The Contradictions of Capitalism

It is a basic tenet of Marxism that capitalism is a contradiction-laden system marked by various internal conflicts and tensions. This is in sharp contrast with the pseudo-scientific claims of neoliberal economics according to which capitalism is a smoothly-functioning, efficient system which always tends toward equilibrium. In times of global slump, it is plausible enough--even for non-Marxists--to say that capitalism is plagued by internal tensions and fissures. But it remains to fill out the thought and explain exactly what this means concretely.

One word about the use of the concept "contradiction" in Marxism. In logic, a contradiction refers to the conjunction of a proposition and its negation (e.g. "it is both the case that it is 1+1=2 and it is not the case that 1+1=2"). That's not what we mean when we talk about the contradictions of capitalism which, in contrast, refer to opposing social forces/processes that brush against the grain of one another. Marxist political economy, methodologically speaking, looks at capitalism as a global system--a dialectical totality--in which various elements reside unstably in an uneven and combined constellation of social processes. To see whether there are any internal contradictions in capitalism we must always situate our analysis at the international level--since what appears to be seamless in a national context can, in fact, be but one part of a contradictory global economic process.

As I say, this is plausible enough at a high level of abstraction, but to see whether or not Marxists are right to think this way we have to look, concretely, at how real capitalism actually works. István Mészáros has done us a great service by actually composing a short list of internal contradictions lodged at the heart of contemporary global capitalism. Below, I reproduce his list with a couple of thoughts about each putative contradiction.

For Mészáros, there are contradictions between:

