Financial Markets as an Element of the Capitalist Economy Model

A financial market is a broad term defining a forum where buyers and sellers can exchange various financial assets such as but not limited to stocks, bonds, currencies, options, and derivatives. The financial market is seen as a vital element of the capitalist economy model as it allows to generate capital formation and liquidity for firms and entrepreneurs. The financial market provides the infrastructure, structural guidelines, and regulations for companies to utilize traditional or their own unique financial instruments that can be used for sale or raising investment capital. Financial instruments are typically assets or capital packages that can be traded, ranging from traditional bonds and stocks on the market to more complex derivative instruments such as options and debt-based financial securities (Higgins, 2019).

A recent news article by Thompson & Riley describes the issues faced by the international bank Credit Suisse, taking a $4.7 billion loss due to the collapse of the U.S. hedge fund Archegos. This resulted in significant pretax loss as well as the outing of the top investment banker and chief risk officer executives at Credit Suisse. It seemed that Archegos borrowed money from Credit Suisse and the bank likely oversaw some asset management in the hedge fund which bought massive stock positions in stocks including media companies. However, once share prices dropped, they could not pay back lenders and Archegos imploded. As a result, Credit Suisse is seeing declining share price, regulator scrutiny, and other issues due to other similar scandals where the banks money is being used to back wrongful investment (Thompson & Riley, 2021). The story demonstrates various use of the financial market by involved stakeholders such as Credit Suisse, Archegos, investors and lenders for the Archegos, as well as shareholders of Credit Suisse. The use of various instruments such as debt notes, stock market investment, and asset management were being used. Furthermore, this incident and others in recent couple of years have highlighted the need for stronger regulation of the financial market as despite the increased scrutiny for lenders after the 2008 financial crisis, the reckless financial market behavior and manipulation that was once practiced by banks (i.e. Lehman Brothers) has not gone away.

Reference

Higgins, R. (2019). Analysis for financial management (12th ed.). McGraw-Hill.

Thompson, M., & Riley, C. (2021). CNN Business. Web.

Capitalism and Religion: Sociological Perspective

Religion in the form of beliefs and rituals has always played a significant role in the lives of all the known societies worldwide. Enlightenment and the subsequent development of social sciences led to attempts to rationally analyze the impact of religious traditions on the lives of nations and individuals. In sociological tradition, such scholars as Emil Durkheim, Karl Marx, and Max Weber are considered the most prominent researchers of religions role in society. While the former author was interested in examining the origin of this phenomenon and thus studied mostly primitive societies, the latter two writers investigated the relationship between religion and capitalism. As such, Weber argued that Protestantism impacted the development of capitalism immensely, whereas Marx viewed any religion as an instrument that helps to preserve the existing power relations between classes.

Both sociologists lived during the time of the great social transformation, including the attempts to reevaluate the role of religion. On the one hand, Nietzsche (2007) ­ Marxs and Webers contemporary  claimed God is dead, which partly expressed the common atheistic sentiments in the society of that time (p. 120). On the other hand, the 19th century saw the Second Great Awakening in the United States and other parts of the world. Therefore, it can be concluded that there was a strong urge to understand the place of religion in the new world.

In this regard, Max Weber sought to examine religion as an antecedent of the capitalist development in Europe. The scholar argued that Protestantism in Europe and the U.S. was significantly different from Catholicism and Orthodox Christianity as it encouraged people to acquire capital which older churches condemned (Swatos and Kaelber, 2016). Moreover, such religious thinkers as Calvin claimed that Gods mercy could be evident during life on Earth as those who are blessed to ascend to heaven are also blessed with wealth. As a result, many people sought to become wealthy to prove their worth to others and themselves.

On the contrary, Marx analyzed religion as the instrument that capitalists use to maintain their power. The sociologist asserted that as capitalists hold many important positions in the government (which was true at his time), they can influence the church. Indeed, the history of slavery shows that many masters justified this institution by finding its approval in Bible. Therefore, Marx strongly advocated for the abolition of religion in his works.

Reference

Nietzsche, F. W. (2007). The gay science (B. Williams, Ed.). Cambridge University Press.

Swatos Jr, W. H., & Kaelber, L. (2016). The protestant ethic turns 100: Essays on the centenary of the Weber thesis. Routledge.

Modern Capitalism Needs a Revolution& by Cohen

Capitalism, unconstrained by any regulatory process, leads objectively to a concentration of production and monopolies  this was Karl Marxs key idea. Roughly the same idea is repeated in Ronald Cohens article (2021) on the collapse of the U.S. economic system, the goal of which is solely to make the greatest profits. The social and climatic consequences caused by peoples desire to produce more and more unnecessary goods become so devastating that humanity cannot cope with them (Cohen, 2021) This is exactly what the German philosopher warned about in his writings. Marx noted that capitalisms tendency to ascribe high value to essentially unnecessary goods would eventually lead people to collapse. Under capitalism, the consumer becomes a slave to inhuman, sophisticated, unnatural, and contrived desires.

In predicting capitalisms self-destruction, Marx devoted his life to studying its problems. However, they persist to this day- the mindless individualistic pursuit of material prosperity, the growth of inequality, and the marginalization of entire populations. The ongoing environmental degradation and corporate-driven climate change can no longer be ignored. Since Marx was mainly interested in the long-term development and transformation of the capitalist system, a legitimate question arises. Namely, many individuals wonder why not use the philosophers theoretical developments to solve problems. People want to know whether his writings might help them better understand the current crisis of capitalism and use it to move toward a more viable system centered on people rather than profit. However, it goes without saying that all statesmen are familiar with Marxs writings. They are aware of how the philosophers socialist ideas can improve the lives of their constituents. Nevertheless, not many dare to change the current system, which once again shows how tightly the ideas of capitalism are ingrained in society. Thus, the exercise proves that sometimes people ignore solutions to problems.

