Section 1
Critical Report
Political economy examines the relationship between the state and the market. It explains how the government interacts with economic agents within the state boundary. Scholars have formulated various theories to explain how the state should relate to the economy. The major debate is whether the state should intervene in the market. Some scholars observe that state intervention is inevitable in case normalcy and constancy is to be restored in society.
Such scholars observe that the market is exploitative, meaning that it should not be left to exist independently. This view is held by neo-liberalists. The scholars observe that the idea of free market economy does not hold because producers from time to time tend to hoard important products that can easily bread violence within the state. It is therefore the responsibility of the state to intervene in the operations of the financial system to guarantee peace and stability.
On the other hand, there are scholars who argue that the market should be left to operate according to its internal logics (Ricardo, 2009). To such scholars, intervening in the market would be suicidal because manufacturers and investors tend to shy away from controlled economies. Scholars such as Thomas Ricardo and Adam Smith uphold this view. The theory supporting this strand is referred to as liberal theory.
Marxists and neo-Marxists have a different stand as regards to the operations of the market. These scholars observe that the owners of the means of production control the market. The proletariat has nothing to offer in society apart from his/her labor. To Marxists, the state is the property from the rich, which is often used to subjugate and oppress the poor. Karl Marx noted that the ruling class would one day lose power to the proletariat due to a number of reasons. This paper attempts to explore the relationship between the market and the state since the time of Plato to present day.
Stages of Capitalism and Effects to Society
The contemporary capitalistic system can be traced back to the fourteenth century whereby a conflict emerged between the owners of land the workers. Everything was running smoothly before the fourteenth century since serfs and lords never produced for the market. The economy was domestic meaning that people produced goods for domestic consumption. The crisis of the fourteenth century caused many tribulations. It was occasioned by poor weather conditions and technological stalemate in the agricultural sector. Through the revolution, serfs acquired land while some moved to urban area in search of greener pastures.
The collapse of manorial system in England generated a class of tenant farmers meaning that they were at liberty to market their goods. Through this, they could acquire new technology that was later used in advancing farming. Through this relationship, a new form of capitalism set foot, which was referred to as feudalism. Feudalism paved way for mercantilism, which was a major form of capitalism.
According to Karl Polanyi, even though mercantilism aimed at commercialization, it never interfered with basic production elements such as labor and land (2006). He notes that competitive labor market was only instituted in England after 1834. This means that industrial capitalism never existed before 1834.
Mercantilism declined in the 18th century after scholars such as Adam Smith challenged its tenets (2009). Mercantilism had a problem in defining the wealth of nations since it held that resources remained constant unless one state invaded the other to increase its fortunes. However, mercantilism contributed a lot in shaping industrial capitalism because people in society had accumulated too much through merchant trading. Karl Marx notes that industrial capitalism came about in the 18th century due to major developments in the factory sector (1988). This implies that there were new manufacturing techniques that were characterized by high division of labor and bureaucratic administration. The two aspects enhanced worldwide domination in terms of capitalistic mode of production.
Industrial capitalism had profound effects to society in the 19th century. The new mode of production at the time generated conflicts in society since Britain complained about Napoleonic France because of instituting rules regarding capitalism. In this conflict, Napoleon suggested that the continent would utilize beet sugar instead of cane sugar. This was an attempt by Napoleon to systemize European financial systems, which would render British Navy irrelevant.
This was a direct confrontation to the position of Britain in Europe and in the world as well. Many people in society requested British government to intervene in order to bring about tranquility. To many scholars, this was viewed as a direct interference to the affairs Britain. The UK administration managed to calm the situation because it was industrialized.
During industrial capitalism, the state could control the market because economic activities were closely related to state operations. All contracts were monitored by state agencies meaning that the state was in charge of everything that went on in society. At the same time, political economists were against state intervention because it affected business.
Henry Ford introduced a new reasoning on economics based on financial and social system. The new principle focuses more on mass production of goods and services. In this economic system, workers are paid relatively higher in order to make them effective in production of goods and services. This becomes the major difference between Ford and Max (Sayers, 1999). Antonio Gramsci was the first to evaluate the ideas of Ford.
