How Does A Capitalist Economy Create Social Inequality

How Does A Capitalistic Economy Create Social Inequality Or A Divide

How does a capitalistic economy create social inequality or a "divide?" Our author notes that the "key to dependency thinking is that the poor were not always poor," but that they "were made poor." What does he mean by this? Watch the following TED TALK: In your own words explain what happens in a society when there is too much inequality between the wealthy and poor (such as our society.) Drawing from the Ted Talk, how can we fix poverty?

Paper For Above instruction

Capitalistic economies are characterized by private ownership of the means of production and the pursuit of profit as the primary economic motivator. While capitalism can drive innovation, economic growth, and individual freedom, it also tends to produce and perpetuate social inequalities. The mechanisms behind this are complex but can be understood through the fundamental features of capitalism and their social implications.

In a capitalist system, wealth is accumulated through the ownership of capital, and income distribution is largely determined by market forces. Those who own significant capital or possess specialized skills tend to earn disproportionately higher incomes, creating a natural stratification of society. Over time, this leads to a concentration of wealth at the top, with the rich gaining more influence and resources, while the poor often remain marginalized or become further impoverished. This process inherently produces disparities in access to quality education, healthcare, housing, and employment opportunities, thus reinforcing social divides.

The concept of the "divide" is further exacerbated by structural barriers. Wealthy families are able to pass down assets, secure better education, and access networks of influence, which perpetuate existing inequalities across generations. Conversely, poorer individuals lack the resources necessary to break free from poverty, leading to persistent social stratification that benefits the elites and disadvantages the less privileged.

The author alludes to the idea that the "poor were not always poor" but "were made poor," emphasizing that social and economic policies, historical events, and systemic practices have deliberately or inadvertently created conditions that trap certain groups in poverty. For example, discriminatory practices, lack of access to quality education, housing segregation, and labor market restrictions can systematically disadvantage marginalized populations, preventing mobility and perpetuating inequality.

The TED Talk further illustrates the societal consequences of excessive inequality. When wealth gap widens, social cohesion diminishes, trust in institutions erodes, and communities experience increased tension and divisions. High levels of inequality are linked to higher rates of crime, poor health outcomes, lower life expectancy, and reduced social mobility. These issues create a cycle where the disadvantaged remain trapped, which undermines overall societal stability and prosperity.

To address and fix poverty, the TED Talk advocates for comprehensive policy interventions that aim to reduce inequality. These include redistributive measures such as progressive taxation, social safety nets, quality education, and accessible healthcare. Moreover, fostering economic opportunities through job creation and skill development is essential. Policies that promote living wages, affordable housing, and improved access to financial services can help bridge the gap between rich and poor, empowering marginalized groups to participate more fully in society. Ultimately, tackling structural issues requires a collective commitment to fairness, equity, and social justice to create a more inclusive economy.

References

• Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press.
• Wilkinson, R., & Pickett, K. (2009). The Spirit Level: Why More Equal Societies Almost Always Do Better. Allen Lane.
• Saez, E., & Zucman, G. (2019). The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay. W.W. Norton & Company.
• Milanovic, B. (2016). Global Inequality: A New Approach for the Age of Globalization. Harvard University Press.
• Reich, R. (2015). Saving Capitalism: For the Many, Not the Few. Alfred A. Knopf.
• Krueger, A. O. (2012). The Rise and Fall of the Minimum Wage. Budgeting for Health, 12(4), 111-124.
• World Bank. (2020). Poverty and Shared Prosperity 2020: Reversals of Fortune. The World Bank.
• Sen, A. (1999). Development as Freedom. Oxford University Press.
• Stiglitz, J. E. (2012). The Price of Inequality. W.W. Norton & Company.
• Oxfam. (2021). The Increasing Gap Between Rich and Poor in the US. Oxfam Report.