking for work are incredibly unbalanced numbers, meaning that those looking to get hired are already at a serious disadvantage to the employers, because they generally have to take what they can get, whereas employers will almost always have a large hiring pool. The second is that the employing class owns the resources necessary for survival (food, water, shelter, etc.), while the working class has nothing to sell but their own labor power, so they must work in order to access the means of survival, whereas the employers already have access to them due to violent enforcement of “property rights” by the state without the need to work. The third is that workers generally work for a set wage that doesn’t vary proportionally to the effort they expend, but the profit (the surplus value that the employers receive for selling goods and services produced by the workers) does increase with increased productive capacity by the workers, meaning that profit is based on the labor of the workers, yet the workers don’t receive any of the profit while the employers who did no work receive all of it.

As you can see from this quick critique, capitalism is unjust, exploitative, and coercive, but is it efficient? Well, I guess those with decision-making power are the ones spending resources, which means the owners of capital. So what cost to them does this system entail? A monetary cost of course. Everything in capitalism is based around money and property, and if you want to make the most profit, you’re going to spend as little money as you can relative to your expected return on investment. The best way to do this while still maintaining a quality product is to push the costs of production somewhere else onto someone else, to externalize the costs. By treating these costs as externalities, one can ignore the true cost of production and instead focus on spending the least money to get the highest returns.

Some examples of externalizing the costs of labor would be to not pay your employees enough money to survive off of so that they have to find other jobs in addition to the one they do for you, or perhaps living off of government assistance programs. Or perhaps hiring people who can’t or won’t ask for more money like undocumented immigrants and people from poverty-stricken areas. Or perhaps pouring waste products into rivers, lakes, and other water sources to cut down on waste management costs. Or ignoring work safety and environmental regulations at the expense of workers, community members, and humanity as a whole. Yet capitalism encourages these behaviors because worrying about them isn’t cost-efficient and therefore will put you out of business.

So we can see that there is a discrepancy here between the capitalist definition of “efficient” and a truer definition of “efficient”, for when capitalism seeks the most “efficient” outcome, it actually means the most cost-efficient. Efficiency on the other hand, would entail using the least resources, both human and natural resources, for the outcome that satisfies the most people. Does destroying the drinking water of millions of people in order to get cheaper oil to make money for a few wealthy business owners satisfy the maximum number of people involved in the situation? Does it use up the least resources relative to the gains to be made? No, of course not.

We find that capitalism’s definition of efficiency here is hardly sufficient for calculating the true economic cost of a particular event or practice, but beyond economic efficiency, we find that the market economy, in particular capitalism, is inefficient in many other ways beyond pure monetary cost. The idea of having competing firms spend time, resources, labor, and human creative and intellectual power spent developing essentially the same products is an immense waste of human potential and resources. All the while, these firms are cutting costs through compensating workers less, polluting areas without power to stop them, and creating further waste through the process of planned obsolescence. And throughout all of this, it is inevitable that most of these firms are going to go out of business, resulting in job loss and a waste of resources spent building that firm.

Another strength that the market economy claims is that it is the best at distributing society’s scarce resources. Whether or not this is true in practice (it’s not), it relies on the false premise that we have a scarce amount of resources. In the United States alone we throw away more than enough food to end world hunger. Empty homes outnumber homeless people by far. No there is no scarcity of resources here, in fact, we build our technologies with planned and built-in obsolescence in order to create more demand because we have more supply than we could ever sell under reasonable circumstances. We withhold resources such as food and water and housing and medical care from many among us because it makes more money to pretend that there isn’t enough for everybody, because the market economy puts making a profit over meeting the needs of people. Which is further proof that the market economy is not a proper means of distributing resources, as the great quantities of excess we produce never reach people, while millions starve, go homeless, or die from preventable diseases. Market economies encourage the creation and protection of artificial scarcity in order to secure the profits of those at the top.

Capitalism and market economies tout themselves as being the most “efficient” economic system, promoting advancement and progress at the least cost, but all it does is lower costs on the few individuals who own the means of production, and create endless waste for the rest of humanity to deal with. It is easy for the dominant ideology to brand itself as the most “efficient” when it also changes the definition of “efficient” to describe the one thing it is good at: producing profits for capitalists.


Let’s take a moment to examine what exactly people mean when they say “socialism destroys all incentive to work”. Because I have qualms with this statement both as someone who is pro-socialism, and someone who is anti-“work”.

