1. WHAT CPITALISM GOT TO DO WITH INEQUALITY?

Capitalism is defined by many resources as an economic system where private

ownership of production, resources, and services dominates over government ownership of

such. In capitalist economy, trade, industry, services, and resources are controlled by a small

group of rich people (capitalists), who enjoy the high level of profit from what they own.

They also control the organization of work at the organizations they own.

People who do not own any resources (workers), gain access to those resources by

selling their ability to work. This creates labor market where workers and capitalists can

negotiate price for workers’ labor based on the variety of factors. These factors include labor

supply and demand, workers’ qualifications, economic and environmental conditions. This

explains the existence of different classes with different income levels within the capitalist

society. In capitalist society people are motivated by earnings, therefore capitalists are trying

to find cheaper labor that would be bale to do more work allowing the capitalists to gain

higher profits. At the same time, labor has similar interest in mind and tries to negotiate

higher wages whenever possible. Since capitalists dominate the market and there are more

workers than jobs, often capitalists can dictate their rules in labor market.

Inequality exists on different levels: within the same country as well as among

different countries. There are poor and rich countries, they focus on industries, products, and

services specific to their region, their market and economic conditions. Each of these

industries, products, and services bring different levels of profit, and therefore, all classes

within these countries economy enjoy different level of profits and earnings. This means that

worker in poor country won’t be at the same economic level as the worker in rich country.
They will also have different level of access to government provided resources and services,

such as healthcare, education, and social assistance.

Inequality is visible within the same country as well. Considering that same levels of

education, healthcare, and social help are available to the citizens of the same country,

capitalists and workers would not have similar opportunities. Different levels of earnings

provide different social classes with different level of access to these services.

Inequality and capitalism are tightly connected because they do not provide same or

similar distribution of power to all classes. In capitalist economy, the power is concentrated

in the hands of capitalists, versus socialist economy government owns most of the assets.

2. HOW ARE UNEMPLOYMENT AND UNDEREMPLOYMENT DIFFERENT IN

RICH AND POOR COUNTRIES?

Unemployment is a part of capitalist economy because there are not enough jobs

for everyone in the market. Capitalists own the resources, control the way production is

done and decide whom to hire and whom not to hire.

Rich and poor countries have access to different resources and systems, therefore

their ability to track unemployment and analyze unemployment and underemployment

rates is not the same. Similarity, in both rich and poor is that not every person who is not

working is considered unemployed.

Unemployed are those who are not working and actively looking for work. There

are many people who do not work, would want to work., but for a variety of reasons are

not looking for work. They choose to stay at home to take care of household, children or

elderly relatives; they could be discouraged from looking for for work due to a poor
economic and market conditions; they could take part time occasional jobs and be paid by

cash without being officially registered as employed; they could become students and be

upgrading their qualifications to be able to find work more easily in the future. These

people are underemployed. Country’s economic situation and overall global economy

paly a big role in influencing unemployment and underemployment rates.

While rich countries have a long history and good capability of tracking

unemployment, unemployment numbers in rich countries do not necessarily reflect the

real picture. Some groups of population voluntarily or not voluntarily become excluded

from the related surveys. Other groups may become unemployed or not work at all due to

the cultural standards. There are groups that move from being unemployed to self-

employed, freelancers or “disabled” because they can’t find jobs and government funds

disability or there is at least some income in independent contracting. This artificially

reduces the real unemployment numbers in rich countries. Additionally, women and

racial minorities are more likely to be unemployed, meaning that countries with higher

numbers of visible minorities may have higher unemployment rates.

Poor countries have limited funds to track unemployment to the same extent rich

countries do. Unemployment in poor countries translates into high level of occasional

part time informal employment, that’s close to impossible to track. It’s easier to find

informal low-paid jobs in poor countries than in rich countries, therefore

underemployment is higher in poor countries. Economic situation in rich countries

significantly affects employment and unemployment conditions in rich countries, forcing

big numbers of people out of their homes and from their their legitimate earnings.
 To conclude, both rich and poor countries have significant issues in tracking

correct unemployment rates. In their efforts to assist capitalists in achieving efficiency

and higher profits, countries reduce number of working places, increasing the surplus of

workers who are being forced to become unemployed or employed informally, i.e.

underemployed. While the numbers are different in rich and poor countries, issues are

very much similar.

3. WHY ARE WAGES FOR MOST WORKERS SO LOW WHILE THEIR HOURS

AEW SO LONG?

Capitalists’ goal is to become richer by gaining as much profit as possible. Since

capitalists control most of the resources and the way all production they own is done,

they have the capacity of setting the rules in the workplaces they own by minimizing

their labor expenses. They do it in a few ways: division of labor, labor mechanization,

labor outsourcing.

Started by Taylor, the division of labor successfully reduced number of specialists

required to perform a complex task. By dividing production process into simple small

tasks, no expensive labor is required and turnover is easily addressed because little

training is required to replace a worker. Ford added more efficiency to the production

process by creating a conveyer line that contributed to the mechanization of labor. Now,

the pace of work can be controlled as well, or in the modern world, production can be

done by machines and controlled by only a few humans. This reduces the possibility of

production interruptions due to illnesses, turnover, strikes, and allows for around the

clock uninterrupted production at a predictable pace.

 Work arrangements and workplace legislation in rich and poor countries are

significantly different. While rich countries regulate employment practices, it’s much less

noticeable in poor countries. Therefore, minimum wages and conditions of work are not

as closely regulated there leading to low wages, high competition for work because of the

workforce surplus, and high interest of rich countries to move their production there.

These developments lead to the reduced need in work force in rich countries,

reduced need in qualified work force, higher competition for work, and lower wages,

forcing many workers to opt for part time, contract, and non-standard work arrangements.

Moreover, it contributes to the production of goods moving to poor countries, and leaving

rich countries with the production of services and some knowledge work. Poor countries

such as China and India have educated so many knowledge workers that this work is

being outsourced as well.

Workers all around the globe are competing for work, the gap between rich and

poor becomes larger allowing capitalists set even tougher rules related to work, work

arrangements, and wages. Workers are forced to agree to these rules in order to be able to

provide to their families. In many instances this means that wages for most workers

become lower while their hours are getting longer.

 Resources

McQuarrie, F. (2011). Industrial relations in Canada (3rd Canadian ed.) Mississauga,

ON: John Wiley & Sons Canada Ltd.

Yates, M. (2003). Naming the system: inequality and work in the global economy. New
York: Monthly Review Press.