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Capitalism In America

Capitalism in America
Capitalism is the complete separation of economy and state, similar to the separation of church and state. The theory of capitalism is based on the private ownership of the means of production, which would equal a completely uncontrolled and unregulated economy where all land is privately owned, only an aspect of that premise is based on individual rights. Capitalism recognizes that each individual person is the owner of their own life and has the right to live it fully to their on personal manner and long as he doesn’t dictate or violate others. The American South had a social system, which was distinct in many ways. There was an economy relative to the region, where class structure and a system of racial difference which caused the South to become unique to the rest of the nation. Historians such as James Henretta have said that Capitalism was the cause of all evil within the American South. American Capitalism defined by Max Weber is ? a greed forgone?, and ?acquisition by force, … whether directly in war or in the form [of] exploitation of subjects?. This type of lifestyle within a growing nation could not work with the gentry class which was moving into the region unless there was people to do the work on the farms for them. At first there were indentured servants, but this system of work only worked for a limited time as these servants would work their time of servitude and then leave on their own. The American farmer in the south needed more control on their workers and needed to know that they (the workers) weren’t going to just leave and start up their own farm for themselves. Thus the manipulation of slave labor became the answer for capitalism, and from the use of black slave labor, tension began to rise between the slaves brought from Africa and the landholders of the South. Tension between Slaves and landowners have been strong in the South for many years, and one might say that the cause of it is the ways of which the Black slaves of plantations and farms were treated. The founders of the Carolina colonies were not only interested in the use of slaves in the solution of their labor problems of too much work not enough workers, but also they had a very big material interest. The use of slave labor, was a coerced, cash-crop system of labor from which slavery became an economic necessity because for a person who owned land they needed workers, and these workers were predominantly Negro slaves brought in sold from Africa. To southern colonists, slavery was first an economic institution solely for the purpose of solving an economic problem, that problem – work cost too much money so the colonists implemented forced labor for economic gain. So slavery provided the basis for a special Southern economic and social life which had continued on until the Civil war. The special economic life that the people of the South lived upon was one of greed for expansion and gain. Capitalism at its best, and the Southern colonies were very good at it. Lewis C. Gray defined the southern plantation as a ?capitalistic type of agricultural organization in which a considerable number of unfree laborers were employed under a unified direction and control in the production of a staple crop.? The plantations were mostly one crop oriented, cotton or tobacco, and this lead to cash crops rather than supplying for the colonies themselves. The plantation gentry or Masters as they were called by the slaves, never thought of the ?big picture’ involving cash crops, only their own well being and how much money they were going to make whether physical force was used or not. Slavery and the plantation system led to agricultural methods that depleted soils and the slavery system forced the South to exploit more slave labor as a means of better production rather than the realization of worn-out lands. Such a labor system in the South aggravated and caused very deep problems between the Master and his slaves. Slavery established the basis of the planter’s position and power. It measured his affluence, marked his status, ?and supplied leisure for social graces and aristocratic duties.? The road of power in the South lay through the plantation and the Master would see to it that his or her plantation be the best. Great planters held enormous power in the southern colonies, they spent much of their free time in leisure, educational pursuits, and participation in public life; George Washington and Thomas Jefferson both were within this group of people. Most planters were also very active entrepreneurs, who would engage in quick profit type situations, which would help, them make more money on top of the plantation profits made for them by their slaves. Although their main means of money and profit was the forced labor unit of slavery on the plantations, these other quick scheme ideas forced planters into believing that slave holding was more profitable. Therefore an increase in the amount of slaves doing work on plantations was evident due to its profitability for planters and farmers and the control on labor. Controlling labor in the South, became an entity in which no plantation could survive without. The Southern Master had many slaves who he expected to do enormous amounts of work all for the Master’s gain. Consequently a capitalistic lifestyle had absorbed and encouraged slavery. The resultant fortunes, for which Planters and Farmers had flow into their pockets, were because of slavery and slave holding. A small commercial bourgeoisie was created from slavery and the ideology of capitalism was the root of construction. Perhaps if it weren’t for capitalism and the expansion by British gentry’s slavery caused by capitalism would never have happened.

