Analysis of Capitalism, Commodity and Culture - Term Paper Example

Title: Analysis of Capitalism, Commodity and Culture The socio economic system in which the meaning of private ownership signifies profit to the owner is defined as Capitalism. The means of production is in the control of the owner and the profit arising out of the business also belongs to the private owner. The first theorist of Capitalism is Adam Smith he stated that in a given commercial and evaluation system individuals will respond by earning more with specialized skill in producing a particular item. These individuals will produce to obtain the greatest value with out any intervention of the state or government, Smith (2008). Marx defined capital as money and capitalist production as the means of conversion of wealth in monetary terms. Marx coined the Labor theory of Value where it is shown that Capitalists exploit labor to deprive them of the value they themselves generate or produce, Kilcullen (1996). In Capitalism there is a free market and that market determines the production, distribution and the price of the goods and services. Free market signifies unregulated supply and demand with little government control in matters of trade. Price of commodities is determined by buyers and sellers and the market is directed by demand and supply of goods and services. Efficiency of economic policy and its feasibility is the yardstick for measuring competition in Capitalistic policy while Socialistic policy involves unity in a single competitive market. A controlled market is opposite to a free market and in it the government controls the supply and price of goods and services. In the seventeenth century in Europe saw the beginning of capitalism in association with European enlightenment. The main principal of European enlightenment lies on the concept of individual freedom to pursue the individual dream and economic interest to generate profit. In Capitalism profit is generated by production along with the labor to make the production. In Capitalist system labor is also defined as wage labor because wages are paid to the labors in order to produce. 'Labor is a commodity like any other', 'an article of trade' - Edmund Burke, Thoughts on Scarcity, 1795. There are means of production which is the required instruments for any goods to be produced including land and related property. Capital is the essential element for business and owned by the Capitalists, with the help of the Capital more wealth can be generated. Capitalism is broader term than being restricted to a means of making money and earns a living; it is a socio economic system. It is a concept of realizing about an organization. Capitalism is based on the theory of individualism and based on the perception that individuals have right to economic freedom. The exact opposite of Capitalism is Communism which is based on collectivism and sharing of wealth instead of importance to individuals and individual wealth. In regards to Capitalism another important concept needs to be discussed, it is called Laissez-faire Capitalism, later stage it was replaced with Keynesian system of Capitalism. Laissez-faire is A French word meaning ‘letting go’ and it signifies a situation where the Government loosens all its control over the market and let’s go the trade and economic activities and allows the market to decide its course. A crucial theory behind laissez-faire capitalism is that unemployment is voluntary because of the individual choice to pursue economic gain. In the 1930’s there was a period of severe economic slowdown with enormous slump in the market leading to high unemployment rates that were not at all voluntary and this led to the rejection of the laissez-faire capitalism. At that point the economy was resurrected and brought to track by the famous English Economist John Maynard Keynes. Keynes said that "The importance of money flows from it being a link between the present and the future." He was the pioneer in conceptualizing and analyzing the relationships of business cycle and labor market which led to the innovative approach of macroeconomics and acted as a preventive measure against further economic depression, Cyprus (2009). Macroeconomics focuses the behaviours of national and regional economy as a whole instead of piecemeal approach. Macroeconomics works with many indicators like unemployment rates and creates different models to explain what relations come out from interaction between these indicators. It was during the great depression which saw macroeconomics as an important and viable area of economic study. In this approach the individual behavior was considered in adherence to the national economy as a whole. In the late 1980s, Keynesian economists reconciled with classical economists and worked to reconcile microeconomic models along with macroeconomics currently different models are heavily influenced by the Keynesian model, Bram (2009). In USA the private sector plays a crucial role in the economic activity of the country. U.S. businesses enjoy greater flexibility than their counterparts in Western Europe and Japan to increase production, lay off workers and develop new products. U.S. firms are global leaders in advance technology, especially in computers and in medical, aerospace and military equipment. However this fast pace approach in technological advancement has given rise to huge rise in the gap in education and professional and technical skills between those at the bottom of the labor market and those at the top. The people at the bottom increasingly face difficulties in obtaining pay raises, health insurance and other benefits. Since 1975, most of the gains in household income have gone to the top 20 percent of creamy layers of the society leading to severe inequality. The economic downturn that began in 2008 raised the U.S. unemployment rate to 8 percent in early 2009, which is very high by U.S. standards, Capitalism Compared USA and Europe (2009). Compared to US economy the German economy is the largest in Europe and combines free enterprise and competition with a high level of social services it reflects a compact society involving employers and employees, workers’ representatives share power with executives in corporate boardrooms in a system known as co-determination (mitbestimmung). Germany is trying to reform its economy by introducing labor reform in order to make it easier for businesses to hire and lay off workers as the present market conditions demand, Capitalism Compared USA and Europe (2009). Commodity is defined as some good which has got some demand and it is supplied with out any qualitative differentiation in the