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Capitalism in Milanovic’s and Ferguson’s Views Essay


Capitalism refers to the classified ownership of methods of production with a principal goal of making a profit. It is a broad system and normally puts into perspective the different elements, which make up the special variants of capitalism. Polak and Williamson (2002, p. 61) claim that different situations will require the application of different variants of capitalism. Therefore, different economists and analysts take various views while exploring the issue of private enterprise capitalism. The two authors stipulate that different types of economists hold sundry viewpoints, for instance, a laissez-faire economist will have a different approach to capitalism to welfare economists or a political economist. Experts also establish relatively different categories of capitalism than the recognized categories. This research paper explores the different views of economists regarding capitalism.

Any strategic analysis of capitalism is normally based on labor and market existence. In a commercial set-up, there have to be workers for the production process to run. Capitalism is a social and economic set up where private entrepreneurs own and control capital assets and buy labor with an established wage rate to produce capital goods (Williamson 2000, p. 51). The capital gains accumulate to the private owners and the pricing mechanism distributes the capital goods produced among users. Normally, laissez-faire economists argue that the government should not influence the markets in the private sector. Other economists establish that there is a need for the government to intervene to avoid the risk of monopolies. The question of wages in labor also calls for the intervention of the government to make sure that workers are treated appropriately (Williamson 2000, p. 65). The labor force of an economy makes up the social and moral aspects of the country. For instance, a well-paid worker will not engage in social immorality to earn a living.

Any private entrepreneur strives to make a profit and fulfill their interests. Consequently, any entrepreneur will seek to cut down the costs of production and reduce their market price to attract more customers (Gibbon 2000, p. 47). This describes the income inequality phenomenon. For government enterprises, wages paid to the workers are uniform unlike in the case of the private sector. Private enterprises compensate their workers at different rates concerning the profits the enterprises make. Thus, it is possible to find compensation for some workers being reasonable while others receive very poor wages, which makes their lives unbearable (Gibbon 2000, p. 87). This phenomenon has formed the basis of arguments by some economists who are against capitalism.

Branko Milanovic believes that capitalism is an imperfect and harmful system for any economy. He bases his argument on moral ground. The fact that some workers in private enterprises receive poor wages is true therefore they are not able to acquire some basic needs. This compromises the dignity of human life as every man is entitled to shelter, food, medical care besides other basic needs (Fowden 2001, p. 61). For that reason, any working person should be able to afford some basic goods and services. This moral theory, according to Milanovic, should feature in the economy. However, this is not reflected in the economy, as many workers are not able to cater for themselves and their families. On the other hand, some workers can afford luxurious lives in contrast to their counterparts. This kind of income gap has diverse effects on the economy of a country, besides the social effects of low living standards.

Milanovic believes that according to an economic perspective, the disparity in income causes a major financial crisis in the economy. Monetary capability is only in the hands of few in the country and, consequently, assets in the country end up being unevenly distributed. Hence, it is evident that capitalism hurts limiting power to only a few people in society (Fowden 2001, p. 80). Also, Milanovic does not see any possible solution to this financial crisis as the government will never have adequate data regarding the minimum wages private enterprises pay their workers.

Adam Ferguson, a great philosopher and a strong moralist in history, believes that the man is a social being. Baldwin and Philip (2000, p. 90) claim that Ferguson disapproves of the commercial society as he blames it for making men weaker. According to Ferguson, this system is responsible for turning men into dishonorable beings who are not responsible for their society. Ferguson’s principles establish that the power of self-centeredness or self-utility leads to self-preservation, which is harmful to society as every man works towards self-interests. As every man becomes self-absorbed, society is bound to face negligence as no one works for the good of society (Fowden 2001, p. 47). Adam Ferguson is a great moralist and he believes in the preservation and protection of the morals of a society. Therefore, Ferguson saw the importance to reconcile the systems for work to fulfill moral purposes as well as economic purposes.

Adam Ferguson addressed the issue of modern commercial society (capitalism) while evaluating the effects it had on communism. He saw that the new system compromised the communal qualities that designed a society. He felt that there was a need for unity instead of individualism and according to him, communism was a dignified technique to earn profit other than individualism. Baldwin and Philip (2000, p. 37) agree with Ferguson’s theory that the economic nature of work is not as crucial as the moral nature of work. Further, Ferguson based his argument on a religious perspective where he established that human beings should not only consider working for their self-interests but should fulfill their religious roles of working to please God. Bourguignon and Morrison (2000, p. 56) claim that God empowers men to pursue social satisfaction. However, this philosophic trend contradicts itself in different instances. Hence, it advocated that a commercial society could progress as well as individuals indirectly pursued self-interests. Paradoxically, Ferguson also established that commercial growth achieved through this technique was bound to promote a fall in virtues, which made the society vulnerable to collapsing.

Both Milanovic and Ferguson oppose capitalism based on morality. However, their arguments are based on different grounds. Milanovic bases his argument on income inequality where he establishes that different enterprises will pay their workers differently based on various factors, which lead to income inequality. Ferguson believes that in a capitalist system, an individual works in pursuit of self-interests and this has a general effect of compromising communist virtues, which are important to society (Gibbon 2000, p. 97). Besides basing their arguments on different points, it is apparent that both Ferguson and Milanovic are against self-centeredness, as they believe that it has adverse effects on morality (Bourguignon & Morrison 2000). Nonetheless, under different viewpoints, the two economists are in support of each other against capitalism.

References

Baldwin, R & Martin, P 2000, two waves of globalization: superficial similarities, fundamental differences, John Willy and Sons, Upper Saddle River.

Bourguignon, F& Morrison, C 2000, the size distribution of income among world citizens, Cengage Learning, London.

Fowden, G 2001, Empire to Commonwealth: Consequences of Monotheism in Late Antiquity, Rutledge publishers, London.

Gibbon, E 2000, the History of the Decline and fall of the Roman Empire, Penguin’s, London.

Polak, B & Williamson, J, 2002, Poverty, Policy, and Industrialization:

Lessons from the distant past, World Bank Working Paper, The University of Michigan Press, Michigan.

Williamson, J 2000, British Inequality during the Industrial Revolution: Accounting For the Kuznets curve, Cambridge University Press, Cambridge, and Paris.

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IvyPanda. (2020, October 1). Capitalism in Milanovic's and Ferguson's Views. Retrieved from https://ivypanda.com/essays/capitalism-in-milanovics-and-fergusons-views/

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"Capitalism in Milanovic's and Ferguson's Views." IvyPanda, 1 Oct. 2020, ivypanda.com/essays/capitalism-in-milanovics-and-fergusons-views/.

1. IvyPanda. "Capitalism in Milanovic's and Ferguson's Views." October 1, 2020. https://ivypanda.com/essays/capitalism-in-milanovics-and-fergusons-views/.


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IvyPanda. "Capitalism in Milanovic's and Ferguson's Views." October 1, 2020. https://ivypanda.com/essays/capitalism-in-milanovics-and-fergusons-views/.

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IvyPanda. 2020. "Capitalism in Milanovic's and Ferguson's Views." October 1, 2020. https://ivypanda.com/essays/capitalism-in-milanovics-and-fergusons-views/.

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IvyPanda. (2020) 'Capitalism in Milanovic's and Ferguson's Views'. 1 October.

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