Everybody talks about capitalism, but what is it? | Kajsa Ekis Ekman | TEDxAthens

In the wake of the financial meltdown and the euro crisis, a new interest in understanding capitalism has surged. So what is this system? It has the power to transform rural societies into bustling urban metropoles in only a decade, foster innovation and new technologies, but one thing the system lacks is a plan. And as we face not only economic crisis, but a much bigger climate crisis, a plan is exactly what is needed.

Kajsa Ekis Ekman was born in Stockholm 1980. She is a journalist and author of two books, "Being and being bought" about trafficking in women, and "Stolen Spring" about the eurocrisis and its consequences for Greece. Her books have been translated into several languages and she lectures around the world about crisis theory, women's rights and Latin American politics. She is a critic at Sweden's major daily Dagens Nyheter and an op-ed writer for the newspaper ETC. She is the founder of the climate action movement Klimax and the solidarity network NFG.

This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx

We heard today about inventions,
about economy and about war,

but there's one word that has not
been mentioned the whole day

and, yet, is the force
that drives all of these things.

Okay, I'm not a Jehovah's Witness
that's talking about God, right?

It's another word, "capitalism."

Do you know what that is?

What is it then?

I didn't hear anything.

See, that's the interesting thing.

When I went to school, I learned
that we were living in a society

that was governed by democracy, right?

And if you didn't know exactly
how many MPs were in your parliament,

you didn't pass the test.

So when I got out of school
and I looked for a job and I got a job,

I didn't see no democracy there.

The boss was ruling
like in a dictatorship!

When I was going to buy
my first apartment,

I didn't see no democracy there either.

When you go to the stores,
where's democracy?

And I realized there is another force
that's guiding society

that's much more powerful than democracy,

and this force is capitalism.

Now, I know what you're thinking now,

that I'm going to talk about
capitalism being bad and all that.

It's not the point.

The point is we have to understand
what this thing is,

we have to understand
the mechanisms of it.

I came to this point
when I came to Athens in 2011

to write my book about the euro crisis.

This was at a time when -

When I landed in Athens,
Syntagma was full of tents,

full of people talking, having meetings
and things like that,

sharing experiences.

It was a time when the whole
European media was talking

about Greeks being lazy,
not working enough,

retiring too early and so on,

facts that later on have been disproven.

I mean, I've been an investigative
journalist for about ten years.

I don't think it's ever been so easy
for me to check facts.

I looked at the ECB,
the OECD, the ILO, Eurostat,

and you see that nowhere
are those facts to be proven.

However, when I was going around Sweden

and talking what were
the causes of the crisis,

I realized that crises today
are much more difficult to understand

than, say, 500 years ago.

Five hundred years ago,

as the historian Fernand Braudel
describes really well,

crises were easy to explain.

There were too many people
and too little food.

When population grew at the same time
as there was a natural disaster,

all of a sudden people
didn't have enough to eat.

Today's crises look very different.

We have stores full of food,

but outside, there are people
who are hungry and begging for money.

So, there must be something wrong
in the mechanism.

Now, let me give you
a definition of capitalism.

A lot of people think
capitalism is free market,

it's free choice, it's individualism -

No.

Capitalism is production
for profit in private hands,

as opposed to, for example,
what's happening in China,

where we have state's capitalism,

where the state produces for profit,
but it's not owned in private hands;

or as opposed to production in private
hands that's not made for profit.

So, capitalism is when the production
of goods and services

is done for the sake of profit
and is in private hands.

Now, this is the total
opposite of a market.

In a market, the principle,
as Marx described,

is product - money - product.

A farmer might go to the market with eggs,
get money for the eggs,

and with this money,
buy some milk, right?

So, the money is just a tool.

Now, a capitalist works the other
way around, starts with money.

Either you take a loan
or you have money to invest.

You make your product

just to end up with more money
than you had in the beginning.

So, the principle is
money - product - more money, right?

Now, capitalism isn't
good or bad in itself.

It doesn't have a moral.

