Global Studies Analytic Essay
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Hailey Klein 2/17/16 Does Capitalism Produce Crisis? Chronis crisis can indicate a “state of greater or lesser permeance, as in a longer or shorter transition towards something better or worse or different.” (Koselleck) The concept of ‘crisis’ or ‘being in a crisis’ has been thought about for generations. From the French medical adaptation to the German philosophical one, the concept of crisis has been seen as a part of life. While it has spread into many different areas of study, it remains a threat to many systems that still thrive today. A major system, capitalism, balances the worlds economic system on the tip of a pin. This delicate system relies on many parts to work in tandem or else crisis will occur. Capitalism produces crisis though the division and subsequent reliance on individuals for goods and services, the increase in want of goods by the consumer and the commodification of goods, and the competition between people in the markets that puts pressure on the entire equation. It is through scholars and experience that one is able to see the full image of capitalism and its delicate nature. It is important first to know the origins of the concept of “crisis”. While seen universally for many centuries, each group of people experienced different adaptations of crisis. Furthermore, when looking at all of these adaptations and adding them up together, one is then able to see the implications and sentiments towards what would be considered a crisis in the world today. The first appearance of the word in modern language was in France during the fourteenth century. The French originally used this word in the medical field to describe distress with patients. It entered the political sphere in the eighteenth century with the prevalence of war and fighting hitting close to home. In reference to war 1 Hailey Klein 2/17/16 and political strategy, crisis was seen as something to avoid. It entered the German sphere of thinking after the French Revolution and seen “as a political, social, and ultimately economic concept” (Koselleck). It was first seen in the political vernacular rather than the economic. It wasn’t until the second half of the nineteenth century that the usage of crisis expanded to many spectrums of fields including economic, political, social, and historical. By looking at these different usages, crisis plays a major role in uncovering the reasons behind distress in the system. Throughout history, capitalism has been seen in many different ways. Adam Smith is one of the first to describe what he believes is a new way of increasing wealth and prosperity, which he calls the division of labor. While highly praising this new system of manufacturing, his description of the results of this new system seems less than desirable. The revolution of the division of labor is very positive. People are able to become very specialized and good at what they do. In addition, factories are able to create more goods in less time, which drives profits up; the more the wealth the happier the economy. Smith explains, “This great increase of the quantity of work which, in consequence of the division of labour, the same number of people are capable of performing, is owing to three different circumstances; first to the increase of dexterity in every particular workman; secondly, to the saving of the time which is commonly lost in passing from one species of work to another; and lastly, to the invention of a great number of machines which facilitate and abridge labour, and enable one man to do the work of many”(Smith 11). 2 Hailey Klein 2/17/16 The division of labor in this sense can be seen as positive and helpful to the greater system of manufacturing. However, as he goes on to talk about the implications of this new system, it is more apparent that this division is weakening the people on a more basic level. While on the major scale it is increasing production and money flow, those on the bottom are not benefiting. This extreme specialization means that now many people are more reliant on their neighbors for other goods and services that they cannot perform on their own. This reliance leaves people in tough situations when it comes to independence and can still be seen in today’s system of capitalism. The system thrives on the ability of one person to rely upon another for a good or service. This reliance links many people and organizations together which can ensure their success but also their failure. This is a major downfall of capitalism that no one has yet to solve. The same principles seen in the division of labor can be seen in the commodification of goods and the results from doing this. In response to Smith, Carl Marx explains his philosophies on the division of labor. He comments that, The various stages of development in the division of labour are just so many different forms of ownership, i.e., the existing stage in the division of labour determines also the relations of individuals to one another with reference to the material, instrument, and product of labour” (Marx 151). While parallel with Smith’s ideas about the division of labor, Marx also sees the flaws of a system so divided up. The fact that the different people work in different systems creates a very imbalanced amount of power between different people. He likens this scenario to that of the ancient feudal system in 3 Hailey Klein 2/17/16 Europe. He says that, “The hierarchical structure of landownership, and the armed bodies of retainers associated with it, gave the nobility power over the serfs” (Marx 153). This links to the system we see today in the world between big businesses and smaller businesses. They have the power over them because they own more stores and have more employees and produce a higher quantity of goods. The smaller business has to be mindful of these larger businesses because it could mean the difference between a good profit and a swift downfall. Marx believes that the social sphere is also connected with the State and the political and economic spheres. “The social structure and the State are continually evolving out of the life process of definite individuals, but of individuals, not as they may appear in their own or other people’s imagination, but as they really are, i.e., as they operate, produce materially, and hence as they work under definite material limits, presuppositions and conditions independent or their will.” (Marx 154) The commodification of goods can be one way that people are limited in their movement in the market. When a good is in high demand the consumers will be drawn to that while the rest of the goods in the market will just sit there. It is problematic for the other