References

Cohen, R. (2021). Modern capitalism needs a revolution to undo the damage it has caused. Time.

The Vision of Capitalism: Adam Smith vs Karl Marx

Comparing Smiths vision of the impact of the capitalist economy to that of Marx, it can be claimed that the former offers a more positive evaluation of the relevant outcomes. Hence, he points out that the main consequence of the capitalist economy is the division of labor that signifies the improvement in the productive powers. Smith notes that the division of labor can be better observed through the example of large manufactures rather than that of trifling manufactures that are supposed to serve a narrow circle of consumers.

He provides an example of a pin-making factory, where the labor is divided in accordance to different types of operations: drawing out the wire, straightening and cutting it, whitening the pins, etc. (Smith 1). Such a division allows an employee to get skilled in the assigned type of operation in a relatively short period. As a result, a manufactory is capable of producing thousands of pins a day, whereas a single worker would not be capable of producing even a dozen of pins in case he or she had to work separately and perform all types of operations.

Marx, in his turn, offers a more pessimistic vision of the capitalistic impact. First and foremost, he regards the division of labor as the separation of use-value from exchange-value (Marx, ch.6). Broadly speaking he regards the capitalist impact as the establishment of the monopoly of the powerful states and the exploitation of the working poor. From this perspective, the main difference in the two theories resides in the fact, that Smith applies the capitalistic impact to the developed countries only, whereas Marx attempts to examine it in the global context. Thus, for instance, Smith points out that the division of labor is more natural to be found in developed countries with strong economies and industries. In the meantime, he fails to evaluate it applying to the developing states.

Another critical difference that should be pointed out is the vision of the capitalistic impact on the agriculture. Thus, Marx insists on the expropriation phenomenon, noticing that it resides in taking away from the labourer the possession of his means of production; a process that transforms, on the one hand, the social means of subsistence and of production into capital, on the other, the immediate producers into wage-labourers (Marx 26).

Otherwise stated, Marx emphasizes the negative side of the capitalist market regarding it in terms of morality and justice. Smith gives a more neutral esteem of the impact that capitalism has on agriculture. The only point that he focuses on, in this framework, is that the division of labor is not as distinct in the agriculture as it is manufacture. Otherwise stated, it is easier to divide such operations as spinning and weaving than to separate the work of a grazier from that of a corn-farmer. As a result, the division of labor in agriculture is less productive or successful in terms of pace as the one in manufacture.

Smith supports this argument referring to the example of rich countries, the superiority of which is mainly based on the manufacturing progress, whereas their agricultural breakaway can be rather insignificant. In addition, he points out the competitive advantage of those countries that have a beneficial geographic position from the maritime perspective. Thus, he provides the comparison between the land and maritime transportations, pointing out the dominant cost-effectiveness of the latter. Therefore, it can be assumed that Smith initially focuses on the benefits of capitalism in the framework of particular countries. Thus, he does not target to prove its advantage in a global context.

The Division of Labor and Its Outcomes

As a result, the two philosophers offer opposite evaluations of the capitalistic impact on the working force. Hence, Smith believes that the relevant impact is entirely positive. Hence, he distinguishes the three advantages: the elevation of the workforces dexterity, time saving, and the implementation of advanced machinery. First and foremost, the division of labor implies that a particular employee performs one and the same operation becoming highly skillful at it in a short time.

Secondly, according to Smith, the time is saved due to the fact that there is no need for an employee to switch from one operation to another. This switch is especially time-consuming as it implies changing the tools and the location. Speaking about the invention of new machinery, Smith focuses on the fact that it has become possible mainly to the division of labor itself.

Thus, a worker that is totally focused on performing one and the same operation is more likely to come up with an idea of appropriate machinery or instrument rather than that who observes the working process in general (Smith 3). At this point, it should be noted that Marx also regards the implementation of the new machinery as a positive change. In the meantime, he believes that it implies a gradual reduction of the need for the human labor. Applying this assumption to the modern reality, it might be noted that his concerns were rather grounded  the development of the technologies implies the reduction of the workplaces creating the unemployment, the potential scope of which can hardly be estimated.

Smith assumes that the division of labor is the result of the humans propensity to exchange things. Otherwise stated, it is not an entirely economic phenomenon. On the contrary, the division of labor is purely natural  a person that is good at doing something prefers to focus on this activity, produce sufficient output and exchange the results of his work for the essential items. From this standpoint, Marx also considers it to be a natural process.

In the meantime, he evaluates the outcomes of the capitalistic impact negatively. Marxs main point resides in the fact that as soon as an employee gets engaged in this bargain, capitalists will do their best to separate the worker from the property with the help of which the labor can be realized. In other words, they will do everything to make the employee dependent.

The Value of the Capitalistic Impact

Smith puts a particular emphasis on the fact that the capitalistic impact is of significant social value. Hence, assuming that such a division existed in the animal environment, it would be of little importance, whereas the most dissimilar geniuses are of use to one another (Smith 2). Smith, likewise, notes that the division of labor refers to the field of philosophy as well. Thus, a particular specialist becomes more competent in the relevant specialty, improving, in such a manner, the quality of science, in general. Marx believes that the capitalistic impact is beneficial for an exclusive social stratum, whereas the interests of the multitude are neglected.

