Transcript Social Institutions

Social Institutions
The Economy
Learning Cycle on the Experience of Work
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Think about some of the experiences you have had at
work (can be informal jobs like housework)
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a partner, discuss your work
experiences with each other. Explore the
experience’s rewards and punishments,
fairness, salary/rewards, difficulty, and
other aspects.
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Prepare a summary to present to the class
Learning Cycle on the Experience of Work
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Use the information from the discussion to reflect on the
nature of work in American society.
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Is work necessary, fulfilling, or alienating, rewarded or not?
How do people’s experiences relate to concepts like
alienation and identity to experiences like unemployment and
poverty ?
How might the nature of work change as the American
economy continues to undergo transformation?
The Economic Institution
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To satisfy basic needs (food, shelter, clothing, education, etc)
every society develops economic institutions
Economic Institution: System of roles and norms that governs the
production, distribution, and consumption of goods and services
Need for economic institutions is rooted in the problem of scarcity
Societies must decide how best to use their limited resources to
satisfy the most needs and they do this by answering basic
questions:
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Basic Economic Questions
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What goods and services should be produced?
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How should these goods and services be produced?
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For whom should these goods and services be produced?
How society answers these questions is determined by the
available factors of production
Factors of Production
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Factors of production: Resources that can be used to
produce and distribute goods and services
Include:
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Natural Resources
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Human Resources
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Land, Water, Plants, etc.
Labor
Capital Resources
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Money, Tools, Machinery, Buildings, etc.
The Nature of Economic Systems
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All economic systems contain 3 basic sectors
Primary Sector
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Deals with extraction of raw materials from the environment
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Secondary Sector
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Concentrates on use of raw materials to manufacture goods
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Ex: Turning a log into a canoe
Tertiary Sector
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Emphasis shifts to the provision of services
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Ex: fishing, hunting, mining, farming
Ex: Doctor, Religious leader
Degree to which 1 sector is emphasized over the other depends
on a society’s available resources and its level of technology
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Ex: In technologically advanced societies, majority of workers are
engaged in providing services
Preindustrial Economic Systems
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Human labor and animal power = main source of energy
Technology remains low
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As a result there is a relatively, inefficient system of food
production so most of the population must engage in
production of food
As society moves from hunting and gathering base to an
agricultural base, complexity of economic system
increases
As societies increase level of food production, full time
participation in the secondary and tertiary sectors
becomes more widespread
Higher productivity allows more people to move labor
from primary sector to the secondary and tertiary sectors
without affecting food supplies
Industrial Economic Systems
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Main emphasis shifts from primary sector to secondary
sector
Shift brought about by introduction of machines and
development of new sources of energy
Advances in technology have consequences
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Increase in agricultural productivity
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Industrial societies can support larger populations
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Few workers needed in primary sector
Change nature of work
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Jobs become more specialized which leads in increase in
production
People work for wages and use those wages to buy goods and
services instead of creating goods and services for themselves
Postindustrial Economic Systems
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Tertiary sector becomes most important area of
economy
Factors that lead to this shift
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As technological innovations lead to more efficient
production techniques, the number of jobs available in
secondary sector begins to decline
Emphasis on all forms of knowledge and on the collection
and distribution of information creates a great demand for
administrative, managerial, professional, technical, and
service personnel
Higher standard of living characteristic of advanced industrial
societies increase the demand for services
Economic Models
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There are 2 basic ideal economic models
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Capitalism
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Socialism
Differences between the 2 depend on who owns the
factors of production
There is no pure form of either
Economics can be arranged as: most capitalist  most
socialist
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US, Japan, Canada = most capitalist
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Britain, France, Germany = in the middle
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Korea, China, Cuba = most socialist
Economic Models: Capitalism
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Capitalism = Factors of production are owned by
individuals rather than by government
Economic activity regulated by forces of profit and
competition
Self-interest regulates economy by guiding the actions
of consumers and producers
Market competition regulates economy by influencing
the answers to the 3 economic questions (what, how,
for whom)
Prices by laws of supply and demand
Economic Models: Capitalism
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Law of Supply: Producers will supply ↑products when
they can charge ↑ prices and vice versa.
