Theoretical Perspectives on Structural-Economic Inequality

Published: 2021-06-23
1826 words
7 pages
16 min to read
Middlebury College
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Modern economies have experienced higher growth and development in the post-war era than they did before the war. Arguably, the first and second world wars were triggered by an element of inequality. Inequality in terms of military and economic capacity, whereby stronger nations would target the weak and less-developed nations for industrial raw materials, natural resources and political might (Atkinson, 1983). Resistance broke out across the world as the colonies sought to liberate their destiny and reclaim their sovereignty. During this period, the colonial masters invested in their colonies by establishing institutions that would address some challenges facing their colonies at the time.

Although the development agenda was all in favor of the colonial masters, it was a good precedent for subsequent development. By the time the colonial masters had exited, the colonies were in a better place politically and economically. The degree of inequality across the world had lessened. For example, South Africa was among the last countries to attain full independence from the Dutch in 1994.However, the country has one of the largest and most developed economies in Africa 23 years after apartheid. Most of South Africas infrastructural and institutional development can be traced to the era of colonialism. Certainly, apartheid was a war against inequality in the country where racial discrimination was prevalent in both public and private institutions. The attainment of independence was a big win against social injustice in the apartheid era.

After the 2nd World War most economies that were involved in the war such as Japan embarked on economic reconstruction. The less developed countries would leverage the foundation laid by the former colonial masters to build strong institutions for social-cultural, economic and political development. Admittedly, modern economies have made great strides in development. However, the problem of inequality is rife in the modern society. The human condition in most economies is marred with inequality of some kind whereby the most privileged in the society enjoy disproportionate servings of influence and affluence. Arguably, there are ineradicable differences in the society, but most of the differences can be evened out with credible game plans in place. According to Smelser and Swedberg (2010), virtually all the socially adjustable differences such as gender, education and life expectancy inequalities can be traced to the structural economic policies of a nation. In this regard, nations that have adopted feasible policies have relatively narrow equality gaps than those with ineffective policies. This essay explores how different theoretical perspectives understand structural economic inequality.

According to Jessop (1982), Karl Marx theory of capitalism is premised on the understanding that an economy is driven by production whereby different inputs are required to create solutions that will satisfy the peoples needs and wants. The resources are identified as factors or means of production and they include land, labor, capital, and entrepreneurship. Marx developed the concept of relations of production whereby he grouped the different players in the economy into two. The capitalists own the inputs while workers do not. The mode of production is determined by infrastructure, technology, and raw materials. According to Marx, the history of production evolves as a result of the interactions between the relations of production and the modes of production as the system tends towards the realization of full productive capacity. According to Pasinetti (2006), this evolutionary change is what leads to economic growth and development. However, this evolution creates conflict between the capitalists and the workers.

Capitalism revolves around enterprise and free market systems whereby entrepreneurship leads to the creation of goods and services to meet the needs of the society at a profit. A free market system would then be adopted where the interaction between the forces of demand and supply would determine the prices fetched by those commodities in the market. The level of profitability is then determined by the mode of production and the relations of production. Perhaps the most salient feature of capitalism is private ownership of the factors of production (Weber, 1978). Capitalism encourages competition in the market. Since there is free entry and exit, there is bound to be many sellers with homogeneous commodities. In addition, commodity prices tend to be similar. In order to remain competitive in the market and maximize profits, capitalists must lower their prices. However, price reduction must begin by cutting down on the cost of production; otherwise, the capitalists will be operating at losses. This calls for an objective examination of the various means of production in order to establish where adjustments can be made to reduce the cost of production.

According to Whimster and Lash (2014), rational thinking is a critical element of a capitalist state, which emphasizes on the correct reason that employs mathematics and logic to attain a desirable state. In this regard, the capitalist considers the cost elements attributed to labor, land, capital and entrepreneurship. The four means of production are relatively invariable with the exception of labor, which can be adjusted readily to achieve higher productivity while keeping the relevant costs (measured in terms of wages) fixed. This implies that the capitalist will try to make the most out of the labor resources at their disposal. The workers will be overworked and the wages will remain fixed. To the capitalist, paying a worker just enough to sustain their life and produce is the most feasible economic position. They can achieve higher productivity at lower production cost which translates into higher profitability.

