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Commodity Form and Legal Form, Research Paper Example

Pages: 15

Words: 4260

Research Paper

The present economic global crisis has spearheaded a renewed interest in the theories embedded in the works of Karl Marx. As a matter of fact, the global crisis that is being experienced not just in the United States of America but in all over the world got people talking. These people are not limited to multi-millionaires owning various and huge stocks. These people include politicians, employers, employees, bankers and economists. However, despite their talking about the economy and the global crisis, none of them seem to know what to do. Hence, the collapse in the economy and its negative effects haunt the world. But there is always hope for a better future. Just like when former President Reagan stated that the recession in the economy will soon come to an end. This optimism has also been reverberated by other politicians and economic movers whenever there is a rapid progression and growth in the economy (Mclellan, 211).

Many a times that politicians and big players in various major economic activities have stated that the world has overcome the cause of economic crisis in which Karl Marx identified to be capitalism. Supporters of the concepts of capitalism have, time and again, stated that the crisis being faced by the world today has ended with every economic boom. But when the economic boom is disrupted to the point of breaking, these very same people always have something to blame. Take for example the economic crash that happened in the 80s. Economists blamed the excessive spending of people that occurred in the 70s. If it is not the hike in the price of oil, the economists blamed the inflationary financing of the war in Vietnam for the crash of the market during the mid-70s.

Not to mention the blamed incongruous banking practices and policies during the 1930s that led to the crisis of that same year. All these crises, although occurred during different times, point out to the unavoidable human error. Taking a closer look at the situations mentioned would reveal that there was no mention of capitalist system. Yet, these so-called human errors have continuously been causing crises sporadically and consistently in the society through the years

It cannot be denied that the conservative economists are in denial as to the intrinsic role that the capitalist assembly plays in the current social economic form. This is primarily due to the fact that the economic philosophy in which the society is founded is operating in the evidence that a capitalist scheme is one that regulates itself. Undeniably, the foremost undertaking of the academic economist is the identification of the marginal circumstances under which self-regulation will be sustained and retained, so that any collapse will be acknowledged as the outcome of extraordinary nonconformities from what is considered the norm in terms of how the economy should move.

The crises that are being faced by the society not just of the present day but since time immemorial are simply recurring that even the most rueful of the economists cannot miss to notice. However, the explanation provided for the economic movers of the society is based on the established customs of traditional political economy that is dependent to the recurring global economic crisis. The standard operating premise of the power behind the concept of supply and demand guarantees the economic movement towards equipoise.

This only connotes that external blows to the global economy are the main cause of the crises being felt all over the world from the United States of America to the poorest nation there is. This crises and external blows are the main reasons why stability of the economy is being disrupted. Hence, encumbering and destabilizing the processes of the equilibration of the various economic markets.

Take for example the thoughtful global financial predicament affected by the failure of Lehman Brothers in the latter part of the year 2008 has raised profound and relevant enquiries that are subjected for social examination as well as the alarming negative movements of the stock markets. Such negative movements in the stock markets are rooted from the fact that banks operating on a global scale are frightened that they will not be able to acquire financial returns from lending monetary assets to countries such as Greece and various different states. This is proven by the fact that even the International Monetary Fund relegated its own forecasted growth by four percent for the year of 2012.

Coincidentally, the International Monetary Fund has made the same forecasted figures for 2008 and 2009. Such predictions for a negative growth can be considered minimum compared to unimpressive shrinkage of the global economic markets and performance. The most frightening aspect of the situation is that the International Monetary Fund is not the only one suffering from the said economic contraction but rather share it with the rest of the world. Everyone is familiar with the crises and its negative effects that are not diminished based on wealth of the nations as underdeveloped, developing and developed countries feel the economic recession’s wrath.

However, due to the mainstream celebration of a capitalist economy, economists and the world in general are not able to anticipate the problems that are related to the capitalist system. Economists also fail to identify the various solutions to the problems because of the familiarity of the society to the crisis and the failure to recognize that capitalism plays a role in the recurring crises. Therefore, there is a clear bias to what is supposed to be an impartial discipline resulting not just to an economic downfall but also in a theoretical collapse.

Neo-classical thinkers believe that there should not be any methodical miscalculations in the economy. It is supported by the claim that the economic choices of the millions of people contribute to the quest for market equilibrium. The losses that people acquire unfortunately are compensated by the unforeseen gains. This is particularly true in the stock market industry. People, for the lack of a better term, gamble by investing monies to stocks without the certainty of gaining profits from the investment. Though the probability of gaining interest from the investment is high, the chances of losing money when market collapses is also something that should not be taken for granted nor lightly.