One of the pivot points of Smiths theory resides in the assumption that the extent of the labor division is determined by the exchanging power of the market. In other words, in order to encourage a man to get entirely involved in a particular market segment, it is essential that the market is big enough to offer a variety of exchanging options. Therefore, some employments can exist only in the context of large cities. Marx, in his turn, assumes that the balance of the exchanging power is impossible in the capitalistic world. Hence, the powerful minority will always have an incomparable advantage over the majority.

Critical Evaluation

It would be irrational to claim that the theory of one philosopher is more sensible than that of another. Hence, they both provide substantial grounding to explain their positions. At his point, it might be suggested that the main difference in these theories resides in the fact that Smith and Marx use different approaches to analyzing the phenomenon of capitalism. Hence, Smith mainly considers it in terms of the benefits it brings to the market development. Indeed, from this perspective, the capitalistic impact might be regarded as positive  it naturally leads to the division of labor, increasing its productivity considerably.

On the other hand, Marx tries to analyze this impact from the standpoint of its value for the employees. As a result, his core argument implies that they will inevitably remain poor as the powerful minority would never allow their accessing the commonwealth. Thence, from the moral perspective, Marxs theory is more justified. Meanwhile, his speculations about the desired market conditions seem to be excessively idealistic. As a consequence, in terms of the market development, Smiths position seems to be more practical, and the examples he provides appear to be more applicable to the modern reality.

Works Cited

Marx, Karl. Capital, London: Penguin UK, 2003. Print.

Smith, Adam. The Wealth of Nations, New York, New York: Random House Publishing Group, 2000. Print.

Democratic Capitalism and Individual Liberty

Democratic capitalism is the economic and political system that is based on individuals potentials in an environment of cooperation and trust. In democratic capitalism the leadership is only charged to harmonize the cooperative nature of the individuals. America, which in all sense is seen as the world symbol of capitalism, its democratic system of government that fosters individuals liberty is demonstrated as the engine to its economic prosperity.

In his quest to find out why despite their prosperity, Americans are so anxious, Tocqueville (1835), illustrates on the freedom of individuals to make decisions on the type of investment to make, location of investment, change from one investment to another, choice of career etc. He showed that, all this freedom is accompanied by a constant desire to accumulate more wealth and capital within the shortest time possible to ensure self satisfaction and happiness. According to Buffett (n.d), human energy works well to supply human needs and ensure their satisfaction when they are assured of individual liberty. This affirms the fact that Americans economic prosperity has been anchored on democratic capitalism and individuals liberty where people are free to make choices depending on their abilities which according to Buffett, forms a basis for innovations and development. Lead (1992) shows how integration of freedom and cooperation gangs up people to achieve even the difficult goals.

In relation to the rule of law, democratic capitalism includes economic justice and social cooperation, among other things. Also, the authorities are simply charged with provision of incentives to foster independency and free will. Thus, individuals are free to make and exercise their thoughts while observing the rule of law. According to Ebeling, (n.d), he indicates that the distinctive nature of the rule of law is to strive to eliminate or reduce the arbitrary powers in the leaders. Thus the role of the rule of law in democratic capitalism is to promote equality to all while nurturing independence. Since in a capitalistic society every individual strives to achieve the most and the best, it is only the government that can engage the society to ensure fair distribution of wealth to induce equality (Kristol, 1978).

Democratic capitalistic states have in many aspects been referred to as welfare states. Myrdal (1960), demonstrates democratic governments as those where welfare aspects of individuals have been a subject of concern. Such welfare aspects include employment conditions, social security, and higher standards in housing, nutrition, health and education. This has been agitated by market forces in free societies as well as due to necessity.

Milton and Fredman (1979) say government measures that promote personal equality or equity of opportunities enhance liberty. In democratic capitalism, government intervention is applied to control its citizens investments, spending, and saving for the exchange of capital security. Such interventions include direct injection of capital to rescue nations financial sector. This is further supported by Smith (1776) where he shows that, capital is only best invested at home where the investors can directly monitor those investments. In addition, Smith indicates that, capital invested at home puts into motion domestic industries and gives revenue and employment to inhabitants of that country than equal capital invested in foreign countries.

Democratic capitalism and individual liberty works well to foster peoples cooperation in trying to achieve the human needs. When each member of a society is free to make choices of investments and other economic decisions, the individuals take up the responsibility of perfecting in production or service delivery to the community. Williams (n.d) shows that in a free society, revenue is earned through serving and pleasing other human beings. Further he suggests that the difference in the revenue earned and thus the accumulated capital between individuals depends on the effectiveness with which he serves fellow men. Thus inequality between individuals is as a result of the rewards gotten after serving and being served by fellow human beings by providing what they dont have and acquiring what one can not produce.

However, the existence of individual liberty to private property and its role in fostering economic development in democratic capitalism does not go unchallenged. Marx and Angles (1848) shows that capital is collective and that it is by engaging the society that capital can be set into motion. It is further indicated that the capitalistic society forms classes of people where there are bourgeoisie become the rulers of the proletarians. This aspect denounces the existence of individual liberty in democratic capitalism.

Recently, the U.S Congress approved $ 700 billion as direct capital injection to its economy to rescue the nations financial sector. The phenomenon in the whole world is a situation of economic downturns therefore the governments are charged with making economic decisions that will stabilize their financial sectors. When the U.S government makes the decision to use its capital at home many, US nationals will be involved directly thus providing revenue and employment opportunities to the citizens as well as boosting local industries. According to Smith (1776) investments at home yield the best economic gains for individuals, organizations or states.

