The definition of capitalism refers to a certain economic system. It differs in that private entities own and dispose of property according to their interests and needs. The interests of society are served by supply and demand, which are freely established in the market. In modern society, the capitalist system is undergoing significant changes. First of all, they affect the development of productive forces and the relationship between labor and capital. This is due to the predominance of return on capital over economic and demographic growth. Another factor of change is the limits of the geographical expansion of capital and the declining opportunities for increasing profits. Moreover, companies and countries are increasingly building digital capital that requires fewer employees. Labor automation and the fourth industrial revolution significantly affect the change in the system due to a large number of technologies. Thus, modern capitalism reflects the needs of society and the development of technology at the expense of attitudes towards work, employment, and the formation of digital savings.
The prevalence of capital over economic and demographic growth is one of the important concepts of change in capitalism and can be seen as a problematic circumstance. In the developed community, income stagnation of some groups of the population is increasingly noted, while the inequality among people is increasing (Aulenbacher et al., 2019). This is explained by the fact that the rich strata of the population, as a rule, live off rent or inherited capital (Banaji, 2020). At the same time, poorer people exist on their hard-earned money and are forced to accumulate capital and spend most of their salary on living. In the case of rentiers, there is a theorization of modern capitalism as a community formed on rent.
Rent in today’s world of changing capitalism can be seen as a universal concept. It covers both the traditional understanding of the issue, such as the relationship between man and nature and social relations (Campling & Colás, 2021). Rent is a way to extract one’s own benefit, which is primarily determined by the position in the social system. This method of obtaining income existed before in the presence of feudal and royal classes (Banaji, 2020). Nevertheless, the changes in modern capitalism show a trend toward the completion of a meritocratic society and the predominance of concentrated capital. However, the main difference appears to be that the funds are not focused only in one particular stratum of society but are dispersed among smaller rentiers (Aulenbacher et al., 2019). Thus, capital is dispersed among the wealthy groups of the population, while the poor class experiences income stagnation and an ever-increasing decline in social prospects in modern society. The theory of rent has its strengths, which explain the stratification of classes through the accumulation of capital and the inability to bridge the gap between the upper and lower strata of society.
When discussing the differences of modern capitalism, it is important to consider the expansion of capital in the current society. The constant expansion in large quantities in the 20th century turned into a structural crisis for modern capitalism (Banaji, 2020). The reason for this may be the fact that producers no longer had the opportunity for an endless increase in capital. The combination of two factors led to this situation: the growth of production costs in enterprises and the gradual departure from the centrist liberal consensus (Campling & Colás, 2021). Rising production costs are reflected in persistent labor shortages, which are explained by a sharp increase in urban population and land urbanization.
Moreover, in the labor arena, the value of administrative personnel has increased and they began to receive high salaries, which reflects the concept of modern capitalism. In addition, the growth in production costs is manifested in an increase in investments to reduce negative externalities (Campling & Colás, 2021). Society and government are pushing for companies and businesses of all sizes to internalize tracking of toxic waste emissions, renewable raw materials, and infrastructure spending.
With the advent of neo-liberal globalization, corporations began to increase their savings by transferring capitalist expansion to new areas. Thus, modern capitalism is characterized by global financialization, which in some cases leads to social and economic instability, which conducts to the need to find alternatives. As a result, states often move to a protectionist type, as the heads are forced to defend the interests of people who have lost their jobs.
Thus, modern capitalism is becoming more and more rent-oriented and benefits from the monopoly of large corporations (Banaji, 2020). At the same time, the diverse activities of financial institutions, which in most cases are aimed only at their own benefit, are far from bringing benefits to society (Aulenbacher et al., 2019). Additionally, the economy faced the challenge of destroying the centrist-liberal consensus that had its impact on capitalism. The reason for this could be domestic deregulation reforms and attempts at global capital expansion. In this case, the situation may lead to tax cuts for the rich, which worsens the situation of the poor. The strength of the theory of neoliberalism lies in explaining the financialization of capital. On the other hand, it does not fully reveal the internationalization of the economic sphere, which causes misunderstanding.
Another factor that reflects modern capitalism is the fourth industrial revolution and technological modernization in matters of industrial automation. The trend of capitalism in today’s society suggests that technology will take over many jobs and corporations will no longer need human resources (Banaji, 2020). Moreover, the capitalist system is taking shape on the basis of the industrial revolution, which many scholars describe as digital (Campling & Colás, 2021). It is characterized by mobile Internet, available in many parts of the world, small-format production devices, the prices of which are constantly decreasing, and artificial intelligence.
For modern capitalism, the effects of this revolution may represent ambiguous changes. On the one hand, it increases economic growth and the productivity of enterprises and corporations. The use of the latest technologies allows one to accumulate more capital by reducing the cost of human resources (Campling & Colás, 2021). However, in the field of employment, the negative impact of replacing people with technical equipment can be traced (Ten Brink, 2019). Technological equipment allows you to spend less money on salaries for workers and increase productivity many times over, but in this case, people do not have enough jobs.
If the capitalism of the last century was supposed to create new jobs instead of lost ones, then the modern system reduces human resources in new areas. Thus, the increase in productivity through innovative technologies is based on the fact that corporations reduce the need for workers (Campling & Colás, 2021). At the same time, the creation of new products, which would require more people, is gradually fading into the background (Ten Brink, 2019). Thus, digital technologies have become the way of development in many new areas but often lead to unemployment and poverty for many people.