When there are losses from the investments, there are also gains. Looking at the situation through the loss and gains aspects of it, there is no denying that an equilibrium market can be achieved. Therefore, there is really no room for any misjudgments or miscalculations as the economy simply cancels the negative out with the every positive effect accumulated. However, this is not the reality of the world economy. As a matter of fact, a world where people are protected from bankruptcy does not exist and is considered only to be an imaginary world- a clear capitalism.

According to Karl Marx capitalism is the crisis that is causing world’s unrest and restlessness that proves to be difficult to escape from. It would seem that the world has not learned a thing from the Great Depression. For example, the United States of America has begone banks that are deregulated that cost trillions that negatively impacted the society. People who do not have much in their bank accounts are the ones left to suffer.  It is further explained that the crisis of the modern day is due to overproduction brought about by the desire of the capitalists. Commodities are being produced one too many and sell them for profits. Too much capital is being invested to the produce commodities and for capitalists to acquire a good portion of the market profitability. Hence, businessmen are investing too much money for the development and marketing of products for market’s consumption without thinking that it could negatively impact the economy. The scariest part of it is that capitalism is not contained in one country. Rather, it operates in a global and international scale through the utilization of a system that involves ownerships- both distinct and independent (Balbus, 573).

Every boom of the economy results in an eventual economic collapse. It is the unfortunate economic cycle of the world. During the flourishing times, capitalists ensures great amount of investment in the production of a commodity. Productions are put on a higher level. This is a good thing for the capitalists because for as long as the commodity ensue a boom in the economy, machineries and other forms of fixed capitals can be used for more than one cycle and replacement is not necessary.

However, when the capitals and the investments that are made start to yield gains and profits, a crisis is sure to follow. Unemployment will increase again. The high yield of profit will eventually decline. Moreover, as the crisis continue and take its toll in the economy, a lot of people will be laid off or their jobs will be taken away from them. Wages will be reduced. Yet, the capitalists, despite the slackened production still makes money as labor can be afforded at a low price especially with the use of globalization. This is particularly true in big companies such as Telus and Verizon. The workers are being outsourced overseas such as in India and Philippines. The wages of an outsourced worker is lower than that of someone working in the United States of America, for example. If call center agents in America are getting paid $18 per hour, the company will only have to pay maybe half of that to an outsourced worker. A huge difference in wages can be noticed. This is not to say though that overseas call center agents are being exploited and abused. On the contrary, they are getting paid above minimum wage as per their country’s labor and wage regulations.

This situation reveals that American and other North American companies are making money but it cannot be denied that a lot of North American people are losing their jobs as well as these companies cut back on the cost by outsourcing. Therefore, the claim that capitalism balances itself out is not a reality. Outsourcing workers do not cancel out the unemployment rate of the people from North America. But it is important to note that it is not the fault of the outsourced workers. But rather of the system that makes the capitalists richer with each passing day.

The extent of overproduction is not limited to the competition among capitalists themselves, although it is a huge part of it. The madness associated with overproduction is also being related to under-consumption. This means that workers who are getting paid low wages are not able to buy and consume the products and commodities that they are producing. This is due to the inability of the masses to afford such commodities. Take for example the products of Apple Inc. whose products are largely produced in China. These products are produced cheaply in China. The usage of the word cheaply connotes cheap labor. Yet, when these products are sold to the public, they cost a lot of money ranging from $500 a phone to almost $700. Not to mention the other accessories that people opt to buy. The masses cannot afford such high-end expensive phones. Even people who are earning above average and above minimum also find it expensive. Therefore, in order to lure people to buy the phones, telecommunications companies are offering the phones for free if a phone subscription is purchased. If telecommunications companies are able to provide free phones with subscriptions, it only goes to show that the products are not that expensive. But because it is a capitalist world that the people live in, commodities such as an iPhone become more expensive than the actual cost.

Capitalists minimize their cost to increase profitability. As a result, people are losing jobs and spending way more than they should. It is the same situation from back in the 1930s where the global recession and economic collapse pointed towards the people’s inappropriate spending habits. The question, though, is why do people spend inappropriately? Is it by choice or is it brought by the capitalists?

Karl Marx provided an answer to the posited question. The production of commodity, according to Marx, is the beating heart of a capitalist system. Commodities are being produced primarily to sustain and provide for the needs of humanity. But then again, it has come to a point where commodities are being produced for the purpose of monetizing the wants of the public rather than what humanity really needs. In the society today, there is a powerful, passionate and prevailing need to accrue objects that are not necessary. Karl Marx argued that commodities must have a value that is created by virtue of labor and time spent in production. Basically speaking, capitalist create the value of their product or commodities based on the capital invested in the production (Ollman, 4). Hence, it is safe to assume that when the capital invested is kept at the minimum and the demand is high the value of the product is high for the capitalists. The capitalists can sell the products without compromising high profitability after deducting the capital or money invested in labor and time. Hence, people buy overpriced products and put their hard earned money in the pockets of the capitalists.

