The Structure of New Capitalism - Essay Example

Question 2: New Capitalism Introduction Max Weber and Karl Max are widely mentioned for advancing literature on capitalism as an economic system composed of a free market where capital assets are owned by private individuals who produce goods and services principally for profit. They note that capital assets form a crucial element in the development of class stratification of the society mainly, the owners of capital factors who control production assets and the working class employed by capitalists (Weber 1905; Jenks 1988). Unlike capitalism new capitalism results from ownership of companies by collective investment schemes representing millions of savers. The millions of savers are defined as the “New Capitalists.” They include individuals with retirement savings, life insurance and other direct and indirect equity investments. Currently they represent between one half and one third of the adult population of most developed countries, and own between 40% and 80% of the outstanding shares on the stock markets of the developed world (Davis et al 2006). New Capitalism has shifted profit values from company dividends to share prices due to the fact that the sale of shares earns profits in the short term as opposed to company dividends. As a result, the new capitalism structure has influenced labour relations by exploiting workers who have to work twice as hard to remain employed (Sennett 2006). This paper discusses how new capitalism structure negatively influences self-integrity and also that the meanings of work for employees have changed as a result. First, the paper presents an analysis of the new capitalism structure followed by the implications of this structure on the integrity of the self. Subsequently, an analysis of employees’ meanings of work with regard to the new capitalism structure is also discussed. The Structure of New Capitalism According to Karl Max capitalism is an economic relationship between owners of capital assets that would eventually be replaced by socialism since capitalists impoverish workers who would in-kind revolt. Capitalists employ labour from workers to produce goods and services which they extract surplus value from. The difference between the cost of production (wages paid for labour) and the value of the commodity is what generates profits for capitalists. Max Weber also agrees with Karl Max on the premise that capitalism forms social stratifications that produce social imbalances where capitalists take advantage of the labour provided by workers to exploit them (Weber 1905; Jenks 1988). The structure of new capitalism is result oriented with emphasis on the output performance of the employee. As a result, there is no job security in tenure because organizations are in constant need of restructuring and innovation. This places a lot of pressure on employees to deliver while at the same time giving no promise of merit due to the dynamic needs of the industry (Stelzer 2006; Newfield 2006; Sennett 2006). The contemporary capitalism framework is such that companies and organisations are constantly changing with the dynamics of an increasingly competitive market. As a result workers face the dilemma of staying relevant in desperate attempts to prove their worth to the organisation given that most jobs are redundant or duplicative in nature. Technology has also worsened the situation since labour as a requirement for production is progressively becoming obsolete. Workers have to compete with machines that have far more efficiency in their output ratings than a number of workers’ efforts combined (Stelzer 2006). New capitalism is driven by three main agenda. First, it shifts managerial power to shareholders which places value on share prices rather that company dividends. Secondly, the shift in power created requires short term results as impatient shareholders demand quick profits from the sale of share prices. Finally, new capitalism is driven by development in new technologies in communication and production. These key aspects combined place pressure on the modern employee who is expected to keep up with trends or become irrelevant hence, dispensable (Sennette 2006). Newfield (2006) notes that contemporary capitalism has adopted a militarised style of management by delegating managerial responsibilities but at the same time retaining control over aspects such as enforcement, restructuring, termination and resource development. Employees are exposed to labour for long hours driven by the fear of job insecurity. Management sets technical goals by monitoring employees’ performance but takes no responsibility for either guiding or funding their achievement. The management pays no attention to tenure as past performance of employees regardless of being exceptionally productive is no guarantee for job security in the future (Sennette 2006; Newfield 2006). The cut throat attitude that companies display in dealing with employees is partly due to the need for innovation and restructuring that render past achievements inconsistent with current trends. This is because of technological advancements in communication technology and industry that has increased the level of competition in the global financial markets. In the new capitalism framework, companies are forced to invest minimal resources to produce maximum results in order to remain competitive in the global financial markets. The results of this new capitalism are employee disloyalty, low trust and little institutional knowledge (Sennett 2006). Implications of New Capitalism Structure on the Integrity of the Self People inertly have constructs of themself that in turn shape the very nature of their experiences which encompass their cognition, emotion and motivation with regard to cultural standards of morality, competence and appropriateness (Markus &Kitayama 1991). Self-integrity is the general perception of one’s self goodness. This therefore means that one feels good about themselves with regard to the belief that they are good parents, good citizens, competent workers, intellectuals, rational or socially suitable etc. (Legaut, Al-Khindi & Inzlicht 2012). Studies conducted by Legaut, Al-Khindi and Inzlicht( 2012) suggest that preservation of self-integrity is as a result of threats to ones’ self-integrity. Further, that an individual will adopt defensive mechanisms that involve psychological alterations aimed at denying, rejecting or transforming the threat in attempts to restore self-worth/integrity. Similar studies advanced by Markus & Kitayama (1991) reveal that the need to preserve self-integrity for individuals in a social system forms the basis of motivation which in turn makes one strive to prove themselves worthy or to achieve certain goals. Hence, an individual would do all this in attempts to restore self-worth/integrity. The structure of new capitalism framework has significant impact on the integrity of employees particularly when it comes to