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The Evolution of Capitalism - Essay Example

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Name of student: Topic: Lecturer: Date of Presentation: Capitalism Industrial revolution began in the late 18th century in Britain and spread to other parts of Western Europe and America powered by coal, steel, electricity, improved transport and communication (Sanders et al…
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The Evolution of Capitalism
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Download file to see previous pages Marx and Engels were very critical of capitalism and the methods proposed by Smith. For them capitalism creates class antagonisms and the only solution is to overthrow capitalism. Carnegie like Marx acknowledges class divisions, but views inequality as inevitable and the solution lies in administration of wealth. The aim of this paper is to explore the evolution of capitalism and its impact on society through the works of Smith, Marx and Carnegie. Adam Smith is considered as the father of free market capitalism with the invisible hand controlling the market. Industrialization led to the factory system which changed work patterns. Laborers now produced commodities for exchange in the market with prices determined by forces of demand and supply instead of producing for own use (Sanders et al. 203). Due to lack of other means of obtaining subsistence food and maintaining their race, they offered their labor to factory owners in exchange of wages thus commodifying labor. Division of labor became the norm in factories leading to labor productivity since workers could produce more products than if acting alone (204). Some operations are more complex than others requiring different skills and as such wages were paid according to level of complexity. Actors in this system are driven by self-interest. In Adam’s words “it’s not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest” (204). By pursuing self-interest (profit) the capitalists provide essential goods and revenue to the community without intending to do so. Though market mechanisms regulate the market, sometimes the employers combine to sink wages below the natural rate (207). Smith condemns such combinations as they hinder competition and same case applies to government interventions. Free trade is encouraged as a nation cannot be self sufficient; it could be cheaper to import than manufacture locally (207). Marx agrees with Smith that division of labor leads to improved productivity thus new wealth acquisition and that competition brings market efficiency (214).However, those who produce wealth do not benefit as capitalists accumulate the surplus value. This to Marx is exploitation of labor and also results into two antagonistic classes; the bourgeoisies (capitalists) and proletariat (working class) (216). The discussion during the early 19th century thus moved from discussing the rise of capitalism and centered on the class struggles produced by capitalism. Free trade and competition advocated by Smith only serve to encourage exploitation of workers by the capitalists. If the market is allowed to operate freely, capitalists employ and dismiss labor as they like and offer low wages since they have a reserve army of workers (217). Furthermore, labor has been replaced by machines. The solution offered by Marx and Engels to end class antagonisms is to overthrow capitalism and replace it with communism. This entails abolishing private property and move from “each according to his ability; to each according to his needs” (215). Carnegie agrees with Marx that capitalism produces classes as evidenced in America. New classes of the rich and poor emerged with the gap between them widening as rich accumulate more wealth (220). Since competition is healthy and the government ought not to intervene in the market, his main concern is how this wealth ...Download file to see next pagesRead More
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