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Example research essay topic: Rich And The Poor Capitalist Economy - 1,345 words

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... hip between labor and capital in more detail. The laborer receives wages in exchange for his labor. The laborer receives this wage which provides him a method of survival in that he can by food, clothes, and shelter. However, the subsistence wage will not provide the worker any means of economic progression. It will not provide him a way of moving up from the lower classes.

An example of this would be a factory worker. He works for one day and is paid for his work ten dollars. The factory owner earns twenty dollars for the work put forth by the worker after subtracting the wage that he pays the worker. Therefore, the employer has created for himself twenty dollars by doing nothing more than giving the laborer work.

The factory owner can then use the twenty dollars to reinvest in the factory or in another venture, increasing his wealth. The laborer on the other hand, earns his ten dollars a day, which is only sufficient for him to purchase necessities. It is often said that in capitalism it is in the best interest of the worker and the capitalist for the capitalists ventures to succeed. This is true in that if the venture does not succeed, the worker nor the capitalist will reap a reward.

However, when it does succeed it is the capitalist who has the opportunity to increase his wealth and it is in the capitalists best interests that the worker not be given opportunity to earn more than the subsistence wage he is being paid. The growth of the business under capitalism will logically benefit a select number of capitalists. The few who are fortunate enough to have wealth have the opportunity for their wealth to grow. However the worker is not as fortunate. Marx knew that a growth in profits for a firm did not help the worker as one might suspect. In fact, a growth in profits would imprison the worker.

When profits increase, wages might also increase but not at the same proportion to profit. An increase in profits for a firm of 30 percent could translate roughly to an increase in wages of 5 percent. Even though wages rose, they rose proportionately less that profits. Therefore the relative wage has not increased, but in fact it has gotten smaller. As the few capitalists increase their wealth, the gap between the rich and the poor must widen. The size of the working class (Marx refers to them as proletariat's) grows in number, but their individual wealth is stagnant.

The relationship between the two classes is a control relationship of the capitalist over the worker. This is not a great improvement over the relationship between the feudal lords and the serfs. In the best case scenario a capitalist economy prospers to the point that wages are driven up. Even in this case, however, the gap that would develop between the rich and the poor is so un proportional that it would be impossible for the laborer to increase his standard of living in a pure capitalist economy. We can see that even the best possible situation for the working class does not improve their situation. The material position of the worker may rise slightly, but his social position continues to decline.

Marx refers to the manner in which a capitalist controls the worker and reaps the rewards of his labor as exploitation of the worker. The capitalist exploits the worker by using him in the production of goods and using the profit that was generated by the workers labor for his own gain. We will look at how this is done, but first we need to understand how the value of a good or a commodity is measured. By gaining that understanding we can then look at the value added to a product by the laborer and what portion of that value is rewarded to him. It had been a problem for economists to determine how the value of a good is derived.

It had been determined that prices of all commodities including labor, are continuously rising and falling and that the price of the goods can rise and fall because of factors that had nothing to do with the production of the good itself. The determination of value was a problem that many economists tried to resolve. Marx was the first economist to investigate thoroughly the notion that the value of a good is determined by the labor put into producing the good. He believed that the value of a commodity was based on all labor, past and present, put into creating the good. This established a way of measuring the true value of good.

However this theory had some problems. How is the value of labor determined? How do we express the value of labor when labor itself is used to measure value? Classical Economists contrast these problems that were faced by Marx (as well as other economists such as David Ricardo), with another theory. This theory suggests that the value of a commodity is equal to its cost of production. Under this idea, the value of labor can be determined by the cost of sustaining him or the cost of replacing him.

Another way of looking at the exploitation of the worker is by examining the number of hours put into producing a product. The value of each product consists of three parts, according to Marx: the first part is the amount of constant capital put into a good, the second part is the amount of variable capital used to create the good (wages), and the third is the surplus value. The surplus value is the value of a good above and beyond the value that was paid to the worker in the form of wages. In fact by dividing the surplus value by the workers wages we are able to derive the Rate of Exploitation of the worker. So for example a workers wage might equal half of the value of the good he produced. The other half of the value that the worker added is the surplus value and the surplus value is taken for profit by the capitalist.

By looking at the relationship between the worker and the capitalist one thing is certain. The value of a good is determined either directly or indirectly by the worker. The value is either composed of the actual units of labor used to produce the product or the cost of labor is used as part the valuation of the good (in addition to the other costs such as materials and machinery). Regardless the worker is reduced to a tool used by the Capitalist and he is nothing more than a component in the production process.

And that is what Marx felt would cause the strain and the inevitable rebellion of the worker. It is important to note that despite the common misperception, Marx did not feel that Capitalism is all bad. He recognized that it ended feudalism which was far worse. In many ways he looked at Capitalism as a segue to something better. He believed that Capitalism was dynamic and constantly changing and this leads to the promotion of technology and spurs advances in science. He also knew that Capitalism was an efficient way of creating material wealth.

However, despite capitalism's advantages, Marx could not over look its disadvantages. It divides people into classes, which in and of itself, Marx believed, creates problems. It produces wealth for few and unhappiness for many. He believed that a worker is not just selling his labor, he is selling his humanness. He believed that a Capitalist economy will grow for decades (although their will be periods of recession and depression), but the capitalist system can not flourish indefinitely because by isolating the worker and creating the tension that must exist between the capitalist and the worker, capitalism must fall. The workers will eventually organize themselves and overthrow capitalism and then capitalism will be regarded as feudalism is now, as a stepping stone to something better.

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