What is the 'Conflict Theory'

The conflict theory, suggested by Karl Marx, claims society is in a state of perpetual conflict because of competition for limited resources. It holds that social order is maintained by domination and power, rather than consensus and conformity. According to conflict theory, those with wealth and power try to hold on to it by any means possible, chiefly by suppressing the poor and powerless.

BREAKING DOWN 'Conflict Theory'

The conflict theory has been used to explain a wide range of social phenomena, including wars and revolutions, wealth and poverty, discrimination and domestic violence. It ascribes most of the fundamental developments in human history, such as democracy and civil rights, to capitalistic attempts to control the masses rather than to a desire for social order. The theory revolves around concepts of social inequality in the division of resources and focuses on the conflicts that exist between classes.

Class Conflicts

Marx’s conflict theory focused on the conflict between two primary classes. The bourgeoisie represents the members of society who hold the majority of the wealth and means. The proletariat includes those considered working class or poor. With the rise of capitalism, Marx theorized that the bourgeoisie, a minority within the population, would use their influence to oppress the proletariat, the majority class.

The uneven distribution within the conflict theory was predicted to be maintained through ideological coercion where the bourgeoisie would force acceptance of the current conditions by the proletariat. Marx further believed that as the working class and poor were subjected to worsening conditions, a collective consciousness would bring the inequality to light and potentially result in revolt. If conditions were subsequently adjusted to address the concerns of the proletariat, the conflict circle would eventually repeat.

Conflict Theory: Marx’s Views on Capitalism

Marx viewed capitalism as part of the historical progress of economic systems, and believed that it was rooted in commodities — or things that are purchased and sold. For example, he believed that labor is a type of commodity. But since laborers have little control or power in the economic system (because they don’t own factories or materials), their worth can be devalued over time. This can create an imbalance between business owners and their workers, which can lead to social conflicts. He believed these problems would eventually be fixed through a social and economic revolution. 

An Example of Conflict Theory

For example, conflict theorists view the relationship between a housing complex owner and a tenant as being based mainly on conflict instead of balance or harmony, even though there may be more harmony than conflict. They believe that they are defined by getting whatever resources they can from each other — i.e. rent payments (for the owner), a place to live and repairs (for the tenant).  

"A Good Book, in Theory"

The financial crisis of 2008-2009 and the subsequent bank bailouts are good examples of real-life conflict theory, according to authors Alan Sears and James Cairns in their novel “A Good Book, in Theory.” Conflict theory proponents view the financial crisis as the inevitable outcome of the inequalities and instabilities that plague Western societies, since the present structure of the global economic system enables the largest banks and institutions to avoid government oversight and take huge risks that only reward a select few.

Sears and Cairns note that large banks and big businesses subsequently received bailout funds from the same governments that claimed to have insufficient funds for large-scale social programs such as universal health care. This dichotomy supports a fundamental assumption of conflict theory, which is that mainstream political institutions and cultural practices favor dominant groups and individuals.

RELATED TERMS
  1. Expectations Theory

    The expectations theory uses long-term interest rates to forecast ...
  2. New Growth Theory

    New growth theory is a concept that presumes the desire and wants ...
  3. Mechanism Design Theory

    Mechanism design theory is an economic theory that seeks to study ...
  4. Marxian Economics

    Marxian economics is based on of the work of Karl Marx, which ...
  5. Rational Expectations Theory

    The rational expectations theory posits that individuals make ...
  6. Contract Theory

    Contract theory is the study of how individuals and businesses ...
Related Articles
  1. Financial Advisor

    Retirement Plan Advisors: Here's What the SEC Expects

    Here's what the SEC looks for when advisors align clients' suitability with investments.
  2. Investing

    Apple’s Suppliers Behaved Better in 2016

    Apple’s 2016 supplier audit revealed better working conditions, environmental practices and care over sourcing conflict materials.
  3. Investing

    How Violence In Yemen Has Affected Oil Prices

    Oil prices have been dropping significantly over the past year due to an abundance of supply and weaker global demand.
  4. Investing

    Modern Portfolio Theory Vs. Behavioral Finance

    Or: How financial markets would work in an ideal world vs. how they work in the real world.
  5. Insights

    Main Characteristics of Capitalist Economies

    Commerce is based on the principles of capitalism, but there are few, if any, examples of pure capitalism except in theory.
  6. Financial Advisor

    Asset Manager Ethics: Independence and Objectivity

    The best practices in maintaining independence and objectivity should be adopted by firms to protect investment professionals from pressure both from within and outside the firm.
  7. Investing

    The Debt Ratings Debate

    Lack of competition and potential conflicts of interest have called the value of these ratings into question.
  8. Insights

    Pros and Cons of Capitalist vs Socialist Economies

    Capitalism relies on the markets. Socialism, on government planning. Each system has its pros and cons.
RELATED FAQS
  1. What's the difference between agency theory and stakeholder theory?

    Learn how agency theory and stakeholder theory are used in business to understand common business communication problems ... Read Answer >>
  2. What is the difference between Communism and Socialism?

    Communism and socialism are umbrella terms referring to left-wing schools of economic thought that oppose capitalism. Read Answer >>
  3. What is capital structure theory?

    Discover capital structure theory as it relates to financial management and the methods in which companies attempt to raise ... Read Answer >>
  4. Is economics a science?

    Learn how economics fits into the category of social sciences, and discover the arguments critics make against this classification. Read Answer >>
  5. How does money supply affect inflation?

    Learn about two competing economic theories of the role of the money supply and whether money supply causes inflation in ... Read Answer >>
Trading Center