Gramsci describes Fordism as production system that is meant to manufacture standardized goods, which are of high quality but of low cost to consumers. In this regard, workers are paid good salaries that guarantee them good life. Unfortunately, even though technology used in manufacturing is of high quality the personnel is not highly trained. Fordism was applied in other manufacturing companies and organizations since it guaranteed high returns. It has three major principles including product standardization, utilization of special and effective equipments and higher remuneration for workers.
In the society, people are able to acquire standardized products at low costs. This has an effect in society because people’s standards of living go up. Fordism has enabled many small companies to acquire technology that is needed in transforming production.
Post-Fordism refers to the ideas that were generated after Antonio Gramsci. The ideas were mainly designed by neo-Marxists to explain how the modern society ought to be. Neo-Fordists relate the new economic trend to globalization, which is facilitated by neoliberal principles. Fordism and neo-Fordism have had positive and negative effects in the society. Through Fordism, many people have been employed in big companies irrespective of whether they are educated.
Employers have realized that educational qualifications do not guarantee high returns. In this regard, talent and experience is considered as an important aspect in any work. Furthermore, Fordism has encouraged people to work hard to realize their goals and objectives in society. Through the concept, the state has completely lost control of the market since people are innovative in creating employment opportunities.
Neo-Marxists are able to analyze the new effects of capitalism using contemporary phenomena. Marx’s ideas could no longer suit the modern society because of the emergence of middle class. The middle class cannot be categorized as either a bourgeoisie or a proletariat. Scholars observe that Marx’s ideas can be construed using other theories such as Fordism. Therefore, Fordidm is utilized in explaining the form of domination and segregation in the modern world.
Section 2
Arab Spring
The ongoing economic crisis in the world can partly be attributable to the ongoing crisis in the Arab states. States in the world rely on oil in manufacturing and distribution of goods. The crisis has resulted to a number of serious problems in both the Arab states and elsewhere. This section will analyze the causes of conflicts and their possible effects. This article employs theories in explaining the crises. The effects are so diverse because of globalization.
Problems occurring in faraway places affect financial systems of other states elsewhere. Theories of modernity elucidate that a problem in one region could affect the activities of the market in another state. This is because of interdependence, which is created and supported by globalization. In the modern society, goods and services are consumed immediately after production. Furthermore, the society is very risky because of environmental and social degradation. In the Arab world, agents of globalization have caused socio-political crises (Steedman, 1979).
According to Karl Marx, the proletariat in Egypt rose against the ruling class because of four main factors. From Marx’s class analysis, it can be noted that workers were dissatisfied with the way the ruling class alienated them from society (Marx, 1988). Workers produced many goods and services but the bourgeoisies in the Arab states consumed everything. Alienation comes in four major ways. The worker is alienated from the product he/she produces.
This means that workers produce goods that they do not consume. This disillusioned many youths and the poor, forcing them to rise against the oligarchs. Workers are never treated decently because products are given more security as opposed to the kind of security provided to the worker. Furthermore, workers are alienated from the process of production. This would mean that workers were never given any chance in Egypt to produce goods that could be consumed in the market. They were only supposed to supply labor, which was never appreciated by the bourgeoisie. This aspect encouraged many workers to rise up against the ruling elites.
By working, the proletariat does not satisfy his or her desires, which compels him or her to seek alternative means of capital. The worker faces another threat of alienation, which is related to self. This means that the worker does not find any time for fulfilling his or her dreams and desires. The worker is only allowed little time for exercising animal related activities such as eating, sleeping and procreating. The worker is finally alienated from his or her friends and relatives. These conditions forced the worker in Egypt to challenge the position of the ruling class in society. The other factors that caused the conflicts according to Marx’s analysis are exploitation, subjugation and tyrannical rule.
References
Marx, K. (1988). The Communist Manifesto. New York, NY: W.W. Norton & Co.
Polanyi, K. (2006). Primitive, archaic, and modern economies. Michigan: Beacon Press.
Ricardo, D. (2009). On the principles of political economy, and taxation. Oxford: John Murray.
Sayers, S. (1999) Plato’s Republic: An Introduction. Edinburgh: Edinburgh University Press, 1999.
Smith, A. (2009). An inquiry into the nature and causes of the wealth of nations. Lausanne: Tourneisen.
Steedman, I. (1979), Trade amongst growing economies, Cambridge, UK: Cambridge University Press.