Exploring Capitalism and Inequality: A Comprehensive Analysis Essay

This essay explores the intricate relationship between capitalism and inequality, drawing on historical context and theoretical perspectives, particularly Marxism. It discusses how capitalism, characterized by private ownership and free markets, inherently creates class divisions and exploits labor for profit. The essay traces the evolution of capitalism, highlighting its growth during the Industrial Revolution and its various forms, such as state capitalism and democratic capitalism. It argues that capitalism's emphasis on commodification, profit motive, and minimal government interference exacerbates inequality, leading to disparities in wealth, power, education, and healthcare. The essay also touches upon the role of technology in widening the gap between the rich and poor and emphasizes how capitalism's inherent dynamics continuously reshape economic structures, often at the expense of the working class. The essay concludes that capitalism, rooted in private inheritance and class divisions, inevitably leads to unequal distribution of resources and opportunities.

Running head: CAPITALISM AN INEQUALITY
Capitalism an Inequality
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1CAPITALISM AN INEQUALITY
The basic foundations lying beneath a capitalistic economy is private ownership with a
free market open to new firms and scholars have argued that the rise of inequality is significant
due to globalization which leads to a collapse and birth of a new hegemon (Amin 2014).
However, one can trace the relationship between capitalism and inequality since the beginning of
capitalism’s advent in society. According to Karl Marx, in a capitalistic society, predominantly
two classes exist- the bourgeois and proletariat and the relationship in between these two classes
is inherently exploitative. The total amount of money that an employer pays to the worker is
always less than the value that the goods are producing in the market (Clarke 2016). Therefore,
the profit that one section of the society is earning is at the expense of the other’s systematic
exploitation. Many theorists have therefore argued for other alternatives to a capitalistic society
because capitalism is a hugely unsustainable system of economy since it merely came into
existence due to the shifting dynamics of the previous form of economy. It is argued that
capitalism in the same way will cease to exist. However, there are some factors that are a result
of the intricate operation of capitalism like technological bloom and advancement within the
society. Today some of the leading countries like New Zealand, Japan, U.S, Costa Rica and
Canada whose economy and organization resemble that of a capitalistic society (Clarke 2016). In
a kaleidoscopic view, capitalism can be further segregated into state capitalism where in
government has power over the economic system, mercantilism which is an old form of
capitalism that permitted the growth of trade amidst different nations (Harris 2016). The other
two famous forms of capitalism are democratic capitalism, prevalent in the American society
which rose into prominence following World War II and social-market economy where the
government intervention is almost prohibited and some instances are Western Europe and Japan.

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According to the Marxist perspective, in a capitalist society, the social institutions are
controlled by those who are in power and they reign supreme in a manner as to keep the masses
ignorant regarding their daily exploitation. One basic cause of inequality in a capitalistic society
is the mass alienation that bourgeoisie class causes in between the proletariat and the means of
production (Clarke 2016). The evolution of the capitalistic class is both a political and economic
phenomenon, where power is enforced to operate. In a capitalistic society, inequality may appear
through gaps and fissures and assume different forms and not necessarily only in the domain of
social or political equality. The rich in a capitalistic society has more right to power, education
and health care. The essay will argue how capitalism apart from being an indirect system of
governance is a breeding ground for economic inequalities. Firstly this essay will discuss about
the historical framework of capitalism, the growth and progress of capitalism, different phases of
capitalist development and a brief discussion on the idea of inequality and the role of politics.
Later on the essay will focus on the economic constraints imposed on a capitalistic society and
study and evaluate a relevant case study to prove how capitalism gives rise to inequality in
society.
Historical Framework of Capitalism
The term capitalism has its origin in the mid 1800s and in this context, Karl Marx who
drew on Hegel for his theories on capitalism, is notably the most eminent socialist to have
interrelated the term with the functioning of a market system that hugely favoured one class at
the expense of society (Leone and Knauf 2015). It is true, that when Marx was writing about
capitalism the markets were powerful enough to control thousands of individuals and their lives.
The market was saturated with unequal accumulation of wealth and power, resulting in an acute
polarisation of poverty and wealth. Marx has written in detail about the pangs of a capitalistic

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market where the workers were subjugated under unquestioning power. When Marx was
writing, capitalism was affluent in Europe and United States (Fine 2016). The blooming of
capitalist firms during Marx’s era was rampant, later on during the onset of 19th century, Marxist
ideas of capitalism sought to demolish the whole structure that suppresses the poor and exercise
utmost control over their lives, pushing the human labours into mechanised roles. The term
capitalism has come to involve multiple layers and the famous social historian Fernand Braudel
attributed it to the span in between twelfth and thirteenth centuries (Fine 2016). Slowly, the term
implicated a market system with absolute monopoly of power. In the 21s century, capitalism
persists in the persistent efforts on the part of workers to protest the inequalities that are blatant
in their power equations with the employees. Many theorists have argued that the only
alternative to capitalism can be the assemblage of power in the hands of government which will
control the autonomy of individuals. Douglass North argues that the social institutions shape the
markets, acting as a driving force and has a great influence in moulding the way a market will
evolve (Pichelmann 2015). Therefore, it can be derived that institutions exert great power in
reducing or inducing inequalities within capitalistic society. The historical and theoretical studies
regarding the existence of inequality in a capitalistic society proves how it is an indirect system
of governance where the economic factors are controlled by a set of acceptable behaviour (Smith
2016).