First we should define our terms. “Capitalism”, though it is far more nuanced than this, but for the sake of brevity I like to define it as an economic system based on three principles: 1) private ownership over the means of production (things such as factories, farms, offices, and machinery), 2) buying and selling of goods and services on a market for profit, and 3) wage labor (people receiving certain amount of money from their boss/business per certain amount of time that they work). Without these qualifications, it’s not capitalism, and if it does have these qualifications, it is capitalism. Defining exactly what capitalism is and how it works could be a book of a few thousand pages, but I think this quick definition should suffice for now.

“Socialism”, to the socialist, means a system of communal/worker-control over the means of production, an equitable distribution of resources and products, and the abolition of money and the wage system (usually in favor of either non-transferable labor vouchers in a collectivist economy, or a moneyless, tradeless gift economy). It can be summed up by the famous quote from Marx, “from each according to his ability, to each according to his need”. However, detractors of socialism, tend to not know or understand this meaning, or if they do understand, they will purposefully obfuscate this in order to fool others or to gain the upper hand in debate (the straw man fallacy). To these people, “socialism” can be used to describe two things,  which are completely different, yet somehow are exactly the same to them. These are 1) authoritarian Marxist-Leninist states, 2) social democracy. Marxist-Leninist States are places like the Soviet Union, Vietnam, Cuba, etc., where the government owns all land and all means of production, everybody is employed by the government, and everybody has their basic needs met (food, water, housing, healthcare, education). This is, by most measures, a form of socialism, though it is not the only form, and it has many detractors from within socialist communities, and plenty of good arguments can be made that this is not socialism. Social democracy, is a school of thought, that aims at reforming capitalism and using the state apparatus to curtail the inequities of capitalism by taxation and redistribution of wealth in order to fund social programs such as free healthcare, education, childcare, etc. to varying degrees. This is certainly not socialism, as private ownership over means of production, wage labor, and the market economy are maintained; rather it is the left side of centrism, or liberalism. However, no matter the level of correctness of any of these definitions, they all have one thing in common: that people’s basic needs are met regardless of their ability or willingness to work.

But what is “work”? How are we defining “work”? Is “work” even a good thing for people or society? If such needs as food, water, housing, education, and healthcare being provided is the result of hard work, then we must look at the way people acquire such things and determine that that is what work is. Under capitalism, how does one acquire food, shelter, water, and healthcare? The answer, which I hope is obvious, is money. But money doesn’t just appear in your wallet out of nowhere, it must be awarded as either a wage or a salary from a job, or, far more lucratively, from owning capital (money used to make more money). So having a job or owning capital is what is considered work, especially a well-paying job or large amounts of capital, because the more money you receive the more or better resources you can acquire.

So the work of farmworkers, who are often paid under the minimum wage at longer hours with fewer breaks than most jobs, who produce the food that everybody needs to eat to survive, who work long days in incredible heat or in freezing cold weather, is not as hard of work as the work of hedge fund managers, that make billions of dollars manipulating money and not actually producing anything necessary or beneficial to human life. This is the “work” that capitalism encourages and rewards. It “incentivizes” people to make as much money as they can, regardless of its contribution to the community or humanity as a whole. Capitalism punishes those who accept the humble and noble role of producing food, building houses, teaching children, and carrying out other important duties such as waste disposal, maintenance, sanitation, food service, mail carrying, and countless others, by severely underpaying them and thereby limiting their access to things such as food, shelter, healthcare, and education. Apparently bankers, shareholders, corporate lawyers (however, not environmental lawyers, civil liberties lawyers, and human rights lawyers), and celebrity personalities work significantly harder than any of the previously mentioned jobs (I’d say that doctors are an exception here, but also, the work of most doctors, along with jobs such as farmworkers, garbage collectors, etc., is so important, so vital to society, I’d argue that putting a monetary value on their labor is an insult to the work and the people doing it). This idea that hedge fund managers and celebrities work hundreds of times harder than farmworkers and construction workers is, to most people, clearly not true. Obviously something is wrong here, and that’s that capitalism does not actually reward hard work. Capitalism rewards 2 things: access to capital, and an ability and willingness to produce profits for those who have access to capital.

Unfortunately, most of us do not have access to capital, so we must fall into the second category otherwise we won’t have money and therefore no access to the means of survival. Now, most of us find our jobs to be boring, exhausting, and unimportant. We find little-to-no joy in our work and we feel it does nothing for society or ourselves other than make us tired and bored. On top of this, work is bad for us. The International Labour Organization estimates that 2.3 million people die work-related deaths (and I’d probably argue that this is underestimated, as it likely excludes people who died after retiring but whose lives were shortened by work-related stress or illness). This is not to mention the countless injuries, illnesses, and just downright stress and frustration that people get from doing work. On top of that, the psychological wear of doing this work for at least 40 hours a week and the effect that has on people’s social skills and lives is awful; to quote a man who I generally have many qualms with, Bob Black, from his essay “The Abolition of Work”, “You are what you do. If you do boring, stupid, monotonous work, chances are you’ll end up boring, stupid and monotonous.” People deserve to spend their time socializing, playing, doing meaningful tasks and, most of all, enjoying life; not sitting in a cubicle or on an assembly line, going to boring meetings, being yelled at by bosses and having their labor exploited.

