Capitalism 101: Beyond the Myths, Into the Machinery

Understanding the True Nature of Capitalism and Why It Persists

Many of capitalism’s staunchest defenders often seem to misunderstand the very system they champion. It is common to hear capitalism conflated with trade, commerce, or simply “making a living,” as if these basic forms of human economic interaction are inseparable from the ideology of capital. But trade has existed for millennia, flourishing in societies long before capitalism emerged. Commerce is as old as civilisation itself, and people have always sought ways to “earn their keep.” To mistake these timeless activities for capitalism is to miss what defines it as a distinct system. Adam Smith, often hailed as the father of capitalism, acknowledged the virtues of trade and specialisation in The Wealth of Nations, but he also warned of the dangers posed by monopolies and unchecked greed. Contrast this with Karl Marx, who dismantled the myths surrounding capitalism in Das Kapital, describing it as a system that extracts surplus value from labour, exploiting workers to generate unearned profit for the owners of capital. These two figures—both titans of economic thought—highlight the need to interrogate what capitalism actually is, rather than what its defenders often claim. At its core, capitalism is not merely about enterprise or ambition; it is a specific economic system built on exploitation and the relentless pursuit of profit. To understand it requires dismantling the myths and propaganda that have been carefully constructed to shield it from scrutiny.

What Capitalism Is (and What It Isn’t)

Capitalism is a specific economic system, one rooted in the private ownership of the means of production and defined by the exploitation of labour for profit. Unlike trade or business, which have existed for thousands of years in varying forms, capitalism represents a distinct organisation of economic life, emerging under specific historical conditions. Trade and commerce flourished in societies long before capitalism arose, from ancient barter systems to sophisticated market economies in the Islamic Golden Age or pre-capitalist Europe. These systems operated under a variety of social structures—feudal, tribal, or communal—and were not reliant on the central dynamic that defines capitalism: the extraction of surplus value from workers. Capitalism is not simply about the exchange of goods or the pursuit of enterprise; it is an economic system that requires labour to be undervalued and underpaid in order to sustain profit for those who own capital.

Adam Smith, often celebrated as the intellectual forebear of capitalism, acknowledged the transformative potential of markets in The Wealth of Nations, praising the division of labour and the efficiencies it created. Yet, even Smith was wary of the darker tendencies of such a system. He cautioned against the monopolistic behaviours of the “merchants and manufacturers” who, he feared, would conspire to restrict competition and exploit the public. Smith understood that trade and commerce could be harnessed for the common good, but he also recognised the dangers when wealth and power became too concentrated. Marx, writing nearly a century later, delved far deeper into these mechanisms, laying bare the exploitative heart of capitalism in Das Kapital. He argued that the system thrives on the extraction of surplus value—the difference between the value a worker produces and the wages they are paid. This surplus, retained by the capitalist, is the source of profit. In Marx’s haunting words, “Capital is dead labour, which, vampire-like, lives only by sucking living labour.” This metaphor is not just poetic; it succinctly captures the systemic nature of exploitation embedded in capitalism.

The distinction between capitalism and trade or business is essential, yet it is often deliberately obscured. Trade is as old as human civilisation itself, with examples ranging from the Silk Road to the bustling markets of pre-colonial Africa and the Americas. These systems of exchange existed independently of capitalism, rooted instead in mutual benefit or the needs of the community. Similarly, business—the act of producing goods or services and exchanging them for value—can thrive in various economic systems without requiring the exploitative dynamics of capital. What sets capitalism apart is that it prioritises profit above all else, subordinating human and environmental needs to the demands of accumulation. This is why trade and business can exist without capitalism, but capitalism cannot exist without exploitation. It is not merely a tool for human enterprise but a structure designed to extract and concentrate wealth in ever-fewer hands. To conflate capitalism with trade or “making a living” is to erase this foundational truth and to mistake a historically contingent system for an inevitable one. Recognising this distinction is the first step in breaking through the myths that sustain capitalism’s ideological dominance.

