Beyond the Market Myth: The Institutional Logic and Contradictions of Capitalism

In prevailing economic discourse, capitalism is typically understood as a market system, a neutral mechanism through which supply meets demand, efficiency is optimized, and individual freedom is expressed through choice. But this market-centered imaginary obscures the structural dynamics, historical evolution, and enduring contradictions that constitute capitalism as a deeply institutionalized social order. It is not merely an economy but a mode of organizing life, matter, and meaning across time and space.

This article is not an ideological defense of capitalism, nor an endorsement of communism or socialism in their historical forms. Rather, it is a fact-finding inquiry into the structural features and contradictions of capitalism as a system. The aim is to understand, not romanticize or vilify, how capitalism functions, how it reproduces itself, and how it shapes social, ecological, and political realities. Even Marx himself, were he alive today, would likely have voiced trenchant criticisms of the authoritarian regimes that have claimed to act in his name. His critique was directed not at liberal freedoms, but at the systemic logic of exploitation embedded in wage labor and capital accumulation. What follows is not a prescription, but a conceptual lens for decoding the forces that govern our world.

It is also worth clarifying that Marx himself was not an ideologue in the conventional sense. He did not offer a fixed doctrine or political blueprint, but rather a method of historical analysis and a critique of ideology. In The German Ideology, he argued that “the ideas of the ruling class are in every epoch the ruling ideas,” a powerful indictment of how dominant narratives serve to legitimize existing social relations. Marx’s aim was not to replace one ideology with another, but to unmask the structural foundations of economic and political power. His project was analytical, not doctrinal concerned less with prescribing solutions than with revealing how capitalism organizes and conceals domination.

An ideologue typically promotes a fixed set of beliefs or doctrines, often with prescriptive certainty. Marx, on the contrary, developed a critique of ideology especially in The German Ideology, in which he argued that dominant ideas in any society serve the ruling class by disguising material power relations as natural or universal truths.

Marx’s aim was not to create a dogma, but to analyze the underlying structures of capitalist society. He wanted to demystify how the economy, politics, and social relations functioned, and how they obscured exploitation, inequality, and historical contingency.

He famously wrote:

“The philosophers have only interpreted the world, in various ways. The point, however, is to change it.”

— Theses on Feuerbach (1845)

At the heart of the capitalist mode of production, as Karl Marx systematically laid out, are four defining features: private property in the means of production, a labor market, capital accumulation, and generalized commodity exchange, i.e., markets. Each of these institutional elements serves a distinct function in the reproduction of the system, and none can be reduced to the voluntary actions of buyers and sellers.

It is important to stress that the emphasis on Marx here is not ideological, but analytical. What makes Marx’s critique indispensable today is its enduring explanatory power in uncovering the structural logic of capitalism. His framework rooted in relations of production, surplus appropriation, and systemic contradiction remains remarkably apt for interpreting the economic, ecological, and political crises of the 21st century. Rather than treating capitalism as a set of market arrangements, Marx invites us to see it as a historically specific social formation driven by accumulation and deeply entwined with exploitation and domination.

Marx’s critical intervention becomes clearer when contrasted with thinkers like John Stuart Mill. While Mill acknowledged economic inequality and advocated reforms such as inheritance taxation and cooperative production, he remained committed to the sanctity of private property and market exchange. For Mill, the aim was to humanize capitalism, not to transform its underlying structure. Marx, by contrast, exposed how exploitation is embedded not in market imperfections, but in the very mechanics of wage labor and capital accumulation, logics Mill left unchallenged.

Marx’s framework, while radical in its conclusions, did not emerge in isolation. He was deeply engaged with the insights of classical economists such as Adam Smith, David Ricardo, and John Stuart Mill, figures who themselves recognized that markets, left unchecked, could corrode social cohesion and political equality. Smith emphasized moral sentiment and warned of the political influence of concentrated wealth. Ricardo exposed structural tensions in income distribution, and Mill advocated progressive taxation, cooperative ownership, and limitations on inheritance to curb plutocracy. These thinkers believed that markets must be framed by institutional safeguards to prevent economic power from undermining democratic life. Marx, however, departed from their reformist ambitions. He saw the problem not in market excesses but in the capitalist mode of production itself, where exploitation is embedded in wage labor and surplus extraction.

Marx’s first principle, private ownership of the means of production, ensures that the conditions for creating value (factories, tools, land, and technology) are concentrated in the hands of a few. The second, the labor market, commodifies human activity itself. Workers are not simply engaging in production. They are selling their capacity to labor, or labor-power, under conditions not of their choosing. Third, the accumulation of capital operates as both method and mandate. Capitalists are compelled to expand their capital in order to survive competition. The final feature, market exchange, serves to distribute goods and services, but also to mystify the true source of value creation, human labor.

A central insight from Marx’s critique of political economy is the idea of surplus value. Surplus, in this context, refers to the portion of societal labor and resources that exceeds what is required to reproduce a given form of life. This surplus is extracted from workers and appropriated by capitalists through the formal equality of contract. As Marx put it, the wage form disguises exploitation: “The advance of capital is not for the purpose of consuming the worker’s labor, but for obtaining surplus labor.”

Exploitation lies not in the disparity between income groups but in the non-compensation of a portion of labor-time. The market exchange of equivalents hides this fundamental asymmetry. While neoclassical economics focuses on marginal utility and equilibrium prices, Marx revealed the structural violence underlying production relations.

