gh little more than the freedom of the market, is able to match social productio

n to these needs and desires.

Capitalism as this money-making activity has existed in the shape of merchants and
money-lenders who acted as intermediaries between consumers and producers engag
ing in simple commodity production (hence the reference to merchant capitalism) si
nce the beginnings of civilization. What is specific about the capitalist mode of
production is that most of the inputs and outputs of production are supplied thr
ough the market (i.e. they are commodities) and essentially all production is in
this mode. For example, in flourishing Feudalism, most or all of the factors of
production including labor are owned by the feudal ruling class outright and th
e products may also be consumed without a market of any kind, it is production f
or use within the feudal social unit and for limited trade.
This has the important consequence that the whole organization of the production
process is reshaped and reorganized to conform with economic rationality as bou
nded by capitalism, which is expressed in price relationships between inputs and
outputs (wages, non-labor factor costs, sales, profits) rather than the larger
rational context faced by society overall. That is, the whole process is organiz
ed and reshaped in order to conform to commercial logic. Another way of saying thi
s is that capital accumulation defines economic rationality in capitalist produc
tion. In the flourishing period of capitalism these are not operating at cross p
urposes and thus Capitalism acts as a progressive force (e.g. against Feudalism)
. In the final stages, Capitalism, as a mode of production, achieves complete do
mination on a planetary basis and has nothing to overcome but itself, the final
(for it, Capitalism, viewed as a Hegelian process, not for historical developmen
t per se) negating of the negation posited by Orthodox Marxism.
In this context, Marx refers to a transition from the formal subsumption of produc
tion under the power of capital to the real subsumption of production under the po
wer of capital. In what he calls the specifically capitalist mode of production, b
oth the technology worked with and the social organization of labour have been c
ompletely refashioned and reshaped in a commercial (profit and market-oriented)
way; the old ways of producing (for example, crafts and cottage industries) had be
en completely displaced by the then new industrialism.
Summary of Basic Distinctions