Rev: IS 10: The Economy

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Review Notes on IS Lecture 10: The Economy

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Economic Sociology

Economic Sectors

A Socio Historical Analysis

Hunter Gatherer Society

Agricultural Societies

Industrial Societies

The Post Industrial Age

Stratification in Post Industrial Societies

Post Modernism

Economic Systems

Pure Capitalism

Socialism

Socialist Nations

The Transition to Socialism

Market Socialism

Communism

Mixed Economies, State Capitalism

Mixed Economies: 3 Capitalist Models in Competition in the 21st Century

The New Deal, aka a Corporatist System / Cooperative Capitalism

Reaganomics, aka Neo Liberalism, Corporate Dominated Capitalism

The Asian Model, aka a Planned Economy

Capitalism & Profit Maximization

Monopoly Capitalism

Multinational Corporations

Interlocking Directorates

Market Concentration

Globalization

The Effects of Globalization

The Effects of Globalization in the US

Deindustrialization

Global Content

Trade Policy

NAFTA

Review: Unemployment

Economic Cycles

Globalism & Tribalism

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Outline on the Economy & the Social Sciences

External
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- Supplement: Fareed Zalaria. How to Restore the American Dream, 2010

- Supplement: Fareed Zalaria & David Von Drehle. America is in Decline; No America is Still Number One, 2011

- Project: Economics & Bargaining

ECONOMIC SYSTEMS PRODUCE & DISTRIBUTE GOODS

Economic systems are the means by which scarce resources are produced & allocated w/in & btwn societies

An important factor of economic systems is the level of economic development denotes how goods & services are produced, as well as how much can be produced

An important factor of economic systems is ownership in relation to the nature & extent of private & public property, & ownership of the means of production

An important factor of economic systems is scale, which ranges from local production, to regional production, to national production, to international production, to globalization

MARKET CONCENTRATION IS AN INEVITABLE OUTCOME OF CAPITALISM

The economic phenomenon called market concentration is aka Pac Man Economics (PME):

PME: aka: Market Concentration

- an industry begins w/ many small producers

- as one or several gain advantage, they, like Pac Man, steadily munch up the competition, growing bigger as each competitor is consumed

- ultimately, one producer consumers all or nearly all of the competition, establishing a monopoly

See Also: Market Concentration

The growth & maturation of most industries follows a general pattern

During an industry's infancy, production is diffused among many small producers

During an industry's infancy, production is often labor intensive

An infant industry develops & grows when:

- consumer preferences are revealed, choosing one or several producers over others

- some producers gain an advantage & become more efficient & profitable

- some producers become disadvantaged & lose money & go out of business

- as production methods become standardized, capital & cheaper labor are substituted for skilled craft work

- marginal producers are driven from the industry

Over time, an industry becomes dominated by a relatively few firms

The less dominant firms either mimic the leader or occupy niches

Examples of dominant firms becoming monopolies or near monopolies include

- Carnegie Steel

- Standard Oil

- ITT

- Intel

- Microsoft

- Walmart

	UNIONS HAVE GREAT DIFFICULTY ADAPTING TO GLOBALIZATION & MKT CONCENTRATION
	The market concentration or Pac Man Economics (PME) that is inherent in capitalism makes it difficult for unions to respond to ever bigger businesses
	In general the structure & strategy of the Labor Movement responds to the structure & strategy of business
	W/ the exception of the Great Depression, unions usually suffer during an economic downturn
	During a depression or econ downturn, mgt can more easily find non union substitutes
	The 1980s & 90s have also tested union job security because of the generally weak econ conditions for wkrs
	In the late 90s & early 00s, there was is now some strengthening of the econ for average wkrs, but by 2002, conditions were worsening again
	Global competition has made it difficult to increase wages as seen in the fact that average wages fell 1/2 % in 05
	The Fed Res Bank found that it could let unemployment go to record low levels, e.g. circa 3 or 4 %, & still not have wage increases because the pressures of immigrant labor, globalization, deindustrialization, & technology has deflated wages during most of the 80s, 90s, & 00s

	THE ECONOMY HAS GONE THROUGH VARIOUS PERIODS OF REGULATION & DEREGULATION
	The Sherman Anti Trust Act of 1890 & the Clayton Anti Trust Act of 1914 had limited industrial concentration & collusive activities btwn producers in a single industry
	The limitations on the size & mkt share of businesses have in many senses been removed since the 1980s in response to govt dereg which was a response to global competition
	Excessive industrial concentration is not defined by the statutes, but by the courts or the FTC
	Price fixing, selling below costs, & other collusive activities are now illegal & have been prosecuted
	Monopolies were broken up from Standard Oil to ATT
	Regulation of certain industries has been a tradition in the us for over a century
	The Interstate Commerce Act of 1887 regulated interstate rail freight rates & has since been applied to other industries
	The regulation of industry as established via the ICA & related legislation, & the Sherman Anti-Trust Act of 1890 & the Clayton Anti-Trust Act of 1914 have eliminated some monopolies, while allowing some monopolies to exist, & regulating some oligopolies
	Deregulation began in the 1970s w/ the Carter admin
	Since the Reagan admin, 1980 - 88, federal regs in the area of the reg of monopolies have been reduced or eliminated
	The initial result of deregulation was the elimination of monopolies & the restoration of price competition
	Deregulation enabled new companies to enter & created competition in wages btwn union & nonunion sectors of industries
	Deregulation has had varying effects across industries & job markets
	- W/ deregulation in the airlines, mechanics were not affected much because they could get jobs in other sectors
	- W/ deregulation in the airlines, pilots & stewardesses lost wages
	- W/ deregulation, some airlines lost money & went out of business, & the mkt was opened up to new carriers such as Southwest
	- W/ deregulation in the airlines, ticket prices declined at first; rural areas & low volume areas lost coverage
	W/ deregulation in trucking, the number of unionized truckers went down, wages fell by 27%, ROE fell 22%
	See Also: An Overview of Globalization
	See Also: Deindustrialization

blank	CONSUMER DEMAND HAS INCREASED & BECOME MORE DIFFERENTIATED	blank
blank	Since 1950 there has been a shift in the 1st World from goods to services because	blank
blank	- the goods market has generally been saturated	blank
blank	- people have the disposable income to consume services such as travel & entertainment	blank
blank	- an older population desires more services	blank
	- service industries have developed & become more efficient & affordable for the middle classes
blank	The Labor Movement has historically been concentrated in the goods producing sector, & has been slow to organize the service producers	blank
blank	The aggressiveness of employers since the Reagan Era has also made it difficult for Labor to move into the new service sectors	blank
blank	The shift in the econ to the service sector & the maturation of the goods producing sector has created more jobs w/ low & high skills; i.e., medium range skill jobs have been eliminated	blank
blank	Lower skill jobs are hard to organize because:	blank
blank	- workers are easily replaced	blank
blank	- it is difficult to recoup organizing costs on low wage jobs	blank
blank	Higher skill jobs are hard to organize because:	blank
blank	- professionals are independent minded & have an ideology opposed to unions because they view it as blue collar	blank
blank	- professionals are highly paid & so see little benefit in a union	blank

blank	EMPLOYER INTERESTS HAVE EXPANDED, SLIGHTLY, TO INCLUDE STAKEHOLDERS	blank
blank	Private sector firms are ultimately answerable to their shareholders	blank
blank	Though today many firms consider other stakeholders such as	blank
blank	Labor	blank
blank	The Community	blank
blank	The Environment	blank
blank	The Consumers	blank
blank	The Govt	blank
blank	etc.	blank
blank	Shareholders seek a higher risk adjusted return than other investments	blank
blank	As environmental conditions change, e.g. a shift from producer to service economy, etc., a firm may shift production & labor	blank
blank	Firms leave previous markets & enter new ones	blank
blank	The historic increase in mergers & acquisitions since the 1980s reflects the mobility of capital	blank
blank	A firm can spin off a lower earning division, forcing unions to deal w/ successor owners	blank

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Outline on Economic Sectors

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- Project: Economic Systems

1. Primary activities are concerned directly w/ natural resources extraction

The primary sector includes the agricultural sector & the extractive industries sector

The primary sector depends on the availability of natural resources & the market for products

The markets of agricultural products & other products from extractive industries such as coal fluctuate radically

The primary sector has generally become a smaller proportion of the overall economy due to growth of other sectors of the economy & technological development resulting in less labor required

2. Secondary activities transform natural resources via manufacturing

The secondary sector includes the industry, manufacturing, & mass distribution

Generally if a product is made by machines or human hands rather than taken directly from the environment, this is the secondary sector

Markets in the industrial sector experience radical fluctuations of supply & demand

In modern societies, i.e. the first world which includes the US, Europe, & Japan, the secondary sector is declining as a % of the total economy

In the 1950s & the early 60s, the secondary sector reached its peak, as a % of the total economy

Beginning in the 1970s & continuing through the present, the secondary sector of the first world declined & went through deindustrialization

Heavy industry declined in the first world & was moved to the second & third world

See Also: Deindustrialization

3. Tertiary activities include the sale & exchange of goods & services

The tertiary sector includes the development of the consumer economy

The development of the consumer economy necessitates the development of mass media & mass marketing

The transportation system becomes critical in the tertiary sector

4. Quaternary activities include producing & processing information & providing services

The quaternary sector includes the service economy, info, hi tech, financial sector, etc.

The service economy includes personal services as well as professional services

The information economy requires a wide & extensive degree of technical training & education

The US is considered to be a post industrial: society, meaning that its economy is primarily in the tertiary & quaternary sectors

The geographic division of labor is based on these types of activities in that:

- peripheral nations are mostly engaged in primary activities, w/ some of the other activities

- semi peripheral nations are mostly engaged in secondary activities, w/ some of the other activities

- core nations are mostly engaged in quaternary activities, w/ some of the other activities

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Chart on a Socio Historic Analysis

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1. Geologic Era

5 bb BP -
5 mm BP

Earth forms
Early primates evolve

2. Pre Human
Evolutionary Era

5 mm BP -
1.5 mm BP

Old Stone Age
Early primates

Pre Human Ancestors

3. Hunter Gather Era

1.5 mm BP -
10 K BC

Middle Stone Age
Early humans

Equality: 99 % of human existence has occurred in H-G society
Sexism & Racism has existed for less than 1 % of human existence

4. Pre Empire Era

10K BC -
3 K BC

New Stone Age
Civilization dawns
First Ag & villages

Patriarchy & Sexism began
Agriculture begins, allowing the production of surplus

5. Early Empires Era

3 K BC -
200 BC

Bronze Age, Mesopotamia,
Egypt, Greece,
China, etc.

The first empires form
Ag transforms from Pastorialism & Horticulture to herd mgt. & agriculture

6. Roman Era

200 BC -
500 AD

Rome rules the West;
China, India rule the East

Limited forms of democracy occur
The practice of colonization develops

7. Middle Ages

500 AD -
1300

Fall of Rome;
Rise of Persia & Ottoman Empire
Crusades
Ends w/ the Enclosure

Modern form of Racism began
Wallerstein & WST holds that globalization begins w/ the Age of Exploration
Proto factories & the div of lab dev

8. Early Industrial Age

1300 -
1700

Renaissance
Reformation
Enlightenment
Industrial Revolution

Early water power; steam power; railroads
The development of ag has biggest transformation since Early Empire Era

9. Industrial Age

1700 -
present

American & French Revolutions

Rise & fall of smokestack industries; deindustrialization; globalization begins

10. Era of
Global Capitalism

1910 -
present

WW1
WW2

True global corporations emerge

11. Post Industrial Age

1970 -
present

Service, Info, High Tech economies

Deindustrialization has a major impact on the developed econs

12. The Future

What's next?

Biotech Age? Democratic Age? Robot Age?

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Summary of an Socio Historical Overview

Approximate Time Period

1. Geologic Era

5 bb BP - 5 mm BP

2. Pre Human Evolution

5 mm BP - 1.5 mm BP

3. Hunter Gatherer Society

1.5 mm BP - 10 K BC

4. Pre Empire Civilization

10 K BC - 3 K BC

5. Early Empires Era

3 K BC - 200 BC

6. Roman Era

200 BC - 500 AD

7. Middle Ages

500 - 1300

8. Early Industrial Age

1300 - 1700

9. Industrial Age

1700 - present

10. Global Capitalism

1910 - present

11. Post-Industrial Society

1970 - present

Socio Prehistorical Time Line: 5 billion BP to 1,000 BP

	The earth's origins begins w/ the planet's origins 5 bil yrs BP & indicates that another full bil yrs passed before the earliest forms of life appeared
	Our human origins shows that plants & animals continued to evolve for billions more yrs until, about 12 mm yrs ago, our earliest human ancestors came onto the scene
	During the period of the earliest civilization, it is apparent that what is called civilization is a relatively recent event, w/ the 1st permanent settlements occurring in the Mid East a scant 12,000 yrs ago
	The written record of our species' existence extends back only half this long, to the time human invented writing & first farmed w/ animal driven plows, some 5 k BP
	Sociology came into being in the wake of the many changes to society wrought by the Industrial Revolution over the last few centuries
	The modern era is characterized by innovations in social & physical technology

Socio Historical Time Line: 1775 to Present

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Outline on Hunter Gatherer Societies
circa 1.5 mm BP - 10 K BC

External
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- Project: What knowledge is needed to develop from a H-G society to an Ag society?

Review: A socio historical overview demonstrates that humanity has experienced distinct stages & milestones in its development

The Chart on the Characteristics of the Hunter - Gatherer Stratification System shows that compared to other systems, the hunter gatherer (H-G) society has the highest level of equality

The Table Summarizing a Socio Historical Overview shows that H-G society began 1.5 mya & ended 10 K BC

Early humans evolved into our modern form and Neanderthal & other human lines died out

The Hunter - Gatherer era is made up of the Old Stone Age & the Middle Stone Age

Old Stone Age c. 2 - 4 mya - 50 K BC

Middle Stone Age c. 30 K - 10 K BC

New or Early Stone Age c. 9 K - 7 K BC aka Proto Neolithic ( is in the pre Empire Era )

Modern humans developed from a variety of human lines:

- 1.5 mm BP H Erectus emerges from Africa

- Around 500,000 yrs. ago Homo Erectus evolves into Java man & Peking man, then Neanderthals & Cromagnons

Homo Erectus, Java man, Peking man, Neanderthals, Cromagnons, et al all lived in what we would recognize as H-G society

- Around 200,000 yrs. ago Homo Sapiens evolved

The early non modern human lines cook, wear clothes, use tools, live in huts, make fire & have the earliest tribal society

There were many types of hunter gatherer societies, & this analysis is done in broad generalities

For most of the H-G era, humans existed in thousands of thousands of mostly isolated tribes w/ a tremendous, astounding variety

At end of H-G period, circa 10K BC, there were less than 100 mm people on Earth

As the name implies, people in H-G Society lived by hunting, done mostly by males, & gathering, done mostly by females

See Also: Gender in the H-G Era

During the H-G Era, people lived on what they could obtain directly from the environment w/ hand made tools such as spears, scrapers, etc.

Early in the H-G Era, people lived in isolated tribal societies of about 50 or fewer people, and toward the end of the era, up to 300 people of networked tribes

Toward the end of the H-G era, tribes might be made of several hundred people

Tribes were small because w/ the early tool technology, a given area could only support a small tribe

Because a given area would only support a tribe for a short period of time, hunter gatherers are often nomadic

In the H-G era, people lived at or near the subsistence level w/ no surplus created for hard times

Thus, every person carried their own weight & the weak had to be let go

During the H-G era, life was hard, as Hobbes said, life was 'nasty, brutish, & short' & yet people did not spend all their time working

During the H-G era, it is estimated that people, in general, worked less than 30 hrs. a week, & spent the remainder of the time doing housework, in leisure, in ritual celebrations, socializing, etc.

During the H-G era, it is estimated that people, in general, spent 21 hrs. a week doing housework while in industrial society, people spend 60 hrs. a week doing housework

During the H-G era, because there was no surplus, there was no patriarchy & no racism

It is important to note that 99 % of human existence has been in H-G society, thus in many respects it is all form of modern human existence that is "abnormal"

Thus, recognizable, modern humans lived in H-G society for approximately 1.5 mm yrs

By 13,000 yrs ago (11,000 BC), the earliest villages developed

City states follow about 7,000 yrs after the development of the earliest villages (3,000 BC)

Humans have lived in ancient society (city & nation states) for approximately 5,000 yrs (only .5% of HG society)

Humans have lived in modern industrial society for approximately 700 yrs (only .07% of HG society)

Thus sociologists see ancient & modern societies as big experimentswhich have not yet proven their resilience

Agriculture has its roots in H-G society, but it was only toward the end that limited agricultural practices were discovered & utilized

Early in the H-G Era, Homo Erectus lived only by hunting & gathering

Later in the H-G Era, Homo Sapiens, who emerged approximately 1/2 mm yrs ago, began to understand basic concepts such as:
- the Male role in procreation
- seasonal cycles
- fertility cycles in humans & animals
- the role of seeds
- the methods for domestication of animals

And toward the end of the H-G era, the understanding of procreation, the seasons & so on, allowed for the limited sewing of crops & the domestication of animals

It was toward the end of the H-G era, that limited agricultural techniques were perfected & put into practice

The first domesticated plant was wheat, & the first domesticated animal was either the dog or the goat

Agricultural practices did not become widespread until the next era:the pre empire era 10 K BC to 3 K BC

Many analysts believe it is agriculture itself that allowed for the development of civilization
See The FOUR Ag revolutions
See The 1st ag revolution: The Beginnings & Spread of Agriculture

A classic debate btwn Hobbes & Rousseau concerns whether in H-G society life is 'nasty, brutish, & short' or 'the idealic village'

See Also: Hobbes

See Also: Rousseau

The Hobbes - Rousseau debate is essentially about 'What was the nature of prehistoric woman & man?' 'What was the nature of prehistoric society?'