This can be explained by the prices of certain particular commodities such as clothes. The brand Aeropostale, for example, sells the company’s jeans for a regular price of $40.00. It would seem very high for the product but then when they go on sale, the products can be bought for half the price. If the company has a room for 50 percent discount and make profit, it can only be assumed that the surplus value of the product is high and the capitalists are making lots of profits.

Another good example is the company Nike, Inc. In order to achieve maximum profitability, Nike Inc. is getting their products manufactured in China due to the fact that it is cost-effective as compared to the cost when the products are made in the United States of America. The cost of labor in China is extremely cheap compared to the United States of America. However, the quality of the product stays the same. Nike Inc. takes pride in the quality of its products and therefore, even though the production and manufacturing are being outsourced, the company still practice strict and direct control and monitoring to ensure that the quality is not being compromised. The company’s ability to expand and to meet the changing demands of the market has allowed it to become the big conglomerate that it is today.

Clearly, as the surplus value of a commodity or of a product increases, the capitalists are gaining more wealth in their pockets. However, there is also a high chance for exploitation (Ripstein, 449). Capitalism is driven by profitability. Hence, capitalists can only make more money when the investment is low and the yield is high. In order to attain this goal, cheap labor is necessary. As a result, North American workers lose their job while developing countries get jobs and get paid lower than that of the regular wage of North American workers. Again, the result is an increase in unemployment in North America and exploitation of cheap laborers. The value of the product they create does not balance out the value of the labor and time spent in creating the product. The only factor that is affecting the surplus value is competition. Capitalists do not have any regard to the value of the worker’s labor.

With this type of economic system, it cannot be denied that there is no market and economic stability. Everything revolves around making money and the truth of the matter is that the commodities being produced, for the most part, barely satisfy the humanity’s needs. Hence, there is always the possibility of crisis. As a matter of fact, if there is one thing that is constant in the present economy, that would be the recurring crisis (Nielsen, 298).

Moreover, the theory of Marx cannot be limited to just the production of commodities as it can also be applied in the service sectors of the economy. Capitalists in the field of providing services tend to pay lower wages that is not appropriate for the amount of work required. This is particularly true in the field of health care system. Capitalists who own private hospitals and care homes face complaints about understaffing and low wages. It is important to note that capitalists want to make money and therefore, they expect workers to do more than what they should be doing and not get paid for the extra work they do. In a sense, this exploitation can be referred to the workers working for free. It is a prevalent situation in the field of health care industry where one nurse is expected to do the job of 2 people for a salary of one. As a result, the workers get burnt out and the quality of care compromised. Yet, the pockets of the capitalists remain untouched and continue to accumulate wealth. In this regard, it is undeniable that the economic system that the society embraces is not working and crisis will always be the end-result.

The reasoning behind such act of cutting wages and manpower in the workforce is the rate of profit as explained by Karl Marx. Competition and constant capitals faced by the capitalists on a daily basis take a good portion of the profit. It is a known fact that in order to be innovated and to compete successfully against other capitalists, there is a need to continually invest in new and recent technologies and equipment. With every penny spent on investment and capital, the profit decreases. The capitalists do not have any choice but to invest in order to keep their momentum and to not lose their competitive advantage. But since the capitalists can acquire cheap labor, the investments are being made on constant capital and fixed variables rather than on labor.

Take for example the case of Walmart which is one of the biggest companies in North America. Instead of hiring more cashier workers, the company has been installing self-checkout machines. Thus, eliminating the need for workers to assist consumers in checking-out products they bought. This is reasonable for the capitalists. They will invest in these innovative machines and pay thousands of dollars upfront that will result for more profitability in the long run. Instead of paying cashier workers for a minimum wage for approximately 8 hours a day, they can use the money to purchase self-checkout machines and never have to pay one cashier worker for as long as they can. A wise move for the capitalists but it clearly will pose a threat to the working people as machines replace human workforce so that capitalists and business owners can make more profit and cut losses.