The Machinery of Exploitation: Labour and Surplus Value

At the heart of capitalism lies the concept of surplus value, the cornerstone of profit and the engine of its exploitative machinery. Surplus value is the difference between the value a worker creates through their labour and the wages they are paid for that labour. This gap is not incidental; it is deliberate and foundational to the system. For capitalists to generate profit, they must extract more value from workers than they return in wages. Again, as Marx so memorably put it in Das Kapital, “Capital is dead labour, which, vampire-like, lives only by sucking living labour.” This vivid imagery captures the parasitic nature of capital, which thrives by draining workers of their time, effort, and creativity whilst offering only a fraction of their true worth in return. It’s the essence of the old tongue-in-cheek refrain, “The boss makes a dollar, I make a dime, that’s why I poop on company time.” Whilst humorous, the joke underscores a fundamental reality: the worker’s contribution far outweighs the meagre compensation they receive, and this imbalance is where profit is born.

Wages are intentionally kept below the value of the work produced to maximise profits, a practice baked into the logic of capitalism. If workers were paid the full value of their labour, there would be no profit left for the owners of capital. This is why, even in times of economic growth and soaring productivity, wages often stagnate or decline. The wealth generated by workers does not flow back to them; it is siphoned upwards to shareholders, executives, and investors. This dynamic is especially visible in modern industries like gig work, fast fashion, and tech monopolies. Gig economy workers, for instance, are classified as "independent contractors" rather than employees, enabling companies to dodge paying benefits and to offer piece rates that barely cover the “cost of living.” Fast fashion exploits garment workers in Global South sweatshops, paying them pennies on the dollar for gruelling labour that creates immense value for Western brands. Meanwhile, tech monopolies like Amazon and Apple rely on massive, poorly paid workforces to sustain their profits whilst funnelling the lion's share of wealth to a tiny elite.

This systemic exploitation is masked by the ideology of “job creators,” a narrative that paints capitalists as benevolent providers of opportunity rather than beneficiaries of unequal power dynamics. By positioning themselves as the magnanimous architects of employment, capitalists shift focus away from the exploitative conditions they create. The reality, however, is starkly different. The jobs they offer are not gifts; they are the bare minimum necessary to sustain their profit-generating operations. Workers create value, and capitalists extract it—that is the crux of the relationship. The rhetoric of job creation serves to obscure this truth, shielding capitalism from criticism and perpetuating the myth that the wealthy deserve their riches because they provide for the rest of society.

In truth, the machinery of exploitation is far from benevolent. It is a relentless system designed to ensure that wealth flows upwards, regardless of the toll it takes on workers’ lives. Recognising this is key to understanding how capitalism operates—not as a neutral or natural way of organising economic life, but as a system built on the deliberate undervaluation of human labour for the benefit of the few. The language of “opportunity” and “job creation” is little more than a smokescreen, concealing the true cost of this exploitation. For the worker, every task completed and every hour worked generates value that will never be returned to them. For the capitalist, this value is their lifeblood—the surplus extracted, the profit secured, and the system sustained.

Rent-Seeking: Capitalism in Overdrive

Rent-seeking lies at the heart of capitalism in overdrive, a form of profit-making that extracts value without creating it. Unlike productive economic activity, which generates goods or services, rent-seeking operates parasitically, siphoning wealth from workers and consumers whilst contributing nothing in return. Hedge funds, private equity firms, and landlords exemplify this behaviour, leveraging their capital to extract rents—whether through financial speculation, exorbitant housing costs, or the monopolisation of essential goods. The logic of rent-seeking is deeply embedded in modern capitalism, particularly in the Global North, where the obsession with quarter-over-quarter profit growth drives increasingly creative, and exploitative, methods of value extraction.

Once confined to niche sectors, rent-seeking has infiltrated every aspect of daily life. What began as Software as a Service (SaaS)—a subscription model for software—has ballooned into an economy where nearly everything is rented. Car manufacturers like BMW famously attempted to charge monthly fees for basic features such as heated seats, essentially putting a paywall on hardware that was already built into the vehicle. Tesla has followed a similar model, offering full battery capacity as an upgrade for a price, even though the hardware is already present in the vehicle. These practices exemplify how companies exploit consumers by turning ownership into a perpetual lease, wringing profits from features that add no additional production cost. Whilst BMW eventually backed down in the face of backlash, this model of value extraction persists, pushing the boundaries of what companies can monetise.

