What Is The Capitalist System Commerce Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

In the next sections, I present an overview of current and historical alternative forms of work organisation in the globalized world. In the sections, I also discussed the constraints (limitation and restrictions) and opportunities (chances and prospect) for each of the alternative forms of work organisation in the globalized world that I explained.

Capitalist labour process

In a capitalist system, labour process essentially describes a process in which harnessed human labour is used to produce a use-value of some sort; mostly, valuable commodities that can be sold at a profit. The capitalistic orientation in this is that prices for these goods and services are rather set by market forces than being determined by a comprehensive plan of production outlining compulsory output value. In such instances, the accrued profit is only shared among the investors and/or owners of the businesses. Profit in such instances is derived principally through sales of the commodities and through surplus value of the harnessed human labour. In other words, the industrialists control workers' activities, and the sale of products, solely for their gains and self-interest.

This is the corroborated by Marx. Marx explained that when the capitalist consumes labour-power, the workers are bound in contract and put under the control of the capitalist to whom labour belongs. Likewise, the ensuing products of the worker's labour belong to the capitalist. This distinctive relation is very much existent in the present day. An example is that of Nike. As regards Nike, factory workers produce Nike's products in cheaper labour zones - a case of surplus value of human labour - and the company thereafter sells these products in more advanced regions at a much higher price. More often than not in factories like that of Nike, the workers operate under unsympathetic orders. The China blue video is a typical example of how workers have been being forced to work under the control of the owners.

Due to the fact that capitalist wants to make the most possible profit and at the same time produce surplus values, they would go ahead to exploit workers' ability to do work by making them produce far more than that what they would normally do and still not pay the workers decent wages. Marx tagged this to be valorisation. In simple terms, valorisation process depicts an instance whereby the capitalist seeks to widen his profit margin and as a result compels workers to products that are far of more value than what the workers receive. Hence, the capitalist is not just concerned about use-values or creating new values but also interested in creating surplus value at the same instant. Thereby, it can be argued that capitalists are more concerned with producing more so as to earn more without necessarily incurring extra cost. An illustration of this is that of the Chinese workers in Disney's World who worked in poor conditions but their bosses cared less other than making profit.

This was also the case in the labour process debate video. The clips in the video showed how a usual management would try to cut down on employees' entitlements while still expecting them to either maintain or possibly improve on their level of production all because they want to be more profitable. Simply, workers are made to work overtime and probably not get paid for it. The video is good example of capitalist labour process as production in the capitalist labour process was organised both technically and socially mainly to increase profit. The implication is that the capitalist labour process is more likely observable within market wherein prices or goods and services are determined by demand and supply, and high competition. Since high competition could possibly force prices to remain in not too-profitable margins, the capitalist results either trying to make more with far less resource inputs or trying to make far more with the same resource inputs.

In a capitalist form of organisation, division of labour is achieved by ensuring that workers specialise in one task but work together to produce commodities. This is contrary to Taylor's idea of division of labour. According to Marx, division of labour in a capitalist setting would perhaps create inequalities amongst various occupations and in the long-run reinforces social inequalities. Alienation consequently exists into the labour-process. Alienation is a process in which humanity progressively turns into strange in the world created by labour (Swingewood 2000, p32). For Marx, alienation is an economic and social condition of class society, which separates wage workers and a pool of individuals who accumulates wealth for personal use.

The capitalist system degrades works. In line with Harry Baverman's (1974) idea of deskilling, skilled workers which once dominated the early years of capitalism were replaced with unskilled workers leading to huge salary scale differentiation as the world becomes more global, deskilling has become a more viable option especially in a capitalist labour process. Although productivity do increase, workers on the other hand are getting more unsatisfied and as such derive no pleasure in working but do so only as it remains a means to meet their needs. In effect, there is need for a more democratic workplace that could counter the negative consequences of capitalist labour process.

Alternatives to capitalist labour-process are self management.

Self Management

Self management is a substitute to capitalist labour process. In this arrangement, workers are more allowed to take control of various aspect of the organisation. Rather than the entrepreneurs controlling all aspects of the organisations, the individuals bestowed with the decision making power control the labour process. They do this by making decision making more popular and by deciding on production schedules that encourages job rotation, equality and co-operation. Such management style helps to promote an organisation that do not exploit its workers in that workers are flexible and permitted to make inputs in their workplaces. In comparison to self-management, the capitalist is rather too hierarchical in their decision making process. The recovered factories movement in Argentina, the Russian Revolution, Yugoslavia, and the LIP factory in France in the 1970s are example of workers self-management. Self managed form of workplace is therefore adopted by those that seek to achieve flexibility in the. Workers' self management is often adopted in an organisation setting which operates without bosses or ran by workers. Examples include but not limited to Worker cooperatives, workers' council and participatory economies. Each of these examples promotes self management and have similar characteristics and common practices.

