This is an interactive lecture which includes links to internet sources, videos, and polls. This lecture on the economic institution contains copyrighted material under the educational fair use exemption to the U.S. copyright law.
Caption: "The photograph that has become known as 'Migrant Mother' is one of a series of photographs that Dorothea Lange made in February or March of 1936 in Nipomo, California. Lange was concluding a month's trip photographing migratory farm labor around the state for what was then the Resettlement Administration" (Source: http://www.english.illinois.edu/MAPS/depression/photoessay.htm).
Check This Out: Read the backstory about the above image of the "Migrant Mother" which is one of the most recognized photographs from the Great Depression.
As we learned in previous lectures, our group membership and statuses influence our social location within the social structure and consequently our life chances; our opportunities within the society we live in.
Your Turn: how are the life chances of these individuals different based on their demographic characteristics? Which of these are ascribed and achieved statuses?
Your Turn: how are the life chances of these individuals different based on their demographic characteristics? Which of these are ascribed and achieved statuses?
Your Turn: Which of the above individuals would
you likely classify as middle class or lower class, more likely to live in poverty,
have a retirement savings, life insurance, or health insurance? Who’s more likely
to have job security, work full time or part time? Who’s more likely to vote,
have a criminal record, believe in God or have the longest life expectancy? Who’s
more likely to be single, married, or divorced?
Sociologists
can answer these questions just by knowing a few key pieces of information
mainly related to one’s social class
status. Social class is also referred to as SES
which means socioeconomic status.
SES=OIE and this means that our socioeconomic status is made up of occupation, income, and education.
A combination of one’s occupation, income, and education affects one’s wealth,
prestige (respect), and power.
Your Turn: do you think social class is ascribed or achieved?
Most people would probably define social class as achieved status, but social research shows that our social class status as children has a huge impact on our life chances as adults. Sociologists also study how structural factors influence our social class status.
You Turn: in what ways do you think the following structural factors influenced the social mobility of large numbers of people moving from one social class to another?
Your Turn: do you think social class is ascribed or achieved?
Most people would probably define social class as achieved status, but social research shows that our social class status as children has a huge impact on our life chances as adults. Sociologists also study how structural factors influence our social class status.
You Turn: in what ways do you think the following structural factors influenced the social mobility of large numbers of people moving from one social class to another?
Structural factors
affect the social class status of
large numbers of people beyond individual efforts. Economic and political
structural factors have a huge influence on our socioeconomic status (SES) and consequently our life chances.
Your Turn: if structural factors significantly affect our life chances, why do people feel ashamed when they experience downward social mobility?
Your Turn: if structural factors significantly affect our life chances, why do people feel ashamed when they experience downward social mobility?
We will now explore how the economic social institution effects our life chances. Social institutions such as the economy are reflections of the American cultural values which include individualism, efficiency, achievement, material comfort, among others and historical factors; for example the Great Depression or the Great Recession.
In traditional gemeinschaft societies, people engaged in primary sector production, or the direct use of natural resources and raw materials right from the land.
In the earliest societies known as hunting and gathering societies, people foraged for food. In pastoral and horticultural societies, people gained technologies to harvest plants on a small scale and started to domesticate animals for food. This allowed people to establish semi-permanent and permanent settlements and to accumulate surplus for bartering. The ability to live in one location instead of constant foraging led people to store goods which was impossible in nomadic or roaming hunting and gathering societies. For the first time in human history, semi-permanent and permanent settlements led to social inequalities when one group had more surplus than another group.
Caption: "Bushman mother carrying infant while digging roots" (http://faculty.rsu.edu/users/f/felwell/www/Ecology/PDFs/Hunting&Gathering.pdf).
In the earliest societies known as hunting and gathering societies, people foraged for food. In pastoral and horticultural societies, people gained technologies to harvest plants on a small scale and started to domesticate animals for food. This allowed people to establish semi-permanent and permanent settlements and to accumulate surplus for bartering. The ability to live in one location instead of constant foraging led people to store goods which was impossible in nomadic or roaming hunting and gathering societies. For the first time in human history, semi-permanent and permanent settlements led to social inequalities when one group had more surplus than another group.
