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Sergio Magallanes
BUS 1050
Instructor: Brian Skog
04/24/2016

ePortfolio Assignment: Capital and Labor: Its Influence in Human History.

The world went through a tremendous transformation during the Industrial Revolution. It
was such the change that it affected the lives of people around the world then, and this
transformation keeps affecting the lives of essentially all humans on earth. In my own
experience, in a way I was displaced by forces of globalization and immigrated to the United
States looking for a better life, which is the way how the relationship of capital and labor
affected the lives of farm workers in Mexico during the 1990s. The changes that the Industrial
Revolution brought about not only changed the way humans live, it also affected how they
interact with each other. It changed dramatically the social dynamics that existed at the time in
the world. Moreover, it also gave way to a new economic system Capitalism. One of the
consequences of Capitalism is that Capital and Labor needed to be separated, and when it
happened, it brought much suffering to people but at the same time it unleashed economic energy
never seen before in the history of the world. In this essay, I focus on the role that the separation
of capital and labor has in Western society. Specially, I attempt to describe how this relationship
has evolved over time and where is heading.

First, to be able to better understand how the industrial revolution had such an impact on
Capital and Labor, it is necessary to explain what economic system existed and what the
relationship between capital and labor was. Before the Industrial Revolution (before 1750-1760)
the economic system was a feudal system. It was command and control system. It was a rigid
system. Economic betterment was extremely difficult, the vast majority of people was born and
diedin the same class system. It was also a time, that was extremely influenced by the church.
The view about wealth accumulation and money was negative. People during this time believed
that it was a sin to accumulate wealth. For example, in the Critical Thinking: Reading from the
Literature of Business and Society book by professor Edward Engh, one of the articles named
Jacob Needleman, Philosopher, is about in an interview in which Bill Moyer asked Jacob
Needleman, a philosopher if money was considered a sin during the dark ages to affirm what he
thought about usury during the Dark Ages. He asked Needleman the following: Bill: So thats
why usury was considered a sin. Needleman responds Absolutely. Needleman states that
during the medieval times the laws against usury were based on an attempt to understand what
money really meant. Money was a means of organizing the material needs of human life, at the
same time recognizing that we are dependent on each other in the human family and that we are
meant to serve something much higher. He is refereeing to the way people viewed money
during this time. It was seen as dirty by people, and sinful because the church in its over
influence preached for a life of spirituality. A life that was void of material gain. Betterment in a
mans station in life was strongly discouraged. In essence, people lived a life of servitude,
bondage, basically it was a form of slavery. Since the feudal system was mostly agricultural,
capital and labor belonged to the lord. There was no say or human rights for the common people
of this time.

Now, this began to change, although the changes that were taking places during the Dark
Ages where slow and sporadic, they helped move things along over several centuries. Then
during the late renaissance period, it was a time of more openness towards inventions, and also
the hold the church once had in society was deteriorating because science began having a
powerful influence. Scientists began explaining things in nature through the scientific method,
whereas before unexplained phenomena was an act of the divine. Inventions such as steam mills,
followed by the factory system made it necessary for a market economic system to emerge
because people began immigrating to the cities where jobs were available. Whereas before
people lived off the lords land, now they had jobs in the city. A new social system was
developed. There were now business owners and workers, and these workers earned wages from
their labor. This is how capital and labor were separated.
The separation of Capital and Labor had a negative effect on peoples life. For example,
in England where the Industrial Revolution initially took place, people lived relatively healthy
lives off the land, but now, as people immigrated to the cities, their health deteriorated because
they lived in overcrowded houses, sanitation in the houses was minimal, and the citys drainage
system was inadequate which produced deceases that killed people. At the work place, working
condition were no better, people were overworked, workers rights did not exist back then, and
they were paid poorly. In an effort to control labor, business owners- capital, constantly used
tactics to suppress labor, minimize cost, and maximize profit. This is how the relationship
between capital and labor became alienated.
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In his essay The Personal Relation in Industry John D. Rockefeller presented in

professors Edward Engh Critical Thinking: Reading from the Literature of Business and
Society book expresses his view about how capital and labor became estranged. He states that

