Economic Ramifications of Capital, Development, and Dependence

All around the globe we see the effects and instruments of economic inequality it affects not only the individuals in poverty but also every link within the economic chain of production and consumption. In viewing Karl Marx’s text Capital, Ivan Illich’s text, Development as Planned Poverty, and Theotonio Dos Santos‘s text, The Structure of Dependence, we see a theoretical framework that outlines the economic ramification of our current system today. The capitalistic production process is a main proponent driving economic inequality and poverty around the globe By understanding the theory’s conception of poverty and economic inequality, a clear and fundamental picture of our global crisis over poverty and inequality is seen.

  For Marx, there are many variables within the framework of the economic system that are the causes of poverty and inequality.

It is in the fundamental functions of a capitalist economy that assist in creating the economic inequality and poverty seen today. In a capitalistic economy, human labor power is exploited by the production process in order to gain a surplus on the product.

Labor essentially determines the value of anything it is producing. Marx states, “what exclusively determines the magnitude of the value of any article is, therefore, the amount of labor socially necessary, or the labor—time socially necessary for its production”. Thus the value of the product is directly correlated to the amount of labor put into it. It is not only the amount of labor time put in, but also the number of people doing the labor.

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If looking at the marginal product of labor, we see that if too many workers are hired, past an optimal point of labor, then their will be inefficiencies in the production process thus factories try and keep the number of workers as low as possible in order to increase their profit margin. This contributes greatly to the global crisis of unemployment and poverty

The aim of any capitalistic production with human labor power is to exceed the necessary labor time and continue into the surplus labor time, for that is where the profit is seen. This though is where the worker is exploited for their labor power, and not gaining anything from the extra labor expended. For example, after the necessary labor time is completed, “… his labor is no longer necessary labor, the worker does indeed expend labor-power, he does work, but his labor is no longer necessary labor, and he creates no value for himself. He creates surplus, value which, for the capitalist, has all the charms of something created out of nothing”(Marx 325). Thus in the surplus labor time, the only group benefiting from the labor is the capitalists (owners of the means of production), Economic inequality is driven by this for the worker, who only makes a fixed wage, is essentially working for free after he has exceeded the necessary labor time for the commodity in production.

For if the worker was working independently, on his own products, this surplus labor time would be beneficial to himself, since he both owns the means of production and the product being created.  This idea though is never seen in the capitalist economies. The entire point of the production process is that the capitalists own the means of production and have the financial means to gain capital, while the only thing the worker can offer is his labor. Since this is the case, the worker cannot buy the means of production since they do not have the capital necessary for this purchase and thus are forced to work for the people who do own the means of production, Marx sees this system as highly exploitive. For example, “the rate of surplus—value is, therefore, an exact expression for the degree of exploitation of labour-power by capital, or for the worker by the capitalist“. If a worker is putting in hours of labor but not gaining the financial means of that labor, their labor is being exploited The exploitation of their labor is, for Marx, what is a main proponent in the economic inequality within the system.

In a capitalistic economy though, the producers depend on the exploitation of labor in order to make a surplus off the commodity so that they can reinvest that surplus back into the capital for production. This concept by Marx can be extended by looking at the separation of the worker and the owners of production more closely and specifically. Marx explains more explicitly about this separation between these two entities “The capital-relation presupposes a complete separation between the workers and the ownership of the conditions for the realization of their labour, As soon as capitalist production stands on its own feet, it not only maintains this separation, but reproduces it on a constantly extending scale”. Thus this process of creating the capital-relation is also the process that ‘divorces the worker from the ownership of the conditions of his own |abor’- thus it is a process that creates two transformations being the social means of subsistence/production are turned into capital, and the immediate producers are turned into wage—laborers (Marx 874).

By being completely separated from the ownership of the conditions, it solidifies the worker in their economic place within the system. With this kind of relation, it is very hard for any kind of economic mobility on the part of the worker, meaning they cannot climb out of economic poverty. Through looking at Ivan Illich’s text on underdevelopment and economic inequality around the globe, we see a continuation of Marx’s theory of economic inequality into the modern realm. One of the largest factors in the expansion of inequality is the system of production that the commodities are produced in. Thus if the system of production is increasing inequality, any increase in production will in turn increase the inequality. For example while Marx touches on reification, Illich also applies this concept to his theory of underdevelopment.

“By reification I mean the hardening of the perception of real needs into the demand for mass-manufactured products. I mean the translation of thirst into the need for a Coke.” This type of reification occurs with the manipulation of primary humans needs into commodities that people don’t actually need. This in turn accelerates the production process and expands it. This, by its nature though, also increases the economic inequality created by the production of such products. The fundamental concept of this idea presented by Illich, as it develops further, becomes a solidified structure in the economic system Consequently meaning the economic inequality is just further produced. Complex production processes are significant factors in this, For example, “the more complex production processes tend to enable only the largest producer to replace outmoded models, continually, and to focus the demand of the consumer on the marginal improvement of what he buys no matter the concomitant side effects”.

The more complex the production process, the harder it is for the commodity to be replicated and produced in a cheaper form. This is significant because this creates a strong centralized hold on the production of such commodities, and when there is such a strong hold, the economic inequality such as labor exploitation only increases. In turn, essentially, the system is locking in the production force that is the catalyst of the economic inequality. In the same way Marx and Illich see the exploitation of the laborer and consumer, Theotonio Dos Santos sees this same concept on the modern global scale among different countries. Just as there are economic inequalities in the capitalistic modes of production, this same type of inequality exists in the relations produced by global markets. For example Dos Santos states, “unequal because development of parts of the system occurs at the expense of other parts.

Trade relations are based on monopolistic control of the market, which leads to the transfer of surplus generated in the dependent countries to the dominant countries”. Just as trade relations are based on monopolistic control of the markets, in the same way, the relations from the capitalists to the workers are in the same monopolistic form, With this, the movement of surplus is directly correlative as well, For workers are essentially seen as the ‘dependent countries’ in the eyes of Dos Santos, and the owners of the means of production would be seen as the ‘dominant countries’ for him Thus just as the surplus generated in dependent countries moves to the dominant countries, the surplus generated by the workers are also moved to the owners of the means of production.

All three of these theorists help to conceptualize the global problem of economic inequality and poverty, and where these problems are rooted within our economic system. By understanding their arguments, it is clear that the system of production in capitalistic economies are main proponent in creating economic inequality and poverty. In the debates on wage increases, and the value of wages, their conception of the global poverty crisis helps make more sense of what the debates are about For every production plant wants to keep wages low, for the less they can spend on labor power, the more surplus they can generate off their products. But in perspective of the workers who are making the products, they need increased wages to hold their standard of living and supply for themselves and possibly a families, even though the economic system depends on this exploitation of labor power, it is clear there must be a reform on the platform of wages.

If the workers aren’t making enough to support themselves and a family, it is impossible for the working class to accumulate their own capital, so they too can try and climb out of poverty, The issue of global poverty is not a simple solution. By looking through the social lenses that Marx, lllich and Dos Santos create, it is clear that the capitalistic mode of production is a significant factor that needs to be reformed. It is holding social classes back like the working class, who are in this system exploited for their labor, and not compensated for the surplus gained off them There are fundamental flaws in the way we manage our workers and the wages they receive, and all of these factors are in the core of the problem of economic inequality and poverty.