Critique of Capitalist Economy Essay Example for Free

Critique of Capitalist Economy Essay Introduction Karl Marx and Freidrich Engels were great supporters of communism and were opposed to the capitalism way of economic system because they believed that it was a way of exploiting the poor and benefiting the rich in the society[1]. They did a lot of work as philosophers in addressing religious, political and economic issues. Karl Mark and Engels were supporters of communism and criticized the capitalism economy which was being advocated for by the developed countries. Thesis; communist economy is better than the capitalist economy. There has always been a conflict between the counties in the west and the Eurasia on the way economic policies should be set with countries like the US supporting capitalism while the countries that were formally soviet union oppose it and want continue with the communism way.   To critically assess the reasons why communism is better than capitalism, the following is the analysis of negative impact of capitalism and the advantages of the communist economy according to Karl Marx and Engels. The most notable writing is the communist manifesto. Communist Manifesto In 1848, Karl Marx and Freidrich Engels came together to write the   communist manifesto which was a proclamation of the unavoidable failure of the capitalist economy and wake up call to the workers all over the world[2]. The manifesto was commissioned by the communist league in England. Capitalism described as the economic scheme where there is free market of capital i.e. facilities and money, the natural resources and labor (production)[3]. This kind of system allows individual entities like people and companies to the business owners and not the central government. They run the production lines, make much profit as possible since they are also the decision makers of the issues that are affecting the production of goods and services plus the sale of the same[4]. Communism on the other hand is described as an economic system which allows the distribution of the countries resources with the intent of creating a non stratified society. In this type of economy, the government owns the production means and there are no private entities that own the same business or industry. Communism is intimately associated with a German philosophy, Karl Marx because he was an activists and an economist and wrote so much literature about communism and criticizing the capitalism. In his works, he put forward postulations that capitalism would be overthrown and ultimately replaced by communism. Since the individual ownership of the means of production would lead to exploitation, Karl Marx advocated for communism arguing that though the communism may vary from country to country, the following beneficial characteristics would still remain[5]; the planning, production and other operations in agriculture and industry are centrally organized, the system does not put up with opposition from other viewpoints and that only one political party runs the government. Communism developed as reaction of employees to the unacceptable working conditions during the emergence and the increased industrial revolution according to Marx and Engels. In Marx’s view, capitalist should[6] give a chance to socialism a chance to excel because capitalism was deemed to fail the economy because it would create two rivalry classes in the society of the â€Å"haves† and â€Å"have not† hence a new economic system would emerge and replace the capitalism[7]. Though not popular in the 19th century, the communist manifesto became widely used and read document as people sought to actually establish the most efficient economic system during the era of industrial revolution.   As discussed by Marx and Engels, the communism economy would come as a scientifically proofed issue and according to the historic changes of phenomena as continuous processes. Feudalism grew and as expected it had to transform giving rise to mercantilism which also naturally translated to capitalism, from this reasoning, Karl Marx expected that the supporters of the capitalist economy would accept change as it was inevitably going to take place with capitalism transforming to socialism (communism). Economy under Capitalism In the manifesto of communism, Marx and Engels argue that employment would be greatly affected by the owners of the means of production. It also addresses the idea of ownership of private property and idea of communism. The employees are depicted to be suffering from alienated labor; the alienation of labor is categorized in to four groups[8]; first, as soon as the product is made it is immediately taken away from the creator; second, the workers are exploited in the production line (too much work un-proportional to the pay), third, the human beings are meant to work and increase productivity blindly and not in agreement with the normal human nature (from species being), finally, mutual satisfaction of the human needs is replaced by the benefit resulting from the exchange of the products (from other beings). Marx analyses the Hegelian deduction of types of economies to explain how all the categories (salaries, rent, profits etc) were all alienated as a consequence of alienation of the human nature in the capitalist economy. This is because the structure of the economic system ultimately ends up dictating the way people come to live their lives in future, their behavior and determines the possible actions to be taken to stay on top. For instance, in the event that a capitalist economist intention is to remain in the industry (business venture) then he has to exploit the employees to the legal limit. The capitalist will definitely end up being a ruthless exploiter despite being wracked by guilt or not because of the need to stay in control of the economy and apparently everything.   