cross section of the market. Commodity is a product and is not differentiated on the basis of source of production such as petroleum, notebook paper, or milk. It can be said that the copper as metal is same and the price only fluctuates because of the increase or decrease of the level of its demand and supply, price of an item is different because of different qualities a superior commodity is high priced than one which is inferior. One significant characteristic of commodity is that its price is determined by the function of the market. Well established commodities are actively traded and have derivatives market, generally commodities are basic items and agricultural products like iron ore, crude oil, coffee beans, soybeans, aluminum, coal, ethanol, salt, sugar, copper, rice, wheat, gold, silver and platinum etc. Sullivan, Sheffrin (2003). In classical political economy a commodity is any good or service produced with the help of human labor and offered for sale in market. In Marx’s theory a commodity is something which is bought and sold it has a value which depends on the quantity of human labor devoted on the commodity Marx, (1859). According to anthropologists and behavioral scientists culture is the full range of learned human behavior patterns. The term was first used by the pioneer English Anthropologist Edward B. Tylor in his book, Primitive Culture, published in 1871. According to Tylor culture is "that complex whole which includes knowledge, belief, art, law, morals, custom, and any other capabilities and habits acquired by man as a member of society." In the medieval times the towns and the cities were dominated by the cathedrals and castles, in modern times the first thing that strikes the eyes are the soaring commercial activities that take place in a country or a city. It becomes a dominating force surrounding which people form their social lifestyle. These activities have far reaching impact and influence the shape of Communities, social relationships, personal aspirations and the work skills learned. A complicated web of values intersects each other circumscribing these commercial aspects of modern society. In recent times business and commercial activities have set to influence the culture and values of the society, to some extent the present trend of majority of Chief Executives is to abandon the following values like workers loyalty, products, corporate structure, business, communities and even nation, to them these are not obligations and are expendable. In fact the materialistic pleasure of free enterprise system and its related ethics has acted as a trap and as mentioned by Daniel Bell, "uses to subvert the very values that sustain it." Short term material goals are prevalent over other important social objectives; business tends to subvert other important social issues like moral cultural values, social conscience, commitment to the community, company loyalty, in brief, a sense of fellow feeling. From the decline of public morality and personal values to the culture of arrogance to increase in young illiteracy rates, and other social evils originates with this eroding value system and its bottom line mentality. The present trend of modern Capitalist society is heading towards a get rich quick concept with the celebration for quick success and instant gratification at whatever cost without looking into the long term objectives. The young generation is being taught to worship monetary success without emphasizing that some of the life’s richest and admired reward is non monitory, Lear (2007). The reason of cultural degradation in modern society is being blamed on Capitalism but it should be noted that the onus of blame not only lies on the system but more on the individuals. According to Ludwig von Mises the reason for such blatant accusation originated from Victorian art critic John Ruskin. Ruskin thought that civilization is degrading due to market economy. He maintained an upper class lifestyle and still is identified as a socialist without even uttering any word about the peasants and working class. Ruskin wrote in Unto This Last (1862) "Government and cooperation are in all things the laws of life, anarchy and competition the laws of death." In real world people are so blinded that they fail to recognize the virtue of Capitalism civilizing the society or sustaining the values and tradition, create something beautiful, and differentiate good things from bad. It has to be recognized that people and culture are products of human choice. Capitalism is the means by which a society can prosper; it also makes sure that minimum resource is used to satisfy the demand of the people. Free economy is efficient as it organizes resources in a cheap and practical means; it satisfies the consumers with standard goods at affordable cost. Entrepreneurs try to provide services even to niche customer groups. In a market economy only the consumers are the real heroes and other factors are subservient to their needs. Capitalism is not only about material things but covers the exchangeable goods, leisure, love, beauty, and art are all exchangeable, and form a part of economic life. Markets often think about long term perspective in fact the Capitalists have to be forward thinking in order to survive in competitive market, Rockwell, (1995). References Bram, T 2009 What is Macroeconomics Wise Greek viewed 29th October 2009 http://www.wisegeek.com/what-is-macroeconomics.htm Capitalism Compared USA and Europe 2009 Central Intelligence Agency World Fact Book America.gov- Engaging the world viewed 29th October 2009 http://www.america.gov/capitalism_compared2.html Capitalism Compared USA and Europe 2009 Library of Congress and the U.S. Federal Reserve Bank America.gov- Engaging the world viewed 29th October 2009 http://www.america.gov/capitalism_compared2.html Cyprus, S 2009 What is Capitalism Wise Greek viewed 29th October 2009 http://www.wisegeek.com/what-is-capitalism.htm Kilcullen, J 1996 Marx on Capitalism POL264 Modern Political Theory Macquarie University VIEWED 30th October 2009 http://www.pol.mq.edu.au/index.html Lear, N. 2007 The Culture of Capitalism Centre for Media Literacy 29th October 2009 http://www.medialit.org/ /CAPITALISM AND CULTUREarticle29.htm Marx, K 1859 A Contribution to the Critique of Political Economy Progress Publishers, Moscow Rockwell, L. H. 1995 Capitalism and Culture, The Free Market Ludwig Von Mises Institute October 1995 Volume 13, Number 10 Smith, A 2008, An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition, Oxford Paperbacks, Oxford, UK Sullivan, A; Sheffrin, S. M (2003) Economics: Principles in action, New Jersey Pearson Prentice Hall Read More