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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 selfemployed, 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.