Conflict theory argues that due to competition for limited resources, society is in a perpetual state of conflict.
Understanding conflict theory
Conflict theory was developed by German philosopher Karl Marx who studied the causes of conflict between the bourgeois (middle to upper-middle class) and proletariat (the working class and poor) in Europe.
Marx was particularly interested in the political, social, and economic ramifications of increasing capitalism in Europe in the mid-1800s. Since capitalism was premised on the existence of a powerful minority class of wealthy individuals and a relatively oppressed majority class, Marx believed the opportunities for conflict were rife.
Conflict theory is based on the idea that both classes are locked in a perpetual battle over resources that are not distributed evenly across society. Wealthier individuals tend to hoard the resources they possess, while poorer individuals do whatever they can to obtain them. These incompatible interests are the drivers of conflict.
Note that Max believed conflict itself was neither good nor bad and instead, should be considered a natural human tendency that most default to. As a consequence, the theory could be used to explain any social phenomenon such as revolution, war, violence, discrimination, and most other forms of injustice.
Conflict theory in economics
In an economic context, Marx focused on two factors:
- The mode of production – in other words, an industrial factory, and
- Relations of production – a term describing the unequal balance of power between factory workers and factory owners.
Since the bourgeoisie owns (and controls) the mode of production, they tend to exploit the proletariat as a way to increase profits. The proletariat has much less power, with only their labor to sell and no access or control over capital.
This causes the common predicament where the proletariat works as little as possible to be paid as much as possible. The bourgeois factory owners, on the other hand, want the proletariat to work as hard as possible for the least amount of pay.
Conflict theory in finance
Governments attempt to manage conflict over financial resources via the reallocation of funds between the rich and the poor. Some common initiatives include a mandated minimum wage, special incentives, favorable tax structures, and social assistance.
The underlying belief behind these measures is that a wealth gap that becomes too wide will cause social unrest to ensue. This may range from a peaceful protest on one end of the spectrum to outright civil war. Advocates of conflict theory believe the government bailouts and Occupy Wall Street movement that occurred during the 2008 GFC is one prime example.
Indeed, competition for limited resources ultimately reached a point where the government needed to intervene to redistribute resources more effectively. Since that time, the divide between the rich and poor has grown once more and there may be similar conflicts in the near future.
- Conflict theory argues that due to competition for limited resources, society is in a perpetual state of conflict. It was developed by German philosopher Karl Marx who studied the class conflict between the wealthy and not-so-wealthy.
- In an economic context, conflict theory deals with the interaction between the mode of production and relations of production. Workers attempt to work as little as possible for the maximum amount of pay, while factory owners strive to pay the lowest possible wage while extracting maximum worker productivity.
- Governments attempt to manage conflict over financial resources via the reallocation of funds between the rich and the poor. This can be achieved via numerous initiatives or as a response to financial events such as the GFC.
Connected Economic Concepts
Positive and Normative Economics
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