Caption: "Bushman mother carrying infant while digging roots" (http://faculty.rsu.edu/users/f/felwell/www/Ecology/PDFs/Hunting&Gathering.pdf).
Over
time, developing technologies such
as irrigation and using animals for labor permitted people to farm and consequently develop other
skills and vocations. Land became a valuable resource and social inequality was now common place. In agricultural societies, emperors and monarchs waged wars as they
conquered territories over which they ruled and their power was passed down within their family lineage. Peasants and
slaves served the monarchs and fought in their wars. Monarchs and other powerful
families lived extravagant lives and ruled from locations referred to as citi-states. The British and Spanish
empires, the Yuan and Ming dynasties, the Ottoman and Roman empires are some of
the empires you might be familiar with.
The invention of the steam engine led to the Industrial Revolution and the birth of modern or gesellshaft societies. Division of labor became much more complex, as occupations grew and people became dependent on machines for labor. A secondary sector of production emerged in which people used natural and raw resources to transform them into products. City-states became nation-states and some monarchies became democracies in different parts of the world. In industrial societies, people began to see themselves as having human rights such personal freedoms and liberties. Capitalism or the pursuit of profit replaced bartering.
Your Turn: How does the American Revolution exemplify the transition from an agricultural to industrial society?
Your Turn: How does the American Revolution exemplify the transition from an agricultural to industrial society?
Continual technological shifts affect the economy. The invention of the microchip propelled many parts of the world into a postindustrial society in which the transfer of electronic information is a significant part of daily life. The internet has completely changed all aspects of our lives. Occupations in a postindustrial society are related to providing service rather than production types of jobs and this is referred to as a tertiary sector of production. While the U.S. produces more products than any other country, including China, less people are employed in this manufacturing process in the United States, since robots are used and this gives people the illusion that the U.S. no longer is a manufacturing giant. Globalization is now common place and multinational corporations that do business in different countries have become tremendously powerful, maybe even more powerful than many governments.
Check This Out: Has globalization killed the nation-state?
Check This Out: Has globalization killed the nation-state?
We're currently transitioning into a bio-technological society and the type of work people do is shifting once again. Just as the internet has changed all aspects of our lives, the robotic revolution will bring forth societal changes that now seem like science fiction. The quaternary economic sector involves people employed in occupations in which ideas are produced. For example Facebook and Google have led to the creation of different types of businesses and occupations whose sole purpose is to navigate the online world of social media. These companies do not produce a material product, rather they produce ideas.
New technologies are associated with cultural lag and people question whether robots might outsmart humans and enslave us. Raymond Kurzweil predicted that singularity will occur in 2045 when humans and robots will merge and humans will become immortal. Astonishing technological advancements are occurring right in front of our eyes.
Your Turn: What are your predictions for the next few years? What new technologies do you see emerging that will change your life and the type of work you will do or not do?
Check This Out: Can you imagine a society without work? A workless society is coming.
New technologies are associated with cultural lag and people question whether robots might outsmart humans and enslave us. Raymond Kurzweil predicted that singularity will occur in 2045 when humans and robots will merge and humans will become immortal. Astonishing technological advancements are occurring right in front of our eyes.
Your Turn: What are your predictions for the next few years? What new technologies do you see emerging that will change your life and the type of work you will do or not do?
Check This Out: Can you imagine a society without work? A workless society is coming.
Check This Out: Robots in the Bio-Technological Society
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Your
Turn: How do you see the economic and political institutions
intertwined?
Economic Systems: Capitalism,
Socialism and Mixed Economies
The simple difference between capitalism and socialism is how much government interference there is between the two opposing economic systems. Today no country has a pure socialist or capitalist economy but a mix of the two. Whether a country leans toward a socialist or capitalist economic system depends on its cultural values.
Your Turn: Think about what you ate for lunch. What government laws or regulations exist to ensure that your food was safe to eat? What laws and regulations exist to ensure that the workers involved in the food industry were not exploited?