The housing crisis in the Global North offers an especially egregious example of rent-seeking. Private equity firms and hedge funds have increasingly turned to housing as a source of profit, buying up single-family homes, apartment complexes, and even trailer parks. In the latter case, the cruelty is particularly stark: landlords jack up space rents on residents, many of whom cannot afford to move their trailers. Unable to pay, they are forced into eviction, creating misery and precarity. This is not an accident; it is the logical outcome of a system that treats housing as a commodity rather than a basic human right. Meanwhile, tenants often pay far more in rent over decades than they would have if they were given the means to buy their homes outright. In many ways, credit scores—a modern form of digital enclosure—serve as a tool to perpetuate this cycle, locking people out of ownership and funnelling them into exploitative rental arrangements.

Healthcare, too, illustrates the predatory nature of rent-seeking. Pharmaceutical companies, particularly in the United States, have commodified lifesaving treatments to an absurd degree. Insulin, a drug that has existed for over a century, remains prohibitively expensive in the US, despite being sold at a fraction of the cost in other countries. Similar patterns can be seen with drugs like Ozempic, where prices are kept high not by production costs but by corporate strategies to maximise shareholder returns. This dynamic is emblematic of a system that prioritises profits over lives, turning even basic healthcare into a vehicle for extraction.

Rent-seeking extends to the natural world, commodifying resources for private gain while ignoring ecological and social costs. In California, a single family controls the bulk of the state’s water supply, using it to fuel the lucrative pistachio trade. Their political influence not only maintains this monopoly but extends to advocacy for war with Iran, their chief rival in pistachio production. This is an almost absurd example of how capitalism's endless hunger for profit drives not only environmental degradation but also geopolitical conflict. War, as Abby Martin has chronicled, is among the most destructive activities humans can undertake, leaving death and ecological devastation in its wake.

Thorstein Veblen’s critique of capitalism captures the essence of rent-seeking’s parasitic nature: “The modern captain of industry has not been a production engineer, but a financial engineer.” Marx, too, understood capitalism’s tendency to commodify everything, reducing even basic needs to opportunities for profit. Nowhere is this more evident than in housing, where annual property taxes in the US punish even those who manage to secure homeownership. Contrast this with systems like those in China, where the principle of “no one gets two before everyone gets one” reflects a radically different approach to resource distribution.

Rent-seeking is not productive; it is parasitic, feeding off the labour of others without contributing anything of value. It erodes the foundation of society, pushing the cost of living higher, degrading the environment, and stripping people of dignity. Whilst capitalism celebrates these behaviours as innovation or entrepreneurship, they are, in reality, symptoms of a system that has lost sight of its purpose—if it ever had one beyond the enrichment of the few. Recognising the parasitic nature of rent-seeking is essential to understanding the broader failings of capitalism and imagining a system that prioritises human and ecological wellbeing over endless profit.

Capitalism and Colonialism: Two Sides of the Same Coin

Capitalism and colonialism are inseparable, two sides of the same coin that have shaped the modern world through dispossession, exploitation, and imperialism. The historical roots of capitalism lie firmly in colonial practices, with the violent accumulation of capital through the transatlantic slave trade, the plunder of resources from colonised lands, and the enclosure of commons that dispossessed people of their shared resources. These practices were not accidental; they were fundamental to the rise of capitalism. Rosa Luxemburg described this process as “the most brutal form of exploitation and oppression,” noting that colonial violence was not a byproduct but a necessity for capitalist accumulation. Similarly, Frantz Fanon emphasised how colonialism imposed economic structures that entrenched inequality and extracted wealth from colonised peoples for the benefit of imperial powers.