1. Production and its control. Capitalism is a system in which competition among firms produces an "anarchy of production". No one firm controls the process as a whole and all are locked into a competitive struggle for market share and profits with rival firms. The result is that the machinations of the market produce instability, uncertainty, heightened risk and bad outcomes that no particular capitalist wills. But, of course, in order for capitalism to be viable it requires the constant, conscious intervention of certain groups (corporate administrators, central bankers, regulators, state officials, etc.) who buck the blind compulsion of market competition to try to steer the process to do their bidding. Both elements of the contradiction are unavoidable within capitalism. It can't be market forces and competition all the way down, because within every capitalist firm there has to be some degree of planning and attempts to control the production process to meet certain conscious goals. Moreover, all capitalists states--however neoliberal--simply cannot avoid "interference" in the economy. But any attempts to bring the production process under control in capitalism--however "necessary", even from a ruling-class perspective--will find itself at odds with the problems created by the "anarchy of production", whether at the national or the global level.
2. Production and consumption. I'm not entirely sure what Mészáros means here--he doesn't specify. But it could be that he's referring to the fact that capitalism has to continually create new markets (and manufacture new "needs") to satisfy its endless expansionary requirements while, at the same time, rubbing up against the problem that working-class purchasing power can't justify the expansion. In other words, he could be referring to the classic tendency of capitalist expansion to overheat and generate over-accumulation--a situation in which capitalists accumulate more productive capacity (e.g. more factories, materials, machines, capital, etc.) than they can profitably utilize.
3. Production and circulation. Again, I'm not entirely sure what Mészáros is getting at here. He could mean that the interests of firms dedicated to circulation and those dedicated to production are at odds with one another and produce macro-level irrationalities. He could also mean that there are contradictions between what's produced, on the one hand, and how things need to be distributed, on the other. Any ideas? The absurdity of how food is trucked and shipped all over the globe when it can be produced more easily nearby comes to mind here, but I don't see the sense in which this evinces an internal contradiction of capitalism. 
4. Competition and monopoly. This contradiction is closely related to #1 above. Capitalism is premised upon market competition, but competition naturally leads to concentration and monopolization as the winners get bigger and absorb the losers. Monopolization also serves other functions from a capitalist point of view: it realizes the goal of capturing maximum market share, it enables the monopolist to reduce risk and stabilize profit flows, the domination of a market generates big profits, etc. Left unchecked, "free competition" tends inevitably toward the concentration of capital in fewer hands by bigger and bigger firms. Yet, in other ways, monopolization threatens the very stability of capitalism as a whole. Also, from an inter-imperialist standpoint monopolization can lead to a reduced incentive to innovate the productive forces thereby allowing rival imperialist powers to gain an industrial/military advantage.
5. Development and underdevelopment (i.e. the "north-south" divide, both globally and within particular countries). The combined and uneven development of countries in the north and south creates tensions and problems--economic as well as political--at the global level. I don't know enough about dependency theory to say anything interesting here.
6. Expansion pregnant with the seeds of crisis-producing contraction. The idea is that booms pave the way for deep slumps and vice versa. David McNally discusses this process at length in his excellent Global Slump. I can't recommend this book highly enough. As I understand it, this is structurally similar to number 2 above.
7. Production and destruction (the latter glorified as "productive" or "creative destruction"). Capitalism thrives on destruction. An excellent example is the rash of urban arsons that occurred in US cities in the 1970s. From the perspective of capitalism this made perfect sense--even though it meant destroying use-values, homes, and entire neighborhoods--even human lives in many cases. But capitalism cannot ceaselessly destroy surplus value, it needs to continually extract it from workers in order to be viable. This conjunction of endless expansion of production--coupled with a functional need for destruction--is, it seems to me, another way of getting at the contradictions already mentioned in #2 and #6 above. 
8. Capital's structural domination of labor and its insurmountable dependence on living labor. Capitalists have a need to dominate labor--the better to keep wages low and productivity high. But, no matter what they do to discipline workers, to keep them divided and docile, capitalists are inescapably dependent on them because they produce the goods that make profits possible. So capitalists are attached at the hip to a social class with diametrically opposed interests. Capitalism produces its own gravediggers. This is perhaps the most well-known contradiction of capitalism. We could add to it the contradiction between the growing socialization of the labor process coupled with the growing privatization of its appropriation by the capitalist class.
9. The production of free time and its crippling negation through the imperative to reproduce and exploit necessary labor. Adorno talked a good deal about this contradiction. Free time is shackled to its opposite, but both need one another in a certain way. No matter how much capitalism attempts to colonize and commercialize leisure time, it is impossible to stamp out the feeling that one's free time is fundamentally at odds with the time spent on the clock.
10. Authoritarian decision-making in the productive enterprises and the need for their "consensual" implementation. Capitalism requires authoritarian decision-making processes within firms for the simple reason that democratic decision-making power would mean bringing to the fore contradiction number 8. But, of course, naked authoritarianism naturally produces resentment and resistance. So, the bosses have an interest in management techniques that attempt to secure the "consent" of employees so as to keep conflict latent. This takes many forms--from outright manipulation and lies, to divide-and-conquer techniques, to paternalism and kickbacks, to quasi-nationalistic narratives about "team-building" and community. Apple, through slick ideological means, performs this last technique remarkably well, although the contradiction remains.
11. The expansion of employment and the generation of unemployment. It is a condition of employing workers in capitalism that it can be done profitably. But it can only be profitable as long as wages are kept below a certain threshold above which profits would be squeezed down to nothing. The bosses have innumerable ways of pushing wages down, but their most potent weapon remains the threat that "we can always hire someone else if you don't like it, since there are plenty of unemployed people willing to take your place". This is why Marx called unemployed workers in capitalist societies the "industrial reserve army". But although it is necessary to keep wages low enough for profit to be made, unemployment is also a source of social instability and it pushes effective demand down, especially when the ranks of the unemployed swell during recessions. Capitalism both needs unemployment but also faces problems if there is too much of it--for the simple reasons that it produces social unrest and drives down demand for the goods capitalists need to sell for a profit.
12. The drive for economizing with material and human resources wedded to the most absurd wastefulness of these resources. This is a reason to think capitalism needs to go--but I don't see how it's an internal contradiction. To be sure, capitalism is a system in which, right now, huge masses of labor, unemployed, sit side by side huge masses of capital, amidst a world of unmet human needs. That is absurd, unjust and irrational from a socialist perspective. But is it an internal contradiction of capitalism? Capitalists need not recognize any contradiction here, since they care nothing for human needs as such. Profitability is the bottom line and from this perspective material resources are not wasted if they are destroyed or hoarded--even if human beings desperately need them.To be sure, capitalism can only legitimate itself ideologically if people think it is a system that meets human needs. So, perhaps that's the contradiction--between the useful ideological image of capitalism as "delivering the goods" and the wasteful, irrational reality of how it actually functions.
13. Growth of output at all costs and the concomitant environmental destruction.  This is certainly a contradiction, but the temporal dimensions of it are different from others on the list. In the short-run scramble for profits this quarter, there is no contradiction. But in the long-run, to the extent that environmental catastrophe threatens the accumulation process there is a massive contradiction. Perhaps there are short-run examples--e.g. over-fishing, etc.
14. The globalizing tendency of transnational enterprises and the necessary constraints exercised by the national states against their rivals. I wrote a little bit about this recently in a survey of theories of imperialism. I'm inclined to think that any theory of imperialism worth its salt must capture this contradiction. But it shouldn't do so--as Callinicos and Harvey propose--by attributing to imperialism two separate "logics". Rather, the contradiction should be seen as a basic feature of global capitalism itself.
15. Control over the particular productive units and the failure to control their comprehensive setting (hence the extremely problematical character of all attempts at planning in all conceivable forms of the capital system). I interpret this to be the same as #1.
16. The contradiction between the economically and the politically regulated extraction of surplus labor. I don't know what Mészáros means here. But it could refer to one massive contradiction that doesn't make the list explicitly--the contradiction between legitimation and accumulation. Capitalist states have to secure the conditions for accumulation, otherwise they get a bad economy with rising unemployment and declining tax revenues. No matter how progressive the goals of the State officials, a stagnant capitalist economy thwarts the realization of those goals. So no matter who's in charge of capitalist State, it is shackled to the need to "create a good business climate" and underwrite profitability. But, of course, doing what's necessary to ensure the accumulation of profits almost always brushes against the grain of the interests of the vast majority of the population. Yet, capitalist States have a need to secure legitimation for what it does by convincing the population that it pursues general interests rather than the particular interests of the ruling class (profitability). But there is a contradiction here. Securing legitimation becomes increasingly difficult when the demands of the accumulation process--which tend to trump all else, for reasons we just saw--require measures that punish the mass of the population. Austerity in Greece is a perfect example.