The simple difference between capitalism and socialism is how much government interference there is between the two opposing economic systems. Today no country has a pure socialist or capitalist economy but a mix of the two. Whether a country leans toward a socialist or capitalist economic system depends on its cultural values.
Your Turn: Think about what you ate for lunch. What government laws or regulations exist to ensure that your food was safe to eat? What laws and regulations exist to ensure that the workers involved in the food industry were not exploited?
Your
Turn: Why do people shop at Wal-Mart? Why do people shop
at Nordstrom’s? How do your answers compare to the arguments made for
capitalism? Why do people criticize Wal-Mart? How is your answer an argument
against capitalism?
Capitalists believe that when people are free to produce without interference, this is good
for society. When a product is shoddy or too expensive, people (market forces) will not purchase and
the company will go out of business. If there is a demand for the product,
another company will meet the market demand. Competition is seen as positive
because it brings out the best in people. Competition and the pursuit of profit
propels technological inventions which not only benefit the capitalist but
society in general. On the other hand, competition can also bring out the worst
in people, including owners that exploit workers through lower wages, and
decreased benefits. A capitalist system is based on the cultural belief that individuals should have freedoms to pursue
their own economic interests without much intrusion.
Socialists
believe that human rights and equality are more important in a society than
individual freedom to purse economic interests. To guarantee social equality,
the government controls economic activities for the benefit of the entire
society. In a socialist economy, people may be guaranteed social benefits from the
“cradle to the grave.” These can include social programs such as extended and paid
maternal and paternal leave, paid vacations, universal healthcare, paid
education from preschool to university, and pension benefits that start 55-65
years of age. To pay for these services, the government regulates the economy and
enforces higher taxes. A socialist system is based on the cultural belief that individuals should sacrifice their individual economic freedoms for societal good.
Your
Turn: How do these two opposing economic systems remind
you of what you learned about individualistic
versus collectivist cultures?
While both capitalist and socialist economic models sound good, in reality neither system exists in its pure state. Today each country has a mixed economy or convergence of the two systems. Each country has a varying degree of capitalism and socialism depending on its cultural beliefs and political systems. While many people might think that the United States has the most capitalist economy in the world, in 2015, the United States ranked #12, while Hong Kong ranked #1 (Economic Freedom Index, 2015).
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Your Turn: go to http://www.heritage.org/index/about to examine the 2016 economic freedom index.
The
different degrees of capitalism and socialism can be understood through
this continuum which starts with unrestricted capitalism or very little control
of the economy by the government, to complete control of the economy by the
government.
Karl
Marx studied the negative societal consequences of unrestricted capitalism or laissez-faire capitalism. During the first half of the 20th
century, the U.S. transitioned from a laissez-faire to a state capitalist economy. Several trends facilitated this
transition:
- The
emergence of the labor movement and labor unions. Labor unions fought for
improved labor conditions.
- Upton
Sinclair’s The Jungle which was an expose of the horrific conditions of the meat packing industry in
1906 and Lewis W. Hine’s photographs of child labor during 1908-1912, created
outrage among the public.
- Henry
Ford realized that by increasing wages for the proletariat class, he created a
new market for his products. Minimum wage laws benefitted capitalists.
- Membership
in the Communist and Socialist parties increased at the turn of the century and
during the Great Depression. Since communists and socialists desired to overthrow capitalism, this motivated the industrialist elites to agree to major
concessions that are referred to as part of the Progressive Era. During this time, the government enacted many laws
to regulate capitalism, outlaw monopolies, and stop political corruption. During and after
the Great Depression, the government continued to pass regulatory laws and create new social programs which led to the continued growth of the middle class. These were referred to as the New Deal and the War on Poverty.
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Caption:
The San Bernardino Valley College auditorium was built during the 1930’s and opened in 1936 as part of
the Works Progress Administration supported by the government during the Great
Depression in an effort to put people to work.
Check This Out: Child Labor in 1920
Check This Out: Child Labor in 1920
In
the U.S. today one of the debates regarding the health of the American economy is
whether there is too much government regulation or not enough.
In 2014, a New York Times poll revealed that the majority of respondents believed government regulation was a problem for the economy.