The transatlantic slave trade, one of the earliest engines of capitalist accumulation, generated immense wealth for European powers through the industrial-scale commodification of human lives. Whilst it is often argued that slavery existed in Africa and other ancient civilisations long before the advent of capitalism, this observation is frequently wielded to diminish the unique horror of the transatlantic trade. Yes, systems of enslavement predate recorded history, but does that make the transatlantic trade any less abhorrent? Far from it. The scale, brutality, and systematic dehumanisation of the transatlantic slave trade were exponentially worse than anything the ancients could have engineered. Enslaved Africans were not only forcibly transported to the Americas in their millions but were subjected to chattel slavery—a system that reduced them to property, stripped them of personhood, and sought to annihilate their cultural and familial ties. They were forced to labour on plantations producing sugar, cotton, and tobacco—commodities that underpinned the industrial revolution and fuelled the rise of European capitalism.

At the same time, European powers were enclosing common lands in their own countries, displacing peasants who had once sustained themselves through shared resources and forcing them into wage labour. This dual process of violent displacement and exploitation—on both sides of the Atlantic—laid the groundwork for capitalism’s development, creating a system that thrives not only on the extraction of resources but on the commodification and brutalisation of human beings. To compare the transatlantic trade to ancient systems of enslavement is to ignore its scale, its industrial logic, and its role in shaping the modern capitalist world order. It was not merely a continuation of historical practices; it was an unprecedented atrocity designed to fuel a system that placed profit above all else.

This pattern of dispossession and exploitation persists in the expansion of markets under capitalism. The assassination of Muammar Gaddafi in Libya serves as a stark example of how imperial powers protect capitalist interests under the guise of promoting democracy or human rights. Gaddafi’s proposal for a gold-backed African currency (the gold Dinar), which would have challenged the dominance of the petrodollar and offered economic sovereignty to African nations, was seen as a direct threat to Western economic hegemony. NATO’s intervention in Libya, ostensibly to protect civilians, resulted in Gaddafi’s death and the destabilisation of the region, ensuring the continued subjugation of African economies to Western financial systems. Gaddafi’s socialist vision, articulated in The Green Book, sought to resist the very imperialist structures that capitalism relies upon, making him an obvious target.

Modern neocolonialism continues this legacy through multinational corporations and international financial institutions like the IMF and World Bank. These entities maintain the economic dominance of the Global North by imposing debt and structural adjustment programmes on the Global South, extracting wealth from impoverished nations whilst enriching the elites of imperial powers. El Salvador and Argentina provide clear examples of this dynamic. In El Salvador, the government’s embrace of Bitcoin and neoliberal policies, whilst celebrated by Global North observers, has done little to alleviate the suffering of the working class, who face rising living costs and stagnant wages. Instead, it has further entrenched economic inequality and dependency on foreign investment. Similarly, Argentina remains locked in a cycle of debt to the IMF, forced to implement austerity measures that devastate the poor while ensuring the repayment of loans that primarily benefit international creditors.

Multinational corporations exacerbate this exploitation by extracting wealth from resource-rich nations, often leaving environmental destruction and social instability in their wake. From mining operations that poison local water supplies to agribusinesses that displace small farmers, these practices echo the colonial extractivism of earlier centuries. The wealth generated rarely benefits the people of these nations; instead, it is funnelled into the coffers of corporations headquartered in the Global North, perpetuating a global economic order that mirrors the colonial hierarchies of the past.

Capitalism cannot be understood without recognising its colonial roots and ongoing reliance on imperialism. As Luxemburg argued, “Capitalism depends on non-capitalist forms of production for its existence and growth,” a reality that has always required the violent subjugation of others. Modern capitalism is simply colonialism in another form, dressed up in the language of markets and development but operating on the same principles of dispossession and exploitation. The suffering of the poor and working classes in El Salvador, Argentina, and beyond is not an aberration; it is a feature of a system designed to concentrate wealth and power in the hands of a few. Understanding this connection is critical to dismantling the myths that capitalism promotes, exposing its reliance on imperial violence and exploitation to sustain itself.

