The Nature of Capitalism

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2.2 Capitalism

Capitalism as an ideology relates to the economical developments. This term involves the condition of economy that is assigned from social classes or levels in society. This views property is the main thing in life. In a capitalist society, Marx declares that such an ideology leads to fragmentation and alienation of individuals, particularly those of the proletariat. Bressler, 1998:213 Capitalists, a community who are in capitalism, believe that they hold and control the economic structure, so they are as if the center of the economic power in society. In addition, it is stated that the character of capitalism is that classes have their own production ways ─ the capitalist─ doing operation based on capital accumulation logic continuously; capital is property money and other assets that can be used for producing material infrastructure from economic production. Ritzer and Goodman, 2007:438. Capitalists try to change the goods for collecting properties to get more. In supporting the theory, there will be explanation about the nature pf capitalism, capitalism in America, and theory of Culture Industry.

2.2.1 The Nature of Capitalism

The nature of capitalism is actually system production that occupies land, labor, technology, money, raw materials, and goods and services as commodities in the market activities for certain profit. Bodley, 2000:303. Capitalism tends to polarize people by steadily widening the gap between rich and poor. Bodley, 2000: 306. It is also stated: “….Capitalism is the outcome of a revolutionary 11 change-a change in laws, attitudes, and social relationships as deep and far- reaching as any in history.”Bodley, 2000:304 Based on www.wikipedia.com the economics of capitalism developed out of the interactions of the following five items: a. Commodities: There are two types of commodities: capital goods and consumer goods. Capital goods are products not produced for immediate consumption i.e. land, raw materials, tools, machines and factories, but as the inputs of consumer goods i.e. televisions, cars, computers, houses to be sold to others. b. Money: Money is primarily a standardized means of exchange which serves to reduce all goods and commodities to a standard value. It eliminates the cumbersome system of barter by separating the transactions involved in the exchange of products, thus greatly facilitating specialization and trade through encouraging the exchange of commodities. c. Labor power: Labor includes all mental and physical human resources, including entrepreneurial capacity and management skills, which are needed to transform one type of commodity into another. d. Means of production: Another term for capital goods – all manufactured aids to production such as tools, machinery, and buildings. e. Production: The act of making goods or services through the combination of labor power and means of production. 12 Moreover, those commodities above can work if there are also some types of elements how capitalism works or how capitalism may occur. Based on www.wikipedia.com , there are some types how capitalism works: a. Individuals Individuals engage in the economy as consumers, laborers, and investors. For example, as consumers, individuals influence production patterns through their purchase decisions, as producers will change production to produce what is most profitable most often what consumers want to buy. As laborers, individuals may decide which jobs to prepare for and in which markets to look for work. As investors they decide how much of their income to save and how to invest their savings. These savings, which become investments, provide much of the money that businesses need to grow. b. Income Income in a capitalist economy depends primarily on what skills are in demand and what skills are currently being supplied. People who have skills that are in scarce supply are worth a lot more in the market and can attract higher incomes. Competition among employers for workers and among workers for jobs, help determine wage rates. From those explanations above, it can be stated that the nature of Capitalism, in this case is the commodities of capitalism which consist of money, labor power, means of production, and production can develop if there are individuals and income work together. 13

2.2.2 Capitalism in America