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The growth and progress of capitalism
Capitalistic societies proliferated mainly during industrial revolution which slowly
assumed the shape of money-commodity-money where money became the ultimate expression
of wealth and power. Under this scenario the producers were powerless and the factors of
production could be brought easily as commodities (Lambin 2014). The replacement of workers
by machinery furthermore forced the labourers to provide cheap labor at the cost of their
physical and social relaxation. In this manner, the employers remained at the advantageous end
by selling the products at a much lower price. As much as this method will ultimately stagnate
the economy because the competing companies will follow the same path, it will nevertheless
create a society opaque and unequal (Veblen 2015). Capitalism progresses in a society because
of the opaque mode of reproduction where the individuals compete in open markets and
contribute to it. A capitalist society will only cease to be unequal when he wages will increase
than the productivity of the workers. Marx argues that only when technical progress is capital-
neutral can the labourers expect a rise in wages with productivity remaining constant.
Capitalism and Inequality
Inequality is the only inevitable outcome of a capitalist society and it will progress in a
same way by which one class will have a favourable stance to dominate over the other for
development and advancement. There are two important aspects o capitalism which are
commodification and cultivation (Pradella 2015). Commodification has consequent in an ever
growing expansion of wants and desires and the development of a subjective perception of needs
and desires. Developing and fulfilling these wants demarcates the classes. The public spheres of
exchange of the products give rise to social relations in a capitalistic society. A significant

5CAPITALISM AN INEQUALITY
driving force behind large scale commodification is low labor costs and the development of
technology to reduce labor costs. Commodification gives rise to inequality and it is a pre-
requisite to satisfy the capitalistic society’s desire for commodities and services.
Commodification has furthermore made a wide gap in between the two classes of the society by
job displacement with the displacement of large scale of mass. Capitalism has also affected the
poor by challenging labor and increased the privileges of a corporate world and the death or
annihilation of welfare state. As stated in the case study capitalism thrives under the boon of
technology in the realm of public ownership and mass production (Nelson 2001). This is proved
when during the industrial revolution, the peasants were taken as manufacturing workers, this
was mainly possible because of technological innovation when profit rate was constant leading
to a fall in the standard of living or humanitarian values by their capitalistic masters. Irrespective
of all these hardships, there is only one class who receives the sum total of benefits, the elite
groups. As argued by Nelson (2001) that technological innovation and its proper implementation
needs funds and organizational access which can only be afforded by the elite group of
individuals. They have better claim at capital and over the factories as well as the working
conditions of laborers since they have the ownership to executive it. The inequality was further
apparent when the wage rate reached the minimal level without jeopardizing the capitalist
interests. Inequality remains constant and the corporate sectors became the leading institutions of
labor exploitation for the maximum productivity (Gray 2015). The mechanisms by which
capitalism operates ceaselessly in the market are:
Freedom of enterprise- in a capitalistic regime each and every individual is omnipotent over the
means of production

6CAPITALISM AN INEQUALITY
Sovereignty of Consumer- the entire pattern of commodity production is based on the desire
and buying pattern of the consumer. In a capitalistic state, it is ultimately the consumers who will
decide production and how much raw materials will be allocated.
Profit Motive- the producer exploits the workers and manufactures good to incur the maximum
profit which guides the entire production process. The society has firm foundation of privately
inherited property therefore is a complete failure when it comes to creating equality and
opportunities to the people of the state (Kotler 2015).
Zero government interference- the government has no power or dominance over the day to
economic practices of the producers and consumers.
Private Property- the main feature of capitalistic society is the existence and dominance of
private property. Private property becomes the ultimate motivator for the ceaseless functioning
of capitalistic society (Kotler 2015).
Over the years, to protest against the rise in inequality that capitalism was thrusting onto
the face of society, workers created labor unions and strikes. History itself became a chronicle of
how capitalism created gulf in between the classes making the rich richer and poor, poorer. Elites
used their power to keep in check these uprisings by their political power and dominance and by
introducing labor management sessions and negotiations (Clarke 2016). The elites’ access to
knowledge and information made them not only financially powerful but also intellectually.
Capitalism is the oldest economy system and as Marx chronicles in Das Kapital, it is a market
based on inequalities and regulated by competition (Fine 2016).
The case study is fundamental in understanding one of the cons of a capitalistic state,
which is, an in-depth understanding o how knowledge and post-industrialized society accentuates

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the gap between the rich and poor, making inequality more pronounced. The study is important
as it will equip the readers with the phenomenon behind unequal income distribution, the
decrease in aggregate incomes and the shifts in economic structure detrimental to reduce the
chasm between the exploiters and exploited. As argued by Nelson (2001) technological
innovations and their encroachment upon the society is critical to the understanding of class
structure, as they are embodiment of the interests of the dominant class.
From the above discussion it can be safely concluded that capitalism has its roots deep
inside the private inheritance of class and property and therefore the social position of the
bourgeoisie. As the case study argues, capitalism will lead to an unavoidable destruction, it is a
dynamic which is lying deep within the economic system, is continuously stationery where a
new structure comes and displaces the existing on. Under the capitalistic economic arrangement,
the conflict between two classes, as can be derived, is based on competing interests and unfair
distribution of surplus and profit. A capitalistic society is constantly expanding pushing apart its
pre-existing barriers.

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