Another example of Capitalism is the Monopoly of the Microsoft Company ran by multi-billionaire Bill Gates. What first must be determined is the object of the question, ?How dangerous is Microsoft.? There exists two chief entities as the object of the question — that of the consumers of Microsoft’s products and that of Microsoft’s competitors. A distinction must be made between these to groups when answering such a question as the one queried above. For these two groups are on opposite sides of one spectrum concerning the power and consequent danger commanded by the powerhouse Microsoft in their deals with one side or the other. Whether a decision or action made by Microsoft is beneficial or not to one of the two does make it the true for the other. Often times quite the opposite is true. In fact most consumers barely regard Microsoft as dangerous from their viewpoint; as Microsoft’s ever-growing influence and affluence has only made, what the consumers see as superior, their product that much more affordable. Cries of monopolistic abuses and that Microsoft unfairly exploits its ownership of the personal computer operating system have been voiced by competitors (if surely they can be considered competitive) of this technological authority. The foremost issue as to the danger the Microsoft Corporation presents to its competitors within the PC software industry is Microsoft’s ownership of the base operating system, MS-DOS, of all the PCs on the market. In addition, Bill Gates, the founder and chairman of Microsoft, has done an outstanding job of hiding it behind his company’s Windows software (How dangerous is Microsoft? Economist 7/8/95). Working together MS-DOS and Windows have become all but standard in four-fifths of personal computers on the market. Because of Microsoft’s dominance in these two areas of personal computing the company receives an advantage that is essential in determining the danger Microsoft exhibits toward their competitors. The virtual monopoly that Microsoft possesses over the operating systems and subsequent graphical interface divulged by its ownership of the respectable modules MS-DOS and Windows. Bill Gates tightened his grasp on the industry through an ingenious deal he made with PC Producers. In the contract, Gates is guaranteed payment for every computer shipped, regardless of whether or not his operating system was installed in the computer. Thus, without paying double, the manufacturers could not install another company’s operating system — therefore Microsoft was awarded a near monopoly. The title to these two programs, especially Windows, provides Microsoft with an unrestrictive and exclusive median to promote, feature, and offer its programs. Offering its programs as pre-installed applications of Windows software allows Microsoft to seize a large portion of the software market, especially in the word-processing and spreadsheet division where Microsoft presents its Word and Excel programs. These two applications have been incorporated, along with others, into a package known as Microsoft Office. With this program, Microsoft has captured ninety percent of the that market by charging less for the package than for a single word-processor of a competitor. Furthermore, because Microsoft controls the operating system of the PC, its competitors must render their applications and software compatible with the parameters contrived by Microsoft. Consequently, these competitors must always at the mercy of changes made by Microsoft. This limits the ability of these companies to plan for the long run. As stated by Gary Reback, the attorney for the competitors of Microsoft filing a suit against the corporation, Microsoft retains a monopoly of the operating system in personal computers, which, essentially, is the brain. This ?brain? controls the arms and legs of the computer (software) and inherently controls the arms and legs of the industry that are the competitive firms. Reback, the firms, and many others deem this kind of control unlawful, unfair, and anti-competitive. It is this kind of control that strengthens Microsoft and makes the company that much more dangerous to competitors. Another example of the danger that Microsoft threatens toward its competitors is an issue involving the release of Microsoft’s new operating system, Windows 95. Whether intentionally or not, the arrival of this new operating system was delayed again and again by Microsoft. This in turn delays other companies dependent on the Microsoft operating system in order to maintain some degree of competition. These delays result in additional, unwanted expenditures and other costs easily swallowed by the Microsoft Corporation, but inflicting severe detriments to other smaller companies who cannot afford the added costs. The danger of Microsoft to its competitors is now becoming more and more evident. Microsoft is further alleged of exploiting its ownership of the PC operating system in such ways as ?including secret parts of Windows that help its own applications? (The Tyranny of Success… The Economist; 5/25/96). When considering whether a monopoly should persist or not the factors must be examined closely. Whether or not the consumers are being exploited is something that is essential when contemplating the break-up of a monopolistic firm. Often times, and in the case of Microsoft, the consumers benefit from the monopoly. In the matter of Microsoft, being in the industry of PC and the products that are complementary to the PC, economies of scale can only be present where there exists little or no competition. This is evident in the dealing with Microsoft. Because Microsoft is thriving, the other firms in the industry are thriving as well, but only not in comparison to Microsoft. Microsoft freely provides the technical details of its software to rivals, thus allowing them to get up to speed with Microsoft and, to some degree, compete with it (How Dangerous, Econ.). Capitalism has allowed Bill Gates to thrust ahead of his former peers and develop what is nearly a natural monopoly. Under the perfect competition of capitalism Carl Marx deemed that the individualistic and unorganized process of this market system would eventually