To What Extent is Inequalities in Society an Inherent Consequence of Capitalism - Essay Example

To What Extent are Inequalities in Society an Inherent Consequence of Capitalism? Introduction Inequality has been an area of interest for scholars and policymakers, especially since capitalism became a dominant mode of production across the globe. The unique prospect for innovation, free enterprise, and generation of profit or wealth that emerged from capitalism has generally been accompanied by constant social inequalities—primarily wealth and income inequalities (Mooney, Knox, & Schacht, 2010). Therefore, inequality may be viewed as the inherent consequence of capitalism. Capitalism, regardless of its economic ability and power to adapt and change, is a natural mechanism of unequal economic system that needs correction. Thus the major question this essay tries to answer is, to what extent are inequalities in society an inherent consequence of capitalism? Another line of argument states that capitalism survives because of its capacity to reward well-performing economic participants. Within this perspective, inequalities reveal, primarily, differences in economic ability and levels of productivity among members of the society (Solimano, 1998). The discourse on the nature and consequences of capitalism, as it relates to inequality, has been largely dominated by key political thinkers, namely, Karl Marx, Max Weber, Erik Olin Wright, and others. Analysing Inequality Contrary to assumptions that inequality is inevitable, needed, and widely valuable, Karl Marx believes that capitalism only creates inequality. According to him, inequality appears in a society because some individuals and/or groups, especially those who have the means or capital, take advantage of or exploit those who only have their labour as a means of subsistence (Kendall, 2012). Basically speaking, the wealthy are wealthy because they exploit the needy. Marx observes that labour is the major source of value and the reason why some exploits and others are exploited. This unfair transaction takes place because of the unequal distribution of income or means of production which implies that only those who own the means of production benefit from wealth creation and the free enterprise. On the other hand, those who are poor do not have a choice but to work for or sell their labour to the owners of production (Kendall, 2012). This line of thought also states that capitalism’s productive value is hampered by an overwhelming interest in profit. In other words, Marx’s critique of capitalism mainly focuses on the social relations surrounding the mode of production. This Marxian approach is integral to the study of income inequality, for it explains the basic relationship between production and distribution. According to Mooney and colleagues (2010), the most definite aspect of Marx’s idea for breaking up the connection between production and distribution within capitalist society is to abolish the alienating and oppressive division of labour and build an economic system that creates multiple sources of income and promotes equal distribution of wealth. Erik Olin Wright is one of the contemporary political thinkers largely influenced by Marx’s concept of inequality and class. He adopts the fundamental Marxist idea that class must be characterised by the social relations that are inherent in capitalist societies. However, Wright formulates a more detailed class framework that more accurately illustrates contemporary class differentiation and the current relationship between inequality and capitalism. His framework focuses on the ownership of three major economic resources, namely, labour, capital, and means of production (Keister & Southgate, 2012, p. 65). From this idea, Wright derives four classes. First is the bourgeoisie, or the capitalist class, who owns all these economic resources. It has power over labourers, owns substantial capital, and controls the most important means of production. Second is the manager class which is composed of managers of major business organisations who manage business activities but do not have control over the means of production and capital (Keister & Southgate, 2012, p. 65). But they have power over other labourers in the organisation. Third is the working class which does not have any control over major economic resources. They only have their labour power which they can sell to the owners of production. The fourth class is the petty bourgeoisie—for example, small business entrepreneurs. Because they possess a certain degree of control over a small amount of capital and means of production, they embody an obviously unique class (Keister & Southgate, 2012, p. 65). However, they are only able to hire a small number of workers hence they have less control of labour. Essentially, Wright largely focuses on the idea that class is integral to the study of inequality within capitalism and must be characterised by the inherent social relations to the means of production. Max Weber accepts the idea of Marx that classes emerged from capitalism and from the relationship of groups and/or individuals to major economic resources, and he believes that economic forces have a