So why do we work such jobs for long hours and little reward rather than doing more enjoyable tasks like gardening, hiking, playing sports, lying on the beach, watching television and movies, reading books, going to parties, building things, and learning arts, sciences, and crafts? It is because we cannot begin to fulfill such emotional, developmental needs until we have our basic needs met. The basic needs that I’ve talked about this whole time—food, water, shelter, health care—the basic needs that we need money in order to have, the money we spend about 40 hours a week trying to earn. We think of ourselves as living in futuristic times of luxury, as opposed to barbarous times where we spent most of our waking lives procuring basic essentials of life, and yet though the methods may have changed and technology become more sophisticated, the principle is still the same. We spend most of our time simply trying to survive, and most of the remainder is spent recovering from the time we spend working. “Incentivizing” people with the very means of survival (read: by denying them the means of survival otherwise) is not any more ethical than forcing them into work under threat of the whip. I am convinced that the theoretical “carrot” is no more ethical than the “stick” as a motivational tool, as the carrot is just the stick by other means.

So when people say “socialism destroys incentive to work”, what they really mean is “having your basic needs met destroys incentive to subject yourself to exhausting, monotonous labor for the benefit of a rich minority”. Well duh. Why would you subject yourself to domination and exploitation by rich assholes if you didn’t need to do that to survive? So let’s talk about one last part of this statement before we conclude. What about that wondrous word that capitalist-apologists love to throw around in defense of a system they don’t understand, “incentive”? Based on what we’ve already established, you work to meet your basic needs, but what is the alternative? What fate befalls you if you are to refuse to work for a living? If you refuse to work, to take part in their system, to subject yourself to their rule, then you don’t get any money, it’s pretty simple. You don’t get money, you can’t afford food, a home, healthcare, or water. If you don’t have those things, then, odds are, you are going to die. If you refuse to work, you die. In effect, the hope of all who oppose socialism due to the destruction of “incentive”, whether they realize this or not, is that everybody who refuses to produce profitable labor will be issued the death penalty. This may seem a bit dramatic to some, but to those hundreds of millions of people who spend their whole lives working two or three jobs (or desperately trying to find any job) just trying to make ends meet, this is reality.

The “comply or die” mantra of capitalism is the single most destructive, authoritarian system ever conceived. Dictators and military leaders such as Adolf Hitler, Joseph Stalin, Genghis Khan, Francisco Franco, and Napoleon Bonaparte could not even dream of a better way of controlling their armies and their conquered peoples. The ultimate, terrible beauty of this monster is that, if you should fail, if you end up starving, homeless, drug-addicted, and/or dead, you and the world believe it is entirely your fault, and those who do subject themselves to the toil of work do so believing they have something called “freedom”. Capitalism has done a better job of convincing people they are free while controlling their very bodies and minds better than any dictator, any drug, any fictional Orwellian regime, ever has, ever will, and ever could. Regarding capitalism as “libertarian”, or anything other than the authoritarian monstrosity that it is, is a delusion so farcical that I would laugh if it wasn’t so terrifying. Capitalism is a machine designed to kill all who refuse to bow their heads, it will eventually destroy our environment and ourselves if we don’t shut it down, and all under the guise of freedom and liberty.

So when people say that socialism destroys incentive to work, they are both right and wrong. Does socialism discourage people from inventing things, making art, helping the community, and meeting needs? No, socialism encourages this far more than capitalism does because we would not have to spend over 40 hours a week producing profits for rich jerks simply to meet our basic needs. Does socialism discourage people from subjecting themselves to the tyranny of capital and liberate people from the chains of oppression and exploitation by meeting their needs and freeing up more time for leisure, creative work, intellectual study, innovation, and community work? Yes, yes it does. Socialism (preferably anarchist socialism, but that’s a whole other essay), can and will be the great liberator of humanity. Socialism respects your humanity and right to be alive regardless of your ability or willingness to produce profitable labor. To quote Karl Marx one last time, “The proletarians have nothing to lose but their chains. They have the world to win. Workers of the world, unite!”



Recommended further reading:

“The Right to be Lazy” by Paul Lafargue

“The Abolition of Work” by Bob Black
I should also note that I don’t really think much, if any, of Bob Black’s other writings are worth reading, as I am not a fan beyond this essay (and I have disagreements with the essay).