Observers continue to ask today, "Who is more accurate in depicting the H-G Era, Hobbes or Rousseau?" because the H-G life has many noble & wonderful qualities that keep people in touch w/ the Earth & other people, but it is a difficult life

There was a high level of cooperation w/in tribes

"Work" in H-G society was hunting & gathering & you shared all your production

There were no markets & there was minimal trading among tribes

In viewing H-G society as more cooperative, Rousseau was more accurate than Hobbes

Hunting & gathering had to be cooperative in order to function

Because of limited specialization & isolation from other societies, H-G societies had high levels of consensus

Ownership was communal because subsistence level production meant that everything had to be shared

In H-G society, people have more free time than do modern, industrial people

People spend their free time relaxing, & partying in communal festival & rituals

Conflict btwn tribes was limited due to isolation & due to the fact that there was little to gain because all production was at the subsistence level, yielding no surplus to be gained through conquest

Conflict was limited to struggles over turf & women

Primitive weapons disallowed dominance by one or a few

All types of relationships, economic, familial, etc. were essentially egalitarian in the H-G Era

Egalitarian relationships were upset / abandoned w/ the development of agriculture, causing for the first time, class conflict

Gender differentiation existed in H-G society, but there was total equality

In H-G society, racial differentiation was recognized only in the context of tribal ("nationalistic") differentiation & therefore was not a basis for inequality/discrimination

The transition from H-G to Pre Empire Era (aka "civilization") occurred in different "hearth areas" at different times

During the Proto Neolithic or Early Stone Age:, circa 9000 to 7000 BC, the transition to an agricultural econ begins in the mid east & other hearth areas

Hearth areas are settings where new practices developed, & then spread to other areas

( Hearth areas may be thought of as "proto cores" visa vie World Systems Theory )

There are SIX major hearth areas which were found in Africa, the mid east, the Indian subcontinent, south Asia, China, & the America

1. Africa: In Africa, a hearth area of civilization developed along the Nile River & south, & along Mediterranean on the African north coast

2. Middle East: In the mid east, in what is now called the Fertile Crescent: a hearth area of civilization developed in Iran & Iraq, Jordan & Israel, Turkey

3. Indian Subcontinent: In the Indian subcontinent, a hearth area of civilization developed along the Indus & Ganges Rivers

4. South Asia: In So Asia, hearth areas of civilization developed in Assam, Bangladesh, Burma, India

5. China: In China, a hearth area of civilization developed along the coast & major rivers, esp the Huang & Yangtze Rivers River

6. Americas: In the Americas, a hearth area of civilization developed in Central Am & in So America in the Andes Mtns

The hearth areas developed relatively simultaneously

blank

Agricultural practices first developed in these SIX major hearth areas

Hunter gatherer, nomadic societies still exist on every continent today, but the numbers of such societies is dwindling rapidly

Modern H-G societies exist in thinly populated, remote tropical, arctic, & desert areas

blank

The next historic stage is Pre Empire Era 10 K BC to 3 K BC
- New Stone Age continues
- "Civilization" & history begin
- 1st widespread ag develops
- 1st permanent villages develop

Table Summarizing a Socio Historical Overview

PW

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Historic Period

Approximate Time Period

1. Geologic Era

5 bb BP - 5 mm BP

2. Pre-Human Evolution

5 mm BP - 1.5 mm BP

3. Hunter Gatherer Society

1.5 mm BP - 10 K BC

4. Pre Empire Civilization

10 K BC - 3 K BC

5. Early Empires Era

3 K BC - 200 BC

6. Roman Era

200 BC - 500 AD

7. Middle Ages

500 - 1300

8. Early Industrial Age

1300 - 1700

9. Industrial Age

1700 - present

10. Global Capitalism

1910 - present

11. Post-Industrial Society

1970 - present

Chart on the Characteristics of the Hunter -Gatherer Stratification System

PW

Type of
System

Ranks
(Mobility)

Method of
Placement

Legitimization
(ideology)

Basis of
Ranking

Level of
Equality

Primitive
( Hunter Gatherer)

open

achievement

tradition

status

highest equality

Chart on the Characteristics of the Types of the Stratification Systems

PW

Type of
System

Ranks
(Mobility)

Method of
Placement

Legitimization
(ideology)

Basis of
Ranking

Level of
Equality

Primitive
( Hunter Gatherer)

open

achievement

tradition

status

highest equality

Slavery

generally closed

ascription

legal/racism

economic (class)

hi inequality

Caste

closed

ascription

religion

status

hi inequality

Feudal

generally closed

generally ascription

legal/religious

economic

highest inequality

Class

open

mostly achievement

legal

economic/
bureaucratic (power)

low to medium

Post-industrial

open

mostly achievement

legal

economic/
bureaucratic (power)

low to high

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Outline on Agricultural Societies

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Agriculture is the science, art & business directed at the cultivation of crops & raising livestock for sustenance & profit

Agriculture established a 2 way relationship btwn people & the environment, which did not exist as strongly in pre agricultural society

For ag to be successful, while people take from the env, they must also give back to it & nurture it

There has been a dramatic decrease in the number of people in ag & food prod

In the 1700s approximately 5 % of the pop lived in urban areas, & approximated 95 % of the pop lived in ag / rural area, & most were farmers

In the 2000s approximately 95 % of the pop lives in urban areas, & approximated 5 % of the pop lives in ag / rural area, & not even all of these are farmers

Ag has developed into global a economic system & has become more directly linked to other economic sectors, especially manufacturing & finance

When ag first developed, farmers were chastised & derided, attacked & exploited by hunter gatherers & warlords & their clans

The attacks on farmers continues up to modern times & is reflected in US lore about the Old West

Today the ag lifestyle is romanticized & is seen as a vital component of Am values such as the belief that farmers

- adapt harmoniously to the natural world

- naturally sustain community & kin

- embody all other important values: religion, fairness, common sense, etc.

Agrarian Systems shape the:
- culture of the agricultural community
- type of tenure (land holding system) that determines who has access to land
- kind of cultivation practices are utilized

The evolution of all economic systems began w/ the transition from hunter gatherer society to agricultural society

Both of horticulture & pastoralism have developed into non nomadic, non subsistence, i.e. surplus producing forms of ag

See Also: Subsistence Agriculture

See Also: The FOUR Agricultural Revolutions

Shifting cultivation or horticulture is a system of agricultural rotation, allowing some areas to replenish each season

Horticulture often uses slash & burn techniques, hand tools, & locations must be changed as the soil is depleted

Pastoralism is subsistence agriculture which focuses on breeding & herding animals for food, shelter, clothing

Pastoral societies run small herds, moving from place to place w/ the seasons, & to find fresh forage

True ag, called intensive ag, developed from horticulture & pastorialism, is practiced in permanent locations, uses more sophisticated tools, & if permanent or successful establishes a mutually beneficial relationship w/ the environment

Intensive, permanent ag began about 8,000 BC

The plow, as pulled by draft animals was developed circa 4,000 BC

The plow & other technology allowed for the first production of a surplus of food & goods

The ag production of surplus allowed people to perform other tasks such as building village, towns, cities, city states, & small empires

The emergence of ag thus allowed for the transition from primary economic relationships to secondary & even some tertiary economic relationships

See Also: The Sectors of the Economy

In ag society, the secondary sector of the economy included the construction of palaces, public buildings, temples, & religious monuments such as the pyramids

The production of a surplus also created the first inequality, economic stratification, poverty & wealth as individual characteristics

Before ag, poverty & wealth had been social, i.e. tribal qualities in that in H-G society everyone benefited or suffered together

In ag society, the means of production is land, & those who own the land obtain most of the wealth

Another major transition in ag society is the ability to transfer labor; i.e., labor may be bought & sold, captured & enslaved, & concentrated by thousands of laborers under one man

Historically speaking, the concentration of land & labor occurred relatively rapidly, falling under the control of monarchs, patriarchs & other forms of domination

The concentration of land & labor in ag systems peaked under the feudal or estate systems in the Middle Ages, but continues to the present in many second & third world countries

Estate ag systems still exist in Asia, Africa, Latin America

The US southern plantation system was a form of the estate ag system

The development of war paralleled the development of ag

The development of ag & war systems created empires such as the Roman & Chinese empires

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Outline on Industrial Economic Systems

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The Industrial Revolution (IR) is said to have begun in England even though industrial tendencies existed in many countries

The IR spread throughout Europe, North American & eventually to the rest of the world

The Early Industrial Age was characterized by the use of water power, then steam power to power machines in factories

The secondary sector became the most powerful & important

The industrial sector is the result of the development of technology and social organization in the form of bureaucracy, the factory system, the wage system, etc.

During the industrial age tradition became less influential, & rationality, science, technology, education, etc. became more influential

Large scale govts based on legal rational authority replaces the traditional authority of monarchies

See Also: Weber on legal rational authority, traditional authority, charisma

Industrialization of the economy produced a surplus unlike the world had ever seen

The industrial production of a surplus resulted in a dramatic long term rise in the standard of living w/in the industrialized countries, though it also created more poor people living at a worse level than under feudalism or other economic systems

Dickens noted this in the Tale of Two Cities, which begins, "It was the best of times and it was the worst of times..."

Industrialization made life harder because of the long hours, low wages, & brutal & unsafe working conditions

But w/ the rise of unions, the middle class & a govt. that regulates the functioning of big business people have better diets, more adequate shelter, better health care, & more luxury goods

Because of industrialization, life expectancy has increased dramatically & birth rates have declined dramatically

Industrialization has resulted in greater social equality than feudalism

Industrialization has created greater equality w/in the system in that there is a middle class, yet there remains a lower class who are very poor

Industrialization has created greater inequality btwn nations in that the wealth is concentrated in the industrial nations while non industrialized nations are poorer than ever

See Also: Globalization

Inequality increased during the Early Industrial Age because unions had not yet gained enough power to resist the exploitation of the Robber Barons of big business

The wealthy have retained wealth but allowed a middle class to emerge, which gives a historically high level of prosperity to a significant segment of the population, & thereby avoiding revolutions that might deprive them of their wealth

The rise of the middle class is accompanied by declining birth rates & increasing democratization

Most social theorists believe that the rise of the middle class, declining birth rates, & democratization are all mutually reinforcing & that the demise of any would be seriously dysfunctional for modern society

Though it is too early to be certain, the trend toward greater equality may be reversed in the Post Industrial Age

Link

See Also: Post Industrial Age

Major industrialized societies of the first world experience few revolutions though many smaller, developing countries do

The transition from agricultural to industrial society is often accomplished w/ the blood of revolution & war

Farley posits that industrialized nations to to war less often than preindustrialized nation, but notes that industrialized nations have fought WW 1 & 2 which killed more people than all other wars combined, & the cold war resulted in the biggest military build-up the world has ever seen

Though it is too early to be certain, it seems democracies rarely go to war w/ democracies; however it is useful to note that pre-WW 2 Germany & Italy were democracies that became oligopolies ruled by a single man

During the Cold War, the industrialized nations of the US & its allies fought proxy wars w/ the USSR & China & their allies in SE Asia & Africa

After 1989 when the Cold War ended, the industrialized nations fought wars w/ partially industrialized nations such as Bosnia, Afghanistan, Iraq, etc. which are largely the result of the collapse of the Cold War world order

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A Socio Historical Overview of the Post Industrial Age circa 1970 to Present

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Introduction: During the Post Industrial Age, the economy shifted from basic industry to services & high tech jobs

The Post-Industrial Age may be seen as a product of both the Industrial Age & the Era of Global Capitalism in that industry matured, resulting in the development of the service & the high tech sectors, and the deindustrialization of the core, i.e. movement of basic industry to the periphery, & the globalization of all facets of society, e.g. the economy, culture, etc.

The previous era, the Era of Global Capitalism, ( 1910 to the present ) created many of the conditions that came together to herald the Post-Industrial Age

The Chart on the Characteristics of the Stratification System of the Post-Industrial Age indicates that the ranking system is open, placement is based on achievement, legitimation is based on the culture of law ( "the rule of law" ), the basis of ranking is accomplished through a bureaucratized state capitalist, economic system, & the range of equality is broad, running from low to high

There are 10 fundamental Qualities of Post-Industrial Society
1. Less heavy basic industrial production
2. The service economy comes to predominate in the first world
3. More high tech jobs
4. The information economy / internet is integral to the overall economy & growth
5. Knowledge & education are equivalent to property & wealth
6. Working middle class transforms into the white collar middle class
7. Rise of professional classes
8. Part time, serial employment
9. Growth of global capitalism continues
10. Global monopolies & mergers develop

Some of the fundamental qualities of post industrial society have decreased inequality and many other have increased inequality

During the Post-Industrial Age, many people have not made the educational shift to high tech / service because education is an expensive investment

Some people see the rise of professional class in the Post-Industrial Age as the end of the class dominated system

In the Post-Industrial Age, production is more complex, forcing the elites to make concessions to get knowledge from workers

In the Post-Industrial Age, there is increased productivity which creates more surplus, of which more is going to workers, resulting in less strikes & bigger markets

Employment relations in the Post-Industrial Age achieve many Labor's goals, w/o the intervention of the Labor Movement

In the Post-Industrial Age, the reduced population growth rate in industrial society has created a larger "pie", & less mouths to feed

In the Post-Industrial Age, elites must invest in the workforce as they never have before

But an educated workforce & open trade systems creates a value system of egalitarianism / democracy

Historically, the elites needed the allegiance of the population only during times of war

In the post industrial era, the elites need the allegiance of the general population, especially the middle classes, for the normal functioning of the high tech / service economy

Given the high tech nature of wars of the 90s & 00s, it is not clear that the elites still have the need for the allegiance of the population during times of war, but most agree that they do

The marginal utility of wealth declines in the Post - Industrial Age

Review the Marginal Utility

The declining MU of wealth means that middle & upper class workers & professionals are less motivated by $$ which result in the demand for more free time & other perquisites

But on the other hand, the international division of labor has resulted in increased world inequality which demonstrates that improved employment relations have not been globalized

The degree of inequality in the stratification system in the modern world system has increased

Historically there has been extensive social mobility in the US mostly from the beginning of immigration & conquest in the 1400's to the 1950s

There is clear evidence that upward social mobility slowed & eventually reversed from the 1960s through the 1980s

In the mid 1990s, there was a restart of upward social mobility which ended w/ the "slowdown" of 2001 to 2003 & has not restarted as of 2004

The economic decline of the US in the modern world system appeared as early as the 1960s

Economic decline stimulated support for Reaganomics in the 1980s

Average Americans became more afraid for their economic security

The corporate class became more involved in politics in an attempt to reverse the decline in US profits & market influence

Today's development of the modern world system goes beyond capitalism and communism in that there is competition among many forms of state and monopoly capitalism

The process of stratification has moved to a new level, the global level

Deindustrialization was the label given to the movement of industry from the core to the periphery & semi periphery

A major cause of the increase in inequality in the P-I Age is the large loss of industrial jobs in America

A major cause of the increase in inequality in the Post-Industrial Age is the growth of jobs at both the higher & lower ends of the income scale

The P-I era is characterized by Reaganomics, the fall of the Berlin Wall in 1989, the collapse of Communism during the early 90s, the "New Democrats" (Clinton, et al) in the 90s

It is no longer simply capitalism vs. communism, but competition among differing forms of organization in the capitalist world economies

Historically speaking, most global competition, which is often in the form of nationalism, has been among differing forms of capitalism

The cold war / competition btwn capitalism & forms of socialism are the historical anomaly

Ronald Reagan was the President from 1980 to 1988 & he ushered in a "Republican Revolution" which was labeled "Reaganomics"

Reaganomics was a unique combination of:
- econ policy which cut govt regulation, cut taxes, & had no Industrial Policy,
- social policy which eliminated welfare, &
- foreign policy which supported Poland & the Pope & oversaw the beginning of the collapse of communism

The effects of Reaganomics, including tax cuts, a military buildup, & deficits, were significant & are still felt in the 00s

Reaganomics in the 80s resulted in downsizing, “service” jobs, cut wages, mergers, less regulation & govt

During the era of Reaganomics, the US moved from having average inequality to having the greatest inequality

Reaganomics contributed to an increase in income & wealth inequality that had already begun as a result of changes in the world economy

But Reaganomics did little to change the basic causes of American economic decline

In 1989 temp jobs were only 3% of new jobs
In 1993 they were 26% (New York Times, March 10, 1994)

The poverty rate increased because of Reaganomics... & persisted

1989   poverty rate was 12.8%
1991   14.2 % as the recession grew
1992   14.8 % at the height of the recession
1993    15.1 % when the recession was over

Average family income declined after Reaganomics, & increased w/ Clinton

There has been a decline in average family income through 1994 when it temporarily increased, followed by continued decline
It was down 7 % since 1989

There was a short recession at the end of the 1st Bush admin, ( Bush, Sr Presidency 1989 - 1992 ) that ended in 1992 & there was econ growth by 1994

The econ growth in the 90s & 00s is a historically new phenomenon in that few new jobs were accompanying gen econ growth

When jobs appeared, they were "soft jobs" i.e. temporary, part time, w/ low wages & few benefits

In the 90s the effects of Reaganomics began to be reversed

From the beginning of the 1980's, the US already had the highest level of income inequality among industrial nations

By the end of the 1980s, this inequality was even higher, & it continued to grow in the 90s finally leveled out toward the end of the 90's

By 95, the US was coming out of the recession in better shape than Europe & Japan

By the late 90s the growth of inequality resulting from job cuts, lower paying jobs, & more temp jobs created higher profits, was reversed.... at least in the short term

Some analysts belief that the European model will create a better econ in the 21st century

Germany & Japan have less inequality than the US because:

Workers are paid more

Workers have a higher levels of education

Workers have a higher levels of skill

Both the labor force & corp mgt. are more loyal to each other than in the US

The major point of the P - I Age is that there has been a historic shift in the American stratification system & the place of the US in the modern world system

It is the end of the Cold War & while American is dominant, it is not absolute, economically speaking, because we are challenged by Europe & Japan

Gender in the P - I Age: The "New Woman"

Race in the P - I Age:

At this time there are no more historical eras, but possibilities include
- the Biotech Age
- the environmental / global warming / population crash
- Pax Democratica / market econ
- "The End of History"
- the Information Age

Chart on the Characteristics of the Stratification System of the Post Industrial Age

PW

Type of System

Ranks

Placement

Legitimation

Basis of Ranking

Equality

Primitive

open

achievement

tradition

status

hi equality

Slavery

generally closed

ascription

legal/racism

economic

hi inequality

Caste

closed

ascription

religion

status

hi inequality

Feudal

generally closed

generally ascription

legal/religious

economic

highest inequality

Class

open

mostly achievement

legal

economic/bureuacratic

low to medium

Post-industrial

open

mostly achievement

legal

economic/bureaucratic

low to high

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Outline on Stratification in Post Industrial Society

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The transition to the Post Industrial (P-I) economy has eliminated hundreds of thousands of manufacturing jobs & created hundreds of thousands of service jobs

The P-I economic transition has divided the labor force into two unequal segments

One new segment in the P-I economy consists of doctors, lawyers, researchers, financial specialists, technicians, engineers, etc.

