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ECONOMY Week Six Sociology 1301: Introduction to Sociology Economy Economy: The social institution that organizes a society’s production, distribution, and consumption of goods and services. Goods: Commodities ranging from necessities (food, clothing, shelter) to luxury items (cars, swimming pools, yachts). Services: Activities that benefit others. 3 Sectors Primary Sector – raw materials Secondary Sector – manufactured goods Tertiary Sector – services Economy Dual Labor Market Primary Labor Market: Offers jobs that provide benefits to workers. Secondary Labor Market: Jobs that provide minimal benefit to workers. Underground Economy: Economic activity involving income not reported to the government as required by law. Feudalism Feudalism: "Economic system characterized by the presence of lords, vassals, serfs, and fiefs" (Conley, 2011, p. 513) Lord: "nobleman who owned land" (Conley, 2011, p. 513) Vassal: "granted the land...by the lord. The fief remained the property of the lord, but it was left to the vassal to reap the harvests from it. In exchange, the vassal provided military protection to for the lord" (Conley, 2011, p. 513) Fief: land Serfs: "of peasant origin, formed the lowest class in feudal society. Serfs were bound to the land and required to give the lord a portion of their production; they were, in turn, granted protection" (Conley, 2011, p. 513) Transition to Economy Reasons for Changes: Enclosure Movement Agricultural Revolution Spice Trade Increase in Population Results: Less people needed for agricultural work Less common land Movement to cities in search of work Selling their labor not goods Creation of money Corporations Further Transition – Industrial Revolution Industrial Revolution New sources of energy Centralization of work in factories Manufacturing and mass production Specialization Wage labor Further Transition – Postindustrial Society Postindustrial Economy: A productive system based on service work and high technology. From tangible products to ideas From mechanical skills to literacy skills From factories to almost anywhere Further Transition – Information Revolution Computers are deskilling labor Computers are making work more abstract Computers limit workplace interactions Computers increase employers’ control of workers Computers allow companies to relocate work Capitalism Capitalism: An economic system in which natural resources and the means of producing goods and services are privately owned. Private Ownership of Property Pursuit of Personal Profit Competition and Consumer Choice Welfare Capitalism: An economic and political system that combines a mostly market-based economy with extensive social welfare programs. State Capitalism: An economic and political system in which companies are privately owned but cooperate closely with the government. Adam Smith When everyone is acting out of self-interest, competition develops Competition leads to division of labor Division of labor increases production Parts of a task take less time to complete Specialization increases accuracy and technological advances Cycle of division of labor – innovation – trade Monetization made it all more efficient George Simmel Development of monetary system is a part of historical evolution Monetary system depersonalizes exchange Feudalism: people paid in items needed for survival Capitalism: people paid money which they could decide what to spend on Crafsmen: paid for products; more at risk Wage Labor: paid for time (hourly), less at risk Salary: paid not for direct service but sum total of their services Karl Marx Two types of people Bourgeois Proletariat Capitalism is flawed Class Tension – Bourgeois oppresses Proletariat for more profits, causing alienation Alienation from Product Alienation from Process of Production Alienation from People Alienation from Ourselves Self-Destruction of System Too much abundance = lower prices Lower prices = lower wages = no one to buy goods Limit to the number of new markets Max Weber Protestant Ethic: predestination of salvation means looking for signs of God's favor through success, self-discipline, and asceticism (the ability to deny pleasure). Spirit of Capitalism: you work hard, but you cannot enjoy the fruits of your labor, instead you must reinvest to increase your capital. Iron Cage: making money for the sole purpose of making money – no end Other Types of Economies Communism: A hypothetical economic and political system in which all members of a society are social equal. Socialism: An economic system in which natural resources and the means of producing goods and services are collectively owned. Collective Ownership of Property Pursuit of Collective Goals Government Control of the Economy Capitalism vs. Socialism Capitalism Produce more Higher overall standard of living Greater income inequality Emphasizes the freedom to pursue self-interest Depends on the ability of producers and consumers to interact with little interference from the state Socialism Produce less Lower overall standard of living Greater economic equality Emphasizes freedom from basic want Equality requires the state to regulate the economy, which in turn limits personal choices and opportunities for citizens Economic Issues Champagne-Glass Distribution: The unequal, global distribution of income, so named for its shape. Caring More for Profit than People Conglomerate: A giant corporation composed of many smaller corporations. Monopoly: The form of business that occurs when there's only one seller of a good or service in the market, leading to zero competition. Oligopoly: The condition when only a handful of firms exist in a particular market. Offshoring: A business decision to move all or part of a company's operations overseas to minimize costs. Worker Rights Union: Organization that forms when workers unite with the common aim of collective bargaining. Union Busting: A company's assault on its workers' union with the hope of dissolving it. Global Economy Global Economy: Economic activity that crosses national borders. 5 major consequences: Global Division of Labor An increasing number of products pass through more than one nation National governments no longer control the economic activity that takes place within their borders A small number of businesses, operating internationally, now controls a vast share of the world’s economic activity Concerns about the rights and opportunities of workers References Conley, D. (2008). You may ask yourself: An introduction to thinking like a sociologist. New York: W. W. Norton & Company. Henslin, J. M. (2008). Sociology: A down-to-earth approach (9th Ed.). Boston, MA: Pearson. Macionis, J. J. (2010). SOC100: Sociology: 2011 custom edition (13th ed.). Upper Saddle River, NJ: Pearson Custom Publishing. Massey, G. (Ed.) (2006). Readings for sociology (5th Ed.). New York: W. W. Norton & Company.
