Michael Parenti: The Myth of Capitalism

The 1% Pathology And The Myth of Capitalism – Michael Parenti

At Labour Heartlands, we believe in giving voice to those who challenge the comfortable lies of power.
Today, we feature a sharp, essential lecture: The Myth of Capitalism by Michael Parenti.

Born in 1933, Michael Parenti is an American political scientist, historian, and cultural critic whose work spans the scholarly and the accessible. A former university lecturer and political candidate, Parenti has spent decades exposing the brutal realities hidden beneath the myths of Western democracy and corporate capitalism.

In this lecture, Parenti tears the mask off modern capitalism — showing how it dresses itself in fairy tales about “freedom,” “prosperity,” and “opportunity” while creating obscene wealth for the few and grinding poverty for the many. As he puts it:

“In every class society that has ever existed, the ruling elements do not rule nakedly. They always adorn their rule with myths, themes, and symbols to justify their privileged positions at the apex of the social pyramid.”

Parenti dissects the two biggest lies propping up corporate capitalism:

• The Prosperity Myth — the idea that capitalism brings general wellbeing for all.
• The Democracy Myth — the claim that capitalism naturally supports freedom and democracy.

He exposes the hard truth: modern capitalist societies don’t just fail to deliver these promises — they actively suppress democracy, gut the environment, and turn working-class communities into expendable fodder in an endless race for profit.

Far from being accidental, the cycles of economic crises, poverty, war, and inequality are baked into the system itself.
As Parenti makes clear, crises aren’t a bug in capitalism — they’re a feature.

Parenti’s analysis resonates powerfully today, when the so-called “1%” — or more accurately, the 0.1% — grow ever richer, while millions struggle to survive under the crushing weight of debt, low pay, and political betrayal.

And while the elites polish their myths of meritocracy and freedom, Parenti reminds us that they are obsessed — not with improving our lives — but with controlling our thoughts:

“Every morning, they ask: ‘What’s the story today? How do we manipulate, control, contain, influence, and shape what people have in their minds?”

In an age of media spin, manufactured consent, and rising inequality, Parenti’s words hit harder than ever.
This lecture is not just history — it’s a handbook for understanding the present.

Watch it, and see the world a little more clearly — without the comforting lies that keep us chained.

The Myths of Capitalism

No Ruling Class Rules Nakedly

I want to point out that in every class society that has ever existed, the ruling elements do not rule nakedly. They always adorn their rule with myths, themes, symbols, and the like to justify their privileged positions at the apex of the social pyramid. The 1% spins its self-legitimating myths. As I said, no ruling class rules nakedly—all of them make strenuous efforts to justify their rule.

I tell students when they say, “Oh, they don’t care what we think—they ignore us and all that,” I respond, “Oh no, no—that’s the only thing they care about: you. The only thing they care about you is what you’re thinking.” They don’t care if you eat correctly. They don’t care about your living conditions. They don’t care that they’ve built up an inhuman and irrational traffic system that’s strangulating us and polluting our air. They don’t care about anything about you except what you’re thinking.

In the morning, they start: “What’s going to be the story today? How do we manipulate? How do we control? How do we contain? How do we influence? How do we act upon what it is that they have in their minds?”

Myths of Capitalism

Modern capitalist societies avoid telling the truth about themselves. Instead, we get those “rags-to-riches” mythologies—the Horatio Alger stories—myths about fair play, equal opportunity, self-reliance, freedom, liberty, all those kinds of things that they feed us again and again: a system that’s been so productive and so wonderful and the like.

The two fundamental myths of modern corporate capitalism that I want to address are:

1. The myth that capitalism creates general prosperity and material well-being.
2. The myth that capitalism creates or bolsters democracy.

We even hear the phrase “capitalist democracies,” “Western capitalist democracies,” and the like.

The Prosperity Myth

Before I get into that, there’s another secondary myth I want to put aside. When I talk about capitalism, I’m talking about giant corporate capitalism—not mom-and-pop small businesses. We’re talking about transnational corporations and banks. Lenin himself dealt with that question. He said, “Ten million small businesses count for nothing; a few giant cartels count for everything.”

He wasn’t dismissing or thinking less of the small—he was talking in terms of power. Where is the power? Who’s shaping the conditions of our lives? Who determines the quality of the air we breathe, the food we eat, the water we drink, the kind of jobs we have, the images we have to deal with? That’s not mom-and-pop. So, I want to put mom-and-pop aside and talk about multinational corporate capitalism.

The prosperity myth—that it creates prosperity. Corporations have given us wonderful things—wonderful for them. Consider some consumer realities:

• The replacement of public, nonprofit rail transit systems with polluting, expensive automotive transit systems involving billion-dollar highway systems—millions killed or maimed over the decades who didn’t have to be if we had fast bullet trains, as L.A. had before General Motors bought up all the tracks, ripped them up, and made people ride buses—then finally got rid of most of the buses and made people buy their own cars.
• The replacement of local, organic food supplies with pesticide-ridden factory farms, genetically modified foods, and antibiotic-ridden meats shipped long distances.
• A tobacco industry that gave several generations lung cancer. Remember that wonderful film of the Senate hearings with the CEOs from Liggett & Myers and other tobacco companies? Each one said, “Nicotine is not addictive.” They all knew it was addictive and were deliberately injecting more nicotine into cigarettes.
• An avalanche of disposable products—cosmetic, medical, whatever—that keep creating solutions for things that are not problems, trying to convince you that you have this need or that problem and you should buy this or that.

