the end of capitalism

In order to consume things that they need and/or want people used to forage, hunt, and gather from the bounty of nature.

One interpretation of “modernity” begins when there is an “economy” wherein people produce things in order to be able to consume what they need and/or want.

Production takes place in every economy, but in a capitalist economy there is something else additionally: The investment of money for the sake of making more money. So we now have the concept of “return on capital.”

This is the kind of stuff Marx wrote about in his magnum opus called Capital (in German: Das Kapital), the main volume of which was published in 1867. In it he theorized that, for various reasons, the system would historically result in lower and lower returns on capital.

The graph below seems to bear that out. Starting in 1870, it shows historical return on capital (the dividend yield on stocks is an approximation of the return on capital in general). It was about 6% in 1870. It first falls below 4% around 1900; first falls below 3% around 1960; and below 2% in 1996. It’s currently around 1.5%.

If we’re heading toward a condition where there’s virtually no return at all on capital (below 1%, let’s say), that would effectively constitute the end of the system. The profit motive for capitalist investing would be nullified if there was essentially no return on capital.