businesses to improve their sales and can lead to a higher level of competition. While competition can be good, in the capitalistic market, it is usually the bigger companies with more money who prevail. The system is set up to favor the richer of the companies. This can depend on the product but the individual is usually not independent in a market of this type. To support this, Marx points out that, “empirical observation must in each 4 Hailey Klein 2/17/16 separate instance bring out empirically, and without any mystification and speculation, the connection of the social and political structure with production” (Marx 154). The social and political structures that exist under the capitalist system make it hard for newcomers, especially those who are smaller, to navigate. This competition between people in the markets puts pressure into the equation that can definitely be seen within capitalism. The capitalist system creates a market that is driven by price and profit. So how exactly does the competition play a role in this system? Schumpter believes that competition is exactly that driving force within the capitalist system. He explains that, “it is hardly necessary to point out that competition of the kind we now have in mind acts not only when in being but also when it is merely an everpresent threat. It disciplines before it attacks” (Schumpter 25). This kind of discipline remains at the heart of the capitalist system even today. The way companies get ahead in this changing world is through monopolies and competitions with companies around the world. While having a monopoly in a particular industry will benefit that specific business, it puts pressure on the whole system because now the other businesses must work even harder to adjust for their loses. The commodification of goods is one of the ways that this competition can flourish. Schumpter explains, “But in capitalist reality as distinguished from its textbook picture, it is not that kind of competition which counts but the competition from the new commodity, the new technology, the new source of supply, the new type of organization (the largestscale unit of control for instance)—competition which commands a 5 Hailey Klein 2/17/16 decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives.” (Schumpter 24) It is not enough that the system is flawed to allow businesses to get such huge leads but also the system is changing continuously, allowing new competitors to enter the capitalist arena all the time. The largestscale unit of control is the most powerful of the companies in play; however, it is possible for a smaller company to still make some waves in the market. The system may only benefit from this intense competition from businesses around the globe. On the other hand, the social structures of society are changed because of the capitalist system. Within the capitalist system, one can see that there are those who are successful and those who are not. This system is unforgiving and will leave those who are weak behind. The social aspect of the capitalist system can be seen in the basic building blocks of the system itself. From the emphasis on selfdiscipline, delayed gratification, and restraint, it is evident that the system favors some and not others. This system is about getting ahead or being left behind. Bell explains what he believes is the reason for the unforgiving nature of the capitalist system. He explains, Along a different sociological axis, one can see the politics of the 1920s, and to some extent that of the 1950s within the framework of "tradition" versus "modernity," with the rural, smalltown Protestant intent on defending his historic values against the cosmopolitan liberal interested in reform and social welfare.” (Bell 34) 6 Hailey Klein 2/17/16 The gap between the old traditional beliefs and the new ones create this imbalance in the system. The liberalization of the public sphere allows for not only competition but also for inequality among those involved in the system itself. Now people who cannot pay their bills go on social welfare, those who cannot work get checks for their unemployment. It is no longer about working together to achieve the goal of producing one thousand shoelaces a day. Instead it is about owing the factories that produce these high quantities of shoelaces and then getting extremely rich on the profits of others work. Bell goes on to describe the capitalist system and the liberalism residing within it as, “Cartelization, monopoly, and the restriction of production had been historic tendencies of capitalism” (Bell 36). While the liberalization of the system has created more opportunity for many, it continues to be the root of sources of crisis within the capitalist system, especially when it comes to competition and dependence on certain entities for stability. There are many different opinions on capitalism and its role in the world today. These include the delicate nature of the system, the people’s roles and operations within the system, as well as the goals of the system. In today’s society, it is difficult to separate the people within the system with the system itself. From the early observations of the division of labor to the newer observations of dependence and inequality, the system has some flaws. Capitalism creates a context for conflict and crisis to arise from many different locations and situations. The competitive nature of the world makes business more difficult and smaller companies struggle more. It makes the consumer dependent on the supplier and the politician dependent on the economist. Through all of this, the free 7 Hailey Klein 2/17/16 nature of the market thrives even though many people within the system are not. What needs to be changed in order to modify this system of capitalism and create a system that doesn’t drive people towards crisis but steers them away? This is a decades old question that remains unanswered still, today. Bibliography Smith, Adam, Edwin Cannan, and George J. Stigler. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: U of Chicago, 1976. Print. "The MarxEngels Reader (Second Edition) 2nd Revised & Enlarged Edition." The MarxEngels Reader (Second Edition): Karl Marx, Friedrich Engels, Robert C. Tucker: 8601419475711: Amazon.com: Books. WW Norton & Company, n.d. Web. 17 Feb. 2016. Schumpeter, Joseph A., and Joseph A. Schumpeter. Can Capitalism Survive? New York: Harper & Row, 1978. Print. Reinhart Koselleck, "Krise" in Geschichtliche Grundbegriffe: Historisches Lexicon zurpolitischsozialen Sprache in Deutschland , eds. Otto Brunner, Werner Konze, and Reinhart Koselleck (8 volumes; Stuttgart: KlettCotta, 197297), 3: 61750. Bell, Daniel. The Cultural Contradictions of Capitalism. New York: Basic, 1976. Print. 8