powerful impact on the lives of the members of the society. However, he disputed Marx’s argument that material forces are the main component of social inequality (Levine, 2006). Weber identifies three components of social inequality, namely, power, status/prestige, and class. Weber views class as the economic component of social inequality. This involves financial resources like income (Levine, 2006). But he realised that social inequality does not only concern economics because members of the society are also differentiated based on the level of power and status they possess. Weber believes that class divisions are associated with differences in status, that is, people with the greatest control over economic resources are placed at the highest level of the status hierarchy. But status is not exclusively associated with economic position. There are people who are given high status in the society even though they do not have control over a huge amount of economic resources (e.g. priests) (Everett & Shifflett, 2005, p. 247). Power, on the other hand, is the political component of social inequality. It is defined by Weber as the ability to control others. Again, people who own sizeable amount of economic resources have greater power. Powerful people also are more capable of manipulating social processes. For instance, an employer charged of corporate felony can evade punishment by hiring expert lawyers (Everett & Shifflett, 2005, p. 247). Weber had a more comprehensive model of social inequality because he takes into consideration the relationship between political, social, and economic components of inequality. Both Marx and Weber, although they have different assumptions about inequality, accept the significance of the economic component of inequality. Jointly, Marx and Weber present persuasive arguments about contemporary social inequality and class division. Another political thinker, Malcolm Waters, explains the nature of inequality in contemporary society. In his article Inequality after Class, Waters presents a comprehensive evaluation of class-based accounts of inequality and introduces a revisionist class analysis which forms the foundation for an inequality theory in the postmodern period (Pakulski & Waters, 1996, p. 10). Emphasising four precepts of class theory—transformational capacity, cultural and behavioural relationship, groupness, and economism—Waters illustrates the weaknesses of class analysis to justify the function of ascribed status, such as gender, and political hegemony in bringing about the structural social inequality in the postmodern period (Pakulski & Waters, 1996, p. 10). His argument is that a knowledge of the history of social inequality as regards the transition from ‘class-based’ system, wherein the economic class is the primary component of structural social inequality, to ‘organised-class system’, wherein the political class serve a major function, to ‘status-conventional’ system, wherein inequality is mainly based on the cultural domain, offers a basis for analysing types of social inequality in postmodernity (Crompton, 2008, p. 84). Apparently, Waters promotes the importance of understanding new theories of social inequality, which are more comprehensive than class-based theories. Class-based theories of inequality had overlooked other components of inequality, such as gender or race, which are often treated as outcomes of class division. Nancy Fraser has differentiated ‘social politics of equality’, generally rooted in class-based components, from ‘cultural politics of difference’, which is related to broader issues of identity (Lovell, 2007, p. 40). Inequality is still perpetuated by economic forces, and a consideration of other components besides class can reveal more serious economic inequalities. Racial differences often have been characterised by economic oppression, hegemony, and discrimination that are more savage than class structures, and which cannot be understood through class analysis (Levine, 1995). As argued by Waters (Tonkiss, 2006, p. 158): “gender has exhibited far more pronounced inequalities of power and material rewards as well as offering more extreme examples of exploitation and brutal coercion than those occurring between classes”. On the other hand, structural-functionalist framework, social inequality stems from institutional collapse, or failure of government institutions to deliver sufficient social services, failure of educational institutions to offer educational opportunities for all, and failure of economic institutions to generate adequate employment and income. These institutional failures lead to ‘culture of poverty’, wherein the ‘underclass’, composed of the have-nots, create beliefs, practices, and attitudes that aggravate their own predicament (Mooney et al., 2010, p. 195). Trapped in this culture of poverty, the underclass feels inferior, powerless, helpless, marginalised, and worthless. The culture of poverty is passed on from one generation to the next, keeping social inequalities alive. In the meantime, contemporary political thinkers, like Lash and Urry, try to move away from the Marxist perspective in their analysis of social inequality. Lash believes that Marx’s critical