The P-I professional segment is relatively well paid, well educated, & has high prestige

One new segment in the P-I economy consists of service workers, clerical workers, retail sales people, etc.

The P-I service segment is paid less than were many workers under the industrial economy, is less educated, & has lower prestige

The P-I economy is creating greater socioeconomic inequality

The more advanced segment of the workforce is creating the demand of services which the lower segment of the workforce provides, such as self fulfillment services, healthier, food preparation, etc.

In 1977 approximately 13% of meals were eaten outside the home while in 1995 approximately 27% of meals were eaten outside the home

The education & professionalism of at least part of the P-I workforce is an impetus towards democratization

In P-I Society, more people
- demand to be informed
- refuse to follow rules blindly
- object to discrimination
- think all people should be free

Inequality & the amount of stratification has increased in P-I Society because lower paying service jobs have replaced higher paying manufacturing jobs

In SW Va, in 2003, on average
- mining jobs paid $46,000
- construction jobs paid 34,000
- service jobs paid 28,000

In SW Va, in 2003, mining jobs are being steadily replaced by service jobs resulting in a decline in pay income for the area

"Deindustrialized", "down sized" workers often cannot afford the education to gain professional employment

Deindustrialized workers are often older & find it difficult to undergo education & career change

The number of professional jobs in the P-I economy are not sufficient for all of the deindustrialized workers

Deindustrialized workers often have a home & roots in a locale & find it unrealistic to relocate to where the new jobs are

The share of income going to the working or lower classes has fallen sharply whereas those in the upper & upper middle classes have gained income

It is fair to say that compared to industrial society, in P-I society, the rich have gotten richer & the poor have gotten poorer, & the middle & working classes are smaller

Nielson & Alderson found that internationally in P-I society, the rich have gotten richer & the poor have gotten poorer, & the middle & working classes are smaller

Nielson & Alderson found that inequality declines w/ the development of industrial society, then levels off, & then increases w/ the development of P-I society

The transition from industrial to P-I Society has hurt the industrial workers & their families who once had high paying manufacturing jobs, but have since become unemployed or moved to low paying service jobs

W/ deindustrialization, Blacks, Hispanics, poor Whites, etc. in the Midwest & Northeast have had difficulty finding employment as the manufacturing jobs disappeared

See Also: Wilson: The Declining Significance of Race

See Also: Going Into Debt for College

The increasing stratification of P-I Society is seen in the further development of the professional class, which may be seen as a subclass of the middle & upper middle classes

The pay & prestige of the professions are generally enhanced in P-I Society

Professionals generally have the quality of:
- greater autonomy on the job
- greater status on & off the job
- higher pay
- extensive & specialized training to enter the profession

See Also: Professionals

The "classic professions" historically included only doctors, lawyers, accountants / banker, & professors

Today nurses, social workers, teachers, & others are also labeled as professional

Professionalization is the process whereby an occupation attempts to be recognized as a profession by increasing education, licensing, regulation, etc. requirements

Some social theorists would call nurses, social workers, teacher, & others semi-professionals

Police, firefighters & others are attempting to professionalize

Police, firefighters & many other occupations are called blue collar professionals by some social theorists

The proportion of professions in the workforce has risen steadily during the development of the P-I economy

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An Introduction to Post Modernity

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- Project: Post Modernism & Optimism

POST MODERNISM HOLDS THAT RATIONALIZATION ULTIMATELY HAS NEGATIVE EFFECTS ON SOCIETY & THAT RATIONALITY WHEN PURSUED TO ITS FULL DEVELOPMENT BECOMES IRRATIONAL

Post modernity (P-M) is an ideology/ school of thought/ which holds that through rationality, as embodied in the social sciences, we are lead to exploitation & oppression

Post modernism developed as a philosophical view from romanticism, which directly followed the Enlightenment & was a reaction against the Enlightenment

For P-M, Friedrich Nietzsche is an important influence; Nietzsche saw Weber's rationalization as mere regimentation & constraint

Post modernism evolved out of the principles of Marxism which hold that we need to reject mainstream culture & create a new culture

For Marx, the proletariat had to create a non bourgeoisie culture, a workers' culture

P-M EMBRACES A FORM OF RADICAL ATHEORETICALITY, METHODS, & FORM OF PRESENTATION

Post modernism embraces a complete openness to perspectives in social inquiry, art, political empowerment, etc.

Many post modernists will not define their position in the affirmative because to do so, is too rational, limiting, oppressive

Post modernism's critique of modernity is that it is a flawed ideology or school of thought because rationality crushes the human spirit

Post modernity is a new historical epoch that has succeeded the modern era, modernity

Post modern social theory is a new way of thinking about post modernity

According to the P-Ms, the world is so different it requires a new way to think about it

Post modernists ask whether technology, rationality, science, etc. have been given too great a role in society today

Post modernists believe that technology, rationality, science, etc. as characterized in modern, industrial society are harmful to society in various ways

P-M ADVOCATES MULTI PERSPECTIVISM WHEREIN ALL POINTS OF VIEW / KNOWLEDGE ARE TAKEN INTO ACCT

See Also: Mannheim on multi perspectivalism

P-M believes that no one kind of knowledge can tell us, or society, what we need to do

P-M believes that only one way of knowing things, whether it be science, religion, or an ideology such as Marxism, is inadequate to provide the knowledge we need because there are multiple ways of knowing

For the P-M, no one paradigm can tell us "the truth"

P-M believes that knowledge consists of more than what can be tested scientifically

Ways of knowing embraced by P-M include cultural knowledge, artistic knowledge, ethics & examine fields such as justice, happiness, beauty, etc.

P-M HOLD THAT SOCIETY NEEDS TO ESCHEW OR EVEN DESTROY THE LARGE BODIES OF 'TAINTED KNOWLEDGE' WHICH EXISTS TODAY BECAUSE IT IS EXPLOITATIVE, BIASED, ETC.

Postman argues that modern societies are technopolies which are societies in which technology defines religion, art, family, politics, history, truth, privacy, intelligence, etc.

For Postman, technopolies have robbed modern people of their souls & invalidated alternative ways of living & believing

P-M rejects the positivist notion that things have one meaning

For P-M, art, religion, even scientific findings have different meanings to different people

Like ethnomethodology, subjective, interpretive meaning is the only valid type of meaning

Post modernism rejects mainstream culture to create greater freedom & respect for all

P-M rejects mainstream culture because each school, culture, etc. in some way rejects or limits others

P-Mism advocates total inclusion

CULTURE IS A WINDOW TO UNDERSTANDING SOCIETY; ALL ASPECTS OF CULTURE, ESP MARGINALIZED CULTURE, ARE IMPORTANT

P-M rejects the stratification of culture into "high" & "low" or popular culture & embraces the values of all cultural representations

P-M views high culture as merely culture that, in the past was created for the upper class & was a cultural representation used to differentiate the rich from the poor

An example of the stratification of culture is classic music where the elites paid composers, who were usually lower class, who were elevated to a medieval professional class, to write music that took hundreds of performers

The film Amadeus depicts the relationship of lower class composers writing music for the elites

P-M notes that an example of the stratification of culture is the early depiction of jazz as unsophisticated & not suitable for the upper class

Today jazz & much music of the middle & lower classes, i.e. folk, appalachian, hip hop, etc. are all respected forms of music

For P-M, the people need to create a range of alternative cultures from punk & alternative rock to classic

Post-modernism rejects many schools of thought such as:
- positivism
- functionalism
- Marxism
- conflict theory
- Weberianism

For Christopher Lash, P-M is an outgrowth of post-industrial society because the "new classes" of information specialists, & people who have "expressive occupations" such as writers, researchers, entertainers, etc., like Nietzsche embrace diverse forms of knowledge & lifestyles

RATIONALITY IS AN INCOMPLETE METHOD OF UNDERSTANDING / KNOWLEDGE

P-M demonstrates that while scientific knowledge is useful, it cannot by itself solve problems

While modern medicine has the ability to provide better healthier than the world has ever seen, business, ethical, political, & philosophical factors determine the level of access & benefit people receive

The development of P-M demonstrates an important social dynamic in that modern, industrial society calls on people to reject tradition, while post-modern, post-industrial society calls on people to reject science, rationality, etc.

From the point of view of traditionalists, science & rationality offer no real life or morality & instead offer only chaos & nihilism

From the point of view of modernists, post-modernism offers only chaos & nihilism

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For the post modernists, progress is an illusion

Post modernism abandons focus on economic & scientific progress by asking questions such as:
- Have we really made progress?
- Who has benefited under "progress"?
- Under what criteria does "progress" exist?

Post-modernism opposes globalization because it is the ultimate imposition of rationalization

Deconstructionism is a branch of post modern philosophy which emphasizes tearing down "popular culture," e.g., global culture

THE MAIN CRITIQUE OF P-M IS THAT IT ONLY OFFERS CRITICISMS OF SOCIAL THEORY, & NO ALTERNATIVE THEORY OR VISION OF SOCIETY

Critics of P-M note that P-M is very good at deconstructing society, but it really offers no alternatives

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The critique of post modernism is that it substitutes only individualism, cultural diversity, etc. for all of Modernity & popular culture

Blank

Jurgen Habermas' critique of post modernism is that post modernism is merely an embrace of radical individualism. The

For Habermas, the post modernist's rejection of rationality offers nothing in its place

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Outline on Economic Systems

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- Project: Economic Systems

Economic systems are social structures that determine the production & distribution of scarce resources

Economic systems define the nature of private & public property including who owns capital, or productive capacity

Economic systems have evolved, historically over time & thus parallel general historical development from hunter gatherer society, to empires, to feudalism, to capitalism, to mixed or state capitalism, to socialism, to communism & to as of yet undefined economic systems

See Also: A Socio Historical Overview

See Also: The Transition of Socialism

See Also: Outline on Marxist History

While there is not total agreement among social scientists, the types of economic systems, each which develops or focuses on a unique economic factor, include hunting & gathering, agricultural, conquest, slave agriculture, feudal, mercantile capitalism, pure capitalism, industrial, state capitalism, service, high tech, socialism, command, communism, and others

Many analyses of economic systems mix political systems w/ economic systems & indeed in the past there was no social sciences of politics or economics, rather social scientists examined political economic systems

It is important not to confuse economic systems w/ the authoritarianism, oligoplism, fascism, nazism, representationism, elitism, democracy, etc. of different political systems

Thus it is possible to have a authoritarian capitalist system as was seen in South America, or a democratic socialist system as was seen in the Scandinavian region

There are FIVE fundamental functions that any economic system must fulfill:
a. An economic system impacts what the society is to produce
b. An economic system impacts how much of each of many products to produce
c. An economic system impacts how production is to be carried out
d. An economic system impacts who is to receive the output
e. An economic system impacts how & when to adapt to change

a. An economic system impacts what the society is to produce

An economic system has an impact on:
- the mix of consumer goods
- the mix of capital & consumer goods
- the mix of capital goods

b. An economic system impacts how much of each of many products to produce

An economic system has an impact on:
- the amount of consumer goods of each type
- the amount of luxury goods
- the amount of art, education, medical care, etc.
- the amount of capital goods
- what resources are needed to produce goods, since resources themselves are products

c. An economic system impacts how production is to be carried out

An economic system has an impact on the organization of:
- of production as private vs. govt.
- of production as big vs. little
- of production w/ regards to labor vs. technology, etc.
- the types of labor such as free, slave, indentured, wage, salary, independent, etc.
- capital such as individual, partnerships, corporations, etc.

d. An economic system impacts who is to receive the output

An economic system has an impact on the socially acceptable:
- distribution of wealth
- level of the income gap
- level of poverty
- level of wealth

e. An economic system impacts how & when to adapt to change

An economic system has an impact on the:
- ability to adapt to internal goals & needs
- ability to adapt to external pressures

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Outline on Pure Capitalism

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PURE CAPITALISM IS CHARACTERIZED BY THE MKT, PRIV PROP, & NO GOVT INTERVENTION

A capitalist economy is one in which most of the productive capacity is privately owned & which the distribution of all goods is accomplished through the market system

Pure capitalism is frequently called laissez faire capitalism because the French word laissez faire means "hands off" connoting that the govt. keeps out of regulating capitalism, thus its pure form

W/in capitalism the system of private ownership as it relates to business, is often called private enterprise

Capital is seen as stored wealth in the form of money, stocks, bonds, etc. as well as the productive capacity including manufacturing & distribution capacity, raw materials, etc.

The US is considered to be the most highly capitalistic nation because it has the highest proportion of privately owned productive capacity, yet the US today is not pure capitalist because the govt. does own some productive capacity

Another important feature of pure capitalism besides lack of govt. or public ownership is a low level of govt. regulation on the market system

In most capitalist systems the market system of supply & demand determines what is produced, who can & cannot buy that production, & who profits from that production

THE CONCEPT OF THE "INVISIBLE HAND" DESCRIBES THE NATURE OF THE SELF REGULATING MKT

Under pure capitalism, the "invisible hand" of the market is said to guide producers into producing the optimal amount in the most efficient manner

Adam Smith, in his book The Wealth of Nations, 1776, developed our understanding of the invisible hand

The invisible hand works imperfectly but in general, when a supply is insufficient, people will pay more for a product, producing excess profits, which attract more producers, who produce more, driving the price down

CAPITALISM DETERMINES WHAT, HOW MUCH, HOW TO PRODUCE, & WHO GETS IT, & HOW TO CHANGE

Capitalism & the market fulfill the FIVE fundamental economic functions
An economic system impacts:
a. - what the society is to produce
b. - how much of each of many products to produce
c. - how production is to be carried out
d. - who is to receive the output
e. - how & when to adapt to change

A capitalist economic system impacts what & how much to produce based on what creates the most profit

Through the profit motive, capitalism determines what & how much to produce in that private enterprise will only produce what will make a profit, & they will produce at a level where supply starts to satiate the market, driving down the price to the level of minimal profits

Capitalists will produce only what is profitable, thus if something is needed but people cannot afford it, it will not be produced

"Orphan drugs" is a generic concept connoting any product that is needed but which there is no monetary demand

Profit is looked at, generally, in two manners, which may be thought of as a cost benefit analysis:
- revenues minus cost equals profit
- sales minus expenses equals net income

For economists, costs are the total payments made to "homes" including workers, land owners, capital suppliers

HI PROFIT RATES ATTRACT INVESTMENT, LO PROFIT RATES REDUCE INVESTMENT

For economists, normal profits are the "average" profits to entrepreneurs in that any product must have profits to attract producers, but not economic profits

The allocation of resources to production depends on profits

For economists, economic profits are "above average" profits which will attract more producers & drive up supply which drives down prices, reducing profits to the level of normal profits

A cap econ system impacts how production is to be carried out based on the max of profit & thus there can be little concern for Labor, alienation in the wkplace etc.