Technological substitution is essentially an inequality between labor owners and capital holders. This leads to increasing stratification in the field of employment. As a result of this fact, those who have high technical skills in dealing with computers and other devices are in demand. In addition, low-skilled people are of interest to large modern capitalists due to their cheap wages (Banaji, 2020). At the same time, numerous representatives of the middle class, who do not require higher qualifications, but are not distinguished by low skills, often remain without job offers. However, in terms of joblessness, modern capitalism offers certain models of solutions (Ten Brink, 2019). Corporations use a checkerboard pattern in the work of technological innovation and human resources. Thus, there is a certain complementarity between machines and humans: the computer is mostly aimed at performing tactical tasks, and the worker is focused on strategic ones.
In the theorizing of modern capitalism, the technological factor is acquiring an increasingly significant role. Scientists suggest that in pursuit of increasing cash savings, corporations are reducing jobs not only for average workers but for highly qualified specialists (Aulenbacher et al., 2019). This group includes various professions related to managerial and financial activities, which make up a significant stratum of the population in many developed countries (Ten Brink, 2019). In addition, the capitalism of current society is characterized by the rapid development and spread of machine learning and artificial intelligence. This allows, in some cases, to replace not only routine work, which is usually meant by automation but also to provide the computer with a solution to part of the mental activity. An example of such activity is the emergence of programs in the field of journalism that are able to create texts on given topics. In form and content, they are similar to texts created by man, so the workers are only engaged in editing them.
Artificial intelligence in the fields of medical diagnostics, the music and gaming industry, and art opens up every year more and more opportunities for the rapid accumulation of capital. Moreover, on a broader level, automation in the capitalist system includes those people whose day-to-day work is easily processed by digital algorithms (Aulenbacher et al., 2019). In addition, when introducing the specified programs into computers, they can effortlessly carry out the work of employees without their formal presence (Arboleda, 2020). From this, we can conclude that in modern capitalism, labor analytics plays a key role in deciding whether to hire, fire, or evaluate the performance of a certain layer of specialists.
Large corporations maintain data on the actions of their employees, which clearly reflects the format of modern capitalism. First of all, due to this, companies increase the efficiency of work and, accordingly, the speed of cash accumulation (Arboleda, 2020). In the theory of capitalism, this model is described as the interaction of man and machine, the usefulness of which is controversial since the data can always be used against the worker (Arboleda, 2020). The main danger lies in the fact that the constant and deep interaction between a person and a computer will only accelerate the process of labor automation (Ralph & Singhal, 2019). This is based on the opinion that with constant interaction with a person, the machine will learn the given algorithms faster.
However, despite the fact that the technological narrative, on the one hand, contributes to the strengthening of the capitalist system, on the other hand, it poses a threat to it. Technological upgrading itself helps to optimize labor costs and increase profits (Adair-Toteff, 2021). Nevertheless, a capitalist economy presents the problem of reducing employment for many people (Ball et al., 2018). The structural crisis of technological substitution denies and limits possible market fluctuations and financial bubbles. Thus, the threat to modern capitalism becomes more pronounced and real.
In this regard, when theorizing the issues of modern capitalism and the threats associated with constant changes in the system, one should single out a way to overcome a possible crisis. First of all, it is important to create jobs where people can earn money without full automation of the process (Adair-Toteff, 2021). Moreover, public policy should focus on the classes of citizens who have already lost their jobs or are about to lose their jobs (Ball et al., 2018). Finally, educational inflation can play a key role in maintaining the capitalist system in world powers. Diploma inflation will allow some of the ready labor force to be absorbed by paying students financial subsidies as hidden social benefits.
In conclusion, it should be noted that modern capitalism is constantly undergoing significant changes in the system. The capitalist system is in a state of continuous transformation, and it is difficult to trace its future. However, at the moment, its main factors are the modernization of labor, the digitalization of capital, and the reduction of human resources in the workplace. As a result, for some sections of society, this leads to the accumulation of a large amount of capital. At the same time, the lower and middle strata begin to suffer from a lack of money and an increasing unemployment rate.
Reference List
Adair-Toteff, C. (2021) ‘Parsons as Economist: His Early Writings on Modern Capitalism’. The American Sociologist, 52(1), pp. 19-37.
Arboleda, M. (2020). Planetary mine: Territories of extraction under late capitalism. Verso Books.
Aulenbacher, B., Bärnthaler, R., & Novy, A. (2019) ‘Karl Polanyi, The Great Transformation, and Contemporary Capitalism’. Österreichische Zeitschrift für Soziologie, 44(2), pp. 105-113.
Ball, M., Bentivegna, V., Edwards, M., & Folin, M. (2018) ‘Modern capitalism and the theory of urban rent: A review’. Land Rent, Housing and Urban Planning, 23(3), pp. 2-21.
Banaji, J. (2020). A brief history of commercial capitalism. Haymarket books.
Campling, L., & Colás, A. (2021). Capitalism and the sea: the maritime factor in the making of the modern world. Verso Books.
Ralph, M., & Singhal, M. (2019). Racial capitalism. Theory and Society, 48(6), 851-881.
Ten Brink, T. (2019). China’s Capitalism. University of Pennsylvania Press.