On the same note, employees are forced to take on the work offer as there are no sensible alternatives. Marx and Engels insist that it is for this reason that people have to rise above such oppression and take the bull by its horns so as to have a collective control of their way of life in terms of economy and societal development. Commodity production is another aspect that is addressed by Marx as being used for exploitation. Commodity in the economy and business definitions is the product produced with an intention of exchange for legal tender or money in the market, as there exists a market, the product can be exchanged and that there is division of labor where a variety of products are produced, otherwise there would be no incentive for the exchange. With this kind of reasoning then, a commodity is described in terms of use and value. The use is easily understood, but the value becomes a complex issue to deal with and the relative value for the exchange has to be elaborated. For instance why does some amount of a product exchange for a different amount of another product? The elaboration has to cover the labor input during production of the product or rather the socially obligatory effort put in at average level of intensity to yield the commodity[9]. This is where the labor theory understanding and interpretation plays a big role, and it states that the quantity of socially essential work time needed to produce the commodity should be the determinant of its worth. In Marx view, this argument has two stages and the first is, to say if two items are compared by equations with an equal sign, there should be a third item of identical amount in both to which they are reducible and which is common, the second stage is to look for the suitable ‘third element’ and in this case labor is the only reasonable element[10]. Labor force is therefore likely to be exploited in order to increase the value of the commodity as the use remains constant. Capitalism is idiosyncratic; the capitalist economist does not only rely on the exchange of products as the source of profits but rather the progression of wealth, in the form of cash, with the intension of profit making by means of trading in the products and changing them into other products which can cost higher prices and generate more profits. According to Marx and Engels, no previous scholars have been able to clearly give an explanation of how capitalism as a whole would generate profits. There solution is that, the capitalists exploit the labor from employees, they buy employees labor effort for the day. The price (value) of the product is established by the same means that is, the socially essential labor force needed to make the product. In such an instance, the day’s labor effort is the worth of the products required to keep the employee alive for one day. Taking for example a situation where commodities take about five hours to create, the   first five hours of the day would be used up on creating value that is equal to the worth of the salaries the employees would be compensated, this is the necessary labor. Any other labor done above this is termed as surplus labor and it only benefits the capitalist economist to make surplus value for the profits. The analysis done by Marx reveal that labor called the variable capital and this because it is the only resource that can create more value than it is worth. Other items basically pass their value to the final processed product but cannot create any additional value and hence referred to as the constant capital. Profits generated by the capitalists are a result of employees working past the necessary labor to create value for the employer. This is the theory of profits as far as the surplus value of labor is concerned. The rate of profit making is bound to fall as the industry increases its mechanization under the capitalist economy, by the use of more constant capital and little variable. As it has already been established that labor is the only resource that can add value to a commodity, less advancement on labor as a result of less capital will translate to a fall in the profits. Marx emphasized on the shamed labor and value of commodity[11]. Labor Theory and Value The analysis of Marx and Engels basically emphasized on the reward of labor power and the other forces of production means, basically such resources as land and technology are necessary for production. The analysis of Marx differentiated the history of the means of production for instance the European nations developed from a