Sociology · Ch 3 — The Market as a Social Institution
Understanding Capitalism as a Social System
Understanding Capitalism as a Social System
Understanding Capitalism as a Social System
Karl Marx, one of the founders of modern sociology, was also a sharp critic of capitalism. For Marx, capitalism was not just an economic arrangement — it was a social system built on specific relationships between people.
Marx understood capitalism as a system of commodity production, meaning production is done for the market, not for the producer's own use. This production relies on wage labour. Workers do not own the materials or tools they work with; instead, they sell their ability to work (their labour power) to an employer in exchange for a wage.
Marx insisted that an economy is not made of things (goods circulating in the market). It is made of relations between people who are connected through the process of production. Every economic system is also a social system.
Each mode of production (the way a society organises its economic life) has its own relations of production — the social relationships people enter into as they produce and exchange goods. These relations give rise to a specific class structure.
Under capitalism, labour itself becomes a commodity. This creates two fundamental classes:
- Capitalists — those who own the means of production (factories, machinery, land, raw materials).
- Workers — those who own nothing but their labour power and must sell it to capitalists to survive.
The capitalist class profits by paying workers less than the value of what they actually produce. The difference between the value a worker creates and the wage they receive is called surplus value. This extraction of surplus value is the source of profit under capitalism.
Marx's theory of capitalist economy and society inspired countless debates and theories about the nature of capitalism throughout the nineteenth and twentieth centuries.
Commodification and Consumption
The global growth of capitalism has meant the extension of markets into areas of life that were previously untouched by market exchange.
Commodification (or commoditisation) is the process by which things that were not earlier traded in the market become commodities — things that can be bought and sold.
According to Marx and other critics, commodification has negative social effects. The commodification of labour is one example, but there are many others in contemporary society.
Examples of commodification discussed in the textbook
- Labour and skills: In capitalist societies, almost everyone accepts that a person's labour, services, or skills can be bought for money. Marx argued this is a situation found only in capitalist societies.
- Human organs: There is controversy about the sale of kidneys by poor people to rich patients who need transplants. Many argue that human organs should not become commodities.
- Marriage: Traditionally, marriages were arranged by families. Today, professional marriage bureaus and websites help people find brides and grooms for a fee.
- Personality development and spoken English courses: Private institutes now teach cultural and social skills (good manners, etiquette, communication) that were earlier imparted mainly within the family.
- Education: The growth of privately owned schools, colleges, and coaching classes represents the commodification of education.
- Bottled water: Until about ten to fifteen years ago, selling drinking water was unthinkable. Today, bottled water is a normal, convenient commodity. This is a clear example of commodification — something that was not a commodity has become one.
A commodity need not be a physical object — it can also be a service. Think of things that were not commodities in the past but have become commodities recently. Also think of things that are not commodities today but could become commodities in the future — and why. Finally, consider things that used to be commodities but have stopped being commodities (for example, slaves were once bought and sold as commodities, but today it is considered immoral).
Consumption and Status Symbols
Another important feature of capitalist society is that consumption becomes increasingly significant — not just for economic reasons, but because it carries symbolic meaning. …