Labor is a priced possession of a worker. According to Marx, a worker derives identity and a sense of self-worth from labor. For example, it is common to see people defining themselves by their vocations. In the modern society, careers have been given a lot of prominence, and ones social status is often defined by the kind of work they do. Perhaps that is why modern society is consumed by titles and achievements. Although the culture of achievement is good for innovation and social progress, equating the worth of a person to career success is fallacious. Apart from identity, labor gives a worker a substance upon which to measure self-conception based on the ability to create (Gordon, 1987). Labor is an input in production; when it is combined with other means of production, a product or service is created. A worker would then use the output as the object of self-conception. For example, it is common to see people identifying with a task of creation that they took part to produce.

In the era of the internet of things and digital technology, innovation is poised to be the engine of the next industrial revolution. An innovator would then conceive themselves as a solution to the problems in a certain field. However, all the personal satisfaction that is derived from work stands to be eroded when capitalists exploit workers. The exploitation of workers changes their approach towards labor and their morale is dampened. When this happens, workers start to look at labor as a means of survival. Moreover, since the product of their labor is owned by the capitalist who then exchanges it at a profit, personal satisfaction is eroded. That notwithstanding, workers have always fought the exploitation in a bid to safeguard their economic interest. The motivation to protect their economic interest would cause them to explore avenues of dispute resolution.

Every society has a justice system. The system comprises institutions and structures that work in harmony to protect the liberties of members of the particular community. Such liberties include political liberty, liberty of conscience, right to hold personal property and freedom of thought among others. In principle, all members of a society have an equal right to the basic liberties. However, according to Weber (1991), capitalism often reinvents itself only to manifest in various forms in the social justice system. When this happens, the justice system may appear to serve the common interest of the society; but in a biased manner.

Capitalism gives a lot of emphasis on entrepreneurship. In fact, on many occasions, capitalism is used to refer to the entrepreneurship culture. The reward for entrepreneurship is profit. This implies that the primary motivation of capitalism is profit maximization. Most of the other affairs in the society, including land and labor disputes, will be determined based on the level of economic gains the available options would deliver to the capitalist state (Bernstein, 1971). The option that stands to bring more economic gains to the state is the most favored one. Sometimes the capitalists would leverage their economic muscle to influence the justice system so that judgments are always pronounced in their favor even when it is obvious that they were on the wrong side of the justice system. With regard to aggrieved workers, taking up their woes with the justice system may not guarantee better relations with the capitalist particularly when the system is rigged. These conditions worsen the state of inequality in the society.

Structural economic inequality is rife where a capitalist state adopts policies that only serve the interests of those in control of the means of production. For example, in the 1950s the Turkish economy experienced significant growth. The growth was attributed to the adoption of import-substitution policies which encouraged industrialization and investment (Rushing, 2010). In this case, both the capitalist and the workers benefited from the policy framework. Increased productivity saw a dramatic rise in rural-urban migration mainly because of economic reasons. The rural-urban migration is said to have advanced the growth of major cities in the country including Ankara and Istanbul.

In the 1980s, the country changed gears by adopting an export-promotion policy mix that saw a dramatic reduction in manufacturing. According to Rushing (2010), although the decline of the manufacturing sector caused a reduction in certain exports, the capitalists did not close down their industries. Instead, they explored strategies of cutting down production costs. Consequently, the capitalists lay off the uneducated workers, the majority of whom had migrated from the rural areas to the cities. Arguably, the export-promotion policy mix served the interests of the capitalists. The uneducated migrant workers were replaced with mechanization. Ultimately, the move created a situation of surplus labor in the economy.

The export-promotion policies widened the inequality in the country at the time. This is because the migrants who were rendered redundant in the cities had to look for ways to maneuver the city life. The migrants would resort to informal employment by starting petty businesses. Housing is a crisis in many cities across the world. The migrants could not afford better housing, and this led to the rise of slums in major cities in Turkey. It is fair to say that the policy adopted by the state worsened the state of inequality among the migrants. In the rural areas, they could afford better housing since most of them lived on their farms. Moreover, the cost of living was affordable as basic supplies were readily available. In terms of well-being, rural areas are less polluted. On the other hand, cities and particularly the slum areas witness environmental degradations of many kinds. The migrants are at ris...

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