issues revolving around privacy. Whereas surveillance of employees to monitor their performance has become necessary in the workplace it is pervasive in that employee rights and privileges with regard to privacy are undermined (Dogig-Crnkovic ND; United Nations 1948). Scholars such as Karl Max and Max Weber propose that the working class due to oppression from the owners of capital assets (Capitalists) would retaliate to replace capitalism with socialism (Weber 1905; Jenks 1988). In the same respect, the invasion of employee privacy is an infringement to their rights and serve to make them uneasy and insecure about their jobs. Another implication of new capitalism on the integrity of employees is in the pressure placed on them to perform with emphasis on results rather than on craftsmanship. Companies today require a multiplicity of talents and competencies that are not achievable in craftsmanship which basically focusses on specific expertise in a particular job or task. This has had employees changing from job to job, task to task and from place to place. Consequently, employees constantly struggle with the need to manage short term relationships and that of maintaining a sustained sense of self (Sennette 2006). This struggle in turn brings forth a lack of motivation of employees since their efforts are not an assurance of job security. Similarly, their past performance is no guarantee for maintaining a posting in the organization (Sennette 2006; Legaut, Al-Khindi &Inzlicht 2012). Lastly, the competitive nature of the new capitalism system is such that employees have no security of tenure in their employment since their contributions may be irrelevant to the current situation as per the dynamics of the industry. The implications of these insecurities are employee disloyalty, low trust and little institutional knowledge (Stelzer 2006; Sennette 2006). According to Duggar (2009) lack of personal integrity at the workplace environment is evident in the lack of trust and competencies of workers. Duggar explains that individuals without self-integrity will not be regarded as team players by clients or fellow employees. Ultimately, individuals who appear not to be worthy of trust are denied opportunities and responsibilities due to their inability to be counted on to perform at a particular task. Changes in the Meanings of Work The meanings of work can be said to be the significance, orientation and the integration that a worker attributes to their job. These comprehensions then shape the individual’s expectations and intentions about their work that produce feelings of dignity and self-worth (Morin 2008). Thus, the meaningfulness of work is perceived as a state of satisfaction based on the coherence between the individual and the work they perform (Isaken 2000). When workers ascribe positive meaning to their work they tend to find meaningfulness in their work and resultantly feel physically and mentally sound. This soundness then translates to commitment to the job. Employees become vigilant of their performance of duties by cooperating with others to achieve set goals. On the other hand, a negative perception of the meaningfulness is attributable to an employees’ display of stress and distress. The employees in attempts to counter their distress would mobilize defensive mechanisms that serve to reaffirm their self-integrity (Legaut, Al-Khindi and Inzlicht 2012; Morin 2008). The meanings of work for employees when perceived positively leads to, job satisfaction, empowerment, effective stress management, career development and improved individual /personal performance etc. A meaningful working experience brought about by ascribing positive meanings to the job generally results in the wholesome well-being of the individual employee which serves as a boost to their individual self-integrity and morale (Rosso et al 2010). Rosso et al (2010) postulates that ascribing positive meanings of works to a job serves to motivate the employee to perform better, this is because the positive attributes produce positive feeling leading to effective performance. Intrinsic motivation is driven by perceptions of enjoyment and satisfaction at work. The assurance of job security in craftsmanship is one way of ensuring enjoyment and job satisfaction. Eventually, employees can be motivated to work for the organization. However under the new capitalism system emphasis is placed on innovation and creativity giving no attention to craftsmanship and thus no room for employees enjoyment at work or job satisfaction (Sennette 2006; Stelzer; 2006 Alland 2005). Moreover, workers’ perceptions of meanings of work have changed such that they no longer find value in their work as they do not feel job secure. Consequently they are demotivated from work which results in disloyalty to the job, little knowledge about the organization and low trust in the organization’s willingness to reward individual employee efforts. This trend has in turn elicited calls and activism for employment protection in the restructuring of legislation to favour job security (Alland 2005; Sennett 2006; Clark & Postel-Vinay 2005). Conclusion The structure of new capitalism framework places emphasis on results rather than craftsmanship in the knowledge and skills of employees. Consequently, this structure has had significant impact of employees’ n self-integrity and the meanings of work. Firstly, by negatively influencing employees’ self-integrity it has created problems related to job insecurity which result in employee demotivation. Employees no longer enjoy security of tenure and are in constant fear of losing their jobs if found redundant (Sennette 2006; Alland 2005).Secondly, the new capitalism structure has changed employees’ meanings of work as they no longer find value in their jobs. Employees ascribe negative meaning to their work if the job doesn’t reinforce their sense of integrity (self-dignity, respect, esteem and worth). As a result of low self-integrity and negative perceptions of meanings of work, employees become disloyal, less knowledgeable about the firm and untrustworthy ending thus affecting the performance of an organisation (Sennette 2006; Clark and Postel-Vinay 2005; Rosso 2012; Bland 2012). References Alland, G 2005, ‘Measuring Job Security over time in search of a Historical Indicator for EPL (Employment Protection and Legislation). IE Working Paper, WP05-17. Bland, A 2012, ‘Re-defining Capitalism? A Role for Social Enterprise.’ The Green European Journal, vol.2, pp. 51-56 Clark, A & Postel-Viney, F. 2005, ‘Job Security and job Protection.’IZA Discussion Paper, No. 1489, pp. 1-44. Davis, S., Lukomnic, J. & Pitt-Watson, D 2006. The New Capitalists: how Citizen Investors are reshaping the Corporate Agenda, Harvard Business School Press, Boston, Massachusetts. Dogig-Crnkovic, G. 2006, Privacy and Protection of Personal integrity in the workplace. Malardalen University, Sweden. 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