Your Turn: Which side are you on? Do we currently have an overregulated or under-regulated economy?
In 2014, a New York Times poll revealed that the majority of respondents believed government regulation was a problem for the economy.
Your Turn: Which side are you on? Do we currently have an overregulated or under-regulated economy?
Globalization of
Capitalism, and Corporate Capitalism
The expansion of capitalism depends on creating consumers. Technology has made global travel, communication, and migration much easier. This has led to the cultural diffusion of cultural values that support capitalism. The North American Free Trade Agreement (NAFTA) in 1992 eliminated tariff taxes on goods traded between Canada, United States, and Mexico. Since then, the U.S. has entered into many free trade agreements with countries around the world. This has contributed to the globalization of capitalism. Sociologists study the consequences of this law on society using the two macroanalysis theories of conflict and functionalism.
The expansion of capitalism depends on creating consumers. Technology has made global travel, communication, and migration much easier. This has led to the cultural diffusion of cultural values that support capitalism. The North American Free Trade Agreement (NAFTA) in 1992 eliminated tariff taxes on goods traded between Canada, United States, and Mexico. Since then, the U.S. has entered into many free trade agreements with countries around the world. This has contributed to the globalization of capitalism. Sociologists study the consequences of this law on society using the two macroanalysis theories of conflict and functionalism.
Your Turn: How does economic
dependence between the United States and China decrease the likelihood of war?
Check This Out: California Turns To China For New Bay Bridge
Check This Out: Medical Outsourcing and the Medical Tourist
Check This Out: California Turns To China For New Bay Bridge
Check This Out: Medical Outsourcing and the Medical Tourist
The
globalization of capitalism has contributed
to the growth of powerful multinational or transnational corporations. Multinational corporations conduct
business in different countries. Wal-Mart, McDonalds, Coca-Cola, and Chevron
are all examples of multinational
corporations. Multinational corporations
compete with each other and they have a significant impact on our daily lives. Sociologists
study societal consequences of corporate
capitalism.
When
a corporation dominates an entire industry this is called a monopoly. Monopolies are mostly illegal in the U.S.
although some monopolies are allowed such as utilities. Monopolies are illegal
because without competition, capitalism would not work. Oligopolies however are legal and are defined as a few corporations
controlling an entire industry. Multinational corporations merge with and
acquire other corporations resulting in oligopolies
in many different types of industries from entertainment, telecommunications,
food, energy, and healthcare just to name a few.
When
a few multinational corporations
control an industry, the benefits of capitalism
explained earlier decline. A decline in competition results in consumers having
less choices and paying higher prices for goods and services while at the same
time creating immensely profitable and powerful corporations. Since
multinational corporations offer products under different brand names, it seems like there are
choices but since the products are controlled by only a few corporations, ultimately these
choices are superficial.
Your Turn: List five American corporations operating in the following industries: soft drinks, potato chips, gas, cell phones, package delivery, department stores, and banks. What patterns do you notice?
Your Turn: List five American corporations operating in the following industries: soft drinks, potato chips, gas, cell phones, package delivery, department stores, and banks. What patterns do you notice?
Caption:
These images shows how a few multinational corporations control industries.
Your Turn: What are the consequences for consumers when a few corporations control the food manufacturing or media industries?
Multinational corporations may share governing board members and executives that are part of the same social networks. Sociologists refer to these board members and executives as the global superclass, transnational elites, or interlocking directorates due to their powerful positions. A board member might sit on the board for McDonalds, Disney, and Coca-Cola. Since s/he is in a position of power at all three multinational corporations, s/he could oversee a profitable deal between all three. The next time you’re at McDonalds’s, order a Pepsi and see what happens. Notice that McDonalds gives away toys advertising only Disney movies. These types of deals lock out the competition and limit consumer choices. Executives at multinational corporations receive high salaries and bonuses especially when compared to the average wages of their employees.
Your Turn: What are the consequences for consumers when a few corporations control the food manufacturing or media industries?
