What is the Difference Between Capitalism and Predatory Capitalism?

Introduction to Capitalism:

Capitalism is a system that often gets misunderstood and misinterpreted, largely due to the elements that have been co-opted by certain actors under the guise of economic power. At its core, capitalism is not predatory. In fact, it is fundamentally about cooperation, free will, and the exchange of goods and services. When properly understood, capitalism aims to empower individuals through the free exchange of goods and services. However, when political rent seeking comes into play, it can lead to severe and detrimental outcomes.

According to Dr. Bee Leland, a PhD in Business, the idea of predatory capitalism is a misrepresentation. It is driven by the very nature of monopoly and rent-seeking behavior, which involve driving up the prices of goods to unsustainable levels in order to benefit a select few, and then causing widespread ruin when the system collapses. The predators then swoop in to take advantage of the chaos, often buying up assets for pennies on the dollar and concentrating wealth into the hands of a few."

True Capitalism vs. Predatory Capitalism

True Capitalism:
In a genuinely capitalist system, there is no coercion. Individuals have the free will to sell, buy, or walk away whenever they choose. This principle of free will is a cornerstone of ethical business practices and mutual cooperation. It fosters an environment where everyone has the opportunity to thrive based on merit and choice, not exploitation.

Predatory Capitalism:
Predatory capitalism, on the other hand, is characterized by a stark inequality and systematic oppression. It is a term that accurately describes a scenario where the few prosper at the expense of the majority. In such a system, the labour of the working class is alienated and undervalued, leading to a cycle of exploitation and economic disparity.

Exploitation and Economic Inequality

Under a true capitalist system, the majority of people, particularly workers, sell their labour to capitalists. This leads to a significant problem: the working class is alienated from the products of their effort, and their wages often fall short of the value they contribute. To maximize profits, capitalists are compelled to suppress wages and extend working hours, leading to an increase in the rate of profit.

The end result is a stark disparity in wealth. A tiny minority of people own the majority of the world's wealth, while those who produce the wealth remain in poverty. This is a clear demonstration of exploitation, as the system is designed to extract surplus value from the labour of the working class.

Why “Predatory Capitalism” Exists

The term “predatory capitalism” exists to highlight a deviation from the principles of pure capitalism. It is not a separate economic system but rather a reflection of how political and social structures can be used to exacerbate inequality and exploitation. Predatory capitalism is a term that accurately describes a system where the actions of a few lead to the ruin of many.

It is crucial to understand that true capitalism is not inherently predatory. It is a system that relies on cooperation and mutual benefit. The term “predatory capitalism” accurately highlights the abusive and exploitative nature of certain actors within the economic system, who seek to benefit at the expense of the greater good.

Conclusion

In summary, capitalism is a system that can be unfairly manipulated to create an environment of extreme inequality and exploitation. Predatory capitalism is a term that highlights the unethical practices employed by some to benefit at the expense of the majority. By understanding the difference between these two concepts, we can work towards a more equitable economic system that truly supports the well-being of all.

Keywords: Capitalism, predatory capitalism, economic disparity