What is Capitalism?

 

capitalismYou really need to understand what Capitalism is in order to understand Marx. Wikipedia (1) is actually a useful starting point here, defining Capitalism as

“an economic system in which the means of production are privately owned; decisions over what is produced and what is bought and what prices should be are determined mainly by private individuals the free market, rather than through a planned economy; and profit is distributed to owners who invest in businesses.”

 

There are three (+1) main components of Capitalism (2)

  1. Private ownership of the means of production – rather than collective or state ownership.
  2. Goods are produced for sale in the free market – rather than for personal use of for barter.
  3. The reason producers produce goods is because they wish to make a profit – the profit motive is central.
  4. To the above I would add a fourth component- which is wage labour – The majority of people in a Capitalist system make their money through wage labour – by selling their labour power to their employers.

Four arguments for Capitalism

  • It is the best economic system for bringing about economic growth, or a sustained increase in the total value of goods and services that are produced,
  • It is the best system for ensuring that what is produced matches up to the needs and wants of the people – because producers only make a profit if they supply what people demand.
  • Thirdly it is argued that production should be efficient because Capitalists are in competition with each other – and the more efficient one’s business is, the lower the cost of production, the lower the price and higher profit.
  • Defenders of Capitalism argue that the genius of Capitalism is that it transforms individual self interest into collective good – selfish capitalists want to make a profit, but they have to produce what people want in order to make a profit!

Capitalism is a dynamic system – it is always transforming the world around it

Capitalism is an incredibly dynamic system – because it induces Capitalists to complete, they are ever looking for new opportunities to invest and make the best rate of profit –There is a natural tendency for this system to change societies and expand globally. Capitalism is restless and Marx was very aware of this fact –

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones … All that is solid melts into air”(4)

Of course, all of the above advantages are contested – Marxist writers generally arguing that there are contradictions within the Capitalist system that make it fundamentally flawed – one such writer is Alex Callinicos…

Alex Callincos (3) – Two contraditions within the Capitalist system

According to Callinicos, the above factors mean there are two fundamental forms of conflict, inherent to the Capitalist system –

  • Firstly, because the Capitalist class exploits labour –the interests of the Capitalist class are in conflict with the interests of the working class.
  • Secondly, each individual member of the Capitalist class is in conflict with other members of that class – Capitalists compete with each other to attain an ever greater amount of profit and an ever greater share of wealth.

Capitalism tends to concentrate wealth in the hands of the few and lead to greater exploitation of the many

enjoy_capitalism_2_Each individual cpitalist, faced with competition from other Capitalists, seeks to maximise profits relative to his competitors. One way in which this can be done is through technological innovation, thus lowering the costs of production below the average costs of production in the sector, which will increase the rate of profit. This will attract further investment (capital).

The problem with this is that it is only a short term solution because eventually other Capitalists will innovate in the same way and the competitive advantage will be nullified, and we return to a level playing field.

Of course some capitalists are unable to afford these technological innovations and go bankrupt, causing unemployment which reduces the bargaining power of those in work, which allows the remaining Capitalists to reduce the wages of their workers, thus increasing the rate of exploitation. At the same time, surviving capitalists buy up the means of production of those firms that have bankrupted at below market value thus leading to a concentration of ownership and a concentration of power in the hands of fewer and fewer people.

From the Marxist point of view therefore, the logic of Capitalism that wealth gradually becomes concentrated in the hands of fewer and fewer people, and the masses get ever more exploited and impoverished.

Sources

(1)  http://en.wikipedia.org/wiki/Capitalism – my version is modified slightly

(2)  Ingham, Geoffrey (2008) Capitalism, Polity – see this for a fuller account of definitions and history of Capitalism

(3)  Callinicos, Alex (2003) An Anti-Capitalist Manifesto, Polity

(4)  First appears in ‘The Communist Manifesto’, 1848. – http://www.marxists.org/archive/marx/works/1848/communist-manifesto/

http://www.learnoutloud.com/Podcast-Directory/Philosophy/Political-Philosophy/The-Communist-Manifesto/22023 – free podcast of the Communist Manifesto

http:/manybooks.net/titles/marxengelsetext93manif12.html – download free ebook – I have a copy permanently on my ipod! – Ironic I’m sure.

The Sociological Imagination by C. Wright Mills

Below is an extract from the “The Sociological imagination” by C. Wright Mills (1959) – I get students to read through this in lesson 1 of A-level sociology and simply answer the two questions below: 

“Nowadays men often feel that their private lives are a series of traps. They sense that within their everyday worlds, they cannot overcome their troubles, and in this feeling, they are often quite correct: What ordinary men are directly aware of and what they try to do are bounded by the private orbits in which they live; their visions and their powers are limited to the close-up scenes of job, family, neighbourhood; in other milieu, they move vicariously and remain spectators. And the more aware they become, however vaguely, of ambitions and of threats which transcend their immediate locales, the more trapped they seem to feel.