The point is it doesn't have a plan,
it doesn't have a responsibility,

because in every company's goal
is only that thing:

to end up with more money at the end.

It doesn't have a responsibility
for the climate, or the economy,

or the country, or the world.

Now, the point is here that capitalism
isn't the same all the time.

It takes many forms.

It can take the form
of imperialism, as we know;

it can take the form
of a free-market type of capitalism;

it can take the form of vampire capitalism
as we saw in Russia in the '90s,

when people were just robbing
the hell out of the economy.

What I'm going to try to describe here

is the changes that capitalism
has gone through over the last 40 years,

which has brought us to this period

where crises are happening
one after the other in the whole world.

Because capitalism, mind you,
doesn't always lead to crisis.

As the economist Andrew Kleiman has said,
you cannot blame capitalism for crisis.

That is as blaming
plane crashes on gravity.

I mean, gravity is always there, right?
But planes do not always crash.

And as a matter of fact,
in the post-war period,

1945 to 1973,

the West didn't see a single crisis.

It was a time when profits went up
at the same time as salaries went up.

The working classes became
consuming classes for the first time

in big parts of the West,

could buy a TV, could buy cars,
could go on vacation and things like that.

Now, in 1973, what happened?
The oil crisis.

After the oil crisis, all of a sudden,
profits went down all over the West.

Now, of course, bearing in mind

that if you have a company
the point is to make profit,

what does a company do
when the no longer can make profit?

Well, one way is to go bankrupt.

Another way is to cut costs.

So, companies all over the West
started cutting costs,

meaning the cost of labor,
lowering salaries,

which of course meant
also attacking trade unions.

You had to do that in order
to be able to push down salaries,

as much as they did.

They got political help in the beginning
of the '80s with Regan and Thatcher,

who launched major attacks on trade unions
all over Britain and America.

Another strategy when profits
went down was financialization.

Now, as you might remember,

finance had been a very repressed part
of the economy since the Great Depression.

Of course, because
in the Great Depression, in 1929,

they saw what would happen if you had
an unregulated financial sector.

It led to a big bubble that then crashed,
and millions were unemployed.

So, after the Great Depression,
they installed regulation for finance.

Right?

Now, in the beginning of the '80s,

investors were pushing
for these regulations to be taken away,

in order to - as you remember,
the formula money - product - money -

to shorten this formula
and make money off of money.

So, just money - money;
that is the finance sector.

So, also in Britain and in America,
regulations were taken away.

So, all of a sudden, banks could lend
as much as they wanted,

they could have as high
interest rates as they wanted,

they didn't have to have a distinction

between the money that people
put in the bank to save

and the money they use for speculation.

[The so-called] Glass-Steagall law
was taken away as well.

So, this led to financial explosion,

and later on when new
innovations came in finance,

they were totally freed from regulation.

The third strategy was privatization.

Now, this is very smart,
if you think about it, for a capitalist

because if your product
is, like, chewing gum,

in a crisis, maybe that's not the first
thing that people are going to buy.

It doesn't matter, like,
if you make a new package,

or if you put a green-tea taste,
or ginger taste,

or mix all these different things
in your chewing gums.

If people don't have money, that's not
the first thing they're going to get.

But if you look at the important
things of life - what are these?

Water, electricity, communications,
health, school, education,

things like that -

The problem was you couldn't
make profit off of these

because these used to be
owned by the state.

Now, capitalists all over the West said,
"Why don't we try to get in there?

Because of course, if there's a crisis
people will still want water,

they're still going to want education."

So, all these sectors were privatized,
from the '80s and onwards, bit by bit.

And I know that people here tend to think

that Sweden is this kind
of social democratic paradise,

where everything is public
and we all get money for free.

Let me tell you that we have actually
gone further than most countries

in deregulating and privatizing things.

I mean, today in Sweden,
you can buy a school -

McDonald's can buy a school,

and take money off of the state,

put a half of it in Cayman
Islands and go bankrupt.

So, Sweden isn't really
what it used to be either.