theory is no longer an accurate explanation of today’s social inequalities. Lash argues that the current world order is ‘informationalised, yet more than ever capitalist’ (Preston, 2001, p. 161). Nevertheless, he emphasises that social analysis should still take into consideration social inequality and the economy. Recently, theoretical economics and political philosophy have been focusing on social inequality and distributive justice focusing mainly on the analysis of political, economic, and ethical domains of justice and inequality (Preston, 2001, pp. 161-162). Furthermore, these areas of analysis try to develop guidelines for building political and economic institutions that contribute to the formation of a ‘just society’. Generally, the 20th century has seen two key political and economic approaches to the issue of social inequality (Solimano, 1998, p. 2): (1) the creation of the welfare state in advanced capitalist countries and its equivalent of the dirigiste state in developing countries; and (2) the instauration of socialism in Russia, Eastern Europe, and China during the first half of the twentieth century, and other countries (e.g. Cuba) later on, around the project of creating an egalitarian socialist society as an alternative to capitalism. However, the failure of socialism in several nations followed by the emergence of private or free enterprise have pushed social inequality and distributive justice to the fringes of public discourse. To get rid of inequality completely is to get rid of capitalism and its benefits. Institutional policies should be developed that provide the less privileged greater opportunities to participate in the marketplace in a manner that eradicates persistent poverty and lessens the most unjust inequality. Even though critics of inequality do not completely exclude capitalism, for practical and moral purposes, inequality should be regulated (Keister & Southgate, 2012). In theory, the solution to inequality between the rich and poor, the powerful and powerless, was to eliminate capitalism, or at least modify the conditions of participation, for instance increasing the taxes of major businesses and greater market opportunities. Another solution was supported by economists who argued that inequality could be resolved through regulation of foreign investment and industrialisation (Lovell, 2007). Empirical studies on inequality reveal a disappointing image of the actual status of access to economic opportunity. Nevertheless, in the recent decades, the spread of ‘shared capitalism’ policies has created new channels of economic opportunity because these policies give employees the chance to acquire other sources of income, namely, through direct profit sharing and stock ownership (Levine, 1995, p. 80). Expanding profit sharing and ownership of capital to include low-earning individuals may, thus, contribute to the reduction of income inequality (Levine, 1995, p. 80). The concept of equal opportunities for all implies that specific irrelevant factors such as class or wealth should not establish or restrict a person’s access to opportunities. Resolving inequality requires reducing discrimination through changes in societal values, beliefs, and attitudes, as well as eliminating the culture of poverty. Conclusions Without a doubt, inequality is an inherent consequence of capitalism, especially if one is to adhere to the arguments of Marx, Wright, and Weber. Capitalism creates class distinctions, which then result in the emergence of wealth inequality. However, several contemporary political thinkers and social theories argue that inequality is not just inherent to capitalism, but to cultural, social, and political factors as well. Waters, Lash, and Urry explain that some of the most vicious social inequalities are not produced by class-based factors but by political domination and institutional failures. Therefore, the extent to which inequality is an inherent consequence of capitalism differs. References Crompton, R. (2008) Class and Stratification. UK: Polity. Everett, K. & Shifflett, P. (2005) Fundamentals of Sociology. UK: Kendall Hunt Publishing Company. Keister, L. & Southgate, D. (2012) Inequality: A Contemporary Approach to Race, Class, and Gender. UK: Cambridge University Press. Kendall, D. (2012) Sociology in Our Times: The Essentials. Mason, OH: Cengage Learning. Levine, D. (1995) Wealth and Freedom: An Introduction to Political Economy. London: Cambridge University Press. Levine, R. (2006) Social Class and Stratification: Classic Statements and Theoretical Debates. UK: Rowman & Littlefield. Lovell, T. (2007) (Mis)recognition, Social Inequality and Social Justice: Nancy Fraser and Pierre Bourdieu. London: Routledge. Mooney, L., Knox, D., & Schacht, C. (2010) Understanding Social Problems. Mason, OH: Cengage Learning. Pakulski, J. & Waters, M. (1996) The Death of Class. London: SAGE. Preston, P. (2001) Reshaping Communications: Technology, Information and Social Change. London: SAGE. Solimano, A. (1998) Social Inequality: Values, Growth, and the State. Michigan: University of Michigan Press. Tonkiss, F. (2006) Contemporary Economic Sociology: Globalisation, Production, Inequality. London: Routledge. Read More