Agents of Socialization: Economic System

Although countless social problems impair society today, one in particular has been remarkably devastating, having caused the deaths of millions of people and the paralysis of society for over 400 years. The world-wide dominant economic hegemony, capitalism, served its purpose at one point in time in history. However, as it stands today, the mounting cultural lag developing from the free-enterprise system is the major contributing factor causing war, poverty, politics, terrorism, pollution, genocide, animal extinction, and many other social issues. These individual problems, when examined holistically, forebode social, economic, and environmental collapse. True universal change will be required to correct the social ills that currently plague humanity. These plagues cause trouble at the local, national, and global levels of perspective.

Capitalism is an economic model that is characterized by the private ownership of land and the means of production. Goods and resources are not distributed evenly because there is no such system in place to efficiently manage doing so. Instead, goods and resources are thrown in to an “open market,” whereas proponents of Capitalism claim that an “invisible hand” will use magical powers to have the resources distributed in such a way so that society’s greatest wants and needs are fulfilled first. In sum, the overall goal in a capitalist economy is for every individual to maximize his or her profits, regardless of environmental and social cost.

These social and environmental costs are first recognized at the local levels. Within every major city one will find beautiful, towering buildings, majestic man-made parks, free publicly-owned libraries, orderly neat rows of streets, the hustle and bustle of people coming to and fro, and thousands of homeless people, who smell of alcohol, wear torn, dirty clothes, and look malnourished. At the superficial level, one may observe that the homeless are in the troughs of society based on their own decision-making. “Well if they would just try harder, they could do better for themselves,” citizens often tell themselves. Unfortunately, the reality of this situation is much more disturbing. In the city of Jacksonville, which has nearly 850,000 residents, there are over 3,000 homeless, and many of these are women (Kinner, Weathersbee, & Wilsom, 2010). City officials allocate city funds to expensive projects that cost millions of dollars. Each year the city gets about $1,000,000,000 in funds. Over 30% of this is used to build and maintain government buildings, including the expensive third courthouse that is currently being built (“My Jax Budget,” 2010). Whilst we are building courthouses galore to ensure we can process all the homeless adults and weed smokers in to prison fast enough, we could be using the money to ensure everyone has homes. In fact, the cost of housing, feeding, clothing, and sending all of the city’s homeless to college would be approximately $120 million annually. This figure is assuming a worst case scenario, whereas all the homeless would be entirely supported by the government and none of them pulling in their own income, which is a rather pessimistic view. In this estimate, all the homeless men and women in the city were given $35,000 living expenses annually, and another $5000 to pay the cost of a college tuition yearly. However, politicians lack the knowledge necessary to help solve the problems that placate our society. The homeless men and women of society are the result of a failed socioeconomic model.

One of the components of capitalism, the incentive system, is of special concern in modern society. The incentive system of capitalism gets people to make as much money as possible, which is what “encourages” everyone to work hard. However, the problem remains in the fact that “working hard” does not directly correlate with “achieving progress in society.” So instead of the “invisible hand” efficiently having resources allocated to proper places, the resources are often mis-spent. In this way, we see magnificent skyscrapers in Jacksonville City and 3,000 homeless men and women within a 3 mile radius of that.

In the capitalist system, it is well understood who everyone is working for: themselves. The incentive system separates people, making everyone more individual and less of a collective whole. As a result, we all find it difficult to trust one another in a capitalist system. For example, if you go to the doctor one day and he says he’ll need your organ removed, you don’t know if he’s trying to pay off a yacht, or if your organ needs to be removed. The incentive method teaches poor value systems, and as a result we have a society filled with apathetic individuals who can no longer trust each other.

However, I’d be quick to admit that the incentive system in capitalism is just about the only functional part of the free-enterprise as a whole. Even in this consideration, social scientists have demonstrated that the external incentives associated with striving for profits are an invariably weak incentive. Comparatively, internal incentives, like those associated with altruism and self-efficacy, have proven to be much more powerful in getting people to complete goals. If two individuals are given the same task, one individual has internal incentives, the other external, in every scenario the individual with internal incentives will perform the task faster, more efficiently, and be happy about doing it (Deci, 1972).

