Last Updated 31 Mar 2020

Capitalism and the American Dream

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SOCI 2013 17 April 2013 How Capitalism Affects the American Dream Capitalism is defined as “an economic system in which the ownership of the means of production- like land, factories, large sums of money, and machines - is in private hands” (SOC 10). Social Philosopher Karl Marx strongly believed that in the end, capitalism simply wouldn’t work for several different reasons. His idea became known as Marxian conflict theory. While the functionalist theory examines groups’ order and cohesion, the conflict theory examines ways groups disagree and struggle for power.

Marx predicted that capitalism would cause continuous tension between the haves and the have -not’s; the have-not’s mostly being the minorities and the poor. He believed that capitalist societies would be reduced to two social classes; the capitalist class (the bourgeoisie or the rich) and the working class (the proletariat or the poor), and that this division would eventually cause some sort of social upheaval. Generation Y is in trouble with the years to come seeing as it is against the odds that one will becomes part of the small percentage of people that are the capitalists.

If our economic system remains the same, the generations to come will become nothing more than workers for the bourgeoisie. Karl Marx gave five reasons in particular as to why capitalism will fail. It will result in monopolies, inflation, unemployment, lack of income, and the wealthy ultimately ruling the world and making the rules. This all will result in reduced quality goods, poverty, poor legislation, and people not being able to afford the necessities of life.

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The first reason Marx gave as to why capitalism won’t work is that in a capitalist economy, monopolies are unavoidable. A monopoly is when one supplier of a particular commodity is the only supplier. Monopolies eliminate competition. This gives the supplier the power to charge high prices and reduce the quality of the products because the consumers don’t have any other choices. An example of this would be cable TV verses things like Dish TV, the iPad, and Netflix. Not as many people want to pay for cable when it is much easier and cheaper to view television shows and movies n other ways. The same concept is happening to land line phones. Gasoline companies are obvious example of monopolies, in which the easiest mode of transportation is a motor vehicle. In this case, people eventually will have no choice but to purchase gasoline. OPEC (Organization of the Petroleum Exporting Countries) now controls 46% of all the oil produced in the world, making it a huge global monopoly. Paying high prices for lower quality products will only cause more and more problems for future generations.

The second reason Marx gave was that because there is no centralized planning in capitalism, meaning that over-production of products is inevitable, and in turn, causes inflation and depressions. Over production is when too many goods are produced and supply outdoes demand. Companies are left with stocks they cannot sell and are forced to shut down as a result. Another reason capitalism doesn’t work is that unemployment levels are raised. Demands for labor saving machinery force employers to let people go.

The worldwide unemployment rate is 6% while the United States, a capitalistic economy, has an unemployment rate of about 8%. According to Marx, unemployment is unavoidable in our economic system. Unemployment also plays into the fourth reason Marx gave, which is that employers will try to maximize their profits by reducing labor expenses and firing people, thus creating a situation where the unemployed don’t have enough income to buy the goods produced, creating the contradiction of causing profits to fall, which starts the cycle all over again.

The fifth, and perhaps the most startling reason Marx gave, is that the control of the state will be by the wealthy, the effect of which is laws benefiting themselves. The wealthiest 1% of people in the United States control 42% of the wealth in our country. Many of these super rich are the ones that own the monopolies like the oil suppliers or are politicians that make laws that are ultimately in their favor. Even if a person in the generations to come were to work hard and have a good paying, stable job, it is still very unlikely that they will be one of he super rich, allowing them to be safe from the current and/or potential economic depressions. Thus, it is safe to conclude that Marx was correct in his predictions that a capitalistic country will eventually fail. Works Cited Amadeo, Kimberly. "Monopoly. " About. com. N. p.. Web. 15 Apr 2013. <http://useconomy. about. com/od/glossary/g/monopoly. htm>. Benokraitis, Nijole. SOC. 2nd Edition. Belmont, CA: Wadsworth, Cengage Learning, 2012. 9,10,14,151,152. Print. Kopicatsu, . "Karl Marx: Why Capitalism Will Fail. " The Escapist. N. p. , 16 Sept 2011. Web. 15 Apr 2013. lt;http://www. escapistmagazine. com/forums/read/528. 313395-Karl-Marx-Why-Capitalism-Will-Fail> "Top 1 Percent Control 42 Percent of Financial Wealth in the U. S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.. " My Budget 360. N. p.. Web. 15 Apr 2013. <http://www. mybudget360. com/top-1-percent-control-42-percent-of-financial-wealth-in-the-us-how-average-americans-are-lured-into-debt-servitude-by-promises-of-mega-wealth/>. "Unemployment. " Wikipedia. N. p. , 13 Apr 2013. Web. 15 Apr 2013. <http://en. wikipedia. org/wiki/Unemployment>.

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