When deciding who gets a candy bar, 2 friends will try to justify why either should get it over his friend. In this hypothetical candy distribution activity, regardless of how close the friends are, they will act out of self-interest as both friends like candy.
Ever since humans began walking on Earth, every person has been motivated by self-interest: Neanderthals would scavenge food for themselves; Romans would accrue the most land and power; and the 21st-century man would try to pay the least EMI on the car he just bought on credit. The similarity between all these situations is that all members of a society are always in a state of conflict, fueled by competition for limited resources.
In 1848, Karl Marx first authored his ideas about Conflict Theory in his pamphlet, “The Communist Manifesto” to serve as the platform for secret socialists who wanted to mend society for greater equality for all members.
The absolute definition
In economics, Conflict Theory refers to “upper” hierarchies (or classes) holding the most control over resources. Furthermore, a society’s economic institutions are based on the said unequal distribution of power: banks were initially opened for the wealthiest bourgeoise, and the poorer sections of society were left unaccounted for. Only after decades of outcry did they become more represented. This shows us that the rich remained in power over the bank’s resources.
Conflict Theory asserts that the disparity between the upper and lower classes is a key factor in determining the level of social unrest. From a financial perspective, many countries previously employed a regressive tax system in which the majority of the tax burden fell on individuals with lower incomes, meaning that poorer earners had to pay a higher proportion of their earnings as taxes. For instance, individuals with lower incomes were required to pay 40% of their income as tax, while the wealthiest individuals paid only 20%. This approach widened the wealth gap between the rich and the poor, ultimately contributing to widespread social unrest.
Conflict Theory is widely applied in global economies to identify those who are disadvantaged at any given time, and to develop strategies to safeguard the less fortunate. For instance, governments use this theory to determine the income threshold for individuals living below the poverty line and consequently establish minimum wage regulations.
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