References

Buffet, H. (N.d). The Economic Foundation of Freedom. Kirkpatrick Signature Series Reader.

Ebeling, R. M. (N.d). Free Markets, The Rule of Law, & Classical Liberatism. Kirkpatrick Signature Series Reader.

Kristol, I. (1978). A Capitalist Conception of Justice. Kirkpatrick Signature Series Reader.

Marx, K. and Engels, F. (1848). From the Communist ManifestoProletarians & Communists. Kirkpatrick Signature Series Reader.

Milton and Friedman, R. (1979). Equity of Opportunity: From Free to Choose: A personal Statement. Kirkpatrick Signature Series Reader.

Myrdal, G. (1960). Planning in the Welfare State: From Beyond the Welfare State. Kirkpatrick Signature Series Reader.

Reas, L. E. (1992). I, Pencil. Kirkpatrick Signature Series Reader.

Smith, A. (1776). From an Inquiry into the Nature & Causes of the Wealth of Nations. Kirkpatrick Signature Series Reader.

Tocqueville, A. (1835). Democratic Capitalism & Individual Liberty: From Democracy in America. Kirkpatrick Signature Series Reader.

Williams, W. E. (2005). The Entrepreneur as American Hero. Kirkpatrick Signature Series Reader.

Marxs Criticism of Capitalism and Sociological Theory

Introduction

Sociology involves the study of how groups of people behave towards each other (Bratton, Denham &Deutschmann 2009, P.14) A theory is a set of frameworks or concepts that, if taken together, attempt to show how a given occurrence happens the way it does. Sociological theory determines actions of human beings in relation to their social and economic existence. It establishes how human beings interact and function while considering the basic structures of a human society. It gives a historical basis of understanding our society. Sociological theory assumes that societies should have basic rules or systems on which they rely on to function. It may assume that there are morals and free will within a society or that societies lack social justice for individuals to liberate themselves. At times, sociological theory may involve conformity to laid-down values and the status quo of the society (Ray 1999, P.35). The original contributors to the works of sociological theory include classical philosophers and thinkers like Karl Marx, Friedrich Engels, Max Weber, Emile Durkheim and even Sigmund Freud. Karl Marx contributed to the theory in his criticism of capitalism (Stones 1998, P.55). Although various scholars either expanded or opposed his claim, it is important to determine how Marxs criticism added to the origin of sociological theories.

Karl Marx [1818-1883] was a German Philosopher whose ideas were considered as the genesis of socialism- seen as an alternative to the oppressive capitalism. His observation was influenced by the way production in capitalism formed structures of social life (OLaughlin 1975, P. 342). In his disapproval of capitalism, Marx observed that the rich in the society were wealthy and powerful while the working class, who laboured more in the production of this wealth, remained poor. He argued that capitalism generated two main groups of people in the society: the Bourgeoisies and the Proletariats. The former own property, control the means of production and use the proletariats to produce goods and services. In turn, capitalism led the society into classes consisting of low, middle and upper class. Upper class citizens are those who own property such as land, machinery or any other form of wealth. Middle class citizens are those who lie between the poor and the rich; they dont own property but their income is quite stable. They are workers but in the hierarchy of payment, they are above the low class citizens. In this case, Marx argued that Capitalism relied on labour to divide people into classes. While labour was important in instilling specialization among workers, Marx observed that it was responsible for the devaluation of the same worker. The worker, owing to the fact that he does not own the means of production continued to work for the rich and in turn this would make him be like the same commodities he was producing (Marx 2001, P.13-16).

Marxs Criticism of Capitalism

In capitalism, Marx saw that employers considered the benefits of the work done as more important than the person who worked make the benefits. While the value of the product was formed through the amount of capital, time and labour invested into it, the value of the worker diminished as though he donated it to the objects produced. In this case, every worker under capitalism would live in denial; neither liking his work nor opting out of it because it sustained him. Workers would become estranged from the work in that the more efforts they put in the production process, the more their employer benefits while they lose value (OLaughlin 1975, P.342-55). They produce for the owner to get richer, not for themselves. Thus in the loss of value, the worker would often be seen as a product which could easily find a replacement. Workers lost control of their own selves by getting alienated from the work itself, missing to take part in the human expectations of them [species-essence], and their lives became dependent on what their employers would want them to do. For in stance, factory workers would be given a schedule of time and amount of work to be done. Without completion of the work or working for the entire time schedule, a worker would risk being sacked or missing the pay. In this system, Marx argued that employers would torment workers by exploiting their effort. Because the exploiters were fellow human beings, Marx added that Capitalism apart from stifling human relations would create individualism, where people aim to gain material advantage regardless of how it impinges on the life of others. Capitalism made everyone to desire to climb the class because of the notion it created: That to be rich is to be powerful and comfortable (Marx 2001, P. 18-22).

In trying to advance status, individuals would more often prefer material gains to human feelings. In this case, they would do anything as long as there was a gainful incentive attached to it. For example, individuals might not like the work itself, but the wedges accrued from the work make them uncertain to quit. Moreover, the desire for material gains would make the closest of friends to mistreat each other or the most inherent adversaries to cooperate (OLaughlin 1975, P.356).

In capitalism, Marx saw that labour did not help the worker any more than sustaining his life. In fact work was just a type of bondage that secluded man from social connections. The fact that he depended on it for life made him its slave; only existing to work and losing importance thereafter. Even more worrying to Marx, was that workers would keep struggling to maintain themselves and by enriching others. For employers to sustain the source of labour, they made workers to exist without choice. They were not allowed to freely develop their minds but instead they were ordered to do what employers wanted. Thus workers were compelled, through the desire to satisfy their own needs, to satisfy employers needs (Bratton, Denham & Deutschmann 2009, P. 16).