After analyzing the local level, we can look at the effects of Capitalism at a national level. Probably the most well-understood of these problems so far is the acknowledgement of a growing disparity in income. Forty years ago, the United States was viewed as a “Middle Class” society. Today, this euphemism is losing its meaning. The gap between the rich and the poor has been growing in recent decades, and it shows no signs of stopping or even slowing down. According to the U.S. Census, in 1967 the median income of the 50^th percentile of all household incomes stood at $33,000. For the 95^th percentile, the richest individuals in American society, this median income was about $89,000. Four decades later, the growing abyss between the have and the have-nots was becoming apparent. In 2003, the U.S. Census reported that the 50^th percentiles of Americans were making $45,000 a year; this is a 30% increase from 1967. However, the 95^th percentile was then making $155,000 a year, which is a 74% increase! When we adjust these figures to account for inflation, the 50^th percentile, the majority of Americans, had lost purchasing power, while the richest 5% have almost doubled their purchasing power (U.S. Census Bureau). In a more egalitarian society, such obvious disparities could never be acceptable.

In the United States, the working class has always been concerned with the well-being of the economy to the extent that they were individually affected through employment availability. In capitalist societies, the government likes to ensure that as many people as possible have a job. If everyone is employed, economists say the nation is doing well. This is a poor method of evaluation, as we could easily have everyone employed and still have people starving on the streets. If we employed a person to dig a hole on all even days, then have them fill the hole on the odd days, this obviously shouldn’t qualify as a “booming economy”. The goal of trying to keep everyone employed is socially paralyzing, which is another problem of the free-enterprise system. For the last century, a phenomenon known as technological unemployment has been taking over the workplace. Little by little, workers are being replaced by automation. In this nation’s infancy, 95% of the population worked as farmers. Today, less than 1% of the population farms to feed the entire nation. This is a primary example of technological unemployment. In this scenario, we saw it as a blessing of technological advancement. This was due to the fact that, as people were being unemployed by automation on the farms, they were able to seek work in manufacturing jobs. Once the majority of workers were in manufacturing jobs, technological unemployment took over again. This time, as machinery unemployed people, it was harder for individuals to get new jobs. Once the information age gathered strength, people were able to get jobs in the service industry. As this transition was not as smooth as when people were leaving the farms, the machines that were automating everything were seen as a burden. In capitalist societies, the increase in productivity that was putting people out of work was actually detrimental to society, due to the economic system that was in place! To clarify, fewer people were in the workforce, but productivity was actually still increasing, and yet this was somehow seen as detrimental. In a more sane society, we would view automation as “fulfilling” an individual’s job. Instead, in our sick capitalist society, we view the robots as “stealing” jobs.

To understand why technological unemployment is actually a detriment to a capitalist society, we need to understand one of the core ideologies of capitalism’s functionality: cyclical consumption. The free-enterprise system works in circular logic, with three primary components: the business, the worker, and the consumer. In this circle, the workers work for the business. The business is the entity that produces goods and services, and the consumers are the people who consume the goods and services that are produced by the businesses. The capitalist claim is that workers will make money from the businesses, spend that money on goods and services, which means the money goes back to the businesses, and then the businesses pay the people again, and so on so forth; the cycle keeps repeating. Although this system has worked in the past, and continues to work today, it is quickly becoming obsolete. Today, as technology is rapidly advancing, people are being replaced by machines. These machines are owned by the bourgeois, who control the means of production. As workers, who are also consumers, get replaced by the machines, their purchasing power constantly gets lowered. This next point shows a fundamental flaw in capitalism. As production increases, seemingly in favor of the capitalist class, purchasing power of the working class diminishes, which has an adverse affect on their ability to purchase the goods and products of those who own the means of production. This issue forebodes economic collapse, because capitalism is entirely dependent on cyclical consumption. If something disrupts this cycle, the whole system will experience a final failure. As a result, society can choose either to intentionally limit technological advancement, in an effort to keep people employed and the system afloat, or we can acknowledge a necessity to evolve (in social terms). Ultimately, this means that technological unemployment can be seen as an expression of freedom to humanity, but the other side of this coin is that it will be the end of capitalism.