Law of Demand: Demand for a product ↑ as the price
of a product ↓
“Invisible Hand” : Interplay between forces of supply
and demand (idea from Adam Smith)
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If government interference is at a minimum and competition is
not restricted, the invisible hand of market forces will keep
economy in balance
This will lead to a Laissez-Faire Economy (Little to no
government interference in business) which is pure capitalism
Commitment to limited government control of business
operations has resulted in labeling of capitalist
economies as free-enterprise systems
The Economy in Perspective
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Functionalist
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Capitalism can bring about a prosperous and stable social order
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Adam Smith wrote that capitalism is based on the core belief that
people are selfish and act to serve their own interests
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Private ownership is considered functional for society’s economic health
because it motivates people to be efficient and productive and to use
resources efficiently
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Conflict
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Capitalism threatens society by allowing a powerful wealthy class to
exploit a weak poor class
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Marx saw efficiency of capitalism producing alienation and exploitation
of labor
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Symbolic Interaction
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Focuses on how people’s definition of their world creates or supports
capitalism
Economic Models: Socialism
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Socialism: Factors of production are owned by the government which
regulates all economic activity
Economic activity is controlled by need and the government controls
central planning
3 Basic Questions answered differently
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What to produce = determined by needs of society (if something is needed it
is provided)
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How to produce = determined by central planners in government (only 1
variety of each good)
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For whom = determined by need rather than ability to pay
Principles guiding are social equality and economic fairness
Ultimate goal is communism (political and economic system in which
property is communally owned)
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No social classes and role of government ↓ as people learn to work together
Postindustrial America
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America does differ from pure capitalism model for 5
reasons
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Rise of Corporation Capitalism
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Corporation: Business organization owned by stockholders and
is treated by law as if it were an individual person
Corporations changed the relationship between business
ownership and control
Few stockholders participate in daily business operations
This shift of power from individual capitalist corporations is due
to the growth of the oligopoly (a few producers control the
industry)
Protectionism : Use of trade barriers to protect domestic
manufacturers from foreign competition (ex: tariffs, quotas)
Free Trade: Trade between nations that is unrestricted by trade
barriers
Postindustrial America
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Globalization of the Economy
Major consequence is that nations become economically interdependent
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and:
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Economic policies of 1 nation affect the policies of other nations
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Economic conditions in 1 nation tend to trigger economic and political events in
other nations
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Expanding Role of Government
Growing population and rise of corporate capitalism in the 1800s led the
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government to assume more responsibility for the operation of the economy
Principal among economic functions that the government serve are:
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Regulation of economic activity
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Protection of consumers (ex: FDA)
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Provision of public goods (goods and services that the government provides for
everyone in society , like roads)
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Promotion of economic well-being
Postindustrial America
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Changing Nature of Work
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America’s continuing shift from industrial base to a service
base
Due in part to advances in technology
E-Commerce
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Business conducted over internet
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Based on information and not tradition factors of production
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New way of doing business
Social Diversity in the U.S. Economy
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Native Americans
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Used to live off the land, but today most live on reservations
and have worst economic straits of any ethnic group
In recent decades, more have worked and gained money
through casinos
African Americans
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In the past, mostly lived in the South and worked as tenant
farmers
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1950s-1960s many moved North
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Today they still lag behind whites and discrimination still exists
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Many are starting their own businesses
Social Diversity in the US Economy
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Hispanic Americans
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Have worked in low-wage jobs as farm and service workers
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Mexican Americans – have been exploited as agricultural workers in the
Southwest and California
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Puerto-Rican immigrants brought skills to New York City
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Cuban Americans came to Florida with skills and are the most upwardly
mobile group
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Asian Americans
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Most successful economic group
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Japanese Americans have become professional workers and scientists
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Chinese Americans work in white-collar jobs, but recent immigrants work
long hours for low wages
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Korean Americans mostly work in grocery stores
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Most successful group is Asian-Indian Americans from India
Mind Your Own Business
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With a partner or on your own:
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Think of type of business you would be interested in owning
(the business must be LEGAL)
Organize your business with the following information
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Name of business
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Location of business, type of building, décor
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Choose a logo for your business
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Blueprint of business (building)
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Products and/or services (A sample menu)
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Create a flyer that will announce your opening day and
sales/special promotions
Be prepared to present your business to the class