Rugged Individualism: The Myth That Holds It All Together

The myth of rugged individualism, so central to the ideology of capitalism, was ironically born as a critique of individualist folly. The phrase "pulling oneself up by one's bootstraps" originally illustrated an impossible task, a satirical jab at the idea that individuals can rise above systemic barriers entirely through their own effort. Yet over time, this phrase and the concept it evokes have been appropriated and twisted to champion self-reliance and to erase the reality of collective struggle. Under capitalism, the myth of rugged individualism has been weaponised to obscure systemic inequalities, discourage solidarity, and perpetuate the idea that personal success or failure is solely a matter of individual effort. Ayn Rand, one of its most vocal proponents, glorified this ethos in works like The Fountainhead and Atlas Shrugged, where she equated individualism with moral virtue and collectivism with mediocrity and oppression. In stark contrast, Marx and Engels saw collective struggle as the only path to liberation, writing in The Communist Manifesto that “the emancipation of the working class must be the act of the working class itself.”

This myth plays a crucial role in conditioning people to see rent-seeking and profit extraction not as parasitic but as virtuous. Corporate media, education, and popular culture reinforce the narrative that wealth is the product of hard work and ingenuity, ignoring the systemic exploitation underpinning capitalist success. From the corporate-sponsored textbooks that glorify industrialists as “self-made” heroes to Hollywood’s celebration of lone geniuses overcoming adversity, the myth is embedded in the fabric of society. More recently, it has found a new frontier in social media, where “influencers” perpetuate the illusion of individual success through hustle culture and self-branding. These narratives obscure the reality that the vast majority of wealth is accumulated through systems of extraction, not creation—whether it’s a landlord profiting from tenants who cannot afford to own property or a corporation exploiting underpaid workers to maximise shareholder returns (see Amazon “piss jugs”).

Rugged individualism conditions people to internalise capitalist ideals so deeply that even imagining the dismantling of the system feels like a personal threat. For many, dreams of wealth and success are inextricably tied to the capitalist framework, even if those dreams hinge on the exploitation and subjugation of others. The myth perpetuates the belief that anyone, regardless of circumstance, can rise to the ranks of the wealthy through hard work, perseverance, or taking the “right” risks. This illusion persists despite overwhelming evidence to the contrary—evidence that systemic barriers like generational poverty, racism, and the structural inequities of capitalism ensure that the “American Dream” is attainable for only a privileged few. This myth fosters competition over solidarity, pitting individuals against one another in a race designed for most to lose. Worse still, it provides a moral framework for inequality: those who succeed are framed as virtuous and deserving, whilst those who struggle are blamed for their own failures, portrayed as lazy, inept, or unworthy of success (see any Gordon Ramsey show).

This internalisation of capitalist ideals extends far beyond personal ambition; it permeates cultural narratives, shaping the collective imagination and reinforcing the structures of power. The Western genre, which dominated early Hollywood and television, is a prime example. These stories of “rugged pioneers” and “enterprising settlers” not only glorified individualism but also masked the brutal realities of colonialism and capitalist expansion. In these narratives, settlers heading westward in search of land and opportunity were presented as heroic, civilising forces bringing prosperity to “wide open spaces.” The dispossession and genocide of Native peoples—whose lands were being stolen in the name of Manifest Destiny—were either ignored or reduced to the actions of “pesky natives” inexplicably hostile to progress. By framing the violent seizure of Indigenous lands as a necessary and virtuous act, these films and shows helped to legitimise the capitalist conquest of the American frontier. They erased the communal and sustainable ways of life practiced by Indigenous peoples, replacing them with the glorification of individual landownership and the relentless pursuit of profit (see the Boomer Sooner fight).

The imagery of rugged cowboys taming a hostile wilderness became central to the mythos of the “American Dream,” reinforcing the idea that success was achieved through personal grit and determination. In reality, westward expansion was fuelled by massive state intervention: land stolen through “treaties” and violence, the railroads funded by government subsidies, and the displacement of Indigenous communities to create space for settlers (see Lebensraum). These “self-made” pioneers were often supported by policies that enriched a small elite at the expense of everyone else. Yet the Western myth persists, shaping the cultural imagination and framing capitalism’s violent origins as a story of noble individualism.

