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Beyond Capitalism, but not Communism

— October 17, 2022

People argue endlessly about which of the Big Two economic systems is better and fairer, but there’s more out there besides Capitalism and Communism.

Having witnessed a great many online discussions rapidly decay in a spittle-flecked, frenetic combination of ignorance and strong emotion due to the absence of any concept of the various economic systems that have existed through space and time, aside from the Big Two (of course), it is this author’s fervent hope that endeavoring to shed light upon such systems, even in an incomplete and partial way, will assist the public imagination and improve our national conversation, leading to more creative economic outcomes. Many of the loudest American voices seem attached to minds which can only think in binary terms: white/black, Democrat/Republican, Capitalist/Communist, freedom/slavery, good/evil. How much more there is, for those who care to see! Beyond capitalism lies more than just “it must be Communism,” and it’s worth exploring ideas that have served other human societies in order to conceive new systems for our future.

First, however, it is prudent to come to adequate agreement as to what those first two words mean.

These days, it seems that both words – Capitalism and Communism – have come to mean something other than ways of organizing an economy and distributing the goods produced therein. Capitalism, then, relates to an economy based upon the accumulation and investment of particularly large piles of wealth to generate economic returns, a meaning utterly lost when the term has been watered down to something more akin to “freedom” or “warm, good, happy feelings of positivity.” Capitalism isn’t the same as simply having markets or engaging in trade. Although elements of capitalism are evident in, say, the forbidden medieval practice of usury (lending money to be repaid with interest), it really came into its own with such innovations as the chartered East India Company in the 18th century, which began the process of ravaging the subcontinent for private profit.

Likewise, “communism” has come to mean “bad, evil things that inspire feelings of unhappiness” rather than “an economic system in which the major means of production are owned and controlled by the public,” with the aim of a classless, stateless society. In 20th century practice, this has often meant a state-controlled economy, though today’s anarchist-communists envision independent, egalitarian communities managing their own economic needs. Doubtless, private owners of capital would prefer that the idea of public collectivization of wealth be widely associated with grim, fearful feelings (similar to the way many economically disadvantaged poors feel about the word “capitalism” these days), but such emotional redefinition does little to advance the worthy goal of creating an economy that works for as many people as possible (and, importantly, doesn’t destroy the natural world on which our lives depend).

Vintage photograph of a man with bushy, white hair and beard, seated, wearing formal clothes.
Karl Marx, acknowledged father of revolutionary communist theory. Photo by John Jabez Edwin Mayall, colored by Olga Shirnina, courtesy of Wikimedia Commons. CC BY-SA 2.0

So, beyond capitalism and communism, what is there? How else could an economy possibly be organized?

Perhaps the oldest system is the gift economy. When humans lived together in small bands, often at least partially nomadic, one depended upon one’s tribe to live. Food was shared; there were social rules about how to parcel out a hunter’s kill. Those who accumulated too much or acted too greedily may have been mocked and humbled by their peers, ensuring that resources were spread widely. Gifts of food, tools, or other objects were regularly exchanged, and while everyone knew the score, not reciprocating similarly at some point was shameful. If you’ve ever attended a seed swap, a supper club, or even Christmas morning, you’ve taken part in a gift economy, where the best way to invest one’s excess is in one’s friends.

Later came the palace economy. Greater control of a larger population enabled central elites to organize the production and distribution of goods. Land and materials may be provided, such as in the Inca Empire, where different villages were assigned different kinds of production. Finished goods would be collected at a central location, such as a palace or temple (since state and religious power were mingled, a condition some among us would prefer even now). Authorities would then redistribute the goods as they saw fit, whether around the kingdom to those that needed them, as trade goods with other polities, gifts to form alliances, financing a military, or what have you. A similar modern equivalent might be North Korea’s version of state communism, where the government decides what grains farmers are to grow, and redistributes whatever grain is produced back to the people “according to need” (and availability).

You likely heard about the next one in school: feudalism, the dominant economic system of medieval Europe, among other regions. Land (the most important means of production) was owned by the monarch, who lent control of it to the nobility in exchange for the promise of military support in war. Nobility lent smaller parcels to knights, who promised to fight. Knights then provided peasantry with land, in exchange for labor and a share of produce. The details and customs varied from place to place, of course, and the Church complicated it even more, but however hierarchal and oppressive, feudalism was a relatively efficient answer to the circumstances of the time. Nowadays, we don’t have to look far for the modern equivalent of a low-mobility landless underclass who serve their more wealthy ‘betters.’

Indigenous tribes of the salmon-rich Pacific Northwest devised the potlatch economy. Any chief who wanted to remain in that position would do so by ordering a potlatch ceremony and inviting outsiders to attend. By commanding as much production of feast foods and gifts as that tribe could afford, and giving it away in abundance during the ceremony, the chief could earn prestige as the richest and most generous, the rightful big man. As in the gift economy, a mental tally was kept and reciprocity expected, with any shortfall resulting in the loss of political prestige. Organized as a way of allocating political power, it was also an effective way of distributing goods from those with more to those with less.

Distributism is a lesser-known economic philosophy with its roots in Catholicism. Rather than the means of production being concentrated in the hands of the rich, or run by a government bureaucracy, the main goal of distributism is to spread the ownership of property and the means of production as widely as possible. This could mean a great many mom-and-pop shops, worker-owned co-ops, small diverse farms, and independent contractors. Sure, the lack of vast accumulations of capital would mean fewer giant corporations, but that price might be worth paying if it means that everyone had the means to sustain themselves.

Socialism has become as emotionally loaded a term as capitalism or communism, but what is it really? Opinions vary, but in the democratic socialist, Nordic model held up by the likes of Alexandria Ocasio-Cortez, there’s still a capitalist, market economy. Some of the most essential human needs, which aren’t always met by the market, are simply made available alongside and outside of it, funded by public taxation (that is, skimming a bit of the productivity off of a capitalist economy in order to make it serve more people). Major examples would be the British National Health Service, social security payments to the elderly, or state-owned banks that do not need to operate at a profit because their mission is more human-centric.

As you can see, beyond capitalism and communism lies an impressive array of other ways to live. In practice, no single economic system takes care of all needs perfectly. We live in such a mix, where we may work for a capitalist, receive food assistance benefits (SNAP) to subsidize an insufficient wage, trade baby clothes with a moms’ group, and take advantage of a community garden plot or CSA share.

Looking around, however, it’s easy to see that the dominant form of American capitalism isn’t working for everyone. There are homeless people and people-less homes. Vast amounts of food are wasted, yet there are hungry people. We’re destroying the landbase and creating mountains of trash. Increasingly, people are impatient to find a better way, although their imaginations usually settle into two opposing and circularly-arguing camps. It’s a situation that could desperately use an injection of fresh ideas, because the system is failing. Sooner than later, we’ll have to figure out how to produce and distribute what people need, beyond capitalism. Let’s start now.

Related: Distributism: An Old/New Economic Answer


History of Capitalism
Lessons for capitalism from the East India Company
Anarchist communism – an introduction
The Gift Economy
Why Envy Might Be Good for Us
TOTW: Palace Economy
The Origins of the “Temple-Economy” as seen in the Light of Prehistoric Evidence
Famine and the Future of Food Security in North Korea [PDF]
The Feudal Society in Medieval Europe
Neofeudalism: The End of Capitalism?
The Potlatch as Fractional Reserve Banking [PDF]
An Introduction to Distributism
Neither Capitalism nor Socialism: A Third Alternative
Capitalism Isn’t Working. But What Would a Viable Socialist System Look Like?
The freedom lover’s case for the welfare state

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