Part 5

Economy and Adaptation

Wall Street stock traders.

One of the most powerful social institutions in modern society is the economy. Using the organismic analogy, the economy can be compared to the human body’s digestive system. It is responsible for the production, distribution and consumption of goods and services. Like the digestive system, the economy extracts raw materials (food) from the environment, converts them into commodities (nutrients), then transports these commodities throughout society (human body). When changes occur in the economy, it affects all of the other institutions.

Prior to industrialization, the church had more power than most other institutions. It controlled all aspects of society from knowledge and beliefs to morals, values, and family life. Once industrialization occurred, it revolutionized all of society’s institutions. We became a manufacturing, wage-based economy. Families moved from rural areas to urban centers searching for jobs in factories. They left behind the close-knit community and the extended family. Education also became an important institution in society. Prior to industrialization, only those who could afford an education could get one. Due to the changing nature of work, a formal system of education was needed. In the early 1900s the U.S. government made it a law that all children attend public schools. In most industrial nations, the political systems are typically transformed into democracies. Because more of the population was attending school, it functioned to provide a literate populous who could vote and participate in the political process.

Most of the jobs today are in the service sector. Due to the Information Revolution, high end jobs typically require specialized knowledge. This has motivated more and more Americans to get a college or graduate degree. But there has also been a large growth in low end service jobs. These jobs are low paying, offer few benefits, and usually have high turnover rates. The countless manufacturing jobs sent overseas have been replaced with these low paying service jobs. Today, more women are working outside of the home. In fact, more American families have both parents working full-time in order to make ends meet.

One theorist who devoted much of his time to understanding the impact that economic forces have on society isKarl Marx. According to Marx, the mode of economic production shapes society. Marx pointed out that the Industrial Revolution was spurred on by a newly formed capitalist class who overthrew the agrarian rulers of feudal society. As a system of world trade began to emerge, the capitalist class, or bourgeoisie, gained power over European society, and colonization further expanded their wealth, power and interests.

Karl Marx, father of communism
and critic of capitalism.

Today, capitalism has spread throughout the globe. Capitalism is an economic system whose means of production are privately owned. In other words, factories and services are owned by individuals rather than by the state. Capitalists must compete with other businesses to maximize profit while providing consumers with the best product at the lowest price. Ideally, a capitalist economy is a free-market system which operates with as little intervention from the government as possible. Many believe that workers benefit the most from capitalism because they get the best products at the lowest cost. According to Marx, however, capitalism causes workers to become alienated from one another and also creates a culture of “naked self interest.”

As much as Marx has been criticized, his writings were more insightful than any otherhave proved to be very insightful theorist when it comes to understanding the economy. In The Communist Manifesto (1848), Marx predicted that capitalism would create a global economy where capitalists would seek to find new workers to exploit for lower wages and higher profits:

The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.

The bourgeoisie has, through its exploitation of the world market, given a cosmopolitan character to production and consumption in every country. To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

Marx believed that social change was caused by conflict between opposing forces. Under the system of capitalism, the two opposing forces are the capitalist class (bourgeoisie) and the working class (proletariat). He predicted that, due to the oppressive, exploitative nature of capitalism, workers would become frustrated with the capitalist class and form a class consciousness where they would unite as a class and eventually overthrow the system of capitalism. He believed that what would then emerge would be a communist society where workers would own the means of production and distribute goods and resources equally.

Marx’s work has been criticized for not predicting the rise of a large middle class. In fact, in most capitalist societies, the standard of living rises considerably and the government usually provides extensive services to the poor and elderly. His theories have also been misrepresented by socialist governments who control the means of production themselves rather than the workers. However, Marx was very insightful about some aspects of capitalism. He did, after all, predict patterns of globalization, large-scale industry, multi-national corporations and a culture of capitalism where individuals are consumed with greed and self-interest rather than interest in the common good of society. In fact, some contemporary theorists have used Marx’s work to point out that once capitalism spreads across the globe, a revolution between workers will occur.