The most interesting part is that the process of cutting wages is not limited in the developed countries. As a matter of fact, even the rick and aristocrat members of the poor and underdeveloped countries like the idea of cutting wages. Just like in the Philippines wherein workers do not always get the benefits that they are entitled for on a yearly basis. Casual workers are only employed for 6 months at a time and they have to renew their contract and re-apply after 6 months. In this way, the business owners do not have to provide and pay benefits to the casual workers. In addition, workers that do the “dirty jobs” that pay good salaries in developed countries do not get paid as much- not even the minimum wage. Professionals such as nurses are paid minimum wage to the point wherein outsourced call center jobs get paid more even in the absence of professional education and license. To cut cost of production and labor means more profitability to the capitalists.

Furthermore, Karl Marx stated that the outcome of the capitalist system is not limited to poverty, unemployment and exploitation but also extends to the environmental crisis that the world will face. It is important to note that Karl Marx was right. Since the world is dominated by wealthy companies and corporations that are driven by profits above anything else, environmental crisis will follow. Capitalist system is not built to sustain and keep the environment intact. It lacks the capability to preserve the environment as it finds ways on how to make profit (Ollman, 115).

Such as in the case of China that is considered to be the factory of the whole world. This is proven by the fact that everything is made in China. The increasing industrialization of the country has led to the increasing environmental challenges that the people are suffering from. As a matter of fact, it is believed that the country has a steady growth of 10% in its annual DGP. But it did not come for free. The 10% increase in its GDP has resulted to increasing health problems and environmental issues that the government must try and provide solutions for. The main problem in the country is its emission of carbon. China is the foremost and major source of carbon emission in the whole world. Elucidating further, China is tagged as the 3rd largest contributor of greenhouse gas emissions. Not to mention that it is ranked as the 16th most contaminated country in the whole world in terms of air and water quality. One of the most important indicators of the environmental problems and issues in China is the fact that the life expectancy of the people has drastically reduced by 5.5 years due to the ever increasing air pollution. Deterioration of the land is a direct result of the contamination of water and its scarcity.

The truth of the matter is that whenever China utilizes its air, soil, water and various environmental resources to make products available to global consumers, environmental burdens are being borne as well. This is due to the fact that the production and the consumption of environmental resources entail the utilization of energy which can pollute the water and air resources. Such as in the cases of factories that emit pollution in the air during production hours. Not to mention emission of carbon in the environment that is the main contributor to global warming. More specifically, the urban China is more affected with the air and water pollution in the country. As a matter of fact, 7 out of the 10 most contaminated places in the whole world can be found in China. The main air pollutants are known to be sulfur dioxide and soot that are the by-products of combusting coal. These by-products are the main cause of acid rain that is affecting about 30% of the total land area of the country. The problem is rooted on the existing industrial boilers operating all across the country. Heating and the utilization of coal for culinary purposes also play important roles in the pollution.

The groundwater pollution in the country is caused by the mercury being released into the air and caught by raindrops. Run-off from various factories, mining operations and smelters in the country also contaminates the groundwater. The unfortunate thing about this situation is the fact that the groundwater is being used by a lot of farmers for their irrigation system; thus, contaminating the crops as well that are being sold to the general public. Fertilizers in the country are not safe either. Testing done by many researchers and scientists revealed that fertilizers in China are found to contain large amount of heavy metals such as cadmium.

Since the concentration of the world’s production is in China by virtue of cheap labor, the environment and the health of the people are at risk. In the same manner that trade and businesses operate in the global scale, so as the health safety risk in China. It transcend into the national scale as well. Unfortunately, the system exploits not just the workers but as well as the environment. The economy is connected to the whole and entire human processes and activities. The problems in the environment and the health-related difficulties rooted from the concentrated production in China all contribute to the global economic crisis that the present economy and society is facing right now.

With all the foregoing, it cannot be denied that the global economic crisis that is affecting the financial aspect of the economy as well as the environment will continue to resurface if the economic system will not change. The rich will become richer and the poor will get poorer in a capitalist system. Karl Marx is actually right after all. The world is just driven by money and profitability that sacrifices human labor and the environment.

Work Cited

Balbus, Isaac, D. “Commodity Form and Legal Form: An Essay on the ‘Relative Autonomy’ of the Legal Form”, Law and Society Review, 1977, Vol. 11, pp. 571-88.

McLellan, D. Marxism before Marx, Harmondsworth, Penguin, 1970.

Nielson, Kai. “Marxism and the Moral Point of View”. American Philosophical Quarterly. 24.4 (1987): 295-306.Colorado, Westview Press, 1989.

Ollman, B. Alienation: Marx’s Conception of Man in Capitalist Society, 2nd ed., Cambridge, Cambridge University Press, 1976.

Ripstein, A. “Rationality and Alienation”, Canadian Journal of Philosophy, (1988) Vol. 15, pp. 449-466.

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