feudal mode of producing products to capitalist economy. Marx believed that change would come at a fast rate because of the advance in technology. The understanding of the social relations of production to be involving groups of people who are classified based on the wealth they own or their income (social classes)[12]. Commodity fetishism is a description of what Engels termed as false consciousness and is intimately associated with the understanding of the ideology. The ideology was used to imply the ideas of the specific people (class) at a point in time in history[13]. Marx and Engels did not describe only the belief as half truth but as the most important political operation. This explains the way a class can control the production means in food and other manufactured goods, they contribute the ideas of production. People in capitalist are alienated from their own labor investment. The alienation of the labor power as expressed by the Marxist supporters indicates it as the major feature of capitalism resulting in commodity fetishism. Before the emergence of the capitalist economy in the European market, many people who operated their businesses as producers or merchants used to purchase goods and resell them to earn profits. The development of the capitalist economy came as a result of treating labor force as a commodity in itself; the peasants were allowed to exchange labor force with money from the rich people because they did not own any land which they could use to produce food from agriculture[14]. People were being paid according to the time they worked (they were selling labor and not commodity). Those who were in possession of land and the means of production were called bourgeois and they are the capitalists while the peasants who had to sell their labor power for survival were called proletarians[15]. The difference between the industrial capitalist and merchants is that the merchants purchase goods and resell them at some higher cost to earn profits depending on the changes of the laws of demand and supply in the market. The merchant practices arbitrage between markets while the industrialist capitalist exploit the labor market and the product under production[16]. For any profits to be created there has to be a surplus in labor market and value surplus. Capitalism on the other hand can be very productive and develop very fast because of the enticement to reinvest profits in the developing technology and capital facilities. It is also the most innovative economic system as it has always changed the means of production and caused notable improvements. With an attempt to cut down the labor cost, the capitalist economists are likely to invest more in the new technology and as a result considerably cut down the labor cost (less labor)[17]. Since Marx and Engels believed that the profits were from surplus labor, they also concluded that the profits would fall. Conclusion Marxism opposed capitalist and encouraged a move to communism (socialism) in which the economy distributes the resources equally to everybody in the community (nation). It does not promote private possession of assets and business.    References Antonio R.J Cohen. (2003). Marx and Modernity. Key Readings and Commentary. Blackwell Publishing Mark K. Engels F. (2007). Capital. A Critique of Political Economy Vol. 3 Part 1. The Process of Capitalist Production as a Whole. Cosimo Moore S.W. (1957). The Critique of Capitalist Democracy. An Introduction to the Theory of the State in Marx, Engels, and Lenin. Whitman Publishers. Preston P.W. (1982). Theories of Development. Taylor Francis Stalin J. Wells H.G (1937). Marxism vs. Liberalism. An interview. New Century Publishers. New York retrieved on 5th February 2009 from http://www.rationalrevolution.net/special/library/cc835_44.htm . [1] Antonio R.J Cohen. (2003). Marx and Modernity. Key Readings and Commentary. Blackwell Publishing [2] Mark K. Engels F. (2007). Capital. A Critique of Political Economy Vol. 3 Part 1. The Process of Capitalist Production as a Whole. Cosimo. [3] Mooore S.W. (1957). The Critique of Capitalist Democracy. An Introduction to the Theory of the State in Marx, Engels, and Lenin. Whitman Publishers. [4] Mark K. Engels F. (2007). n 2 [5] Stalin J. Wells H.G (1937). Marxism vs. Liberalism. An interview. New Century Publishers. New York retrieved on 5th February 2009 from [6] Stalin J. Wells H.G (1937) n 4 [7] Mark K. Engels F. (2007). n 2 [8] Mooore S.W. (1957). The Critique of Capitalist Democracy. An Introduction to the Theory of the State in Marx, Engels, and Lenin. Whitman Publishers. [9] Mark K. Engels F. (2007) n 2 [10] Antonio R.J Cohen. (2003). Marx and Modernity. Key Readings and Commentary. Blackwell Publishing [11] Mark K. Engels F. (2007) n 2 [12] Preston P.W. (1982). Theories of Development. Taylor Francis [13]Antonio R.J Cohen. (2003). Marx and Modernity. Key Readings and Commentary. Blackwell Publishing [14]Preston P.W. (1982). N 11 [15] Preston P.W. (1982). Theories of Development. Taylor Francis [16] Antonio R.J Cohen. (2003) n 6 [17] Mooore S.W. (1957). The Critique of Capitalist Democracy. An Introduction to the Theory of the State in Marx, Engels, and Lenin. Whitman Publishers.