as businesses grew, and managers replaced the original business owners, the personal touch and
relationship between employer and employees was lost. This, he says coupled with the relentless
drive for profits, made for poorly pay, and workers welfare a nuisance. He elaborates on this
Capital, not infrequently used its power to enforce long hours and low wages: labor likewise
retaliated with such a strength as it had, and gradually the parties to industry came to view each
other as enemies instead of as friends and think of their interest as antagonistic rather than
common. This was the case because as in the past labor belonged to capital, capital was used to
conduct its affairs with disregard to labors welfare. Labor was an expense that needed to be
controlled. Capital failed make the switch and as a result, the long fight for labors rights has
been fought. Rockefeller advocates for labor to be viewed as an asset in the organization.
However, this comes at a time in history where capital made irreparable damage to its
relationship with labor.
The relationship between capital and labor has improved since the separation happened.
Workers have gained considerably benefits and rights against Capital over the last three
centuries. With the help of government legislation, labor now enjoys rights to work such a good
work environment, 8 hour days, and 40 hours work week. Benefits such as 401K programs
offered for retirement purposes, sick leave, vacations, and paid time off. For example, Greg Ip in
his article Labor Vs Capital: Workers gain a small edge. States that Workers in the first
quarter (April 2015) of the year recorded their biggest annual gain since 2008, evidence that a
steady decline in unemployment is finally having an effect on paychecks. This is another sign
that labor has gained ground over capital. This is not to say that everything is well. There are
steps capital can take to help balance power between them. One such example is workers wages.
For example, CEO pay and workers pay might be a good place to start. In many case CEO pay

is over 300% above the average pay in the company. A more reasonable salary for the CEO
perhaps could help gain trust from labor. Or perhaps better living wages to the detriment of
profits, hence capital.
Looking back to when the separation of Capital and Labor happened, it is easy to see how
things have changed in this relationship. It has changed for the better. On one hand, how they
treat each other is evidently much better. Capital is beginning to understand that for businesses to
be prosperous, its people need to be treated fairly. The view is that people are assets, businesses
need to share more of their wealth to be seen as a social responsible. Jenny Chen on her article
about Chobani yogurt. She states Chobani could make some of the workers millionaires. And
develops this point further immense boom in the Greek yogurt industry over the last decade
is estimated to be worth between $3 billion and 5 billion. Even at the low end of that range,
the average employees share could be worth $150,000 if the payouts ever happen, according to
the Times. People who have worked at the company longer would receive larger shares, possible
worth over $1 million. She talks about the sharing profit policy that Chobani has in place. This
is exactly the kind of company that is socially responsible. It helps its people live well at the
same time is profitable. In this case, capital and labor have a more balance relationship than at
the beginning of the separation. And this is where the trend its going, unfortunately it is uneven.
In developed countries where the rule of law is stronger, its society is more protected
from capital. Therefore, its workers fare a lot better than in developing countries. However, over
the long haul it might interesting to see what turns this relationship take. Globalization is at play
here right now. Corporations reap in billions of dollars while worker remuneration does not
increase the same way. Greg Ip expresses this sentiment The picture is murkier over the long
haul. Forces such as globalization and technology, both of which have reduce labors bargaining

power is finally having an effect on paychecks. This is especially true for workers that have
been left behind by the new economy in America. Workers which are uneducated and their jobs
have immigrated south of the border or overseas.
In conclusion, my understanding about this relationship is in constant flux, ever
changing. It is one of give and take. For example, during the Industrial Revolution workers were
mistreated, so they organized to bargain against capital. Labor formed unions. Then move
forward to present day labor has gain over capital considerably, however in it relentless drive for
profits and wealth, capital has globalization on its side. As a consequence, workers are displaced
in the home country and the countries where multinationals operate. This at the same time has a
contradictory effect, for example in America the new economy has made billionaires seemly
overnight. However, at the same time, the old economy has suffered thus millions of Americans
that were and are employed in the old economy suffering financially. My hope is that in the
future, this relationship grows to be more equal where workers are pay respectable living wages,
and companies are social responsible, while at the same time making profits.

Cited Works
Engh, Edward. Critical Thinking: Reading from the Literature of Business and Society.
Third Edition. Pearson Learning Solutions, 2015. Print.
Chen, Jenny. Chobani Could Make Some of Its Workers Millionaires. Associate Business
Editor, The Huffington Post. 26 April. 2016.
Ip, Greg Labor Vs Capital: Workers gain a small edge. The Wall Street Journal Web. 24.
April. 2016.