The econ function of profits & losses signals that resources should be reallocated

Losses or below average profits (normal profits) will tell people to get out of the business into a more profitable business

Above average profits (economic profits) will tell people to get into the business

A cap econ system impacts who is the receive the output based on who has the money to buy goods

A cap econ system impacts how & when to adapt to change by adapting to the profit levels in the production of different goods & services

When a product falls below normal profits, enterprises start looking for methods to reduce costs to bolster profits or for new, more profitable products to produce

INVESTMENTS UPGRADES OLD FACILITIES, BUILDS NEW FACILITIES, & MOVES FACILITIES

Brown field industrialization connotes economic expansion in the same area, in the same general product line by building or rebuilding of a factory or other productive facility in an area that has had such facilities before

Green field industrialization connotes the new development of a factory or other productive facility in a new area

Deindustrialization is is the relative decline in industrial production & employment in core regions as a result of the development of information technology & the export of traditional industries to semi peripheral & peripheral nations

Deindustrialization is economic contraction in one area that is usually accompanied by economic expansion in another area

A capitalist economic system will pursue profits & adapt through expansion of current facilities, brown field Industrialization, green field industrialization, or deindustrialization

THERE ARE FIVE MAJOR WEAKNESSES OR CRITICISMS OF CAPITALISM:

A. COMPETITION DEVOLVES INTO MONOPOLISTIC SYSTEMS

Marx noted that capitalist, competitive systems devolve into a monopolistic systems because production becomes ever more concentrated as some producers grow, become more profitable, driving smaller, inefficient producers out of business

Pac Man Economics

Based on the nature of capitalism to produce ever bigger firms, Marx predicted the downfall of capitalism

Marx saw ever bigger firms, driving workers ever harder, w/o regards to humanity

Brutal monopolies run by robber barons emerges out of pure capitalism in the 1800s & early 1900s

Marx was correct in that until the development of "trust busting" & the govt regulation of big business which occurred in the early 1900s & heralded the beginning of mixed or state capitalism, pure capitalism demonstrated its monopolistic, exploitative character

B. CAPITALISM INCREASES INCOME INEQUALITIES

A capitalist system develops inherent income inequalities because it is a winner take all system

C. UNDER CAPITALISM, ONLY "WANTS" ARE REGISTERED BY THE MARKET

In a capitalist system, only "wants" are registered by the market

For economists, wants are different than needs

Wants are what consumers can afford

For economists, needs are half of wants in that to purchase a product one must want the product, i.e. be able to afford it, & one must need or desire the product

For the economist, orphan drugs are needed, but they are not wanted

D. THE MARKET IS OPERATES BEST IN THE SHORT TERM

The market system has no vision & cannot plan ahead because it registers wants & profit in the extreme short term

E. CAPITALISM HAS MARKET FAILURES

Market failures are the collapse of demand, resulting in an economic downturn, bust, recession, depression, etc.

Historically, capitalist systems have had frequent market failures

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Outline on Socialism

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Socialism is an economic system, normally found in industrialized countries, in which the means of production is publicly owned

There are several different types of socialism that vary on govt. control, mkt emphasis, control of the society's culture, & more

State socialism emphasizes the major role of govt. as the central planner of the economy, & society in general

Market socialism emphasizes the major role of worker owned enterprises that compete w/ one another, as the most influential planner of the economy, & society in general

Democratic socialism emphasizes the major role of democratically elected councils as the most influential planner of the economy, & society in general, & control of the culture is seen as more important than control of the economy

A mixed economy is a form of socialism combined w/ a form of capitalism

Mixed economies are economic systems in which the govt. provides extensive social services & performs some major econ functions while manufacturing & other industries are at least in part, privately owned

Socialism is said to occur when the govt. regulates & controls the profits of the major segments of the economy even though those segments remain privately owned

Though many theorists had examined socialism before, Marx is considered to be the father of socialism because he gained widespread international recognition

Marx advocated that workers should unite, take control of the means of production, abolish production related private property, & socialize the means of production

For Marx, the first & most critical task of socialism is the abolition of alienated labor, thus allowing true human freedom

With "actualized labor," people are no longer compelled or controlled by social conditions but rather are able to consciously able to determine their future

One of Marx's most quoted phrases was that he said under socialism there would be 'a withering away of the state'

The withering of the state connoted not that there would be no govt., as is often misunderstood, but that govt. would cease to exist as we recognize it now in that it would be controlled by the people, a tool for the public's use, rather than being controlled by the elite

Critics of socialism hold that it is impossible for the mkt to function because socialism is by definition monopolistic in that there is only one producer, the state owned enterprises, which do not have any competition to spur efficiency

The lack of competition & the norm of taking care of people rather than doing what is most efficient means that govt. & business decisions are based on social policy rather than market factors

Socialist economies cannot possibly be as efficient as capitalist ones & thus the socialist nations had a lower standard of living than capitalist nations

Marx recognized that socialism would not be as efficient as capitalism; however, Marx & many socialists believed that people would settle for less as a society if they could have no poverty, free education, no crime, & other benefits

Marx believed that after the proletarian rev, wkrs would control the econ, but there would still be many remnants of the old systems

The socialist economies that existed were not the result of an overthrow of capitalism, but rather were the result of the overthrow of feudalism & thus they did not have the efficiency that would have been in place had a fully mature capitalist nation

W/ the collapse of the Soviet Union in 1989, once socialist nations were given a choice, people have for the most part voted for politicians favoring capitalist or mixed economies & democracy

Regardless of the path of its development, socialism has shown itself to be a route to a modern industrial country

After its inception in 1917, the Soviet Union was more efficient & dynamic that western societies as seen in its rapid industrialization, the launch of Sputnik, its world class educational system etc.

As the despotism of the political system set in, this threw a pall over the socialist economy & culture

State socialism failed because it was accompanied by an authoritarian political system & because of its inability to compete in a globalized, post-industrial economy

As the old, despotic socialism dies, these nations are developing forms of worker ownership that are in fact closer to Marx's ideal communist society

Worker owned enterprises that compete w/ one another has created an economic system called market socialism

Internal
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Outline on Socialist Nations

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The nearest examples of socialism today are China, Cuba, Vietnam, & North Korea

The former Soviet Union, now Russia, & its satellite nations in Eastern Europe, i.e. Poland, Czechoslovakia, Romania, Hungary, etc. were said to be socialist until the fall of the Soviet Union's socialist system in 1989

President Mikhail Gorbachev introduced elements of democratic political reform & capitalist economic forms into the Soviet system in the 1980s which came to be called Glasnost

Glasnost gave the Soviet Union & its satellites economic & political freedom & thus they through off the authoritarian political system they had been living under

Since an attempted military coup in 1991, when Boris Yeltsin took over as President, Russia has become more democratic & more capitalist, though some call it a crime capitalist economy because of the corruption & cronyism

In Russia today, the most profitable & easily concentratible sectors of the economy have been privatized & are said to be owned & controlled by "the Oligarchs"

The Russian Oligarchs run oil, the media, timber, many industries & President Putin & other Russian leaders have agreed to "look the other way" as the Oligarchs, all whom are billionaires, continue to cherry pick the Russian economy as long as they do not enter into politics

Today, less profitable sectors of the Russian economy, such as health, transportation, & some industries remain socialized

In Russia, many businesses are a complicated mix of public & private ownership

The defense industry in Russia is one third owned by Labor, one quarter by government, & the rest is in private hands

In Russia, most newspapers are privately own, some TV stations are publicly owned, some are private, & some have mixed ownership

Only 6% of Russian agriculture was privatized by 1994

60% of energy is owned by bureaucrats & company insiders, including the Oligarchs

The corruption of "insider" ownership occurred because it is difficult to work out a fair system to privatize a public enterprise & because those w/ power used it to gain economic assets

This transition from socialism to capitalism resulted in a 45% decline in GDP in Russia during the 1990s, leading to tragic levels of unemployment, poverty, & alcoholism

China is socialist in its ideology, but since the 1980s, they have introduced many competitive elements into their economic system

A 1989 student uprising in Beijing in Tianamen Square, still shrouded in history, failed to galvanize democracy in China

China took ownership of Taiwan from the British in 1999 & they have largely left the capitalist system intact

Black markets make up a significant proportion of the economies in the socialist & formerly socialist nations

It is estimated that the black market is up to 25% of the US economy

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Outline on the Transition to Socialism

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Marx & many other social theorists have examined the historical development of economic systems & found that economic systems have developed from hunter gatherer to subsistence agriculture & pastoralism to agriculture to industry

For Marx, just as the economic system determines the wider social structure or culture of society, the social system of ownership is determined by the economic system

Table on the Stages of Economic Evolution, According to Marx demonstrates that ownership has evolved from social or communal ownership to a complex system of private & state ownership w/ an increasing concentration of wealth

Marx & many others have examined the transitions from one type of society & economic system to another

Marx realized that there had been both evolutions & revolutions as there were many revolutions from feudal to capitalist systems

Capitalism has not developed in the manner in which Marx predicted

Neo Marxism examines in great detail what Marx failed to consider & how to address those short-comings

See Also: Neo Marxism

Capitalism did not simply evolve into a bigger & more exploitative version of the 1880s monopoly, robber baron dominated structure which Marx lived through

Capitalism adjusted to its crises, based on Marx's work, & developed mixed or state capitalism by socializing some healthcare, unemployment, & a social safety net, trust busting, legalizing a Labor Movement & regulating big business

The transition from pure or laissez faire capitalism to mixed or state capitalism resulted in the formation of a middle class

The middle class does not seem interested in radical social change, but has been satisfied w/ the development of a limited social safety net, & regulation of big business in relation to wages, benefits, workplace safety, limits on competition, etc.

Instead of socialism developing in advanced capitalist nations, revolutionaries brought down feudal govts., such as the Czarist regime in Russia in 1917, & installed despotic political systems & centrally planned economies

Table on the Stages of Economic Evolution, According to Marx

Far0511 PW

Socio-Economic System

Hunting & Gathering

Subsistence Ag & Pastorialism

Agriculture

Industry

Economic Relationships of Production

Primitive Communism

Primitive Communism

Slavery, Feudalism, Free Labor

Capitalism Socialism Communism

Ownership System

Communal Ownership

Communal Ownership

Private, Familial Ownership

Private, Individual Ownership

Stratification

No concentration of wealth

Low concentration of wealth

High concentration of wealth

Medium to high concentration of wealth

The Stages of Economic Evolution, According to Marx demonstrates that ownership has evolved from social or communal ownership to a complex system of private & state ownership w/ an increasing concentration of wealth

Internal
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Outline on Market Socialism

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Market socialism emphasizes the major role of worker owned enterprises that compete w/ one another, as the most influential planner of the economy, & society in general

Market socialism is a socialist economic system dominated by worker owned enterprises that compete w/ one another

Market socialism developed from the "classic" early socialism of the Soviet Union & other socialist nations as a result of the failure of authoritarian, state socialism

As the old, despotic socialism dies, these nations are developing forms of worker ownership that are in fact closer to Marx's ideal communist society

The Soviet Union had developed some worker owned industries that successfully competed in the global, market economy

Many socialist, employee owned industries continued to function after the fall of the Soviet Union in 1989-91, & the Russian govt. awarded 25% of ownership of enterprises to the workers in those enterprises

15% was available for sale to workers & mgrs.

Most of the ownership ended up in the hands of mgrs & Party Officials, thus worker ownership occurred marginally in some industries because of the Oligarchs domination

Market socialism incorporates some elements of socialism while retaining a market economy

Workers are learning to think in terms of the long term welfare of their enterprise, & thus their own long term welfare, and sacrifice short term, individualistic maximization of wages

Mixed ownership firms continue to operate in the Soviet Union, Poland, Hungary, Romania & other former Soviet Satellites while western multi national corporations continue to enter into their markets & to invest in their nations

Market socialism has proven itself to be much more efficient than state socialism

Internal
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Outline on the Communism

External
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Communism is a system proposed by Marx, & others, to date not realized in the world, in which all wealth is collectively owned, workers control the work place, & govt. as we know it is not needed

For Marx, under communism the remnants of exploitative society are now gone

Under socialism, some expletive aspects of capitalism still exist, but under communism these are now gone

Under communism, society will be economically be organized around the principle embodied in Marx's famous maxim, "From each according to their ability, to each according to their needs."

The former Soviet Union declared that it had transformed itself from socialism to communism in the 1960s, but this was false, as was its socialism

Under communism, Marx proposed that there would be a classless society in that there would be little economic differences in income

Marx proposed that w/ unalienated, or "actualized labor" each person would produce as they & society needed & thus from each worker would come the production according to their ability, & to each worker rewards would be given according to their need [ Marx did not use the term: actualized labor ], oft summarized as "From each, according to their ability, to each according to their need"

As under socialism, Marx predicted that govt. as we know it would wither away in that it would truly be a tool of the public rather than a tool of the elite

For example, Marx thought govt. would be able to give up its police function, & indeed in the former Soviet Union, crime was a fraction of what it was in the western nations because there was little poverty

Marx believed that once capitalist nations had totally matured , maximizing concentration of wealth & the exploitation workers, the people would realize that the system could offer them nothing more & seek to overthrown it & establish socialism

Thus in light of Marx's analysis, the socialist revolutions that occurred in Russia, China, & the other socialist nations were pre mature in that these nations were essentially feudal

Russia, et al, went directly from feudalism to what Marx would have seen as faux socialism

Most theorists believe that Marx was wrong in that no capitalist nations have transitioned to socialism; however, it is useful to note that Marx believed that socialism & communism would evolve only in totally mature capitalist nations

Marx & others wrote a lot on communism, & examined it philosophically, but in reality no nation has even every approached Marx's & other's vision of socialism, much less communism

For Marx & others, communism is a social system that seeks to end the exploitation of people by people

For Marx & others, communism is:

- not an end, but a means to greater freedom and humanity

- an ideal to which reality will have to adjust itself

- the next stage in human emancipation and recovery

Marx believed that we are a creature of the social conditions we have created, but we need no remain a prisoner of those conditions in that we could develop a social system, such as communism, that freed us of the constraints of social conditions

For Marx, to establish socialism, & then communism, society must abolish production related private property, & socialize the means of production

The abolition of production related private property & socialization of the means of production are the first steps in the abolition of alienated labor & establishment of "actualizing labor" [ Marx did not use the term: actualizing labor ]

Actualized labor allows freedom & may be understood as a process of labor or creation whereby people are no longer compelled or controlled by social conditions but rather are able to consciously able to determine their future

The ultimate goal of Marxism is to meet the needs of the individual to achieve their freedom.

Marx held that to achieve freedom, people must associate freely and fulfill their human needs to further their development

Marx believed that true human freedom was now possible

Up until the period of the ind rev, relations of production, i.e., had not been sufficient to support humanity

For Marx, in the ind age humanity had conquered nature, and all that was left was to end the exploitation of people by people

Internal
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Outline on the Mixed Economies: State Capitalism

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Mixed economies are economic systems in which the govt. provides extensive social services & performs some major economic functions while manufacturing & other industries are at least in part, privately owned

A mixed economy is a form of socialism combined w/ a form of capitalism

State capitalism, democratic socialism, market socialism, mixed capitalism, etc. are all mixed economies which vary primarily on the dimensions of ownership, regulation & a social safety net

The primary dimensions of concern in mixed economies include state ownership, public ownership, private ownership, worker ownership, govt. regulation of big business, govt. regulation of the environment, govt. regulation of workplace safety, & social safety net, health care, retraining, etc.

The unique mixture of these dimensions makes each country w/ a mixed economy unique, w/ particular strengths & weaknesses

Nearly all capitalist nations vary on a dimension running from pure capitalism to mixed economies to socialism

The US is no longer pure capitalist, rather it has its own unique form of a mixed economy

The mixed economy qualities of the US include: some state ownership, some regulation of big business, some govt. regulation of the environment, some govt. regulation of the workplace, a small social safety net, health care for the elderly & disabled, some worker retraining

The mixed economies of most western European countries is similar to the US but they have somewhat more of each socialist dimension than the US

Sweden, Germany, and Norway are generally socialist & among the most productive nations in the world

Sweden's mixed economy provides stronger environmental protection than the US, & it also has worker ownership in several major industries

Btwn 1970 & 1990, Japan had one of the most productive economies in the world, rising to the highest per capita income of any major industrialized nation

The Japanese economy has remained powerful, but has stagnated in the 1990s because of a banking crisis

Japan's economic system has high worker control of the workplace, little worker ownership, & the lowest income gap btwn mgrs. & workers

Japan has strong environmental protection in some areas such as air quality, but is weak in others, such as ocean fishing

The mixed economies of most Eastern European countries are similar to the Western Europeans except that they have more worker owned enterprises

In most Eastern European countries, the govt. intervenes to maintain economic growth through management of fiscal & monetary policy

In Europe, the Labor Movement & the Green Movement are more powerful than in other nations & these movements serve to preserve the social or public qualities of their govts

In Europe, the Labor Movement & the Green Movement exercise their power through social democratic political parties in that they have their own parties & candidates

The European parliamentary political system also serves to give a plethora of minority parties greater influence thus forcing the govt. to establish policies that take into account the needs & positions of all segments of the population & not just the dominant party

With the fall of the Soviet Union, 1989, 1991, nearly all nations experienced a roll back of mixed economic qualities

The US, since President Reagan, has cut back its social welfare system, cut regulation of business, lowered taxes, & in 2003 is privatizing Medicare

In Europe, England has significantly cut mixed economic features, yet remains one the less productive European nations

Sweden & England have since reinstituted some mixed economic features as their social democratic parties have regained power

Social democrats in Canada have also gained ground & retained their mixed economic features such as their world renowned healthcare system

In 2006, Fr experienced several waves of riots, some student lead, some youth lead

Like the other core nations of the world, Fr has elected a more conservative, capitalist oriented govt

Fr's capitalist oriented govt is rolling back Fr's mixed econ, social safety net, & instituting facets of capitalism & competition

Fr's leadership maintains that they must increase the competition w/ Fr society in order to compete in the global mkt

Thus the roll back of mixed econs & the cuts in social safety nets are a result of globalization & the dominance of the world econ sys by corps

Internal
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Outline on the Mixed Economies: 3 Capitalist Models in Competition in the 21st Century

External
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- Project: Compare the Mixed Economies: The 3 Capitalist Models

- Supplement: Command & Control. Fixing capitalism means taking power back from business. Time Magazine. Jan 30. 2012. pp. 45-46.