Marx added that if capitalism would not be avoided, the society would continue to be split up into the powerful and powerless groups. The latter would be the subject of the farmers discrimination, perpetuation of social injustice and continual conflicts. Individuals would struggle among their classes over resources. The capacity and social stability of societies lied in the wealth and organization it possessed. However, capitalism would evolve gaps between classes and people would become aggressive against one another. While the minority would prosper, majority of the people would remain slaves. Thus a society would not develop with capitalism simply because wealth would be vested among a few individuals who must limit its (wealth) distribution to sustain their status. Moreover, the status of the working class would continue to dwindle if they didnt rise against the bourgeoisies (Ritzer 2002, P. 120).

To correct this mess, Marx suggested that workers were to seize power by forming unions and compel the property owners into communal ownership. As a result, Classes would dissolve and all human beings would exist equally in what he called Communism. In this people would earn what they work for and human beings would have time to relate on a social level with regard to their human existence (Marx 2001, P.35).

Contributions to Sociological Theory

In relation to sociological theory, Marxs contributions may be noted in his analysis of class struggles and conflicts as observed in capitalism. In conflict theory, Marx stated that conflicts were common and continuous in the society because there were individuals or groups with opposing interests (Ritzer 2002, P.125). These groups were common in capitalist societies. Conflict theory dealt with the materialistic capitalist society, a dialectical method of analysis and a critical view towards the available social and political structures for reforms. The materialistic view of history asserts that social life of a people is influenced by those who work to produce basic goods and services. In Marxs view, social arrangement of the society was a great factor that determined how work would create relationships among people. Everything of value was a result of this relationship: working men and women managed the conditions under which they lived. That is, people irresistibly entered in explicit social relations, not by choice but by external compulsions associated with their determination to live. The sum of these production relations was the economic structure of the society, the basis on which legal, social and political systems were founded. This was also the foundation to which creating social awareness corresponded. Thus, Marx was stating that the system of production determined the stages of developing the social, intellectual and political life of people; in that the social existence of a people determined their awareness and opposed the view that it was peoples awareness about their neighbours that influenced their social being.

Marx also emphasized on several stages of economic and social changes in which a society would be transformed. To determined the historical development of a society, Marx observed that feudalism, capitalism and socialism would succeed each other in this respective. In the 19th century, capitalism dominated most of the societies. Capitalist societies were driven by the private ownership and how the means of production were controlled by a small number of people in a large population of the society. As a result, this created two huge classes of people: the bourgeoisie (owners of property) and the proletariat (workers whose only possession was labour hours which they offered to capitalists for wedges). The former were powerful and dominant, the latter were powerless and oppressed (Ray 1999, P.69).

On the social scene, conflicts occurred between the dominant and powerful group against the powerless and subordinate group to deny them equal access to resources. The material means of production included land, labour and machinery while the social means pf production included division of labour and classicism. He used the capitalists and the working class to argue his case of class struggles. While the capitalists owned the factors of production, they dominated over the workers. Therefore the existence and dissimilar capacities of these two groups would explode into a conflict. The capitalists would want to dominate in politics, trade and even spiritual leadership at the expense of the poor (Marx 2001, P.36).

Limitations of Marxs Criticism

Individuals with similar equitable socio-economic status would belong in the same class. As a result, the rich, belonging to the upper class, would use the poor workers to enhance their status (Stones 1998, P.59). Although politics and ethnic groupings also contributed to the formation of these classes, Marx observed that the society largely depended on economic capacity; other factors like politics, ethnicity and religion only followed suit; wealthy citizens either were also dominant in other platforms of social interactions (Marx 2001, P.35). Marx placed people in classes according to their occupations because he felt it is occupation that created their wealth. However, he did not recognize inherited wealth. Thus, while economic stability was the basis of classifying individuals, their status was not entirely the product of their occupation. Marxis contribution can be identified in the way he posited that class differences exist in the society based on wealth possession (Ritzer 2002, P. 118).

Exploitation of the lower class manifested in the way employers paid workers less than they ought to. Capitalists would use their economic prowess to control the state and then turn it into a bunch of servants. For example, the police would enforce ownership of property rights by guarding this property against possible intrusion by the poor. They also perpetuated unfair dealings between the employer and the rich by either corruptly turning a blind eye to these dealings or ignoring to put capitalists answerable to the law because they happened to be the ones with political power in the state (Marx 2001, P.33). According to Marx, religion furthered oppression by allowing the rich to mollify the population but in turn continue to mistreat them [the poor] (Ray 1999, P. 70). As observed earlier, religion and the state were close; the leaders of the state (mostly the rich) happened to be either cronies to the clergy, used the law of religion or were religious leaders as well. The use of intellectuals would also create ideas and social organizations that were supportive of classicism. They included the sanctification of institutions like families and religion. The dominant ruling class dominated these institutions and the ideology of the society as created by intellectuals was that of the rich, the poor were forced to obey.

Marxs dialectical analysis of the society posits that social and economic arrangements of a society created its own demolition. For example, feudalism where land owners exploited the poor land leaser led to the mushrooming of merchants determined to make profits hence capitalism. Similarly capitalism would dissolve to pave way for socialism. Whereas both owners of capital and the working class relied on each other for survival, their economic aims were different. This was a contradiction that Marx saw would lead to conflicts. As a result, tension would build as the working class accumulated an understanding of how theyve been exploited and then finally try to topple the upper class (Ritzer 2002, P.128).