Multinational corporations may share governing board members and executives that are part of the same social networks. Sociologists refer to these board members and executives as the global superclass, transnational elites, or interlocking directorates due to their powerful positions. A board member might sit on the board for McDonalds, Disney, and Coca-Cola. Since s/he is in a position of power at all three multinational corporations, s/he could oversee a profitable deal between all three. The next time you’re at McDonalds’s, order a Pepsi and see what happens. Notice that McDonalds gives away toys advertising only Disney movies. These types of deals lock out the competition and limit consumer choices. Executives at multinational corporations receive high salaries and bonuses especially when compared to the average wages of their employees.
The global
superclass directly through their connection to political leaders and
indirectly through lobbyists
influence government legislation in various countries. The interconnection
between the economic elites and political elites is quite powerful as we found out
during the Great Recession when the major banks and car manufacturers received
financial bailouts or guaranteed government loans while millions of people lost their jobs and homes or both. A
study by the University of Zurich in Switzerland concluded that “concentration
of power is not good or bad in itself but the core's tight interconnections
could be. As the world learned in 2008, such networks are unstable. If one
[corporation] suffers distress this propagates [spreads]” (2011).
Your Turn: Recently, some multinational corporations such as Google and Apple have come under criticism for evading paying taxes in the U.S. by taking advantage of lower corporate tax laws in other countries. A solution proposed to this has been to lower corporate taxes. What do you think?
Check This Out: Apple’s Move Keeps Profit Out of Reach of Taxes
Your Turn: Go to Executive Pay Watch and examine information related to executive salaries.
Your Turn: Recently, some multinational corporations such as Google and Apple have come under criticism for evading paying taxes in the U.S. by taking advantage of lower corporate tax laws in other countries. A solution proposed to this has been to lower corporate taxes. What do you think?
Check This Out: Apple’s Move Keeps Profit Out of Reach of Taxes
Your Turn: Go to Executive Pay Watch and examine information related to executive salaries.
Conspicuous
Consumption, McDonaldization of Society, and Planned Obsolescence
The American economy today requires people to consume products and services. Sociologist Thorstein Veblen coined the term conspicuous consumption to refer to people being influenced to display their wealth through possessions. You may be familiar with the saying: “keeping up with the Joneses” which is an appropriate description of conspicuous consumption. When people spend their incomes on products to show them off to others, this keeps people employed but also creates personal debt.
The American economy today requires people to consume products and services. Sociologist Thorstein Veblen coined the term conspicuous consumption to refer to people being influenced to display their wealth through possessions. You may be familiar with the saying: “keeping up with the Joneses” which is an appropriate description of conspicuous consumption. When people spend their incomes on products to show them off to others, this keeps people employed but also creates personal debt.
The McDonaldization
of Society is a term coined by sociologist George Ritzer who studies how American cultural core values regarding efficiency
and practicality effect all aspects
of our society. Corporations study and manipulate our consumption behaviors.
The faster a company can deliver a product the more customers it can service.
“Time is money” to a capitalist means creating efficient and time saving technologies
and procedures.
Ritzer believes that this cultural attitude creates a cookie cutter template for social life which has infiltrated all social institutions including education, family, and the mass media.
Your Turn: How is the typical visit to a physician or the typical college experience related to a visit to a McDonalds or any other corporate fast food restaurant?
Ritzer believes that this cultural attitude creates a cookie cutter template for social life which has infiltrated all social institutions including education, family, and the mass media.
Your Turn: How is the typical visit to a physician or the typical college experience related to a visit to a McDonalds or any other corporate fast food restaurant?
Your Turn: What pattern do you notice in the above image?
Check This Out: Branding – why red & yellow is used by the fast food industry
Check This Out: Branding – why red & yellow is used by the fast food industry
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Planned
obsolescence refers to products being manufactured
with a predetermined expiration or shelf life. Corporations do this in subtle ways that
increase the likelihood that you will continue to purchase their products. For
example, a part in a refrigerator or air condition unit might stop working just
as the warranty expires or when you attempt to replace the part you learn that
it is no longer being manufactured making the entire unit worthless. Batteries
on cell phones might expire just before your carrier contract and the carrier
has a special on a brand new free phone if you renew for another term. Ink cartridges only work for specific printers rather than manufactured with a universal fit.