- Supplement: Command Jobs Created by Presidential Administration June 7, 2015

THE VARIANTS OF THE GLOBAL CAP WES, I.E. IN THE US, GER, & JAP, ARE ALL IN COMPETITION W/ EACH OTHER

The Japanese & the Euros have notices that the US is becoming more competitive

The UK has followed the US lead w/ some econ improvement since the 1st yrs of Reaganomics

By the end of the 90s, the UK, like the US had the same trend of increasing income inequality, lower wkr pay, & few benefits

In the 70s & 80s the UK was called "the sick man of Europe" because of its econ weakness, but after Thatcher & Blair followed Reaganomics, as indicated in the Table on Core Nation Econ Indicators, the UK increased its econ competitive condition while the Brit wking class suffered a decline in their living standards

For the rest of Euro, the focus was less on Reaganomics & more on the econ advantages of the Euro Union ( EU ) unification & improved mgt / labor coop

The idea for most of Euro was that more econ cooperation will make their econs more efficient & competitive

W/ far greater welfare & unemployment benefits that the US, more pay & benefits to wkrs, & shorter wking hrs, Euros are now becoming worried that they will be left behind if the new Reaganomics strat continues to succeed

THE NEW DEAL, REAGANOMICS, & THE ASIAN MODELS ARE ALL VARIATIONS OF THE GLOBAL CAP WES

Whether Reaganomics as expressed in lower wages, lower benefits, cutting jobs, & increasing wkr hrs will maintain US econ dominance in the long run is uncertain

Many observers in the US argue that the US can regain econ strength, & gain a society w/ fewer social problems, by moving in the opposite direction away from Reaganomics

Some observers believe the US should look at how Germany & Japan are able to train their wkforces & obtain wkr involvement in corporate decision making as a way to improve competitiveness

Ger is based on FDR's New Deal econ model which estbes a balance of power btwn labor & mgt, govt reg to limit corp power, & a social safety net

Jap & other regional nations are based on the Asian Model which estbes a hi level of gov control of corp dev & investment, & a ethic which promotes econ equality

The US needs a better ed, better trained, better paid, & more motivated & loyal wkforce that rewards nations that are able to compete in hi tech ind

The US must compete in a new hi tech world econ by focusing more on ed & motivation of the bottom 50 % of the wkforce, rather than by beating down wages & labor

It is the better ed, more skilled, & more loyal wkrs, because of more labor participation & union involvement, of Euro & Japan who will give nations the edge

OBSERVERS DISAGREE ON WHICH OF THE 3 WES'S IS BEST: THE NEW DEAL, REAGANOMICS, OR THE ASIAN MODEL

Whether or not the critique of Reaganomics & the responses to it are valid, soc strat & the econ sys of the US, Europe, & Japan are significantly different forms of capitalism, allowing different classes to push through agendas favoring their interests relative to those of other classes

The three capitalist, econ systems operating in the core nations today go by various names such as

1. the New Deal / corporatist system / cooperative capitalism, etc. which exists in Germany, France & other Euro nations

2. Reaganomics / neo liberalism / corp dominated cap, etc.; which exists in the US & the UK

3. the Asian development model / a planned economy, etc. which exists in Japan & other Asian nations

THE NEW DEAL, REAGANOMICS, & THE ASIAN MODEL ARE ALL FORMS OF A 'MIXED ECONOMY'

The three capitalist, econ systems operating in the core nations today are all types of "mixed capitalism" as contrasted w/ the earlier forms of capitalism, often called pure capitalism or laissez faire capitalism

See Also: Mixed Capitalism

See Also: Pure Capitalism

Mixed economies are economic systems in which the govt provides extensive social services & performs some major economic functions while manufacturing & other industries are at least in part, privately owned, & provides a regulatory structure which limits the corp power of mkt concentration, monopoly, etc.

The three systems today differ not only on how the forces & relations of production are organized, but also along the many other dimensions including their welfare systems, the level of democracy, personal freedoms, & more

The three systems today differ on the forces & relations of production in relation to wkr participation, union participation, job security, the skilling vs. deskilling of jobs, careers vs. temp work, developing viable national productions systems vs. outsourcing & deindustrialization, & more

The Table on the Competing Forms of Capitalism demonstrates the key differences in the systems & the advantages & disadvantages of each type of sys, w/ the major disadvantages being econ crisis under Reaganism, & slower growth & higher taxes under the New Deal & the Asian Model

The 3 systems lead to different stats for competing in today's WES w/ differing positive & negative outcomes for people in each nation

Just as Brit, Holland, & Fr were competing w/ each other from different pol & econ instits in the 1700s, by the mid of the 21st C we will likely find out which of the 3 current forms of capitalism will take or continue to lead

CHINA IS A 4TH TYPE OF WES, A HYBRID OF PLANNED / SOCIALIST ECON MIXED W/ A CAP SYS W/ AN AUTHORITARIAN POL / CUL SYS

A fourth model is emerging in the WES, that of China, which is a hybrid planned / socialist & capitalist system

China is now the 4th largest econ behind but currently it has the most rapid rate of growth & is thus expected by many to be the largest econ by 2050

China, more than most other Asian nations, embraces an authoritarian pol / cul sys that maintains a very hi level of control in civil society

Table on the Competing Forms of Capitalism

External
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The New Deal / Corporatist System /
Cooperative Capitalism, etc.

Reaganomics / Neo Liberalism /
Corp Dominated Cap, etc.

The Asian Development Model /
A Planned Cap Economy, etc.

Nations:
Germany, France & other Euro nations

Nations:
The US & the UK

Nations:
Japan & other Asian nations

Characteristics:
Large welfare state
State reg of the econ
Some econ planning
Strong unions

Characteristics:
Small state
Little govt regs
Weak unions
Low labor costs

Characteristics:
Strong state intervention
Extensive regs
Extensive econ planning
Weak unions

Outcomes:
Hi prod costs
Low inequality
Hi wkr benefits
Hi job security
Hi unemployment
Low poverty
Hi taxes

Outcomes:
Low prod costs
Hi inequality
Low wkr benefits
Less job security
Low unemployment
Hi poverty
Low taxes

Outcomes:
Medium prod costs
Low inequality
Medium wkr benefits
Medium job security
Low unemployment
Low poverty
Low taxes

Advantages:

Advantages:

Advantages:

Disadvantages:

Disadvantages:

Disadvantages:

The Table on the Competing Forms of Capitalism demonstrates the key differences in the systems & the advantages & disadvantages of each type of sys, w/ the major disadvantages being econ crisis under Reaganism, & slower growth & higher taxes under the New Deal & the Asian Model

Internal
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Outline on the New Deal
aka a Corporatist System / Cooperative Capitalism

External
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- Supplement: New Deal Programs

- Supplement: The New Deal

- Supplement: The Power Steering. How Chrysler's Intalian boss drives an American revival. Time Magazine. Dec. 19, 2011. pp. 36-41.

- Video: The German Economic System. News Hour. Feb, 2012. 9:50 min

- Project: Video: The German Economic System

THE US EMBRACED A NEW DEAL / CORPORATIST / COOPERATIVE ECON SYS FROM THE 1930s TO THE 1980s, & THE EUROS STILL EMBRACE IT

One of the three capitalist, econ systems operating in the core nations today goes by various names such as the New Deal / corporatist system / cooperative capitalism, etc. which exists in Germany, France & other Euro nations

In Continental Euro nation, esp Germany & Fr, the UC / CC, & MC / WC in alliance w/ govt, have arrived at a sort of power sharing agreement so that the govt helps organize the econ, & protect the interests of all parties

A central component of the New Deal sys in contrast to Reaganomics is strong labor unions & labor laws, restricting what corp elites can do in the econ & pol sys

In the 1980s, under President Reagan & the following Presidents, the New Deal econ sys began to be transformed to the new Reaganomics variant of global cap

While some Euro nations embraced facets of Reaganomics, esp the UK under Thatcher, in general the Euros have retained more of the New Deal aspects of their econ

THE NEW DEAL REGULATED CORPS, LEGALIZED UNIONS, ESTBED A SOCIAL SAFETY NET, & BEGAN GOVT MGT OF GROWTH & DECLINE OF THE ECON THROUGH FISCAL & MONETARY POLICY

Broadly, the fundamental quals of the New Deal include:

a. regulation of corps to limit monopoly power, mkt concentration, unsafe practices, unsafe products, price fixing, etc.

b. the legalization of unions & the Labor Mvmt which also has the effect of regulating corps w/ respect to wages, benefits, career paths, working conditions, pensions etc.

c. the establishment of a social safety net, esp as seen in Social Security retirement benefits & Medicare (national healthcare for the retired) & Medicaid (national healthcare for the poor)

d. mgt of the growth & decline of the econ by embracing 'Keynesian economics' which called for stimulating an econ to make it grow, or restricting an econ to slow growth by fiscal & monetary policy; i.e. govt spending & govt control of the money supply, receptively

THE NEW DEAL CONSISTS OF MANY GOVT PROGRAMS & INITIATIVES SOME OF WHICH STILL FUNCTION TODAY, I.E. SOC SECURITY

In the throes of the Great Depression, which began w/ the stock mkt crash in 1929 under President Hoover, btwn 1933 &1935 FDR began to pass his econ & soc policies with the goals of what historians call the 3 Rs, of giving relief to the unemployed & badly hurt farmers, reform of business and financial practices, & promoting recovery of the economy during the Great Depression

The "First New Deal" (March 4, 1933) was aimed at meeting the needs of practically all major groups, from banking & railroads to industry & farming

The New Deal innovated with banking reform laws, work relief programs, ag programs, & industrial reform (the National Recovery Administration, NRA), & the end of the gold standard

A "Second New Deal" (May 14, 1935) included labor union support, the Works Progress Administration (WPA) relief program, the Social Security Act, & programs to aid the ag sector, including tenant farmers & migrant wkrs

The Supreme Court ruled several programs unconstitutional; however, most were soon replaced, w/ the exception of the NRA

The Fair Labor Standards Act of 1938 was the last major program launched, which set maximum hours & minimum wages for most categories of workers

	THE EFFECTS OF THE NEW DEAL ARE TO LEVEL OUT THE BOOMS & RECESSIONS OF THE MKT, & TO LIMIT THE ILLS OF CORP POWER
	In Euro, esp Germany, corps are much less able to dominate the econ & pol sys, but have to work in a competitive alliance w/ the state & labor
	Histly, mkt sys have shown a fairly regular pattern of rapid econ growth, i.e. booms, & econ decline, i.e. recessions but since the implementation of Keynesian econ, these mkt trends have been moderated
	During the Clinton admin (1992 - 2000) the US experienced its longest growth period, & at the end of this boom, the MC experienced a couple yrs of real wage growth
	During the Clinton econ boom, some economist speculated that the US had finally learned to manage the econ so well that we might see the end of recession
	However, this boom ended in 2002 w/ Bush Jr's minor recession, & 2007 w/ a major recession, but even these recessions are not as devastating as those before the Great Depression
	The limits of corp power may seem inadequate to many today, but at least in the core nations, corps have lost much of the power that earned them the name "robber barons" in the 1800s & early 1900s

Internal
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Outline on Reaganomics
aka Neo Liberalism, Corp Dominated Capitalism

External
Links

- Supplement: Command & Control. Fixing capitalism means taking power back from business. Time Magazine. Jan 30. 2012. pp. 45-46.

REAGANOMICS EMPOWERS THE UC TO LEAD SOCIETY FOR THE BENEFIT OF ALL

One of the three capitalist, econ systems operating in the core nations today goes by various names such as Reaganomics / neo liberalism / corp dominated cap, etc.; including the US & the UK

The political econ sys of the US & to a lessor degree, the UK, is one where the govt stays relatively uninvolved in the econ, i.e. w/ little econ planning & almost no govt ownership of industry

The neo lib poli econ sys results in more freedom for a corporate class to run the econ as they see fit

The UC & the CC are clearly the dominate the sys & other classes, w/ the MC & WC having little influence in the govt & in obtaining govt protection w/ labor laws, income protection, social benefits, etc.

THE PRINCIPLES OF REAGANOMICS INCLUDE THE FREE MKT, CUT REGS & TAXES, TRICKLE DOWN ECON, & ESTB FOREIGN POLICY FROM A POSITION OF POWER

The major principles of Reaganomics include:

1. let the free mkt operate

2. cut govt regs so the UC & corps can operate optimally

3. cut taxes so the UC & corps can reinvest to the benefit of all society, as opposed to letting govt inefficiently redistribute money

4. let wealth trickle down from the UC to the other classes

5. estb foreign policy from a position of power

REAGAN CAME TO POWER AFTER AM'S HUMILIATION IN VIETNAM, WATERGATE, AN ECON RECESSION, & THE HOSTAGE CRISIS IN IRAN

Reagan was elected President in 1980, defeating then President Carter

Reagan came to power at the end of the Vietnam War & the Watergate era, & the US was in econ stagnation & had suffered intl humiliation when the Shah of Iran was overthrown & Am hostages were held in Tehran & Carter's rescue planned failed

Reaganomics made the rich richer while the other classes essentially maintained their position or slightly declined

Reaganomics have dominated in US econ & foreign policy since Reagan was elected in 1980 through the Reagan, Bush Sr, Clinton, & Bush Jr admins, but Obama has returned to some form of New Deal policies

Internal
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Outline on the Asian Model

External
Links

THE ASIAN MODEL COMBINES THE FREE MKT W/ A GOVT BUREAUCRATIC CLASS TO MANAGE ECON DEV, & A PRINCIPLE OF EQUALITY

One of the three capitalist, econ systems operating in the core nations today goes by various names such as the Asian development model / a planned economy, etc. including Japan & other Asian nations

The Asian Model the state has more independent, or autonomous pol power, as well as more control over the econ

As is the case of Japan, there govt ownership of ind, but the priv sector is rigidly guided & restricted by bureaucratic govt elites

Bureaucratic govt elites are not elected officials & are less subject to influence by either the CC or WC through the pol process

A govt ministry can have the freedom to plan the econ & look to long term nat interests w/o having their econ policies disrupted by either CC or WC short term, narrow interests

THE ASIAN MODEL IS SO SUCCESSFUL THAT THE ASIAN PACIFIC REGION IS GROWING FASTER THAN ANY OTHER REGION

Japan & other emerging econs in east & SE Asia have a variation of the state development capitalism most exemplified by Japan

In the Asian Model the state is much stronger & usually able to force capitalists & labor to follow its regs & long term econ planning goals

The Asian Model has created record econ growth & industrialization in many Asian Pacific nations including Korea, Taiwan, Thailand, etc.

China's form of econ, evolving out of a socialist system, is a unique sys combing some quals of Reaganomics & the Asian Model

The Asian Model has been so successful that if current trends continue, the Asian Pacific region will produce over half of the world's econ output by 2050

THE PRINCIPLES OF THE ASIAN MODEL INCLUDE FREE MKT, LIMIT OF UC / CORP POWER FOR BENEFIT OF ALL, MANAGE ECON DEV, EQUAL DIST OF WEALTH, A CORP SOC SAFETY NET, & PARTICIPATORY RELATIONS OF PRODUCTION

The principles of the Asian model include:

1. letting the free mkt operate

2. managing / limiting the power of the UC & corps for the benefit of all society

3. having govt bur manage & regulate the econ for planned econ dev

4. estb a relatively equal dist of wealth

5. having a minimal social safety net, but having corps minimize the effects of a recession on all classes by keeping unemployment low, keeping wages relatively equal, etc.

6. participatory relations of production whereby, in today's hi tech econ, all wkrs have a profl relationship w/ mgt, & ideas are generated at the shop floor & passed up the chain of command

Internal
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Outline on the Capitalism & Profit Maximization

External
Links

- Video: The Corporation: Segment 5: Sept 11th & the Price of Gold & Oil 2:25 minutes

THE MKT IS EFFICIENT BECAUSE OF THE OPERATION OF THE "INVISIBLE HAND"

The functioning of capitalism, through the market & the "invisible hand," promotes profit maximization, efficiency, flexibility, etc.

Adam Smith believed that under capitalism, w/ its processes of the invisible hand & the profit motive, everyone would benefit because these social processes reward efficiency w/ higher profits, create jobs, create products, provide a tax base, etc.

Marx recognized that capitalism was the most efficient system, the most flexible system; even more so than socialism

Marx, however, believed that w/ the transition to socialism that the efficiency developed in mature capitalism would be more than sufficient to provide for all human needs & thus socialism is a compromise btwn humanity & efficiency

EFFICIENCY IN THE MKTS DOES NOT GUARANTEE FAIRNESS IN THE MKTS

For Marx, what is most efficient is deficient in its humanity

Thus, modern economists agree w/ Marx agree who posits that capitalism depends on a norm of maximization

For modern economists & Marx, economically rational behavior is that which brings the maximum possible return in income, wealth, or profits

Critics of capitalism note that when one person maximizes wealth, it may occur at the expense of another

Maximization of profits results in social inequality

The US has greater economic inequality & more severe poverty than most other industrialized countries all of which are less capitalistic than the US

See Also: Stratification

PEOPLE HAVE NOT ALWAYS PURSUED UNBRIDLED PROFIT MAX

Many argue that maximizing wealth, inequality, poverty, etc. is simply human nature

There are TWO arguments that say it is wealth maximization, inequality, poverty, etc. are part of human nature

First, the socio historical examination shows that while wealth maximization, inequality, poverty, etc. have been consistent in the US for the last 100 years, stratification has not been consistent historically in that it has changed depending on the type of socio-economic system from a low during the Hunter Gatherer Era, to a high during the Feudalism of the Middle Ages, to the medium to high level during the Post Industrial Age, i.e. the present

THE PURSUIT OF PROFIT MAX IS CULTURALLY DETERMINED

Second, Weber demonstrates that stratification is related to, created by the interaction of cultural, religious & social systems as well as economic systems

See Also: Weber

See Also: Weber on Strat

The norm of maximization of wealth & income has arisen in socialist countries

The norm of maximization of wealth & income arising in socialist countries is the result of their viewing the higher standard of living in capitalist countries

In extremely isolated socialist countries such as Albania & North Korea, it does not seem that individualist, maximizing values are prevalent

It seems that if an individual, class, or even society is isolated from inequality, i.e. does not have to view others w/ more wealth, then people are content w/ their own level

To paraphrase Merton's findings of crime, commonly called the J Curve or the Expectations Theory, it is not a lack of wealth that motivates people or creates feelings of deprivation & alienation, rather it is the lack of wealth in the midst of wealth that creates need, deprivation, etc.