Marxs criticism made him believe that sociological theory and political social theory and political arrangements were related. Social theory was perpetuated by political tradition of the people which was guided by social theory itself. Although the history of a society would not be altered, the political activity of the working class would lead to the transitions in social relationships. Marx used material gains as a parameter to determine behaviour of human beings towards each other. Those in possession would always try to sustain their wealth status and hold on power. Thus, individuals were more miserable in capitalism than socialism. The rewards of peoples efforts were eaten by those who did not work for them. Capitalism created social problems and individuals had to create religion and other forms of culture for consolation which unfortunately found themselves under the control of the rich (Stones 1998, P.62)

While Marx observed social relations in terms of the available economic interaction; his contribution to sociological theory in his classical Marxist theory has been criticised. Marxist was concerned with the oppression of the poor by the rich and how this was the source of social conflicts. To eliminate oppression of the poor, classes had to be abolished and states left to control the means of production where everyone took part as the limitations of classes would have been broken. However, the participation of the whole population in making decisions would lead to the delay in solution making. Thus, the society would remain inefficient and poor and prone to more social problems (Friedman 2006).

In addition, communal method of decision making was apt to create conflicts. It was not easy to satisfy everyone in the societal plan thus, other than delaying the solution, individuals were apt to walk out of the binds of the society for the feeling that the decisions made were not accommodative. In this case, an element of coercion, democracy, was relevant to make individuals abide by the decision (Ritzer 2002, p.130).

In a stable society, it is not the valuation of fellow human beings but the economic system which reflects a superstructure; a combination of religion, economy, social and political aspects. Therefore, if all people were to be taken as equal, then the society could not develop. It was only through competition for scarce resources that human beings grow (Friedman 2006) In competing for resources, individuals tend to be aggressive towards each other but they eventually adapt to newer ways of outdoing one another; for the benefit of the societys growth. Hence conflict was not oppression, it was an incentive for individual development, hence the society (Bratton, Denham & Deutschmann 2009, P.25).

It can be argued that Marx was subjectively inclined to disliking capitalism for the fact that the lower class were oppressed but he failed to note how societies were never in economic stagnation. The influence created by private ownership of property instilled determination in everyone, to be rich and improve their standards of living. In observing that the economic structure of a society shaped social relations, Marx would have also seen that the determinism created by capitalism would eventually shape these relationships for the better (OLaughlin 1975, P. 368).

Conclusion

In conclusion, Marx contributed to sociological theory by linking the economic structure of the society and how it affected social interactions. Apparently, he was concerned with the welfare of workers and how the abolition of capitalism would save their oppression. While agreeing with him that the economic tradition of the society determined the social framework, socialism was also prone to creating further conflicts. Nevertheless, his suggestions helped to build sociological theory in understanding how wealth and classes would bring conflicts.

Reference

Bratton, J, David, D & Linda, D 2009, Capitalism and Classical Sociological Theory, Toronto University Press, Inc., Toronto, Ontario.

Friedman, M (Producer), 2006, Free to Choose: The Power of the Market, Online TV Series. Web.

Marx, K 2001, Preface to a critique of Political Economy, the Electric Book Company, London.

OLaughlin, Bridget 1975, Marxist Approaches in Anthropology, Annual Review of Anthropology, vol. 4, pp.341-70.

Ray, L 1999, Theorising Classical Sociology, Open University Press, Buckingham. Ritzer, G 2002, Contemporary sociological Theory and its Classical Roots: The Basics, McGraw-Hill, Boston.

Stones, R 1998, Key Sociological Thinkers, Palgrave Macmillan, Basingstoke.

The Industrial Revolution & the Rise of Capitalism

Introduction

  • People who do not know their past cannot fully understand the main principles of society
  • Every period in history has a certain impact on peoples thoughts
  • Industrial Age still has a great influence on modern people
  • The perception of wealth significantly changed during the Industrial Age
  • The emergence of Capitalism along with the Industrial Revolution
  • The perception of wealth and business has changed since the times of the Industrial Age

The Industrial Age

General Information

  • The Industrial Age started in Great Britain in the 18th century
  • The number of factories and plants was rapidly growing
  • In production, the main focus was on the separation of standardization and labor
  • The optimization of production and maximization of profits for businesspeople
  • Many companies appeared during the Industrial Revolution
  • The Industrial Age quickly spread to the whole of Europe (Hartwell, 2017)

Main Features

  • The transition from manual production to mechanization
  • The focus on active consumption and mass production
  • The rapid development of technology
  • A considerable economic growth
  • The improvement of the overall quality of peoples lives
  • The development of Capitalism

Disadvantages

  • The limited access of the working class to the goods they were producing
  • The growing power of wealthy people in the sphere of economy
  • The increasing social stratification
  • It was very difficult for poor people to start their own business
  • Task separation
  • The decreasing control over the competition
  • It was almost impossible for low-income people to improve their financial situation (Mantoux, 2013)

Capitalism

Main Peculiarities

  • Capitalist society appeared in the 18th century
  • The first reason for the occurrence of Capitalism is the rapid development of technologies
  • The second reason is the increasingly growing population
  • Positive changes in the agricultural sector
  • The increase in the economic growth
  • Capitalism and Socialism are incompatible due to major differences between them (Hudson, 2014)

