User:Ldennisbc/sandbox/The Effects of Capitalism on Social Stratification

The Effects of Capitalism On Social Stratification

The Effects of Capitalism On Social Stratification

2014 differences in national income equality around the world as measured by the national Gini coefficient.
Subjects	Capitalism Economics Inequality Sociology Social Stratification

Widely regarded as a topical issue, the global phenomenon of economic inequality encapsulates all aspects of society and is destined to become one of the defining issues of contemporary life in the 21^st century society. Through the widespread rise of capitalist beliefs, its power structures, accompanying values of consumerism, materialism and a ‘profit motive’, connections to a rising social disparity has been established. The advancement and continuity of capitalist philosophy has transformed an extending social stratification and has impacted upon communities and individuals at all levels of society. As such, escalating poverty levels and decreasing standards of living have resulted, presenting a multiplicity of social issues. Hence, these growing discrepancies of wealth in Western capitalist societies such as Australia and the United States, along with Eastern nations, displays the issue’s universal significance on a macro scale.

Capitalism's effect on low socio-economic populations

See also: Poverty and Lower class

Graph showing the population of people living in extreme poverty

It has long been argued that poverty is the direct result of modern day capitalist philosophy, alternatively, others discuss that the most notable advancements in the struggle against poverty has transpired in economies that have adopted a more open market. The turn of this century has brought about a weakening of the notion of development, where the social remodelling and political landscape that is associated with this process has given rise to a so-called 'assault on poverty', the extremity of economic inequality. Supporting this, critics often indict neoliberalistic and capitalist markets for lowering the standard of living for those of a lower socioeconomic status. This dissonance is common amongst more socialist intellectuals as well as in broader groups of academia, however similar to other critiques of capitalism is directly contrasted by statistical trends occurring over the last few decades. This is evidenced through the demographic of people globally consistently living below the threshold of USD $2 a day today being less than half of what it was three decades prior. Moreover, The social form and means by which excess-value is garnered from the subordinate class by the dominant class, is a key indicator of the impact capitalist philosophy has on the lower classes. In neoliberalism economies, this occurs primarily through the wage relation which intertwines the proletariat and bourgeoisie classes. Similarly, capitalist ideology is said to cause a proliferation of dissent arising from the proletariat regarding living standards, especially in comparison to the bourgeoisie, as well as the escalating homogenisation within each class, resulting in with interclass conflict. This is somewhat contradicted however, as for centuries there has been interclass conflict between the bourgeoisie and the proletariat and yet worldwide, the demographic of individuals living in conditions considered as extreme poverty has decreased 80 percent, from 1970 to 2006, suggesting that the notion of poverty as a result of conflict generated by capitalism is false.

Communism as an alternative

See also: Communism and Communist economics

Flag of the communist party of Vietnam

In considering alternatives to capitalism, the fact that capitalism is both an economic and political system must be taken into account. In reaching an alternative to capitalism which would promote a greater sense of egalitarianism, Communism is often considered. Communism is at its very core, a system of economic means to promote a unanimous consensus of impartiality. However Communism is often hastily rejected, particularly western economies. Communism gained immense notoriety proceeding the U.S.S.R's defeat of Nazi Germany in 1945 and then subsequently during the Vietnam War era. This is in large reason for Communism's rejection amongst Western culture, as the propaganda utilised by those who held significant economic and political power during this time heavily influenced the perception of Communism. In this manner, the wars involving communism such as Vietnam can be thought of more of a war between economic systems, a fight between inequality and equality.

Capitalism's effect on middle socio-economic populations

See also: Middle class and Distribution of wealth

The believed effect on those of a middle socio-economic stratum are often similar to the claims made regarding capitalism's effect on the societal system of class and its associated power structures in relation to low socio-economic demographics. The middle class has managed to throughout modern history, be both a winner and loser of capitalism, however this is along with the assumption that capitalism punishes losers and rewards winners. This is however juxtaposed by the capitalist system being a major factor in the formation of the middle class, and capitalism proposed as being the best way to maintain and improve the aggregate living standards of the middle class whilst keeping it functioning at peak efficiency. Further, capitalism strives in countries where democracy has been a strong entrenchment. The construction of democracy was to implement a system that provided everyone with a chance to participate in growth and wealth, whereby the two-class system that had previously dominated would be eradicated, being that of the aristocrats and the peasants. However contrasting this, some theorise that the middle class now exists in a state of Social Darwinism, supported by the consumer hour glass theory which claims that the population brackets which low-income and high-income earners live within continue to expand, but the middle class is being squeezed out of existence. Additionally, the inclination and behaviours that give rise to a dominant capitalist economy, are fostered through those that are of the 'middle class' living in 'middle class' societies, where the general population maintains a degree of adequate financial stability, but not to the point to allow for a life of leisure. The result is this caste of society being unable to attain notions which are intrinsically entrenched within their demographic, such as the American dream.