Internal
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Outline on Monopoly Capitalism

External
Links

- Project: Monopolies Today

There are three major organization forms of enterprise w/in the economic system of monopoly capitalism including monopoly, oligopoly, & conglomerate

A monopoly is an enterprise which is the only producer of a given product, & has no competition

An oligopoly is a few enterprises which are the major producers of a given product, who do not compete among themselves & have no outside competition

A CONGLOMERATE IS A CORP W/ MANY DIFFERENT BUSINESS TYPES

A conglomerate is a very large company that owns production in a number of industries, thereby achieving at least oligopoly status, & possibly monopoly status in one or several of the industries

Conglomerates became popular in the 1960s & 70s but many were dismantled during the corporate takeover period of the 1980s

The major advantage of conglomeration is that it allows an enterprise to diversify into several different business & sectors of the economy thereby avoiding economic business cycles

The major disadvantage of conglomeration is that it is very difficult to manage unrelated business

Today, most conglomerates are at least in similar industries such as the Pepsi-Co conglomerate which owns Frito Lay, Pizza Hut & other consumer food corporations

PURE CAPITALISM IS THE COMPETITION AMONG MANY BUSINESSES

Pure capitalism evolved from a system of small producers & small buyers to one of a large producer & consumers, i.e. monopolistic relations, or a few large producers & consumers, i.e. oligopolistic or conglomerate relations as a result of the concentration of wealth & the normal functioning of pure capitalism

The market system & the laws of supply & demand bring rewards to those who supply what people want & can buy, especially those who do it the most efficiently

The pursuit of profit maximization means that enterprises must grow ever larger & attempt to grab more market share

Pure capitalism cannot continue to function as a system of small buyer & sellers in that the maximization of profits creates ever larger enterprises who are continually absorbing the smaller enterprises

See Also: Capitalism & Profit Maximization

The extent to which capitalism actually works varies because the market can only function when there is free competition

The origins of the current high levels of econ concentration began in the 1800s when large American producers combined into a few giant corporations known as trusts, thereby eliminating competition & creating oligopoly

By the late 1800s many industries in the US such as oil, steel, railroads, banking et al, had become monopolies in that they were dominated by one producer and many others were oligopolies in that they were dominated by only a few producers

MONOPOLY CAPITALISM EXISTS WHEN MONOPOLISTIC OR OLIGOPOLISTIC CORPS DOMINATE THE MKT, LIMITING OR ELIMINATING COMPETITION, OFTEN ESTBING A 'FOLLOW THE LEADER' TYPE OF MKT RELATIONS

To the extent that an economy is dominated by one or a few producers, there cannot be competition so the market cannot encourage efficiency

Thus, the market does not always exert great influence under capitalism

In the early 1900s, a growing concern about the effects on concentration in the economy led to the passage of antitrust laws

Antitrust laws eventually resulted in the breakup of Standard Oil & other trusts, but have since rarely been strictly enforced

Monopolies, oligopolies, & conglomerates do not produce at the most efficient amount, rather they produce at an inefficient level where they can saturate the market & maximize the total amount sold

The effect of monopoly capitalism & profit maximization results in market concentration

Market Concentration

Interlocking Directorates

Internal
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Outline on Corporations

External
Links

- Supplement: The Fortune 500, 1998, 1 - 50

- Supplement: The Fortune 500, 1998, 51 - 100

- Supplement: The Fortune 500, 1998, Overview of GM

- Supplement: The Fortune 500, 2000, 1-50

- Supplement: The Global 100, 1998, 1-51

- Supplement: The Global 100, 1998, 51-100

- Resource: The Table on a Comparison of Corporations' & Nations' Income, 2005

The Table on a Comparison of Corporations' & Nations' Income, 2005, demonstrates that of 500 corps & 181 nations:
                - the top   10 corps are larger than 140 nations
                - the top 200 corps are larger than 100 nations
                - the top 500 corps are larger than   80 nations

Link

- Project: The Corporation & Bureaucracy

- Project: Video: The Corporation

- Video: The Corporation: Segment 1: Intro: A Few Bad Apples 18:09 minutes

- Video: Barbarians at the Gate 1993. 1 hr 47 min

- Video: The Milton Friedman Choir performs "The Corporation" 2:53 minutes

A CORPORATION IS A FORM OF BUSINESS ORGANIZATION WHICH ENJOYS THE LEGAL STATUS OF A PERSON FOR CARRYING ON CERTAIN ACTIVITIES

Most corps are organized for profit by subscribers who raise capital (investment money) by selling shares of stock

A corp is a legally chartered enterprise w/ most of the legal rights of a person including the right to:
- conduct business
- own & sell property
- borrow $$
- sue & be sued

Corps have hd legal protection as "persons" for over a centry in the us as a result of the 19th Amendment & the Supreme Court decision in Santa Clara County v. Southern Pacific RR Co, 1886

Corp's legal status as a person protects the owners of corps, i.e. the stockholders, from bearing full legal or fiscal rsponsibility for the actions of the corp

Because corps are recognized as persons, debts, bankruptcy, & lawsuits are restricted to the corp itslerf & do not carry over to its owners, creating the concept of corp limited liability

One of the biggest advantageous of corps is that they have ability to raise tremendous, unlimited amounts of capital

The corp is the most prevalent (biggest & most powerful) form of business org

THE QUALITIES OF CORPS INCLUDE SEPARATE MGT & OWNERSHIP, SHAREHOLDERS, STOCK -- 'UNLIMITED' CAPITAL, LIMITED LIABILITY, & UNLIMITED LIFE

Modern corps usually have a separation of management & ownership

Corps existed in ancient Rome, but modern forms developed w/ the spread of commerce in the Renaissance & growth of industry in the 18th & 19th centuries

Large sums of capital are needed for industrial development in such sectors as:
- RR - steel mills - etc.
- Coal mines - factories

Most corps operate under state charters

As a legal person, corps may hold property, carry on business, & even commit crimes

Increasing power & narrowing control to a few owners by holding companies (organized to control shares in other corps) has caused opposition & some restriction by law

Shareholders, a.k.a. stockholders, are the owners of a corp

A stock's "value" is found in its % or proportion of the corp

Issuing new stock reduces a shareholder's share, but the corp must offer all shareholders new stock sufficient to maintain their share- -for a price

The market price is what the stock is traded for on an exchange & is based on many factors such as dividend payment record, capital gains record, expectations for the future, competition, etc.

While sole proprietorships & partnerships have unlimited liability which means that any damages or debts attributed to the enterprise can also be attached to the owner(s) because the two have no separate legal existence

Corps have limited liability which means that shareholders can only lose the amt of $$ invested in stock & are not responsible for any damages or debts of the corp

Liability is limited to corps assets

A corp's major value is not in the corp's assets, but what the stock can be traded for-- which reflects both assets & market power

A corp can only be sued for its assets, ie the assets of the corp, not the shareholders

Thus a corp can earn big money over several decades, pay that out to shareholders in dividends & stock splits (capital gains), & have little value left for outsiders to take

A corp that only owns stock in other corps is known as a shell corp

A corp that has paid out all real value & has little left internally, is known as a hollow corp

The hollow corp phenomenon has been used by tobacco cos., asbestos cos. coal cos. & others

In today's post industrial world, it is true that many corps have little value other than the services they offer; e.g. Microsoft has very few assets, etc.

Unlimited life

Corp has unlimited life span & ownership

Stock trading means ownership can change drastically: e-trade

Stock can be bequeathed

The death of any investor does not affect the life or operation or a corp

A disadvantage of a corp is double taxation

CORPORATE PERSONNEL INCLUDE STOCKHOLDERS, DIRECTORS, MGT, & WORKERS

1. Shareholders, a.k.a. stockholders

2. Board of directors

3. Top mgt

4. Mid mgt

5. Lower mgt

6. Workers

INSTITUTIONAL INVESTORS INCLUDE LARGE ORGS THAT OWN MANY SHARES OF STOCK

Examples of institutional investors include banks, mutual funds, pension funds, insurance companies, foundations, and sometimes other "cash rich" corps who choose to invest in other corps rather than themselves

The NYC Employee Retirement System convinced Exxon to appoint an environmentalist to its board following the Exxon Valdez oil spill in 1989

Institutional investors can rock the stock market

A proxy is a document authorizing another to vote on behalf of a shareholder

Top Table on 13 Types of Corporations
Type of Corp	Descriptions	Example
Public	Govt owned Formed for specific public purpose	TVA
Quasi public	Public Utilities; for profit Often have monopoly Provide basic services	Commonwealth Ed ODP
Private	Owned by private individuals or co's	GM, Microsoft
Not for profit	Exist to provide social service, rather than make a profit	Harvard Un
For profit	Major goal is to make profit: today that is done by increasing stock value; not through div	IBM, GM
Publicly traded	Sell stock on open market (Dow, Nasdaq, etc.)	IBM, GM, Microsoft
Not publicly traded	Withhold stock from open market: corp constitution determines how stock is bought/sold	Top
Professional	shareholders offer prof services (medical, legal, engineering, etc.)
S corp	No more than 35 shareholders; may be taxed as partnerships	Inland Asphalt Rothschilds Schlumberge'
Limited liability	Combine benefits of S corp & limited partnership, w/o drawbacks of either	Realatech
Subsidiary	Stock is owned entirely or almost entirely by another corp	Seven Up
Parent co.	Owns most, if not all of another & takes an active part in managing all subsidiaries	Sears
Holding co.	Owns most, if not all of another but takes no active part in managing all subsidiaries.	Intermark

Top Table: The Largest 100 US Corporations by Revenues, 1999 Kerbo 0407
Rank	Corporations	Revenue in $ millions
1.	General Motors	161,315 = 161.315 billion
2.	Ford Motor	144,416.0
3.	Wal-Mart Stores	139,208.0
4.	Exxon	100,697.0
5.	General Electric	100,469.0
6.	Intl. Business Machines	81,667.0
7.	Citigroup	76,431.0
8.	Philip Morris	57,813.0
9.	Boeing	56,154.0
10.	AT&T	53,588.0
11.	Bank of America	50,777.0
12.	Mobil	47,678.0
13.	Hewlett Packard	47,061.0
14.	State Farm Insurance Cos.	44,620.9
15.	Sears Roebuck	41,322.0
16.	E.I. du Pont de Nemours	39,130.0
17.	Procter & Gamble	37,154.0
18.	TIAA-CREF	35,889.0
19.	Merrill Lynch	35,853.0
20.	Prudential Ins. Co. of America	34,427.0
21.	Kmart	33,674.0
22.	American International Group	33,296.0
23.	Chase Manhattan Corp.	32,379.0
24.	Texaco	31,707.0
25.	Bell Atlantic	31,565.0
26.	Fannie Mae	31,498.8
27.	Enron	31,260.0
28.	Compaq Computer	31,169.0
29.	Morgan Stanley Dean Witter	31,131.0
30.	Dayton Hudson	30,951.0
31.	J.C. Penney	30,678.0
32.	Home Depot	30,219.0
33.	Lucent Technologies	30,147.0
34.	Motorola	29,398.0
35.	SBC Communications	28,777.0
36.	Kroger	28,203.3
37.	Merck	26,898.2
38.	Chevron	26,801.0
39.	Metropolitian Life Insurance	26,735.0
40.	Intel	26.273.0
41.	Lockheed Martin	26,266.0
42.	Allstate	25,879.0
43.	United Technologies	25,715.0
44.	Bank One Corp.	25,959.0
45.	GTE	25,473.0
46.	United Parcel Service	24,788.0
47.	USX	24,754.0
48.	Safeway	24,484.2
49.	Costco	24,269.9
50.	ConAgra	23,840.5
51.	Johnson & Johnson	23,657.0
52.	Bell South	23,123.0
53.	Walt Disney	22,976.0
54.	PepsiCo	22,348.0
55.	Ingram Micro	22,034.0
56.	First Union Corp.	21,543.0
57.	Cigna	21,437.0
58.	Caterpillar	20,977.0
59.	McKesson HBOC	20,857.3
60.	Lowes	20,713.0
61.	Aetna	20,604.1
62.	Wells Fargo	20,482.0
63.	Xerox	20,019.0
64.	Sara Lee	20,011.0
65.	PG&E Corp.	19,942.0
66.	Lehman Brothers Holdings	19,894.0
67.	American Stores	19,866.7
68.	New York Life Insurances	19,848.9
69.	Columbia/HCA Healthcare	19,681.0
70.	Raytheon	19,530.0
71.	International Paper	19,500.0
72.	AMR	19,205.0
73.	American Express	19,132.0
74.	Coca-Cola	18,813.0
75.	Dow Chemical	18,441.0
76.	J.P. Morgan and Co.	18,425.0
77.	Bristol-Myers Squibb	18,283.6
78.	Dell Computer	18,243.0
79.	Freddie Mac	18,048.0
80.	MCI Worldcom	17,678.0
81.	Duke Energy	17,610.0
82.	UAL	17,561.0
83.	AutoNation	17,487.0
84.	United HealthCare	17,355.0
85.	Halliburton	17,353.1
86.	Supervalu	17,201.4
87.	Ameritech	17,154.0
88.	Sprint	17,134.3
89.	RJR Nabisco Holdings	17,037.0
90.	Electronic Data Systems	16,891.0
91.	Archer Daniels Midland	16,108.6
92.	Albertson's	16,005.1
93.	Cardinal Health	15,918.1
94.	FDX	15,872.8
95.	Federated Department Stores	15,833.0
96.	Alcoa	15,489.4
97.	Sysco	15,327.5
98	Walgreen	15,307.0

99.	CVS	15,274
100.	Allied Signal	15,128

Internal
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Outline on Interlocking Directorates

External
Links

In advanced capitalism, most corporations are interlocked

Interlocks, a.k.a., interlocking directorates, occur when corporate directors sit on the boards of several corporations, & thus interlock them together

Interlocking directorates are an example of a powerful type of interorganizational relationship (IOR) where a member or members of the boards of directors or trustees of one org also serve on boards of other orgs

Much of the upper class has been reduced to "investor status" while the corporate class wields even more power than their % of ownership indicates

The concept of interlocking directorates holds that the linking of two or more corporations through at least one of their board members increases power, control & networking of both corps

There are direct & indirect interlocks among corps

Direct interlocks occur when a board member sits on the boards of two or more corporations, linking them

Indirect interlocks are two corporations tied by their board members through a third corporation

Direct interlocks between competing corporations such as Wendy's & McDonalds are illegal, but both may own frozen food processing corporations

The structure of the corporate class is one of interlocking directorates giving unity & class consciousness in the corporate class through SEVEN processes:
1. Owning stock in several other corporations
Banks & insurance companies own stock in many other corporations
2. Influencing major corporations & government
3. Establishing economic concentration
4. Dominating the mkt through establishing a large market share, oligopolies or oligopsonies
5. Creating networks of directors & managers at the corporate level
6. Magnifying the size of major corporations through interlocks
7. Ranks are more permeable than the old upper class, allowing more networking

On average, corporate boards of directors have 12 people who control the corporation

The board has the
- authority to hire & fire management
- set broad policy
- approve acquisitions/divestitures

Board members come from inside corp mgt, outside the corp but inside the corporate network, & from outside the network

Compared to board members, most individual stockholders are widely dispersed & have minor amounts of stock

There are ELEVEN major effects of interlocking directorates
The effects of interlocking directorates are to:
1. reduce competition & generally increase cooperation
2. increases econ concentration
3. represent outside influences
4. share info: the business or envl scan: SWOT
5. provide unity ( like other networking devices )
6. provide "coordination" in the economy
7. provide unity in corp dealings w/ govt
8. increases influence over govt
9. secure good relations w/ sources of capital
10. maintain or create mkt relations w/ other firms
11. provide another means ( in addition to stock control and credit ) for board influence ( used extensively by banks )

Allen found that the top 250 corporations averaged 10 interlocks

A study by US Senate Committee on Govt. Affairs ( SCGA ), 1978, found that each of the top 123 corps was linked w/ 62 others [This is the most recent, exhaustive, govt analysis]

The SCGA found that the largest 13 corps had links w/ 70 % of other corporations

In 1989 the top 1% of the population owned
- 47 % of all stock
- 73 % of all bonds
- 53 % of all trusts

Allen demonstrates that interlocks create the possibility for financial corporate dominance

The inner group of the corp class is made up of elite board members & top corporate officers
The ELEVEN qualities of the inner group are that they
1. tend to have more positions on corporate boards
2. are more likely to be board members on large corps
3. often represent large banks on corporate boards
4. belong to social clubs
5. have worked way up rather than starting at the top
6. represent corp interest in other institutions: foundations, universities, govt, etc.
7. like most interlocks, are accounted for by a relatively small number of people
8. tie large corps more closely together
9. represent one set of common interests in the political environment
10. are international players
11. are more able to speak for corp interests as a whole rather than just one corporation

