What is misunderstood about capitalism?
Capitalism and alternatives
Capitalism is a mystery. It has long since permeated all areas of life, but its interpretation is still controversial. It starts with the term: using the word "capitalism" is often considered "leftist" or even "Marxist" in Germany. In the USA, however, the term - which, by the way, does not come from Karl Marx  - is used completely naturally. Speaking of "capitalism" has the advantage that it describes precisely what characterizes today's economy: It is about the use of capital with the aim of owning even more capital afterwards, i.e. making a profit. It is a process that creates exponential growth. 
M.A., born 1964; Business correspondent for "Taz. Die Tageszeitung"; Book author of, among others, "The victory of capital. How wealth came into the world. The story of growth, money and crises" (2015); lives in Berlin.
But what is this "capital"? It is not the same as money, although it is often used interchangeably in everyday life. Money is at least 4,000 years old: The first human texts come from Mesopotamia and were not written to pass on literature, but to record payment obligations. While money is ancient, capital is still young. Modern capitalism emerged in northwest England around 1760 when textile manufacturers came up with the idea of mechanizing looms and spinning mills. Today these machines look very small and delicate, but with them a new era began. For the first time in history, human labor was systematically replaced by technology, and with that wealth came into the world. The economy had largely stagnated for millennia, but it was now growing exponentially. The "capital" in capitalism is not money, but efficient production processes and technical progress. It was a revolution, not simply more of the same. The Austrian economist Joseph Schumpeter found a succinct picture for this fundamental change: "You can line up as many stagecoaches as you like - and yet it will never turn into a railway." 
But why did industrialization begin in England of all places? And why from 1760? "Although thousands of books have been written, it remains a bit of a mystery," says American economic historian Joyce Appleby.  Technologically, the British were not particularly advanced and initially did not know any more than the ancient Romans. The steam engine was based on principles known since Archimedes. Economic historians have now developed well over 20 different theories as to why modern capitalism began in England.  The most convincing analysis starts with production costs: English wages were the highest in the world in the 18th century - so that British goods were no longer internationally competitive. Because people were expensive, it was worthwhile for the first time to use machines and begin industrialization.  The British experience is still relevant: capitalism is stable only as long as real wages rise and keep pace with increasing efficiency. Many entrepreneurs will not believe it, but high - not low - salaries encourage growth and make companies rich.
Capitalism = market economy?Even though capitalism is around 250 years old, persistent misunderstandings still linger. This includes the belief that capitalism is the same as a "market economy". But the market economy does not exist, or only in small niches. A glance at history already shows that modern capitalism has to be more than just a collection of markets. Because markets already existed in ancient Greece 2500 years ago. The Arabs had their souks, Turks and Persians their bazaars. Indians and Chinese also exchanged their goods in markets, but modern capitalism has nowhere emerged from this.
However, the theory of the market economy means more than that there are only markets. Above all, it wants to describe how fair prices are created - namely through extensive competition. Many providers should meet many buyers, so that competition ensures that neither companies nor customers are taken advantage of. However, this attractive theory has one disadvantage: the assumed competition is limited at most. Instead, our economy is shaped by large corporations that control the entire value chain, from raw materials to sales. Even a dry figure from the Federal Statistical Office says it all: "Less than one percent of the largest companies generated a good 66 percent of all sales in 2011."  This extreme concentration of economic power can also be seen in all other western countries.
There is a real market economy, but it is not the big companies, but the small self-employed who have to assert themselves in the merciless competition. Craftsmen, hairdressers, innkeepers, architects, small shop owners or cleaning operators - they all have to face the competition. If the food doesn't taste good, next time customers go to a different restaurant. This sector of small firms is actually very large in terms of numbers, but only a fraction of the actual value creation takes place there. The economy is dominated by a few large corporations.
This development is by no means new, it was already observed in the 19th century. Between 1879 and 1886 alone, around 90 cartels are likely to have emerged in Germany, most of them were price cartels.  From the companies' point of view, this was rational and even imperative: With the increasing use of technology, the investment costs rose steadily, and therefore the companies wanted to ensure that sales and prices were right and were not ruined by unlimited competition. At that time, a paradox emerged for the first time that still shapes capitalism today: high investments are only risked when the risk is largely ruled out.
The history of the German electrical industry is exemplary: The international triumph of the light bulb, invented by the American Thomas Alva Edison, began in 1882. In Germany, Emil Rathenau founded the German Edison Society for Applied Electricity as early as 1883. In order to avoid any trouble, he agreed in advance with the only conceivable competitor - Siemens & Halske, which had been building dynamo machines since the 1860s. As an arrangement, Rathenau suggested that Siemens should forego its own electrification efforts, in return he would purchase all preliminary products from Siemens. Rathenau only wanted to manufacture the lightbulbs himself.  So the market was distributed even before it existed.
Technical developments soon made this lightbulb contract superfluous, but the fruitful cooperation remained. When Emil Rathenau founded his Allgemeine Elektrizitätsgesellschaft (AEG) in 1887, Siemens and Deutsche Bank stepped in as investors, so that in 1910 they together controlled 75 percent of electrical engineering production in Germany.  Instead of a competitive "market economy", a variant of capitalism prevailed that was later called "Deutschland AG": everyone was intertwined with everyone so as not to let annoying competition arise in the first place. The situation was similar in other key sectors such as chemistry.
The large corporations have also succeeded in cementing the market for more than 100 years. A look at the DAX stock market index, which brings together the thirty largest German stock corporations, is illuminating. The majority of these companies were founded before the First World War, and they have been able to hold their own to this day because no one can beat their sheer size. Whether steel, cars, chemicals or pharmaceuticals: These markets are largely closed and newcomers can no longer crack them. The trend towards concentration also encompasses new markets that arise through technical innovations. The Internet is a good example: it took less than ten years for start-ups such as Google, Facebook or Amazon to achieve a dominant market position. There is not much left of real competition on the internet either, which was once praised as a zone of freedom.
Even the "father of the social market economy", Ludwig Erhard, did not completely escape the rule of large corporations. In his famous book "Prosperity for All" he complained: "The development of modern technology for its part once again promoted certain monopoly tendencies, so that the equality of competition was undoubtedly impaired everywhere."  However, Erhard was not ready to agree ask what is left of its "market economy" when the major industries all show "monopoly tendencies".
Modern capitalism is a kind of planned economy - even if it does not resemble the socialist planned economy at all. Of course, there is a diametrical difference between the calculations being carried out centrally in a ministry or decentrally by private companies. But planning is always done because planning has to be done. If the risk - and thus the profit - could not be calculated, nobody would invest at all.
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