This dynamic of surplus extraction depends, however, on an invisible foundation: social reproductive activity, the unpaid or underpaid labor, often gendered and racialized, that sustains the daily and generational renewal of labor-power. Without food preparation, caregiving, emotional labor, and communal cohesion, no wage labor would be possible. Yet capitalism relegates these activities outside the realm of economic value. As scholars like Nancy Fraser argue, the historical separation between production and reproduction is not a natural divide but a socio-economic construct.

The commodification of life under capitalism is cumulative and accelerating. As Immanuel Wallerstein emphasized in his world-systems analysis, capitalism is defined by its endless expansion of commodification, drawing more spheres of life (land, bodies, ecosystems) into circuits of exchange. From child care to clean air, from intimacy to DNA, what was once shared or sacred is transformed into a commodity for profit.

As Immanuel Wallerstein’s World-Systems Analysis demonstrates, capitalism must be understood not as a collection of discrete national economies but as a single, historically structured world economy. Since the long sixteenth century, this system has been organized through a global division of labor with a core–periphery–semi-periphery dynamic. Core regions dominate capital-intensive production and global finance. Peripheral zones are relegated to low-wage labor and raw material extraction, and semi-peripheral regions mediate between the two, both exploiting and being exploited.

This spatial hierarchy facilitates the transfer of surplus value from the periphery to the core, sustaining capital accumulation on a global scale. Wallerstein emphasized that the system’s expansion is not neutral or benevolent. It relies on unequal exchange, coercive trade relationships, and periodic crises of overaccumulation. Over time, these contradictions (economic, ecological, and political) threaten the very conditions that capitalism depends on.

This expansion is also ecologically catastrophic. Industrial capitalism, driven by the logic of accumulation and powered by fossil fuels, severed human life from natural and seasonal rhythms. It replaced ecological reciprocity with extractive temporality. Marx called this the “metabolic rift,” a breakdown in the interchange between humans and nature due to the capitalist mode of production.

Neoliberalism, far from addressing this rift, has transformed environmentalism into a marketing device. Under carbon trading regimes and environmental derivatives, pollution becomes a priced externality rather than a systemic failure. “Green capitalism” promises that markets will fix what markets have broken, diverting attention and capital from the structural change required. As environmental theorist Larry Lohmann critiques, the logic of offsets and permits turns ecological limits into new frontiers for speculation.

Capitalism’s durability cannot be understood solely through its economic mechanisms. Its reproduction has historically depended on military and political capacities. As Giovanni Arrighi demonstrated, each era of capitalist expansion has been underpinned by the hegemony of a leading state (Venice, the Dutch Republic, Britain, the United States) able to enforce rules and stabilize markets on a global scale. The institutional scaffolding of capitalism is thus inextricable from imperial projects and coercive force.

Capitalism, then, is not merely an economy, nor is it a coherent ethical worldview. It is, in the most precise terms, an institutionalized societal order, a historically specific configuration of production, reproduction, politics, and ideology. As such, it rests on profound separations: between humans and nature, between labor and life, between economy and polity. These separations are functional, not accidental.

The history of capitalism can be read through four successive regimes:

1. Mercantile capitalism (15th–18th centuries)

2. Liberal-colonial capitalism (19th century)

3. State-managed monopoly capitalism (mid-20th century)

4. Globalizing neoliberal capitalism (late 20th century to present)

Each phase deepens systemic contradictions while adapting to crisis and resistance.

Marx himself identified four central contradictions that continue to animate crisis tendencies today:

1. The ecological contradiction. The drive for surplus depletes natural systems.

2. The social contradiction. The commodification of labor undermines its own reproduction.

3. The political contradiction. Capital requires strong states to enforce “free” markets.

4. The racial and imperial contradiction. Populations are differentially valued and systematically excluded.

Capitalism transfers value to capital under the guise of “free” contract, while systematically excluding racialized populations from protection and subjecting them to violations both material and symbolic. Exploitation and exploration, in this regard, are not merely metaphors but material operations of power. These are enacted, for example, in the simultaneous use of exploited factory labor in global supply chains and the exploration of new frontiers for profit—whether through land grabs in the Global South, the extraction of data from online behavior, or the financialization of basic human needs like housing and water. Capital expands not only by underpaying labor but by continually seeking and conquering new realms of life to commodify.

In the Global South, land grabbing has intensified since the early 2000s, with foreign investors acquiring over 25 million hectares of agricultural land, often displacing indigenous and rural communities.

In the digital realm, surveillance capitalism extracts behavioral data from online users and repackages it for profit, transforming everyday interactions into sources of commercial value.

Even water, a basic human necessity, is being financialized. In many African regions, water services are subjected to privatization and complex investment structures, threatening affordability and access.

These examples reveal how capitalism perpetuates its reach by systematically exploiting labor, appropriating resources, and commodifying aspects of life previously considered communal, essential, or intangible.

If we are to confront the crises of our time (climate collapse, social fragmentation, political authoritarianism, and racialized violence) we must begin by abandoning the fiction that markets are neutral. The front story of capitalism, wrapped in technical language and moral appeals to individualism, conceals a backstory of enclosure, extraction, and exclusion.

Only by foregrounding capitalism’s institutional logic and contradictions can we begin to imagine an alternative social order, one grounded not in the endless accumulation of capital, but in the collective reproduction of life.