In 1913 Sup Ct Justice Louis Brandeis warned that interlocks contain many evils, such as the suppression of competition

Interlocks are seen as the means by which elites maintain their position & exercise societal control

Interlocks, like any IOR, help orgs control uncertainties & are a valuable source of info

In the basic form of an interlock, a an officer or member of the board of directors of one org is a member of the board of another org

Another form of an interlock is where members of two orgs sit on the board of a third org

Since orgs cannot merge w/ all orgs because of limited resources & fed merger restrictions, an interlocking board of directors is an indirect way to link orgs

Interlocking directorates provide opportunities for collusion, co-optation, monitoring, legitimacy, career advancement, & social cohesion

Financial instits are the dominant actors in the network set of interlocking directorates

Commercial banks, & ins corps are the most likely to have their members of the boards of other types of orgs

Some theorists conclude that the corp sys is dominated by a handful of NY fin instit

In the past, railroads were at the center of the network set of interlocking directorates

Railroads, telegraphy & coal corps were at the core of the network set of interlocking directorates circa 1886 to 1905

RRs were very powerful as the US industrialized & moved west

Interlocks allow orgs to manage uncertainty in their envs

Interlocks provide access to resources & can influence decisions

Some orgs mandate an interlock w/ another org, thus lowering the autonomy of the latter org

Interlocks are purposive for both parties

Orgs that are experiencing fin probs may seek out director from a bank, & conversely, banks seek out directors from corps that are expanding & may need capital

Public orgs such as colleges also seek out interlocks from local political & community orgs

Orgs in the public sector engage in the same kinds of interlocks through their boards

Interlocks are affected by local ties through the interactions at upper class clubs, or the presence of corp headquarters

In 1980, of the 797 largest US firms, only 62 had no interlocks & there is a large number of fin instits interlocked

Interlocks are the most common in concentrated industries where monopolies almost exist

Highly interlocked firms have greater econ effectiveness

Interlocks are used to prevent hostile takeovers

The poison pill defense against a hostile takeover gives a network of stockholders, usually dev in relation to the interlocks of all involved corps, the opportunity to buy the corps stock at a discount

W/ the poison pill defense, the option to buy discounted stock spreads rapidly through the network set & prevents the hostile takeover

Some studies have found that interlocks do not constrain one another across industries

Social status w/in a community is imp for interlocks in that the socially elite individuals who are assoc w/ large corps are disproportionately represented on other boards

Orgs tend to interlock w/ those of equal social standing

Both econ "clout & grace" contribute to the densest interlocks because these attributes make board members attractive to one another

Some believe that the power of boards is limited, relying on the managerial thesis to support their view that mgrs, not boards are in control of corps today

Often, the CEO & other top tier mgrs have more knowledge of the op of the org than do board members

On the other hand, the board can replace mgt

The presence of external influences, i.e. interlocked directors, was found to have little influence on a board or the mgt of the org

But the board of a corp is the apex of pwr in the org & there is a natural jousting for power

Top mgrs want to maintain their pwr & prefer a passive board while active boards want a mgt who will faithfully execute their directives

Since the corp scandals of the early 00s, i.e. Envron & WorldCom being the two largest corp scandals in hist, Congress has enacted legislation making directors more responsible, & more liable, for the ops of their corps

The legislation enacted by Congress to limit corp corruption has served to increase the power & reach of boards

Ornstein (1984) concluded that corp imperatives & class solidarity factors op in interlocks encouraging them to make decisions in the interest of the up class

Kerbo & Fave (1983) found that an intercorp complex of major corps, w/ banks in a central coordinating position formed an inner group of the corp class that provides the human linkages

It was found that in the 1980 Congressional elections that corp contributions to PACs were based on ideological conservatism

PAC contributions in 1980 were based on interlocks as structured by class wide rational actions

Class interests are exercised through powerful orgs in mod society which are structured around interlocking directorates

IN 92 Mizruchi examined 1576 dyads among 57 large mfr firms & found that membership in the same ind was related to similarity of pol behavior

Internal
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Outline on Market Concentration

External
Links

- Project: Video: Walmart: The High Cost of Low Prices: Segment 1: Walmart Out Competes Main Street

- Video: Walmart: The High Cost of Low Prices: Segment 1: Walmart out competes main street 15:05 minutes

LARGE BUREAUCRACIES CENTRALIZE CONTROL IN A LARGE MANAGERIAL STRUCTURE & CONTRUBTE TO THE CENTRALIZATION OF CONTROL AMONG ENTERPRISES

As firms have grown larger, a greater share of econ activity is controlled by top mgrs of a few large firms

In the 1920s & the 1930s the concentration of the econ occurred through the growth of multi divisional firms (Chandler, 1977)

In multi divisional firms the central office coordinates the activities of a number op operating division or product lines through allocating funds, personnel & other resources

GE operated seven major divisions: research, services & materials, power plants, industrial products, consumer products, natural resources & aircraft engines

A concentrated econ is one in which the number of producers of any given product is small because a very few producers control almost all the market for any given product

In a concentrated economy there is little or no competition

An unconcentrated econ, i.e., a dispersed economy, is one in which there are many producers

Pure capitalism is, by definition, an unconcentrated econ

Market concentration is caused by the inevitable evolution from pure capitalism to monopoly capitalism as the result of profit maximization which induces enterprises to grow ever larger, & absorb smaller inefficient producers

A concentrated mkt is dominated by very big business in the form of monopolies, oligopolies, conglomerates, monopsonies, & other forms of large enterprises

See the Table on the Concentration in the American Economy

An analysis of the Table on the Concentration in the American Economy shows that while the general trend of the economy is toward greater concentration, some industries become less concentrated due to international competition, radical changes in the industry that creates a niche for new producers, & because govt. regulation breaks up concentrated enterprises

The effects of mkt concentration include a. inefficiency, b. the concentration of political power, c. predatory price cutting, d. inequality in society, & e. vulnerability to foreign competition

A. ONE OF THE EFFECTS OF MKT CONCENTRATION IS THE INEFFICIENCY THAT RESULTS FROM THE LACK OF COMPETITION

Inefficiency from lack of competition from mkt concentration includes poor productivity, low quality products, overpricing, & failure to respond to changes in demand

Under pure cap, the inefficiencies from lack of competition from mkt concentration are weeded out because stronger enterprises out compete inefficient enterprises, but under monopoly cap, other enterprises do not exist, thus allowing inefficiencies to continue

See Also: The Auto Industry

B. ONE OF THE EFFECT OF MKT CONCENTRATIONS IS THAT IT ALSO CONCENTRATES POLITICAL POWER

The political power of monopolies, oligopolies, & conglomerates is exercised through lobbying, PAC contributions, & policy institutes, etc.

Large firms use the local need for jobs to create policy favorable to the firm

Larger firms encourage several localities to compete for their factory

Enterprises attempt to extract subsidies from local govts. in the form of property tax abatements, public services, road construction, & sometimes even land

Many states allow the use of property tax abatement as an inducement to plant construction & Wolkoff, 1983, found that most of the time, the maximum legal abatement is routinely given

Wise county & LENOWISECO routinely give tax abatements, public services, road construction, land, buildings, & more to induce enterprises to come to or stay in the area

C. ONE OF THE EFFECT OF MKT CONCENTRATIONS IS THAT IT LEADS TO POWER IN THE MKT PLACE THAT CAN BE USED TO ELIMINATE POTENTIAL SOURCES OF FUTURE COMPETITION

Predatory price cutting occurs when a producer sells at a lower price & subsidizes that lower price w/ profits from another part of the org in a different area, that usually engages in price gouging because of lack of competition

Monopolistic, oligopolistic, conglomerates keep new competitors out by temporarily cutting their prices below that of the new producer, often by using money earned in one activity to temporarily subsidize another

D. ONE OF THE EFFECT OF MKT CONCENTRATIONS IS THAT IT CONTRIBUTES TO INEQUALITY IN SOCIETY

Inequality is exasperated by placing great wealth & power in the hands of a few people

Depending on govt. regulation, competition for labor, labor mgt. relations, workplace culture, & other factors, market concentration can lead to higher wages because it eliminates the competition that creates pressures to keep wages low

In the 1800s, when the US economy was transitioning from pure capitalism to monopoly capitalism, there was intense competition, no govt. regulation, a workplace culture that justified worker exploitation, and wages were often below the subsistence level

Producers were forced to demand the lowest possible wages because all other producers were demanding the lowest possible wages

An effect of low wages was that few people had enough money to buy the products that were produced, causing business cycles of boom & bust

As pure capitalism transitioned to monopoly cap, market concentration eliminated the incentive to pay low wages by reducing the incentive to cut prices

Monopolies, oligopolies & conglomerates involve little or no price competition

While mkt concentration may reduce pressure to cut wages, it can still lead to inequality through the accrual of profits to only a few owners of capital, i.e., the elite & corporate classes

Producers in a concentrated mkt have no price competition & may therefore raise prices more than enough to cover the costs of the higher wages they may pay, so profit margins increase under the market concentration of monopoly capitalism

See Also: The Airline Industry

E. MKT CONCENTRATION MAKES PRODUCERS COMPLACENT & THUS VULNERABLE TO INTL COMPETITION

One of the effects of mkt concentration is that producers become highly vulnerable to international competition

Because they are not forced to remain efficient because of a lack of competition, enterprises pay high wages, have inefficient mgt., have inefficient strategies, etc.

Under monopoly cap, lack of efficiency leaves enterprises vulnerable when efficient foreign competitors enter the mkt

Typically the workers suffer more than their mgrs. when foreign competition threatens

In the auto industry executive salaries soared in the 1980s & 90s even as workers were laid off, & other workers experienced the new phenomenon of "give backs"

The multinational corporation is the most common form of org under concentrated corporate cap, i.e. under the market concentration of monopoly cap

Table: Concentration in the American Economy

Far 0511

Number of Firms in Industry

Domestic Market Share of 4 Largest Producers

Industry

1982

1992

1997

1982

1992

1997

Breakfast cereal

32

42

48

86 %

85 %

83 %

Pet food

222

102

129

52

58

58

Cookies & crackers

296

374

322

59

56

60

Chocolate producers

77

146

152

75

75

80

Beer

67

160

494

77

90

90

Soap & detergents

642

635

738

60

63

66

Tires

108

104

110

66

70

72

Guns (small arms)

138

177

189

51

43

42

Household cooking equip.

71

80

77

52

60

58

Home refrigerators & freezers

39

52

21

94

82

82

Home laundry equip.

15

10

10

91

94

90

Home vacuum cleaners

29

35

25

79

59

68

Electric lamps

113

76

54

91

86

90

Radio & TV equip. (1982) *

432

49

Records & tapes (1982)

548

61

Audio-visual equip. (1992/97)

391

521

39

52

Telephones

259

479

548

76

51

54

Motor vehicles

284

398

325

92

84

82

Aircraft

139

151

172

64

79

85

Motorcycles & bicycles

269

244

373

59

65

68

Watchers & clocks

227

179

145

51

40

52

Burial caskets

270

195

161

52

64

80

An analysis of the Table on the Concentration in the American Economy shows that while the general trend of the economy is toward greater concentration, some industries become less concentrated due to international competition, radical changes in the industry that creates a niche for new producers, & because govt. regulation breaks up concentrated enterprises

Out of 22 industries, 13 added more producers; 6 industries lost producers

Out of 22 industries, 11 industries became more concentrated, 8 industries became less concentrated

Out of 22 industries, 20 of them had over half of all production done by just 4 producers, & 9 of the industries had 80% or more of production produced by just 4 producers

Source: In Farley, Intro to Soci, 2003, 5th ed. Concentration data for 1982 are from the Census, 1986c, Table 5; Data for 1992 are from the Census, 1996i. Data for 1997 are from the 2001 Census

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Outline on Globalization

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- Project: Globalization & the Standardization of Culture

- Project: Work in the Global Economy

GLOBALIZATION IS THE INTERCONNECTEDNESS OF DIFFERENT PARTS OF THE WORLD THROUGH ECONOMIC, ENVIRONMENTAL, POLITICAL, CULTURAL, ETC. CONVERGENCE & CHANGE

Globalization is a trend whereby production, competition, & economic exchange increasingly occur on a worldwide scale

Given the impact of globalization, there is almost no remote place on Earth

The effects of globalization include the growth of multinational corps., an increase in international trade, the creation & mystification of global content, the internationalization of capital markets, the creation of nascent world govt. & global regulatory agencies, the homogenization of culture, creating a global western culture, and the polarization of culture, creating a clash of cultures aka, cultural wars

See Also: The Effects of Globalization

Globalization has been going on since international trade began

Wallerstein's world systems theory views world capitalism as beginning in the middle ages as the Europeans began their "Age of Exploration" & such nations as Italy, Spain & Portugal became world powers based on international trade & colonization

The trend of international trade & globalization is in a period of unprecedented acceleration

Researchers Chase Dunn, Kawano, & Brewer (2000) found that world trade, in relation to domestic production, grew rapidly over a 160 yr. period during the 1800s & 1900s

Researchers Chase Dunn, Kawano, & Brewer found that the long term trend of globalization, there are three distinct surges of globalization:

- about 1845 to 1880

- about 1900 to 1925

- about 1970 to present

Economics & culture are perhaps the strongest globalizing forces
How?

The global economy is specializing through locational flexibility

The global economy is specializing in some countries or regions through:
- extracting raw materials
- processing raw materials
- manufacturing the raw materials into parts
- assembling parts
- consuming finished good

- Examples of globalized production include the Plastic Hoover vacuum & the Ford "World Car"

There are over 800 mm people who are tied directly to global mkt in the US, Europe, & Japan

The core nations have totally globalized economies & many other peripheral & semi peripheral countries are partially globalized

Global culture(s) are rising & falling
Strong cultures are infectious
Which culture is the most well known word in the world?

Global forces are so powerful, they are affecting the global physical env

THERE ARE FIVE FEATURES OF THE GLOBAL ECONOMIC & CULTURAL SYSTEMS INCLUDING: COMPLEMENTARITY, INTL DIV OF LABOR, ECON OF SCALE, TRANSFERABILITY, DIFFUSION

The features of global econ & cultural systems include

1. complementarity, which occurs when demand in one place is complemented by supply in another

2. the international division of labor, which is the specialization of labor by country

3. economies of scale, which are efficiencies created by world scale operations

4. transferability, which is the ability to move capital, skills, technology, or products creates deindustrialization in the core & economic development in the periphery

5. spatial diffusion, which is expansion, relocation, hierarchical: the way things spread through space over time

FACTORS AFFECTING GLOBALIZATION INCLUDE TECH SYS, CONSUMER MKTS, DIV OF LABOR, & FINANCE

There are FOUR factors affecting globalization & local economic development, including the international

1. technical systems, which today are almost all international in scope

2. consumer markets, which today are characterized by global patterns of consumption as seen in people around the world who enjoy McDonalds, Coke, etc.

As late as the 70s only a few peripheral nations were open to intl trade & only 33 % of the wkrs in centrally planned econs: SU, China, etc.

As late as the 70s in the core countries only 33 % of the wkrs were not in the world sys because of trade barriers, etc.

In the 00s, only 10% of the entire world's wkrs are outside of the global econ

3. division of labor, which today results in complex & simple products being constructed w/ parts from several nations, assembled in another nation, & sold in another

4. finance, which operates 24 hrs a day following the business day in Am, Japan, Asia, & Europe

Americanization is a powerful quality of globalization

GLOBALIZATION THEORIES INCLUDE SUSTAINABLE DEV TH, MODERNIZATION TH, DEPENDENCY TH, & WORLD SYS TH

Sustainable development theory examines how nations can encourage economic growth in a way that will benefit those nations & their people & not just multinational corporations in a manner that can be sustained over the long run w/o further damage of the environment

Sustainable development theory asks who really benefits when international corps build plants or extract natural resources in developing countries

Modernization theory examines how both the corporations & those who live in developing countries benefit because of the jobs & new markets that are created by the investment of multinational corps.