Underlying this sense of being trapped are seemingly impersonal changes in the very structure of continent-wide societies. The facts of contemporary history are also facts about the success and the failure of individual men and women. When a society is industrialized, a peasant becomes a worker; when economies rise or fall, a man is employed or unemployed. When wars happen, an insurance salesman becomes a rocket launcher; a store clerk, a radar man; a wife lives alone; a child grows up without a father. Neither the life of an individual nor the history of a society can be understood without understanding both.

It is not only information men need–in this Age of Fact, information often dominates their attention and overwhelms their capacities to assimilate it….What they need, and what they feel they need, is a quality of mind that will help them to use information and to develop reason in order to achieve lucid summations of what is going on in the world and of what may be happening within themselves. It is this quality, I am going to contend, that journalists and scholars, artists and publics, scientists and editors are coming to expect of what may be called the sociological imagination.

 

The first fruit of the sociological imagination–and the first lesson of the social science that embodies it–is the idea that the individual can understand his own experience and gauge his own fate only by locating himself within his period, that he can know his own chances in life only by becoming aware of those of all individuals in his circumstances. In many ways it is a terrible lesson; in many ways a magnificent one.

The sociological imagination enables its possessor to understand the larger historical scene in terms of its meaning for the life of a variety of individuals. It enables him to take into account how individuals, in the welter of their daily experience, often become falsely conscious of their social positions.

Consider marriage. Inside a marriage a man and a woman may experience personal troubles, but when the divorce rate during the first four years of marriage is 250 out of every 1,000 attempts, this is an indication of a structural issue having to do with the institutions of marriage and the family and other institutions that bear upon them.

Questions 

1) Why do men feel trapped?

2) What underlies this sense of being trapped?

3) What is the sociological imagination and what does it enable its possessor to do??

4) How might the sociological imagination help someone understand their personal trouble of going through a divorce?

 

 

 

 

Top Ten ‘Big Questions’ for A-Level Sociology Students

Does society shape the individual? Do class, gender, ethnicity influence our life chances? How and why do societies change?

One way of introducing sociology is to introduce some of the ‘big questions’ that sociologists asks. These questions get students thinking sociologically before they even start studying sociology!

Big Sociology Questions

  1. To what extent is the individual shaped by society?
  2. Is there such a thing as a social structure that constrains individual action, or is society nothing more than a figment of our imaginations?
  3. To what extent does our social class background affect our life chances?
  4. To what extent does our gender affect our life chances?
  5. To what extent does our ethnicity affect our life chances?
  6. What is the role of institutions in society – do they perform positive functions, or simply work in the interests of the powerful and against the powerless? (a related question here is why do our life chances vary by class, gender and ethnicity)
  7. How and why has British society changed over the last 50 years?
  8. What are the strengths and Limitations of macro-scale research in helping us to understand human action?
  9. What are the strengths and limitations of micro-scale research in helping us to understand human action?
  10. Is it possible to do value free social research and find out the ‘objective’ knowledge about society and the motives that lie behind social action?
  11. Is British Society today better than it was 400 years ago?

OK there are 11 questions in fairness, but top ten makes for a more classic title!

Getting Students thinking about Social Theory

The questions above get students thinking critically about social theory, social inequalities, research methods, social change and social progress.

Questions one to six introduce students to the main sociological theories: Functionalism, Marxism, Interactionism and Feminism, and to the basic stratifications in society: class, gender and ethnicity.

Depending on how they answer (even before they start studying sociology) you can explain to them either ‘this is what Functionalists think’ you clearly disagree and get them involved in some early days critical dialogue.

The later questions move on to social change and progress (questions 7 and 11) and this brings up the topic of postmodernism.

Finally there are some questions on research methods – and yes, these are a little dry, but I think it’s good to be up front about the centrality of social research in sociology!

When to ask these questions…?

I used to use these at Open Evening events for prospective A-level sociology students.

Typically at these events there’d be too many students for staff so these questions (among other things) could be something for them to ponder while waiting to chat with a staff member – and then you’ve got something to ask them about when you have a discussion.

You can basically use the questions to introduce the main themes of sociology.

And of course you can return to these questions at the end of the course too, to see what students think about them after almost two years of studying!

Hopefully their responses would be more critical and nuanced than two years earlier!

Signposting

These questions run all the way through the AS and A-level sociology AQA specification – the idea of sociology is to develop a position on each of these questions, using a range of research-evidence, and be able to critically evaluate the validity etc. of the research evidence you have used to support your ‘position. 

I use these questions at the end of the very first lesson of my Introduction to Sociology, and return to them frequently during the two years of study. They’re quite a good place to start and end!

Please click here to return to the homepage – ReviseSociology.com

And so it goes on….