Disadvantages of Capitalist Society

  • The increasing control over resources by wealthy people
  • The growing chasm between the working class and the upper class
  • The introduction of certain rules and restrictions on factories and plants
  • The reduction of the government control overproduction
  • Fewer opportunities for poor people to become successful
  • The growing indignation of the working class
  • The increasing environmental pollution (Mantoux, 2013)

Contemporary Society

Capitalism Today

  • The main principles of Capitalism have not changed since its occurrence
  • The focus on consumption and mass production has become even stronger
  • Environmental pollution has become a major problem
  • The negligence towards safety restrictions
  • The suppression of democracy
  • The increasing propaganda
  • The problem of social inequality remains (Amin, 2014)

The Perception of Wealth

  • A survey regarding the business peoples perception of money, wealth, and the process of production was conducted
  • The age of participants was from 27 to 38 years
  • 90% of respondents agreed that the increased consumption is one of the main features of progress
  • 60% of respondents believed that it was more efficient to focus on the quantity of production rather than on quality
  • 80% of respondents admitted that it was very difficult for people from the low and middle classes to become successful
  • 60% of respondents agreed that in modern business, people are not regarded as resources
  • Almost all the respondents admitted that maintaining a competitive advantage is crucial in modern business (Amin, 2014)

Conclusion

  • Industrial Revolution caused many changes in the sphere of business.
  • Capitalism changed peoples perception of business, wealth, and production.
  • The key features of capitalism are profitability, social stratification, task separation, and the decrease in the government control.
  • Employee effectiveness fully depends on employee happiness.
  • The increasing number of employers focus on creating a positive work environment.
  • Still, many employers regard their subordinates as resources.

References

Amin, S. (2014). Capitalism in the age of globalization: The management of contemporary society (2nd ed.). London, UK: Zed Books Ltd.

Hartwell, R. M. (2017). The industrial revolution and economic growth (Vol. 4). Abingdon, UK: Taylor & Francis.

Hudson, P. (2014). The industrial revolution. London, UK: Bloomsbury Publishing.

Mantoux, P. (2013). The industrial revolution in the eighteenth century: An outline of the beginnings of the modern factory system in England. London, UK: Routledge.

Capitalism vs. Socialism: Principles and Arguments

The fundamental principles and arguments of the supporters of socialism and capitalism as opposing systems were established in the period of the 19th century and the practical implication of the 20th century led to the adaptation and further solidification of their respective argumentative basis. Capitalism is an economic system, which is based on the idea of private property and the market distribution of goods and factors of production.

It emphasizes the rationality and efficiency of the process of capitalist development. The main bias and fallacy of the author is the fact that he states most capitalist nations have almost no absolute poverty, which is not necessarily true due to the presence of mass homelessness in countries, such as US (Caplan). Through the mechanism of competition, the private interests of individual economic entities spontaneously fall into line with public interests, which allows to systematically improve the standard of living of the population in the long term.

The rhetorical argument is effective because another claim is the statement about fair distribution based on the market mechanism, since the generated income of the entities is proportional to their productive contribution. The author uses mainly logos as a rhetorical appeal, but ethos and pathos are also present. It is important to understand that capitalism promotes free market, which allow people to improve themselves (Caplan). Theoretical or real-life socialism, that is, absolute equality, is stated to be economically inefficient and irrational, since it diminishes the moral and institutional foundations of society through dictatorship. Moreover, this contradicts not only economic, but also political freedom.

The prevalent interpretations of socialism and capitalism as systems of economy have certain similarities such as wage labor, the expanded division of labor, problems of finding stable regimes or forms of capital, the accumulation and distribution of income, and the regulation of the activities of institutional economic entities. Majority of capitalist nations are proponents of freedom and human rights, whereas the latter usually deprives citizens from their fundamental needs (Caplan).

In general terms, national systems of economy are complicated states of numerous interconnected entities  some of which are newly created, while others have evolved. In a dynamic perspective, they, on the one hand, should have consistency and stability, and on the other, flexibility and adaptability. In addition, most capitalist nations are indeed richer and more developed than their socialist counterparts (Caplan). The historical experience of national systems has shown the existence of contrasting models of each system. While some of the positive features of the preferred system intensified during certain periods and in individual countries, its existing weaknesses also became apparent.

Moreover, the reasons presented by the author fall under the *STAR acronym. The situation is manifested in the fact that these systems are reviewed as ideal economies for both cases. The task is to identify the reasons why socialism fails to be viable compared to capitalism as an economic system. The actions undertaken by the author is to compare the ideals versions and their manifestations in the real countries. The overall results are that modern form capitalism does not fully match the ideal capitalism, but these nations are still outperforming socialist counterparts.

The arguments given to the audience are correct and plausible due to the fact that it uses straight forward examples and common-sense knowledge. Supporters of socialism adhere to the notion that it is defined as an economic system manifested on organized regulation of the economic processes and public ownership. It also uses similar basic economic tools, but with opposing derivatives about economic realities. This system considered capitalism as an unequal system and it is a result of free markets. The ideal existing socialism, is considered to be a model that allows conscious organized development, which eliminates capitalist flaws, like crises and social conflicts. It is such a model that promotes its own progress and a high degree of freedom, which in practice almost always had the opposite character.

Evidently, existing economic systems are structurally contrasting, but capitalism can offer more flexibility and adjustability to its proponents. The differences between the historical realities of favored systems are far from the ideal model, which is considered the direction of further development. The arguments given by the author are a comparative analysis based on the proclaimed values and objectives, such as efficiency, rationality, justice, freedom and modernization.

However, in general, they provide regulatory standards for economic modernity. The capitalist model of housekeeping has proven its viability in the long run. Socialism, as an alternative system, proved to be more stable in the short term.