So, these three strategies,
combined of course with the fact

that China and Soviet Union
later on were included

in the whole capitalist world economy,

have changed a lot of things.

Now, what happened was, in the US,
they managed to put salaries so low

that people in the US now needed to have
two, three jobs to survive.

How then were they
going to consume products?

And that's like every capitalist dilemma,

because what you want is of course
your workers should not earn that much,

so you cut costs,

but the workers of all the other companies
should earn a lot, ideally,

so they can buy your products.

Now, if all the companies succeed
in pushing down wages,

nobody is there to consume.

So that was a problem.
But then, what came in? The loans.

Remember the second strategy,
financialization.

So, loans came in, so now all these people
in the US working three jobs were told,

"Well, you can just take loans!

If you take loans, you can get
a new house and so on.

Don't worry, the interest
rate is very low."

Nobody saw that it went up
after two or three years.

So, when all that got together,

we had the breakdown that we had in 2008.

Normal people in the US had
one capitalist on [each] shoulder.

One of them of course is
the company owner that you work for,

that's, you know, taking off
of your work every day.

The other one was the bank.

When one of them wasn't paying enough
to satisfy the needs of the other one,

things broke down.

Who had to step in
and solve the whole thing?

The taxpayers again, these same workers.

Now, going back to Europe,

the European industrialists
had their own strategy

in attacking falling profits.

In 1983, the major European
industrialists met in Paris;

the initiative of the CEO of Volvo,

a Swedish guy - I don't know
if I should be proud -

Pehr Gustaf Gyllenhammar.

He called his colleagues
up in Europe and he said,

"Listen, guys, we have a problem.

The European industry is going bad,

Japan is going ahead of us,

the US is going ahead,

we need to do something."

So, they all met in Paris.

Of course these were all
like competing companies

that normally would have hated each other,

but now they decided to collaborate.

They said, "The problem in Europe is
we have too many different governments,

that decide different things, right?

So, we need a unit that can impose
the same rules in the same market,

in the whole of Europe."

Now, before that,
I don't know if you remember,

we had the European Community.

If you opened a newspaper in the 1970s

and tried to read
about the European Community,

there wouldn't be
anything there about it. Why?

Because the European Community
wasn't really that much of a thing.

What it was was fine words
about peace, and about brotherhood,

agricultural subsidies,

but not much more than that.

Now, these industrialists that met decided
to develop the European Community

into what is now known
as the European Union.

Unfortunately, they haven't
really gotten credit for it,

and a lot of them
are writing memoirs saying,

"Why are people
giving credit to politicians

when it was us, you know, the capitalists.
We did this. Nobody's thanking us!"

So, they wrote a manifesto back in 1983
called "Europe 1990,"

that then became the basis
of the Maastricht Treaty,

that laid the foundation
of what is now the European Union,

and later transformed into the euro.

So, we can see
that the same thing happened

when the American crisis
came over to Europe,

mutated into euro crisis,

and all of a sudden the flaws
of the scheme were exposed.

Now, I'm realizing I only have
a couple of minutes here

to preach, like, a world revolution,
so I don't think that's going to happen.

But I want to ask you
to think of something:

with the crisis that we have today,
the crisis of the three Es -

economy, ecology and energy -

do you think this system will be able
to solve this crisis by itself?

Are there mechanisms in companies
that are taking care of these things?

You know, there's a famous quote:

"The market is a good servant,

but it's a bad master,
and it's a worse religion."

Now, I want you to think of:

what if we brought back democracy
as it was intended to be?

And some of you will tell us,
"No, of course we already have democracy."

Yeah, in one sense, we do,

but if you were to understand the full
meaning of what democracy might be,

not only voting every four years,

but having democracy
in all sectors of society,

democracy also in the workplace,
democracy everywhere,

I think there's only one thing
that cannot be democratic,

and that's love, unfortunately, you know.

It's just bound to be like that,
you can do nothing about it,

though you might have democracy
in your relationship once you get one.

But I want you to think of that.

Are they going to solve it?

And if they're not
going to solve it, who will?

Thank you.

(Applause)