This myth, ingrained through cultural narratives and media, ensures that capitalism is seen not as a system of exploitation but as a natural and virtuous way of life. The myth of rugged individualism convinces people that collective action is unnecessary or even dangerous, framing systemic change as a threat to individual opportunity. This narrative is exemplified in the life of Andrew Carnegie, often hailed as the quintessential “self-made man.” Carnegie’s rise from humble beginnings to industrial titan is frequently invoked as proof that capitalism rewards hard work and ingenuity. Yet this portrayal is a carefully constructed fraud, designed to obscure the brutal realities of how his wealth was accumulated. Far from being a lone genius who pulled himself up by his bootstraps, Carnegie’s fortune was built on the backs of exploited workers, the theft of surplus value, and the violent suppression of collective struggle. His immense wealth, glorified as the product of personal effort, was in reality extracted from the labour of thousands who toiled under dangerous and dehumanising conditions in his steel mills.

Carnegie’s success depended on the systematic destruction of unions and collective organising, which he saw as threats to his empire. His role in the infamous Homestead Strike of 1892 lays bare the hypocrisy of his “self-made” narrative. Whilst vacationing in Scotland, Carnegie left his lieutenant, Henry Clay Frick, to oversee the union-busting efforts at the Homestead Steel Works. Frick brought in Pinkerton agents, who violently clashed with striking workers, resulting in multiple deaths and a crushing defeat for the union. Carnegie’s empire was not built through hard work alone but through imperial might—deploying private armies, exploiting immigrant labour, and ensuring that workers were paid as little as possible for the immense value they created. His wealth was the product of a system that relied on the oppression of others, not the triumph of individual effort.

The reality of Carnegie’s legacy also reveals how the dreams of wealth and “success” under capitalism almost always depend on the exploitation of labour, the extraction of resources, and the subjugation of marginalised groups. The promise of “self-made” success in Carnegie’s case came at the expense of workers who were denied fair wages, safe working conditions, and the right to organise. His steel mills operated with grueling hours, low pay, and frequent injuries—conditions that made his vast fortune possible. Despite his later reputation as a philanthropist, giving away millions through libraries and foundations, the damage wrought by his empire cannot be erased. His charitable giving was only made possible by the vast accumulation of surplus value stolen from his workers—a wealth they themselves had created but never shared in.

Carnegie’s story illustrates the hollowness of the “self-made man” myth and how it perpetuates the idea that structural inequalities are irrelevant or justified. The narrative surrounding him frames systemic change—such as unionisation or fair labour laws—as an attack on the freedoms of those who have supposedly “earned their wealth.” Yet his empire stands as a testament to the exact opposite: that such wealth is rarely earned through personal effort but instead through the exploitation of others. By recognising this reality, we can see Carnegie not as a hero of rugged individualism but as a symbol of the systemic oppression and inequality that capitalism relies upon to sustain itself.

Far from being a noble ideal, rugged individualism is a tool of capitalist propaganda, designed to erode solidarity and obscure the systemic nature of exploitation. It perpetuates a system that thrives on inequality and normalises the suffering of others as the price of personal ambition. To move toward a more equitable and humane world, we must reject this myth and embrace the collective struggle—not just against capitalism, but against the cultural narratives that sustain it. By recognising the interconnectedness of our lives and the necessity of mutual support, we can dismantle the illusions that have upheld this system for so long.

Final thoughts …

I realise I’m running out of space here, and you’ve likely had your fill of reading, so let me end with this: Capitalism’s relentless drive for endless growth fuels inequality, environmental destruction, and social instability, prioritising profit over people and the planet. Fossil fuel extraction accelerates climate change, widening wealth gaps entrench poverty whilst enriching a tiny elite, and the system’s unsustainable logic ignores its catastrophic consequences. Yet alternatives exist: Indigenous economies rooted in balance and sustainability, cooperative / matristic models, and socialist experiments all offer glimpses of a fairer, more humane way to live. Bell Hooks reminds us, “Healing is an act of communion,” and Antonio Gramsci calls us to challenge the myths capitalism perpetuates. We don’t have to accept a system built on exploitation. We can dream of collective abundance where everyone has enough. As Rosa Luxemburg said, “We stand before a choice: socialism or barbarism.” The future is ours to shape—let’s make it a just one.