Check This Out: Planned Obsolescence
Check This Out: Planned Obsolescence
A symbolic
interactionist might conclude the following consequences of consumption on our self-identities.
Buying things might allow us to become something we could not otherwise be but
creates artificial or unrealistic desires which do not satisfy our real needs
to connect with others. People socially
construct a reality in which meaning of life is related to the things we
possess rather than seeking fulfilling relationships.
Measuring the Health of
the American Economy
Social scientists have many tools to measure the health of the economy. Some of these include consumer confidence surveys, gross domestic product (GDP), federal budget, employment rates, median income, and poverty rates.
It is worth noting that today there is a dual labor market. This means that a segment of the working population is employed in the primary labor market which include jobs with high pay, high job security, and opportunity for advancement versus a secondary labor market that includes jobs that have a high turnover rate, low pay, hardly any benefits, and low job security. More often, social scientists think of the primary labor market as high value skilled and professional types of occupations as opposed to low value skilled jobs that are often part time and contingent (not permanent such as jobs secured through temporary employment agencies). Minorities including women are more likely to be employed in the secondary labor market.
Your Turn: Which jobs or occupations do you think fit the primary labor market versus the secondary labor market?
Social scientists have many tools to measure the health of the economy. Some of these include consumer confidence surveys, gross domestic product (GDP), federal budget, employment rates, median income, and poverty rates.
It is worth noting that today there is a dual labor market. This means that a segment of the working population is employed in the primary labor market which include jobs with high pay, high job security, and opportunity for advancement versus a secondary labor market that includes jobs that have a high turnover rate, low pay, hardly any benefits, and low job security. More often, social scientists think of the primary labor market as high value skilled and professional types of occupations as opposed to low value skilled jobs that are often part time and contingent (not permanent such as jobs secured through temporary employment agencies). Minorities including women are more likely to be employed in the secondary labor market.
Your Turn: Which jobs or occupations do you think fit the primary labor market versus the secondary labor market?
Check This Out: Gross Domestic Product (GDP)
Check This Out: Federal Debt
Check This Out: What does a trillion dollars look like?
Check This Out: Federal Debt
Check This Out: What does a trillion dollars look like?
Federal spending in 2016 - $4 Trillion, Deficit in 2016 - $616 Billion (usgovernmentspending.com)
Your
Turn: What predictions can you make about the federal budget
and the federal debt as the baby boomer generation continues to transition into
old age?
Your
Turn: Given the data regarding unemployment,
race/ethnicity, and education attainment, what assumptions can you make about
who’s more or less likely to graduate from college?
Your
Turn: Why do you think there's a 21% gap in earnings between males and females?
Your Turn: When it comes to age and poverty, why do you think children have the highest poverty rates while seniors have the lowest poverty rates? Why do you think seniors used to have the highest poverty rates?
Survey Yourself: Should Government Control the Following Scenarios:
1. Should the government outlaw soft drinks larger the 16 ounces? (2012-2013)?
2. Should the government outlaw toys in fast food restaurant's child meals (Happy Meals)? (2011)
3. Should California porn stars have to wear condoms? (2016)
4. Should the government force large companies to pay living wage while maintaining minimum wage for smaller companies? (2013)
5. Should the government impose fines on people and businesses who do not purchase health insurance from profit health insurance companies?
1. Should the government outlaw soft drinks larger the 16 ounces? (2012-2013)?
2. Should the government outlaw toys in fast food restaurant's child meals (Happy Meals)? (2011)
3. Should California porn stars have to wear condoms? (2016)
4. Should the government force large companies to pay living wage while maintaining minimum wage for smaller companies? (2013)
5. Should the government impose fines on people and businesses who do not purchase health insurance from profit health insurance companies?
Quiz Yourself: Complete this self-assessment related to the information in this lecture.
View Videos and Additional Resources: Economic Institution
Next Unit: Political Institution
View Videos and Additional Resources: Economic Institution
Next Unit: Political Institution