Participatory Economies

Instead of the private ownership of wealth that capitalist encourages, in participatory economic there is social ownership of means of production. This means that either everyone owns the means of production or there are no owners. Two benefits of this is that: (a) there is really no difference between employees pay, and (2) power is dissolved and less domineering compared to what obtains in capitalism. Participatory economic, also known as Parecon, is an alternative system proposed by the Michal Albert. The core values of the Parecon system are: equality, solidarity, diversity and self management. The underlying principle of participatory economic is that everyone should be properly represented and allowed to have unprejudiced contributions in the making of decisions that affect them. The Parecon is made of several principles and institutions which include:

Balanced Job Complexes - encourages equal workload for everyone. In other words, workers have a share fair in share of task empowering and not empowering. For example, if the company has a clothing and shoe factory, an employee could work for a couple of days in the clothing factory and then work in the shoe factory the remaining days in the week. This gives workers the opportunity to develop various skills. A disadvantage of this is that workers do not specialise on an area.

Remuneration according to effort and sacrifice: In the capitalist labour process, some people would have more complex jobs than others but balance job complex has changed this as everyone has a balanced workload in Parecon. Therefore, everyone is paid the same. In addition, individuals can earn more based on the amount of effort they put into a job. Hence, for them to earn more, they would need to put-in extra hours. As such, Parecon encourages flexibility because if workers are allowed work flexible hours based on how much money they wish to earn.

Participatory planning: workers and consumers councils work together to estimate the supply and demand for every product in the economy. Price is then adjusted properly and is not artificial as it occurs in the capitalist market. Price is predominantly adjusted to reflect the actually cost on the society.

Workers' council

Workers' and Consumers' Council are organised in a forms targeted at achieving the decision making principles. The workers' councils emanated in Europe, and is now mandated for many firms at the European Union level (Bellace 2002). Workers councils are formed by workers and the main purpose is to institute a non-hierarchical and venerable work-form. This institutionalized body representative communicates between a single employer and the employee of a single plant or enterprise (Workers Council, 1995 pp. 6), empowering people within the workplace to make decision that would change their lives. However, workers who are not empowered would be in trounced with the workers' council if they feel their tasks are unevenly distributed and not getting the best out of work. Workers council are found everywhere in Europe e.g. Russia in 1905 where the councils was called Soviets, France during 1968, and Netherlands were examples of Workers Council.

Workers Cooperatives

Workers Cooperatives is owned and democratically managed by worker who are at the same time the owner. Only the workers own shares of the business and only one membership share is issued to a member. It is not mandatory for employees to get membership, but only employees can become members. Mondragón Cooperative Corporation (MCC) in the Basque Country and Suma Wholefoods in the UK are one of the world's best known worker cooperatives. Cooperatives were mainly formed in past in response to curbing poverty and the exploitation generated by industrial capitalism. Workers pull resources together to provide better welfare for themselves such as housing, credit, education.

Origin of Self Management and Criticism of Capitalism

The failure on the capitalistic form of labour-process lead to the development of self-management workplaces as it was seen to be a more efficient way to improve and revive the factories or industries. Workers self-management is perceived to be resistant to globalisations and economic crisis as the workplace emerged at the times of economic turndown or crisis. Hence, prompting the coming together of activists to form a new workplace so as to save workers' jobs. In 2001, Argentina workers reaction to economic crisis and unemployment was to take over control of the factories in which they had worked and form a new organisation with was managed. Another perfect example is Tower Colliery which closed in 1994 as a result of uneconomic mining industry. The trade union activists responded by organising a buyout and it re-opened as a workers cooperative.

Argentina was initially considered to be successful during the military regime of Juan Peron. He built the economy based on the golden rule in Europe and North America. In the 1990s, Carlos Menem rules also transformed Argentina but the rule used according to the International Monetary Fund (a global economic policy), was to downsize and sell of public assets. Menem's miracle later turned into a disaster and half of the country lived below poverty as the policies adopted created capitalism, unemployment increased and the country currency dropped. In the capitalist economy, stagnant or declining economy has negative effects as this lead to increased unemployment rate. This would not have been a huge problem if individuals within an economy have access to resources or had the opportunity to make investments so as to improvise and create an alternative means to survive.

Market instability is another criticism of capitalist economy proffered by Marx. It is ascribable to what happened in Argentina. When the IMF rule was implemented, it worked but later turned into disaster. Considering that explosive growth in capitalist economy varies, the industry could overproduce at the point whereby the economy is stagnant. This would thereby lead to a great loss in such period. Activities within capitalist market are not planned for because of the effect of the instability in the market economy which determines much of what they can sell. Since the economy impacted negatively on factories, factory workers in Argentina were not paid and were prepared to forgo the money owned provided they could take over the factory. As a result of workers took over the factory and formed a cooperative.