lead to its own downfall. Capitalism would become so complex that, without direction, its freedom would lead to ruination (p147, Heil.). Marx was in favor of monopoly, though he never foresaw their existence in capitalism. He believed that, especially if the government should regulate it, monopolies would bring the market system into a more centralized and equal type of economy: socialism. In viewing Microsoft, Henry George, a Victorian economist, would be opposed. For many people have gained great wealth by obtaining what he calls ?unearned income.? This unearned in come took form in the money that was made as a result of possessing shares of Microsoft, whose stock skyrocketed, leaving many people millionaires. Marshall, another Victorian economist, almost need not apply to the concerns of Microsoft. His philosophy of supply and demand is principally in accordance with chief market doctrines of supply and demand. It is apparent to all of who study economics that in the short-run consumer demand takes precedence over supply, whereas the positions are reversed in the long run. Along with supply in the long-run costs of production helps govern and assert the price of the product. Now Microsoft, in the ensuing race for the Internet, finds itself not as a leader but a follower — in this case of Netscape. But this position may make Microsoft that much more dangerous. When it first sought entrance to the Internet market, Microsoft was not only down, but also presumably out. But at this stage Microsoft has pulled itself up by the proverbial ?boot-straps? and positioned itself closely behind Netscape. Estimates show Microsoft as little as six months behind Netscape. Microsoft did not neglect to use every advantage it possessed in order to persistently gain ground one the once untouchable Netscape. It used Windows 95 to push its Microsoft Network on consumers (it is alleged that installing Windows 95 and the Microsoft Network can disable rival on-line services). In addition Microsoft teamed up with Java to strengthen its potential within the Internet market. Microsoft’s maneuver in dealing with its late coming to the Internet market illustrates its composure and confidence under the pressure of the volatile market system present in the fight for the Internet. Its about-face after initial failings with on-line services shows that Microsoft can evaluate a challenge on several levels and make educated decisions. If anything these events strengthened the company and made Microsoft far more dangerous to competitors such as Netscape. So while the Microsoft Corporation has become so large and powerful that it almost radiates anti-competition — for an important barrier to entry in the industry is capital. But while Microsoft may be limiting its competition, it is aiding the consumer. For it is able to charge a lower price and produce more efficiently because of smaller costs than if it existed in a purely competitive industry. Moreover, Microsoft is not the stereotypical monopoly, in that it continues to innovate — how else are upgrades to its present software explained. Thus, by rule of reason it would not be right to break-up this firm, for its existence is beneficial to the public. Slight regulatory action may be needed though in order to provide its competitors with more of a fighting chance. Competition still exists though and in the unpredictable industry of technology a firm can plummet and rise swiftly (IBM, for example, replaced Apple Computers in the early 1980s, but was soon ousted by the incumbent Microsoft). Microsoft recent affluence may connote a peak of its power. It seems to have saturated all easily obtained territory. Its profits may soon begin to dwindle as it loses its might — this will be proven in the near future as Microsoft takes on Netscape. It seems to some that the impatience and over confidence of Bill Gates may soon lead to his company’s downfall as the leader of the industry. One more long running monopoly is the US Postal service. Generally the best type of market structure for the general public is perfect competition because it creates the lowest possible price for the public. There are some exceptions were perfect competition isn’t the best choice for the public on account of various reasons. The United States Postal Service is one of them and since the Postal Service is a monopoly, it is its own market. The discussion is the budget dilemmas that the postal service has faced for the past twenty years and if it is in the best interest of the economy for the United States Postal Service to continue as a monopoly. Since the Postal Service is a necessity for America, the government had to subsidize the service in order for it to continue in operation. In 1979 the United States Postal Service had a cash flow of $22.5 Billion and was additionally receiving $176 million from investing. Even with this added revenue the Postal Service was still greatly under funded on its own. At the time it was discussed to privatize the postal service and introduce competition because of the extreme losses that the service was experiencing. A positive argument for privatizing the Postal Service was with numerous competitors in the market there would be more efficiency and the public would receive lower prices. These problems did indeed eventually did get solved over the past fifteen years and now the Postal Service is making record breaking profits. Now in the first quarter of the fiscal year 1996 the Postal Service already has a net income of $1.2 billion. These are examples of how capitalism has helped make America the place it is today. We need a dash of Capitalism here and there to help us survive in the works of economics. The importance of understanding the philosophy that capitalism is built on lies in the fact that no social system can be understood completely or defended from it’s philosophical framework. Capitalism is the only moral social system because safeguards human survival, it is the only system that is based upon man’s needs and recognizes that humans have the ability to greater themselves by thinking and it protects the individual mind of every man (person).
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