What difference does it make that production is capitalist production Essay

What difference does it make that production is capitalist production - Essay Example The term "Capitalist" was first used in 1848 by Karl Marx and Frederick Engels in the Communist Manifesto in the famous sentence: "Modern Industry has converted the little workshop of the patriarchal master into the great factory of the industrial capitalist"1. According to the Houghton Mifflin Company, capitalism can be defined as follow: "An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market."2 The capitalist production is a system where the owners of money capital - referred as capitalists - hire labor to work in the production process. The capitalists gather within a corporation where they own shares. The decision process can be made by only one of them - commonly the one that owns the largest amount of shares - or they can appoint a manager who will take the decisions regarding the production for them. The output produced as well as the fixed and circulating capital goods used in the production and the residual of the value of output over total costs, including labor costs belong to the capitalists. As the capitalist process is based on the amount of capital, if the capitalists need additional capital - more than what they own - they can borrow from lenders and retain a part of the profit from previous years to use it as capital this year. Cooperative Production Even though Karl Marx was historically the first opponent to capitalism, he's the one in the Capital3 who gave the best explanation of its mechanisms. He also provided an alternative to the capital based mode of production: cooperatives. He did not actually present this alternative as we know it today but gave the main grouds of its creation. It is why usually cooperatives are associated with socialist and communist regimes. It is Robert Owen, a Welshman, who is the known creator of the cooperative movement in the nineteenth century. The most common definition of a cooperative is an organization which is owned by and operated for the benefit of those using its services.4 In other words a group of workers gather in order to set up a production process. Each of them participates in the production process, has shares and voting rights. In a cooperative, workers make common decisions or choose a manager to take the decisions regarding the production process. As in the capitalist production, the members of a cooperative can borrow money from lenders if they can not provide a sufficient amount of capital to the production process or retain a part of the net income from previous years to use it as capital this year. The main difference between capitalist production and a cooperative one is that the owners of the cooperative participate in the production process. They are not separated from the activity which is the case in the capitalist model. And mainly, they benefit from the entire production. They are not only paid for their labor but