The capitalist system lacks economic freedom. The workers at China blue factory could not express their feelings. They were scared of getting fired. In the early 1980s, Venezuela suffered from capital flight and a sustained deindustrialization led to the closure of thousands of production sites. This country was faced with serious economic crisis and employment rate dropped. Their capitalist approach did not demonstrate economic freedom. For example, wealth was not distributed. Various forms of exploitation occurred in the capitalist labour process such as alienation, inequality, unemployment and economic stability. Therefore as a result of all these, Venezuela had use different measures to promote structural changes in the economy and the democratization of relations of ownership, labour, and production. . The intention was mainly to overcome the conditions of capitalist exploitation, work separation, and overcoming capitalist social relations.

Yugoslavia between 1945 and 1985 attained some greatness largely because of the type of government's policies it adopted. It was originally communist country after the second world ward until after 1990. Political and economic isolation forced the Yugoslav leaders to experiment with new economic models (Schrenk, Ardalan, and Tatawy 1979; Vuckovic 1998). Dissatisfied with the bureaucratic characteristic, the federal government implemented reforms to suppress central planning and replaced it with a new model of social planning (Singh et al. 2007). The Yugoslavia leaders were not pleased with the central government doctrine over economic planning and policy therefore adopted the workers self management.


The whole idea behind moving into self-managed workplaces was to put an end to alienation and exploitation. As a result, in a number of cases, major social, political and economic activities have been organised by workers without the need of bureaucracies, managers or political elites telling people what to do. We have seen workers take over and run factories. Worker self management created opportunities for workers to manage the workplace the way they wanted it to be run compared to the authoritative days of the capitalist. Hence, worker self-management helped to overcome the consequence of hierarchy by giving everyone a chance to participate in the industry.

In attempt to achieve a democratic workplace, workers decided on what to produce, how to produce and how much to produce. In Yugoslavia, workers were given legal power to decide on all crucial issues of their cooperative. When self management was implemented in Argentina, everyone was supposedly placed on the same level and power was too dormant among a selected few. Instead every worker was given the opportunity to participate. Worker participation in the decision-making process is widely viewed as vital in securing and enhancing employee satisfaction and productivity in organizations (Huselid 1995; Pfeffer 1995, 2002; Rogers 1995; Witt 1992). In Germany and Sweden semi autonomous and decentralisation made work easier amongst workforce. This happenings lead to the implementation of total quality strategy at Fiat. Also works council in Netherlands improved the quality of decision making as every worker was given opportunity to have a say in issues affecting their works within the organisation.

In the case of Suma worker cooperative, there was a lot of flexibility amongst teams with daily tasks. Suma encourages job rotation. For instance, drivers worked in the warehouse or in the office for two days a week and office workers will do manual work for one day a week. Job rotation is to a certain extent encouraged in the world today. During my industrial placement at IBM, job rotation was strongly encouraged as I had the opportunity to take up other roles from time to time. This made me multi- skilled just by been exposed to various types of roles. One would also be able to build needed skills. Unlike the capitalist system where jobs were monotonous and unrewarding and there was great level of dissatisfaction among employees, job rotation and enrichment has been created Job satisfaction for workers.

The Suma principles also establish equal wages amongst all employees. Asides from the fact that the system is trying to achieve equality in other to avoid exploitation, employees are more encouraged and opportune. Rather than pay a worker higher than others, the organisation employs another worker and the difference in pay is used to pay the wage of the new employee. This can then also been seen as a way of creating more job rather than exploitation. Self-management promoted cooperation rather than competition which is perceived to be a more effective way of managing workplace than competition. Cooperation within the workplace has an impact on way or the other on the other qualities of a self management workplace.


Lack of capital is one of the greatest challenges faced self managed workplaces. Industries experience immense difficulties in raising capital. They applications loans are seldom turned down because they have a weak capital base and no collateral. This was a constraint for the Italian co-operatives and also Suma cooperative. Lack of funding has a great impact on the industry because without capital, it gets difficult for self managed workplaces to compete effectively. In Argentina, self managed workplace had to make do with the technology they acquired from the old system as they do not have access to funds like those that operated in the capitalist system. As a result, more pressure was put on workers.

Although formal and informal channel of communication is encouraged under a worker self-management, there is a limit to democratic participation. Due to the fact that workers had to monitor the machines, it limited their participation in assembles. In the case of the shoe factory, the factory workers had to travel to and from their workspaces therefore limiting the extent to which they can participate in decision making. In addition, it was complicated to shift into centralised decision making process as some workers. Hence, decision making in the self-management workplaces take a longer time. This inadvertently slows down the decision making process as leaders of self-management workplaces have to consult with virtually all the workers in the workplace. This waste of time in the globalised world merely means loss of money. A lot could have been done in the process of waiting for a collective decision.

