Work and Trade: Ignorance of the capitalist
Throughout history, capitalist have been trying to maximise their profit margin. They want to produce a good or service at the lowest cost of product and sell it at the highest possible price that people would buy it for. In a free market, the price of which their goods are sold is dependent on the market equilibrium. If all the capitalists act independent of each other, there is nothing much that they can do, individually, to affect the market price level. Therefore, they concentrate on reducing the cost of production.
The process of production itself has been changing through time. In the era prior to industrialisation, division of labour in producing a commodity did not really exist. A commodity would be produced, from start to finish, by a single skilled worker or a group of skilled workers, constantly participating in every step of the production process. But this was set to change. In 1776, Adam Smith, an economist, believed that dividing labour would increase efficiency. Therefore, the division of labour would be the key to produce output efficiently (i.e., at minimal cost and minimal wastage). According to Adam smith, if every sector of the work force were to have a specific role to perform in the production of the final good, the sector would only specialise in churning out their specific portion of the final good that they are responsible of. For example, instead of one sole person drawing up plans for a new building, sourcing the resources needed, building the building itself, advertising and marketing it and finally leasing it, every step of the process can be delegated to a or a group of specialists who have done such work before and would be able to do it faster and with minimal resources as they are trained and experienced in that field of work. Hence, capitalists have been increasingly adopting Smith’s idea of production.
Although the capitalist maybe making a good profit, we must start to ask what division of labour mean to the society at large and what does it costs.
Division of labour greatly de-skills a worker. Any person can be trained with relative ease to replace a labourer. It also makes it hard for the labourers to move across professions without retraining. Therefore it becomes possible for labourers to be exploited by the capitalist. Labourers’’ wages and conditions can be manipulated to suit the capitalist better. The labourers themselves cannot do much about it as the nature of their work has become very elastic and they can be easily replaced and in the fear of not being able to find new work if they are let off due to their revolt. Keeping to the nature of capitalist wanting to maximise profit, they would be only paying their labourers minimum wages. This situation would only worsen the already wide wage gap that exists between the capitalist and labourers in the society.
Also, capitalist wanting to find even cheaper cost of labour, start to search elsewhere on the globe for countries that fit their bill. As the world becomes more and more globalised by the day through the numerous free trade agreements signed between nations and states, mobility of resources becomes very easy and cheap. It becomes more profitable for them to ship their resources to these countries to manufacture them there and ship the finished products back to their country to put on the final label before selling them. This is very prevalent among developed countries in the 20th and 21st century. Corporations like Nike and General Motors are moving away from their countries of origin, the United States, to countries with cheaper labour like China and Pakistan. One direct consequence of this shift would be the loss of employment in the developed country. Another would be the troubling fact that the shift would be to countries that do not have firm labour laws and supervision. In 2007, there was a report on the BBC titled “India child garment workers found”[1], about 70 child workers in India have been discovered working in a Delhi textile factory. Although the child workers were working on many different garment lines, one of the lines being belonged to the international corporation Gap. In the same article, it is disturbing to read that “20% of India’s economy is dependent on children under 14-years-old.”[2] With capitalist exporting their productions to such countries, it only encourages such practices to continue.
Although I have only mentioned two of the concerns for the society brought about by the capitalists’ aim to maximise profit, division of labour to increase efficiency and increased mobility of resources due to globalisation, there are many more affecting society in various magnitudes. Therefore, it is clear for the need of a government body to regulate such problems so that no one will be exploited or left behind while society changes and progresses.