Although the issues explored at the national level seem serious, the concern gets even worse as we delve into the social issues caused by capitalism at the global level. If you ask a proponent of capitalism, he or she will tell you that the system promotes an environment of efficiency. So let us evaluate that claim. In the free market system, the “invisible hand” indiscriminately picks the prices of products and services. However, the actual variable the sets prices is the mechanism of scarcity. When a resource is in abundance, it is either free or very inexpensive—I’m not aware of anyone who has ever paid for air before. When a resource is scarce, it usually is very expensive. If we recall that the bottom line in capitalism is to maximize profits regardless of environmental and social concern, we can understand then that all sellers and producers would like for their product to be scarce, whether the scarcity is real or perceived, since this will raise the value of the product, and this will thus elevate their profits. So then, does capitalism promote sustainability and abundance? No, sustainability and abundance are enemies of profit.

Due to the component of cyclical consumption, a capitalist society can never be self-sufficient and sustainable. Unfortunately, we live on a finite planet. We cannot use a linear system of production on a finite planet forever. As a cause of this simple mathematical calculation, the world ecosystem is being systematically destroyed. As it stands now, we are already courting the point of no return. Forty percent of all arable land has suffered long-term damage (United Nations, 2009). Fifty thousand hectares of trees are cut down every single day (World’s forest continue, 2006). Probably most depressing of all is the realization that one mammal in four, one bird in eight, and one amphibian in three are threatened with extinction, according to the World Endangered Species List. For how long can we take living matter, turn it into dead shit, and call this economic expansion? Luckily, those on Wall Street aren’t stressed over any of this, since their only concern was to make profit in the first place.

Although we could possibly use all three of the major approaches of sociology to explain the economic system, I feel that the social-conflict approach applies best. Through this approach, we can see that humanity is facing economic, social, and environmental destruction. The majority of these issues arise from conflicts that humans have started. In capitalism, everyone is meant to compete with each other. Through these individual conflicts, an aberrant behavior has developed, whereas everyone’s primary concern is profit. The concerns of society and the environment have become secondary, if they’re even there at all.

Society must recognize that capitalism has no consciousness. The free-enterprise system is not self-aware; it cannot know it is destroying the planet and it cannot know what is best for the majority. It is no measure of health to be well-adjusted to a profoundly sick society. Individuals must acknowledge what is wrong and make a choice to change. In the coming decades, as the problems continue to build to unbearable amounts, the debates surrounding the dominant economic system will continue on, and will become very fierce. There will be those who want to try and save the system, and there will be those who have gained a higher level of awareness and realize the necessity for change.

Reference Page

Kinner, D.L., Weathersbee, T., & Wilson, R. (2010, February). Homeless in jacksonville. The Florida Times-Union, Retrieved from http://jacksonville.com/special/homeless/

My Jax budget. (2010, March). Retrieved from http://www.myjaxbudget.com/Default.aspx

Deci, E.L. (1972). Intrinsic motivation, extrinsic reinforcement, and inequity. Journal of Personality and Social Psychology, 22(1), 113-120.

Income and poverty since 1967, U.S. Census Bureau

Food security: violent conflict. (2009, July 01). Retrieved from http://www.un.org/News/Press/docs/2009/dsgsm465.doc.htm

World's forests continue to shrink. (2006, June). USA Today, Retrieved from http://findarticles.com/p/articles/mi_m1272/is_2733_134/ai_n27059543/