Despite the achievements of worker self management, from the examples above, the stiff market competition poses as an inhibiting factor. Considering the existence of the self management in the market economy, self management is difficult because they do not make decisions based on the external influences which is the way their competitors work therefore they find it difficult to cope in trying to deal with market needs.

In self-management workplace, the managers appointed as administrative staff were people with no technological skills. In view of this, they lacked experience and skills in managerial area. Therefore the workers had to adapt and develop new skills. As it would be expected, there is need for specialist. A part of the limitation in Yugoslavia was that workers lacked the required knowledge and competence to make appropriate investment and financial decisions. Because of this; there are tendencies of entrenchment of decision-making elite (influential) within the councils over time. In industries today, skilled workers are sought widely. In self management workplace, for sake of equality within the workplace, workers are promoted from within.

Viability in market economy

There is a great distinction between self-management workplace and the market economy. A market economy is also known as a free market economy. It generally describes an economy that depends on market forces to allocate resources and goods, and also to determine prices and quantities of each good to be produced. The power to determine what to produce and how to produce might be left with firms, however the market force determines what quantities the firm produces and prices. This is in contrast with the alternative work organisation (worker self management) whereby production decisions are solely made by the workers. The principal idea behind market economy is 'consumer control' whereas the self-management workplace workers collectively control the system - as such, their decisions are based on their own preferences not that of the consumers.

In a market economy, everything is owned by individuals and private businesses, the owners are allowed to act as they so wish even it is to satisfy their own self-interests. As such, one can argue that capitalist economy is more likely to work in a market economy because it possesses similar attributes or features that are also ordinarily found in the capitalist market. In Market economy and capitalist economy, prices of goods and services are determined by free price system guided by the demand and supply functions. For instance, a summer dress would usually be sold cheaper during off-seasons periods (i.e. in summer or autumn) - since its intended purpose and need is relatively of little relevance at these times when compared to the period it was designed for. Therefore one can debate that the higher the demand for specific goods or services and its perceived relevance, the higher the price; and the more the industry would produce. Likewise, the lower the demand for specific goods or services and its perceived relevance, the lower the price and the lesser the goods produced.

However, workplace self management does not operate this way. The central production decision making and prices of goods or services are relatively not determined by demand and supply functions; though both could be based on the level of demand and supply in the markets. What this means is that in workplace self management, the final say on what to produce and what the price should be is largely dependent on reaching a consensus among its member. This height of formalities if done in a market economy would result in a clash between the two systems as they modalities of existence differ greatly. According to Albert (2004), even if the market economy started out with a balanced job complex, a division in class would still arise because some individuals in the workplace self management would still attempt to gain from what the economy has got to offer at the expense of a collective initiative.

Furthermore, coupled with the noticeable advancements and changes in present day economy and society, more people are beginning become specialised in roles that they believe will serve them best and also in roles in which they can maximise their skills. Moreover, there are now companies that are now more engaged in the outsourcing of special skills to those that need it. As an example, Astra Zeneca IT department is outsourced to IBM. The belief is that the more companies outsource their less core operations, the more chances and opportunities they will have to innovate and develop on their core functions and operations. In relation to this, it can be implied that in the market economy, workers are continuously looking for avenues through which they improve. In short, in a market economy workers are always looking for ways to be better than their peers. This is however the contrary in a workplace management as 'equality amongst all' is their slogan.

Nonetheless, one benefit of self-management workplace in market economy is that prices of goods and services tend to be cheaper. This is because self management workplace seeks not to make maximum profit but generally work towards realising a better welfare package for all and sundry, and a better economy in the larger perspective. By this means, self management workplace would compete perfectly in terms of prices. The question is then, how well would they compete in the terms of quality? Because of the extent of competition which exists in the market economy, self-management workplace might not be among the top earners or market leaders in their respective industries but they will always survive if they are well-managed since they still meet the needs of selected targets in the economy. To sum-up, collectivist tendencies could pose a threat to prosperity and economic freedom. As such, the existence of self-management workplace in the market economy might negatively impact on economic progress and distort the quality and growth on the individuals and that of the society. Therefore alternative work organisation (i.e. workers self-management) is not viable within a market economy.


Self-Management successfully served as an alternative form of work organisation to overcome the issues faced in the capitalist labour process reviving workers' work life. Empowering this system brought about a change in the societies and the way industries operated. In the present globalised world, self management is not a viable alternative as it would have to operate within the market economy. Although Suma Cooperative which operates in the capitalist economies is still surviving but the cooperative is limited by legal constraint attaches as a result of operating the capitalist economy. Self management cannot be a long surviving alternative in the globalised world as its constraints limit the possibility to catch up with the changing world.