The history of capitalism has been a history of both great prosperity and great poverty. We often note how wealth and poverty exist side by side, as if it were just an unfortunate juxtaposition. In fact, it’s not at all. There’s a dynamic interaction between those two things: this poverty exists because of this wealth; this wealth exists because of this poverty.

The wealth of the few rests on the poverty of the many. There could not be optimates (as Cicero called them)—the elite few who ruled the Roman Senate—unless they had slaves and proletarians who worked for bare subsistence. There could be no lords and ladies without serfs who labored from dawn to dusk to keep them in luxury. There could be no corporate capitalists without workers, indentured workers, debtors, taxpayers, and all sorts of other people.

The 1% Myth

Do the 1%—that top plutocracy—believe their own mythologies? Of course. People believe in their own virtue. Of course, they believe in their own value to society. You think Mitt Romney doesn’t? He thinks he’s God’s gift.

The class propaganda they put out elevates them, justifies their worth. Why wouldn’t they believe it? It’s very persuasive. We all find things persuasive that flatter us. They believe:

• The poor are the authors of their own poverty.
• Their own wealth is earned and socially useful—it creates jobs, provides growth.
• The free market system is the most productive and beneficial in history.
• Competing systems, reforms, and government regulations are harmful.
• Government should not be a “nanny state” tending to the needy—let them learn self-reliance.

At the same time, they overlook the fact that their own class is not self-reliant. No one is more reliant on government handouts than corporate America. They get tax breaks, subsidies, loan guarantees, export subsidies, equity grants, land giveaways, almost-free leases on government land, oil giveaways, airwave leases for a song, and billion-dollar bailouts.

Mom-and-pop don’t get bailouts. If you go out of business, you lose your grocery store, your little café—the federal government doesn’t give you a bailout.

The Enlightenment and Capitalism’s Irrationality

Big corporate capitalism, besides being hypocritical and self-deluding, is also an irrational system. Marx said it was a ruthlessly rational system that demystified and shattered the Dark Ages. The Enlightenment thinkers were naively enthusiastic—coming down from a thousand years of superstition, they saw the world opening up.

But capitalism becomes irrational in its social relations. It is also amazingly irrational regarding the environment—treating it as limitless and disposable. Capitalism’s crises are not exceptional—they are the norm. Balanced, productive, calm, equitable social relations are the exception. Crises, panics, recessions—that’s the norm.

From the Panic of 1792 to the Great Depression to the 2008 crash, capitalism has been marked by instability. Wars and recessions stimulate the economy and distract people from grievances.

Social Democracy and the Rollback

The post-WWII prosperity in America came from:

1. A backlog of consumer demand.
2. The GI Bill, which trained millions.
3. Giant military budgets that maintained high-paying jobs.

This prosperity lasted until 2008. But starting in 1978, under Jimmy Carter, the rollback began. The U.S. Chamber of Commerce said, “We have to stop this—we are becoming a social democracy.”

Social democracies—like Finland, Norway, Sweden—are capitalist but with strong public sectors providing health care, affordable housing, and job programs. The U.S. had a similar emergence, but the elite fought back.

Reaganism began under Carter—military budgets increased, social benefits cut. Today, they’ve rolled back much of the social democracy.

Recessions as a Weapon

Recessions are not bad for the 1%. They tame labor, break unions, and make workers desperate. Small businesses are bought at bargain prices; big ones swallow others.

The 1% does not want a well-educated, self-confident public with high expectations. They want us hungry—the hungrier you are, the harder you’ll work for less. Why do Indonesians work for 17 cents an hour? Because hunger drives them. The goal is to push American workers closer to that.

Capitalism and Democracy

Another myth is that capitalism fosters democracy. Every democratic gain has been made against the ruling class. They opposed abolishing property qualifications for voting. They’ve always fought to limit participation.

Today, voter suppression laws disenfranchise millions. The elite have always believed the people should not rule. Democracy, when successful, creates problems for free-market capitalism.

Public vs. Private Sector

Free-market advocates say everything works better in the private sector. But:

• Medicare’s administrative costs: 3 cents per dollar (socialism in action).
• Private health insurance administrative costs: 26 cents per dollar (capitalism in action).
• Social Security’s administrative costs: 1% (respondents guess 50%).
• Public utilities offer rates 20% lower than private ones.

Capitalist leaders want to eliminate public programs because they work. That’s why they’re destroying the Postal Service—forcing it to pre-fund pensions for workers not yet born.

The Pathology of Profit Over Survival

A New Yorker cartoon showed a businessman saying, “While the end of the world scenario will be rife with unimaginable horrors, we believe the pre-end period will be filled with unprecedented opportunities for profit.”

They’re crazy. The Arctic is melting, and they see it as a chance to drill for oil. They’re running up and down the bus selling seat belts as we hurtle toward the cliff.

Our job is to grab control of the bus, turn it around, and throw them off.

Final Thought

Capitalism is a system where rational pursuit of profit leads to irrational destruction. Our task is to take control—challenge corporate power, defend democracy, and build an equitable society before greed drives us off the cliff.

As one internet commentator put it:
“What an incomprehensible, insane world it seemed to me—until I realised it was ruled by rapacious, money-mad sociopaths. Then it all made sense.”

Our job is to replace that madness with justice.

-Michael Parenti