soc 101

Capitalism

 

Ah!  Capitalism!  Love you, hate you, benefit me, destroy me!  Let me count the ways!

Capitalism is the dominant mode of economics in the US today, probably in  the world.  The profit motive drives the economies of nearly all nations (maybe all, but perhaps that depends on how one defines a nation.)  Even the nations like China that claim to be non-capitalist have a fair amount of capitalism within them.

 

Before we start in on capitalism, here is a short blurb on socialism. Socialism a an economic system in which the public (i.e., society)  has some say/control over the economy.  Socialism has taken many forms in the last 150 years.  In the US, it is often thought of as something akin to the devil. Well, maybe that is a bit of an exaggeration~! But, generally people in the US have a lot of misconceptions about what socialism is and whether or not it works.  The general attitude is that socialism has never worked and therefore, for all its flaws, capitalism is the only possible form of economics available.  But, every Western European nation has combined capitalism with socialism to create what is often referred to as democratic socialism.  So when people make the claim that capitalism is the only form of economics that works and/or that socialism is a complete failure, they are overlooking the facts.  Socialism has worked well with capitalism in many countries for nearly 100 years.  IN fact, as your book points out, the standard of living in most Western European countries is similar to ours and they have lower poverty rates as well (better overall health too, in spite of problems in the health care system.)

Second, there are several important socialist institutions in the US.  Social security, an institution that really isn’t collapsing, no matter what they hype, is one of them. Your education is another. Free K-12 education is a socialist institution.  The fact that you pay $3,000 per year for tuition instead of 30 – 50K is another example of a socialist institution as well.

 

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when you hear the word socialist what comes to mind?

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But, on to capitalism.

 

The great critic of capitalism, Karl Marx, had some amazingly astute things to say about capitalism. He explained very clearly some of the reasons why capitalism is such a good thing.  (Bet you never thought you would hear that Marx thought capitalism was good, did you? ) One of the reasons why people love capitalism is that it raises the standard of living of people.  Why?

There are a few complicated reasons why this is so.

First, let’s do a quick review of how capitalism works.

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Have you ever wanted to own your own business?  if so what and how would you make it work?)

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Here are ten shoe factories.

 

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The goal of every shoe factory owner to is make a profit.  To do so, they must out sell the people who are also selling shoes.  In order to do this, they can take a few routes.

They can create a superior product that people will want over other shoes.  In order to do this, they must develop new technologies.  When new technologies are created, we, as a society, experience an increase in many aspects of our standard of living.  Think of computers, of the new medicines that are available, of things like microwaves and cell phones.  The list could on and on.  New technologies developed because it promoted profit.  New technologies are associated with an increase in the standard of living of people in Westernized, first world countries.

In order for new technologies to develop, people have to be educated to produce those technologies.  So public education increases and as the standard of education goes up, people’s lives also improve.  They practice better health practices.  They are more likely to use reason to solve problems. Violence goes down.  Divorce goes down.  (BTW, all of these things are correlated with increased education.)

If people are going to create these technologies, they will also want to be paid for them.  Job categories are created that are well paid.  They are also interesting and fun to do jobs.  They wreck our bodies less.  There are fewer health hazards in the work place.  With better pay, people are able to spend more on the arts and social life has more chance of taking place.  More leisure is created.  People are more likely to become involved politically. (Yes, all these things are associated with increased pay for jobs.)

Plus, in order to sell us shoes, there is

a). competition! Prices stay low. 

b). We have lots of choices about what to buy, and we can buy it cheap.  Business is booming all around. 

c).There are lots of jobs!

d).  the conditions on the job are good, because there is a lot of options for workers.

e).  people own their own businesses so they care about the community in which they have the company.  They know that it is important to have safe, well educated community members so that these people will come to work healthy and relatively happy and do a good job.  Companies invest in the local community.  Everyone flourishes!

 

So, viola, capitalism has improved the quality of life for people. 

 

Let’s take a little side road here before we go back to our list of ways in which the shoe factory owners can make a profit. 

What other positive effects might capitalism have on society.

It increases innovation.

It rewards hard work.  S/he who tries hard can make money, like our inventive shoe people.

It promotes the virtues of creativity, patience, thriftiness, and persistence.

 

All good things!!!!

 

Is it really all this good?

Back to the factories.

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Our people are all out to make a profit, but some are more successful than others.

 

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Looks like some of these folks were less successful than others.  Three factories are gone.

 

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Three factories have become bigger.  They can buy products more cheaply than the competitors.  They can get some of the markets of the competitors.  Pretty soon we have this.

 

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What companies can you think of that have taken over small businesses in your community?  What problems have you seen?

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Where we had ten factories, we now have four.  One of them specializes in $5,000 shoes.  The remaining factories no longer have to keep prices low, they don’t have so much competition.  Workers have fewer choices, so wages and working conditions decline.  Hard work is no longer rewarded in the same way it once was.  Now people are told to shut up and put up or hit the road.

Companies no longer care about communities because they are no longer local. 

Another list of capitalism created problems:

a).  The profit motive encourages greed.

b).  Workers are discouraged from exerting creativity on the job since companies “own” ideas.

c).  Having things becomes too easy and becomes more important than who one is.

 

Here is another issue that deserves it’s own paragraph.  Capitalism leads to the accumulation of wealth.  But wealth is not equally distributed unless some effort is made to ensure that it is (enter democratic socialism).  If no effort is made to control the amassing of wealth,  a small group of people will have huge amounts.  Wealth leads to power.  This group can have a huge effect on the political system of the country.  Democracy becomes at risk, since it may have been sold to the highest bidder.

 

So, capitalism.  Love it or hate it?  Tough choice?

 

1.  Write, from personal experience why you like and/or dislike capitalism.  Be sure to give example that you have seen of how capitalism has been a good thing or a bad thing in people’s lives.

2.  One of the drawbacks to capitalism is that it encourages us to constantly spend and to find our identity in what we own or to do retail therapy (make ourselves feel better by shopping).  What can people do to break this cycle?  What can we substitute for “things” if we are caught in the cycle of buying to make ourselves feel better and to give us a sense of who we are?