In conclusion, deep transformations, as a rule, are associated with changes in cultural values, social differences, and international relations. Moreover, these transformations occur within a short historical period and differ in their rhythm and pace. The traditional economic theory, based on the analysis of equilibrium, is unable to resolve the causal relationships that have arisen.

There is a need to formulate an approach to explain how the general historical background, the same starting conditions, systemic interdependence, institutional reform and similar policies can lead to different country results. The transformation of economies, the testing of diverse development models is, of course, a multifaceted and controversial historical process. However, the arguments given throughout the article give a clear picture of capitalism being more reliable and suitable for prosperity of the nations and its population.

Work Cited

Caplan, Bryan. Capitalism vs. Socialism: The Bruenig-Caplan Debate. EconLog, 2018. Web.

Capitalism vs. Socialism: Comparing and Contrasting

Debates around the economic model of the social structure have not stopped since the XIX century when Karl Marx introduced his leftist paradigm. On the one hand, some individuals believe that capitalism is the form that guarantees freedom and progress that they value the most. On the other hand, some people believe that socialism must be the next step of human social evolution.

First, if one tries to compare the history of these paradigms, one could learn that capitalism is an older formation and idea than socialism. Capitalism started to spread in the Western World since the beginning of the Industrial Revolution in the XVIII century. As for socialism, it was first invented as a project and then implemented in some countries: the Soviet Union, China, a reasonable number of Latin American, South-East Asian, and African countries where it is still maintained till today. At some point, most countries posed this dilemma to their policy-makers: the United States, Britain, France  however, capitalism stays the dominating model. Hence, capitalism has been a significantly older model, while the socialist idea received a portion of popularity in the XIX-XX centuries.

Secondly, it is essential to compare the level of government participation in the economy in the context of the structures discussed. As for socialism, it is based on a planned economy, which implies extensive state involvement. There may be different dimensions of the latter: taxation, partial ownership of specific industries, determination of the national demand, subsidizing of some realms of the economy that have to do with vital spheres of public life. As for the ones defending the paradigm of capitalism, they believe that state participation must be as minimal as possible. Some libertarians even call taxation a theft as it is seen as a forced withdrawal of money. In capitalism, individuals enjoy the economic freedom that is only determined by the economic law of demand and supply. In other words, these socio-economic models have nothing in common speaking of government involvement.

Another point to be made is the role of the philosophical background behind these models. Socialism is an eschatological concept that believes it is a step towards total equality in communism. There is an understanding that the common good is the most important aim that a society may have, as it presumably means the wealth of each member of the community. However, there is a poles apart opinion on this. Pro-capitalists believe that society needs to provide citizens with opportunities and the freedom to use those opportunities in the innovative, creative ways they come up with. Communism is seen as unreal. Therefore, both capitalism and socialism aim to guarantee members of the sociawell-beingng while attaining that goal with poles apart means. If socialism finds its way to personal happiness via the common one, for capitalists, it is a zero-sum game where the wellbeing of one means a flaw for another one.

To conclude, despite the ongoing debate, socialism and capitalism conceptually do have common goals; however, their methods and attitudes differ dramatically. Capitalism, as a concept, was established and practiced long before the socialist model, which still stays less preferable for many countries. Moreover, the capitalistic approach denies the role of the state, while socialists believe that it may be the guarantor of economic and social prosperity. Finally, capitalism does not have the final goal  it directly goes for the wellbeing of the individuals, who deserve it from the market perspective. Meanwhile, socialism has a more ambitious objective of reaching communism and universal happiness.

Population, Consumerism and Capitalism

Population relates to both consumerism and capitalism at different levels. Capitalists see population growth as both a threat and an opportunity to increase their profit levels. As the population grows, consumerism grows as well to serve the interest of the public. Population growth has negative impacts on the environment. People clear forests to erect houses for both commercial and domestic use. This process leads to biodiversity loss and climate menaces that affect the lives of people negatively. However, it has been difficult to handle the issue of population because different people view population issues from different perspectives. Around the global south, population growth is the major problem while in the global north; population decline is the major challenge.

Consumerism benefits the economy greatly as people continue to produce and consume products. Additionally, consumerism promotes the idea of industrialization, which is a major contributor to the economy of the world. As such, it becomes hard to change the values of consumerism regardless of the negative impacts that they pose to society because the advantages of consumerism outweigh its negativities. Capitalism, on the other hand, provides an equal ground where people can operate freely by allocating relevant authorities to both the government and the private sector. The politicians and capitalists exist in a mutual relationship. Therefore, it is difficult to ban or change capitalism values.

As population growth increases, the level of consumption rises, thus enhancing consumerism. Both consumerism and population compound one another. Consumerism focuses on the increased quantity of production at a reduced price per unit. On the other hand, Demand for basic items such as food and clothing rises as the population grows. The increased demand triggers more production of items to equalize supply and demand. However, the combination of this relationship can lead to negative environmental impacts where people employ the use of technology to improve productivity. Excessive use of machines and industrialization leads to high production of carbon dioxide, which is harmful to the environment.

Capitalism is a wealth-generating mechanism for many nations. As consumer demands increase, capitalists take that opportunity to produce more products at a lower cost to maximize profits. The aspect of mass production is detrimental to the environmental health of a society. Air pollution and deforestation are some of the major impacts that capitalism has on society. Population growth determines the levels of demand within a society, hence the level of capitalism. In addition, population growth results in increased per capita consumption, which is a key aspect of capitalism.

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