Political Capitalism and the Middle Class

See also: Politics and Political capital

The existence of the middle class in a modern western country such as the United States, where political polarisation and stark ideological contrasts between people quite often culminates in bouts of sporadic violence. It has been argued by Aristotle that the cornerstone of democratic stability is the presence of a large middle class, and that the extremities of poverty and wealth produced the risk of a potential rise of either a populist revolution or a repressive regime. Post-WW2 prosperity engendered a broader stronger middle class in the United States, which quickly became a deep and robust force of stability throughout all world politics. However, this demographic dominance began to plummet in the latter part of the 20^th century, particularly in the 80’s and 90’s due to outsourcing and de-unionisation. This trend continued into the 21^st century subsequent to the 2008 global financial crisis, resulting in median United States household income being one percent lower in 2014 that it was in 1989, inflation considered. The relationship between the middle class and it’s governing political body is unique in that politicians often capitalise on the middle class through rhetoric. This rhetoric is utilised in a manner which appeals to not only middle class individuals but also those of a lower socioeconomic level, urging both groups to politically support these bodies as they promise to broaden the middle class. Political capitalism often takes advantage of the middle class while simultaneously supporting hem in a superficial way. Despite a sizeable middle class being associated with political stability, the process by which they come in to being, is potentially destabilising, this creates a paradox of modern political history. In these economies, rapid growth, the spread of new technologies and the frustration over political empowerment has seen individuals venting their grievances through information superhighways to try and force governing bodies to enact change. Whether these economies can endure this relies on their capacity to accommodate and co-opt new political forces and thereby foster a broader social basis for stability which is then responsive to assertions from the middle class. Alternatively, history depicts numerus defunct regimes that failed to become accustom to this shift in the dynamics of political power. All the while, those economies which are at the forefront of the developed world are now engaging in a change which could see economic opportunity curtailed.

Capitalism's effect on high socio-economic populations

See also: Upper class and Bourgeoisie

Bar graph showing what percentage of wealth is held by percentage brackets fo population

Capitalism is generally believed to have done more to advance certain aspects of humanity than any other economic system to date, yet, it is a bi-polar construct, born out of a separation consciousness, thus supporting the notion of capitalism benefitting the upper echelons of society. Capitalism allows for a concentration of wealth and income in the upper stratum of society. Subsequently, the agglomeration of wealth engenders a concentration of power, this allows for those in power to have greater sway over the legislative process, favouring those of power's personal agendas, thus leading to a greater overall concentration of wealth and power. This cycle of the concentration of wealth, income and thus power is so fundamentally traditional to capitalism that it is described by classical economist Adam Smith in 1776. Smith describes that the people who own society, in his day at least, being those that are at the pinnacle of trade and manufacturing are the "principal architects of policy". However, it is also argued that the most notable accomplishments of capitalism especially in a Western context, have redounded principally to the benefit of the ordinary individual. These advancements have allowed greater access to modern conveniences that previously, were considered the exclusive prerogative of the upper echelons of society. Alternatively, it is suggested under Neoliberalism businesses and companies are purveyed indemnity and corporate benefits, whilst the rest of society is subjected to the corollaries and low pay of capitalism. Capitalism as a system allows a society to vote with their dollars, people will decide just how much something is worth to them, as such, at its heart, capitalism is a process and system of privatisation. Also, capitalism nurtures economic inequality alongside equality under the law, allowing for a widening of 'the gap between strata of a society.

Neoliberalism

See also: Neoliberalism and Lassiez faire

Neoliberalism is a prominent ideology which in recent times has manifested public policies of numerous economies, both developing and advanced. Neoliberalism posits that the less involvement a state body has in its economic activities compounded with the deregulation of its markets can produce potential to foster greater social well-being and prosperity. The philosophy of neoliberalism was brought to fruition primarily in the United States throughout the late 19^th century and early 20^th century, where the great depression led to what is known as Keynesian economics, which is a theory by John Maynard Keynes which challenged liberalism as a policy for capitalists. Neoliberalism, as an ideology, often comes under criticism in today’s politically polarised climate as the proposed focalisation on economic efficiency is believed to be at the cost of other factors such as worker’s rights, as it may be perceived as negatively impacting performance. Neoliberalism asserts itself as a doctrine founded in the inexorable notions of modern economics. Despite its scientific trappings, modern economics is not a subject area that is purely based in science, but rather the elaboration of sociological theories which have become entrenched in western ideology. Neoliberalism proves to be towards the favour of the upper class as in modern economies such as the United States, its presence works to dismantle programs of welfare whilst stripping labour rights for all workers and cutting back significantly on social programs.

Political Capitalism Among Households and Business

See also: Political capital

Whilst Political capitalism has not, to an extent, being recognised as an economic system rather than purely a political one, the foundations that culminate to form a theoretical base for political capitalism are well established and accepted on a broad scale. In areas of study such as political science and sociology, the notions of the power domination and biased pluralism are popular perceptions that prove fundamental to political capitalism. This relates to the issue of the power that large conglomerate organisations possess, the reach that these institutions hold is far wider than ever-previously thought, however the issue does not lie within the size of these organisations, rather the troubling intersection of their economic and political sway. The ratio of the power these organisations have is exemplified by just how few they are in comparison to smaller businesses, as in the United States 99.7% of all businesses are considered to be of a small to medium size. This often raises the question of the equity of wealth and income not only between households but also corporations.