Dependency theory argues that corporations take wealth out of the developing countries & gain control of resources that could otherwise have been developed & benefited from by the people living in the countries

World systems theory holds that all of history may be understood as a conflict btwn three sets of nations, the core, the semi periphery, & the periphery, all of whom may form strategic alliances to further their own interests

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Outline on the Effects of Globalization

External
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- Project: Video: CNN 3: Famine Foretold 3:10 minute

- Video:CNN 3: Famine Foretold

The effects of globalization include
a. the growth of multinational corps.
b. an increase in international trade
c. the creation & mystification of global content
d. the internationalization of capital markets
e. the creation of nascent world govt. & global regulatory agencies
f. the reduction in the influence of the nation-state
g. the creation of economic coalitions
h. the weakening of democracy, the homogenization of culture
i. an increased risk of ecological crisis
j. creating a global western culture
k. the polarization of culture, creating a clash of cultures aka, cultural wars

a. The growth & development of multinational corps is both a cause & an effect of globalization

Globalization makes multinational corps ever more powerful

Link

See Also: Multinational Corporations

See Also: Corporate Power

b. The production & trade occurring in worldwide mkts can be seen in the growth of international trade

In 2003, 70% of all goods produced in the US compete w/ imports

Imports in the US increased 80% btwn 1982 & 86

Imports in the US increased by over 100% btwn 1990 & 2000

In 2004, imports into the US increased by 30%

Lou Dobbs predicted that if current trends continue, assuming a 4% increase in GDP & a 30% increase in imports, the US trade (account) deficit would be equal to US GDP by the year 2017 at $20T

While it is unlikely that imports will continue to rapidly increase, the present rate is damaging to the US econ, the US worker, & esp middle class families

US products & services are distributed worldwide & compete w/ many other local & global products

An example of a globalized products & services is seen in the 3000 7-11 Stores in Japan

An example of a globalized product & service are the US autos & their dealers who compete in Germany w/ Mercedes & Toyota, & compete in Japan w/ Mercedes & Toyota, & who compete in Brazil w/ Mercedes & Toyota

All industrialized nation have seen the share of product market taken by imports increase, & the increase has been faster in many other countries than in the US

c. Globalization blurs or mystifies the line btwn domestic products & imports as product content becomes globalized

The concept of product content denotes the percentage of each product's value as measured in resources & labor that is created in each nation that the product is produced in

Product content is the value added by each nation

In 2003, 85% of all US manufacturers use foreign material in their domestic manufacturing process, & US materials are similarly used by foreign producers

US firms have production plants in foreign nations & foreign nations have production plants in the US

During the 1980s, Japanese companies created over 10,000 jobs in TN

See Also: The Global Auto Industry

During the 1980s, US firms employed thousands of people in Mexico, as well as in other nations

Link

See Also: Global Content

d. Globalization has a major effect on world capital markets & banking

See Also: Global Banking

The trading of stocks & bonds & the lending & borrowing of money has become totally globalized

The internet & computerization of the markets has created a system whereby borders have ceased to have any meaning

The markets are managed 24 hrs. a day by such large firms as Shearson-Leman Bros. et al

The markets begin each day in Japan, then the European markets open, then the US markets, w/ all of the smaller regional markets in btwn

Because increased world trade creates increased trade surpluses or trade deficits, nations have an increased need to trade currency

Btwn 1973 & 1993, currency trading grew over ten time from $10 bb a day to $ 1.3 tt a day

During this period, currency trading grew because of the increase in international trade, the growth of the US federal deficit, as well as the growth of private debt

e. Globalization creates international regulatory agencies & nascent forms of world govt, which some consider a blessing & others a curse

See Also: Global Regulatory Agencies: UN, WTO, NAFTA, EU, NATO, GATT, Rio Protocol, etc.

f. Globalization reduces the influence of nations

Globalization reduces the effectiveness of borders in the least in an economic & cultural sense

g. Globalization creates ever more powerful economic coalitions of countries

See Also: Global Economic Coalitions: EEC, NAFTA, FTAA, ASEAN

Regional economic coalitions of countries cooperate w/in each coalition, & compete w/ other coalitions

The EEC is a free trade zone in Europe which has increased economic cooperation

In 2003, the Free Trade Agreement of the Americas (FTAA) is being negotiated to expand NAFTA to all of No. & So. Am.

The Pacific Rim nations such as Japan, Taiwan, So. Korea, China, et al are negotiating expanded trade

h. Globalization weakens democracy to the extent that the nation-state is weakened because as economic decision-making comes to dominate, less decisions are made by democratically elected representatives

i. Globalization creates an increased risk of ecological crisis

Globalization creates ever larger economic entities in the form of supra-national corps. & economic coalitions, all of which have an ever greater effect on the environment

Globalized economic entities have the possibility of unprecedented effects on the environment because of their sheer power & size, & to date, that environmental effect has not been environmentally benign

Deforestation is occurring rapidly

The use of fossil fuel has decreased on a per capita basis in the core nations, but increased overall, & is increasing on both a per capita basis as well as over all in non-core nations

Ozone depletion is expected to decrease, & eventually improve due to a global agreement to limit the use of chlorofloracarbons

j. Globalization creates the homogenization of culture, creating a global western culture

k. Globalization creates the polarization of culture, creating a clash of cultures aka, cultural wars

Link

See Also: Globalism & Tribalism

The chance of social conflict, social violence, or war over globalized issues such as culture, religion, labor, the environment, the economy, etc. is increased w/ globalization

No nation wants to be deprived of the opportunity for econ development, & yet no country wants to be dictated to in terms of culture, religion, worker rights, etc.

Labor, environmentalists, et al are organizing to oppose what they see as multinational corps' exploitation

There are FIVE general cultural effects of globalization including the:

1. increasing cultural & economic value of local, regional, & national identities

2. increasing need that people feel for a place of their own & their own identity

3. increasing perception, or environmental scanning, i.e. surveillance of transnational corps. of identities

4. global integration & disintegration, which go hand in hand, of economies & culture

5. rise & fall of transnational corps., national govts., & global institutions

Link

See Also: The Effects of Globalization on the US

	Because of globalization, many US manufacturers encounter substantial foreign competition
	Products such as steel are commodities & thus production & shipping cost differences cannot be passed on to buyers
	Fixed costs for plants & equipment & even labor are incurred whether the plant is operating or not
	Producers may sell below cost, e.g. engage in econ "dumping" because they lose less as compared to not producing at all
	Services can also be dumped, as in the airline industry selling a seat below cost
	In the 1970s, US auto makers experienced global competition
	Increased fuel prices, as a result of the 1972-3 oil embargo, & increased quality by European & Japanese auto makers resulted in loss of mkt share for US autos which less competitive because they were inefficient & had low dependability compared to foreign competition
	Differences in labor costs in the 1st, 2nd & 3rd worlds led to price advantages in some nation
	Exchange rates also caused variations in labor, equipment & raw materials
	Globalization generally increases the elasticity of demand because the industry is less concentrated, resulting in less ability to pass on wage increases
	US manufacturers reacted to globalization by demanding wage concessions, obtaining suppliers concessions for parts & raw materials, the shutting down of less efficient plants, creating new production methods, etc.
	Global competition in basic industries has drastic effects on wages & employment of domestic workers
	Domestic producers are moving some labor intensive operations to countries w/ lower labor costs
	See Also: Deindustrialization	Link
	At the same time, German auto makers such as Daimler Chrysler & BMW, & Honda of Japan have opened plants in the US

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Outline on the Effects of Globalization on the US

External
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- Project: Video: CNN 5: The Hispanic Economic Gap

- Video: CNN 5: The Hispanic Economic Gap 2:10 min

GLOBAL COMPETITION HAS OUTPERFORMED MANY US INDUSTRIES

As a result of globalization & other social, political, & economic factors, the US has lost its econ dominance

After WW2, the US became the unchallenged econ superpower, dominating manufacturing & services

The 1950s & the 1960s were the US's econ & cultural heydays

As other core nations recovered from WW2, & as developing nations grew, more & more countries developed the capacity to produce products of comparable or greater worth than the US

An example of the falling econ dominance of the US & the rising economic influence of other nations is that the 1960s, Japan & Korea had almost none of the world or US auto mkt, today they have a substantial proportion of both the US & world auto mkt

In 2003, Toyota displaced Ford at the number two car seller in the US

In 2007, Toyota surpassed GM & became the largest auto seller in the US

In the early 1950s, the US produced about 60% of the world's manufactured products, & by the early 1980s, the US produced less than 30% of the world's products

In 2000, the GNP of the EC is greater than that of the US

In the 1990s, Japanese per capita income exceeded that of the US, & thus w/ less than half of the US's population, Japan had 2/3s of the GNP of the US

OTHER ECON POWERS SUCH AS JAPAN HAVE HAD INDUSTRIES OUT COMPETED

Since the late 1990s, Japan & other Pacific rim countries have an economic crisis, resulting in loss of Japanese econ power

In general, nations have a competitive advantage in the world mkt if they pay lower wages, though low wages create severe disadvantages that are often externalized economic costs, falling on the national govt. & the national social structure

An example of a competitive advantage in low wages is seen in the Korean Hyundai corp who pays its workers less than comparable workers in the US, Europe, & Japan

Low wages are not the only competitive advantage a nation may have

The US & many core nations have exported jobs to the semi peripheral & peripheral nations where wages are at their lowest

GLOBAL CORPS LOOK FOR NOT ONLY CHEAP WAGES BUT ALSO 'CHEAP WKING CONDITIONS'

While the US has exported jobs to nations around the world, the northern border region of Mexico has gained more US jobs & factories than any other single nation

Foreign owned plants in northern Mexico are called maquiladores

The US owned maquiladores are notorious for low wages, unsafe working conditions, envl degradation, & large profits

In the maquiladores, workers are paid 15 to 20% of what US workers earn

In the maquiladores, lax environmental & safety controls lower costs for the owners, but raise costs, which are usually economically externalized to the national govt. & the national social structures

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Outline on Deindustrialization

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DEINDUSTRIALIZATION IS THE PROCESS WHEREBY INDUSTRIES ARE PERMANENTLY LOST IN CORE NATIONS & TRANSFERRED TO SEMI - & PERIPHERAL NATIONS TO GAIN ADVANTAGES SUCH AS LOW WAGES, LACK OF ENVL REGS, ETC.

Deindustrialization is the relative decline in industrial production & employment in core regions as a result of the development of information technology & the export of traditional industries to semi peripheral & peripheral nations

Deindustrialization is a decline in the importance of heavy industry as a source of employment

Deindustrialization is one part of globalization

Because of more efficient operations, lower wages, lower environmental regulations, lower labor laws, etc. many nations produce cars, TVs, etc. at lower cost

In search of lower wages, & other competitive edges, US corporations have moved assembly operations to third world countries

An example of deindustrialization is seen in that thousands of manufacturing jobs have shifted from the US to northern Mexico

In 1988, of the 1,400 manufacturing jobs in Mexico, near the US border, 90% were in American owned corporations

The closing of industrial jobs resulted in 38 mm jobs lost in the US, which were shipped to foreign nations

DEINDUSTRIALIZATION IS ONLY ONE PHASE OF CREATIVE DESTRUCTION IN THE ECONOMIC CYCLE

A dictum of economics is that the old economic system must be phased out in order to build a new economy

The transformation of one economic base to another necessitates destruction of old economies & ways of life & the development of the new economy

Usually, such a major social change as an economic transformation is not universally welcomed

But economic transformation must happen in the development of any economy

An example of an economic transformation is
- ag to natural resource extraction
- natural resource extraction to manufacturing
- manufacturing to hi tech
- deindustrialization

Some economies develop strategies to attempt to skip stages of econ development

The US economy shifted, or transformed, because international competition caused a shift in the global economic structure

DEINDUSTRIALIZATION IS THE PART OF GLOBALIZATION WHERE CORPS SHIFT PRODUCTION TO 'A MORE FAVORABLE BUSINESS ENV'

The global economic structure changed because

- the US lost its competitive edge in manufacturing to Japan, South Korea, & Germany

- the US won the competition in hi tech & hi income services

- the US responded to its lost edge in manufacturing w/ downsizing, lean manufacturing, deindustrialization, etc.

- of an increase in automation which allowed corporations to create efficient, global enterprises

DEINDUSTRIALIZATION IS A BENEFIT TO THE UC WHEN THEY GAIN WAGE & OTHER ADVANTAGES & A DEVASTATING COST TO ALL OTHER CLASSES WHEN THEY LOOSE THEIR LIFE'S CAREER

Deindustrialization did not adversely impact the upper classes very much because the wealthy were not rooted to manufacturing because they could shift assets to the new economy & to foreign, US owned production

Deindustrialization did not adversely impact the lower classes very much because they were not primarily dependent on manufacturing jobs for their income

Deindustrialization impacted the middle & working classes more than any other because they were dependent on manufacturing jobs as their primary source of employment & could not easily shift to other occupations

Wkrs could not easily shift to other occupations because there were not enough other, well paying jobs, & because there was not enough training available for displaced workers to upgrade their skills to fit the new, high tech economy

The deindustrialization that began in the 1980s & continues in the 2000s created three shifts in the middle & working classes including the:

a. shrinkage of skilled blue & white collar jobs

b. expansion of low skilled, low pay service jobs in peripheral industries

c. expansion of professional & managerial jobs in the upper range of middle class pay structure

DEINDUSTRIALIZATION RESULTED IN THE SHRINKAGE IN THE MIDDLE CLASS, & GROWTH IN THE LOWER & UPPER CLASSES

From 1988 to 1993, the US lost 2 mm skilled & semi skilled jobs in manufacturing, mining & construction, & gained 1.3 mm service jobs paying $215 per week or $10,750 per year

In 1993, 18% of all fully employed workers earned wages below the poverty line, which was a 50% increase since 1979

In 1994, 72% of new jobs were managerial & professional, 25% of the workforce was mgr / prof ( 34 of 132 mm ), & 12% of workforce was manufacturing ( 17 of 132 mm )

By eliminating higher paying jobs, deindustrialization has resulted in growing inequality & rising poverty since the late 1970s

DEINDUSTRIALIZATION HAS DEVASTATED CENTRAL CITIES, ESP THE MFR CITIES IN THE MIDWEST & NORTHEAST, OFTEN CALLED THE "RUST BELT"

Blacks & Hispanics in the inner cities are hardest hit because it is difficult for them to move to other areas because of costs & segregation

A study by Rosenbaum & Meaden, 1993, demonstrated that when poor Blacks in Chicago were given the chance to move to the suburbs, their employment rose relative to those who stayed in the inner city

As a result of deindustrialization & job losses in the inner city, poverty has been concentrated in these areas

Deindustrialization has resulted in the degradation of the inner cities

DEINDUSTRIALIZATION HAS PARALLELED & FOSTERED THE GROWTH OF THE SERVICE ECON

Manufacturing job losses have been offset by growth in jobs in the services & administrative sectors

But jobs in the services & administrative sectors have not created enough jobs to replace all of those which were lost to deindustrialization

Jobs in the services & administrative sectors require higher education & so were not available to displaced workers from the manufacturing sector

Jobs in the services & administrative sectors paid less & so swelled the ranks of the working poor

Deindustrialization had a major, negative impact on unions & organized Labor

Industrial work, the old bastions of unions have been the hardest hit

The union's center was in industrial blue collar jobs, which were the jobs hardest hit by deindustrialization

The new sectors of the economy, the service economy, female & minority dominated employment sectors had never been unionized

Unions have learned new tactics, positions to gain the support of minority, female, & service sector workers

Since deindustrialization, the growth in the Labor Movement has come from the public sector & the service sector

The US has lowest unionization rate of any modern, industrialized nation

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Outline on Global Content

External
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The concept of global content denotes that products in the globalized market place are frequently a mixture of labor, parts, resources, etc. from a variety of nations

Content, in economics, usually refers only to the nation of origin

Frequently the few nations that require content labeling only require the listing of one producer, the largest single producer out of all of the producers of one product

An "American" car today may be made of parts assembled in Canada, Mexico, France, & Japan, as well as the US

Cars from any nation usually have major portions produced in several nations

Multinational corps are multinational not only in the sense that they sell their products worldwide, but also in the sense that they produce their products worldwide

While the primary issue related to global content is often the labor & resources that make up a product, other issues are becoming increasingly important including child labor, sweat shop labor, hormonal & chemical additives, genetic engineering, disease prone products (eg mad cow), & more

Meat products from the US have frequently been banned from Japan because of the fear of mad cow disease

Wood products from Canada have been banned from the US because of govt subsidies of the Canadian timber industry

The US govt is constantly surveying imported products to eliminated those w/ child labor & sweatshop labor

US dairy products have been banned from the EU because the US allows the use of the hormone BGH in dairy production & thus it is in our milk, cheese & other dairy products

The US dairy industry has managed to defeat every attempt to have the content of its products labeled, even in the US, as to whether it contains BGH or not

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Outline on Trade Policy

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Protectionism is a trade policy that denotes that many countries need protection against price competition from products produced cheaply in other countries due to their comparative advantages or due to low wages, lack of workplace safety, or exploitation of the environment

Free trade is a trade policy that denotes that there should be not laws or regulations limiting trade in any manner because ultimately the mkt itself should regulate who produces what products & services, & who consumes what products & services

Fair trade is a trade policy that denotes that free trade should be permitted subject to rules about the labor & environmental practices

Critics of free trade hold that:

- core countries ultimately benefit from globalization because they can sell more of their products abroad

- globalization causes increased exploitation of local workers in many non core countries because multinational corps. have greater power than even many non core nation's govts.

- core workers must compete w/ non core workers where wages are much lower, & are often not even a living wage

- because of low wages, unsafe working conditions, lack of envl protection & job loss in core countries, everyone loses except the owners of capital

Critics of protectionism hold that protectionism:

- makes the protected economies inefficient & only forestall the inevitable effect of globalization at which time the protected nations will be in worse condition than before protectionism

- often leads to retaliatory restrictions on US exports ot other countries, thus depriving US corps of markets

- leads to reduced productivity & higher prices in the US

- denies US consumers the cheapest goods

- makes US producers, especially the oligopolistic producers, less competitive & efficient in the long run

Critics of fair trade hold that fair trade is just protectionism in disguise

Supporters of fair trade hold that their purpose is to level the playing field as guided by principles that are different from those of protectionism

Supporters of fair trade hold that

- global mkts should be established & equalized over a period of decades not years

- all nations should, at a minimum, pay a living wage

- all nations should have safe workplaces

- all nations should require protection of the env

- child labor should be closely regulated & slave, & indentured labor should be prohibited

- the ultimate conditions of free trade should create a level playing field based on fundamental workplace rights

Despite the negative effects of globalization & free trade on non core countries, many of their govts. & many of their workers believe that efforts to restrict free trade is an effort by core countries to maintain a monopoly over world econ production

The non core countries see the efforts by the core to demand envl protection in their economy, to demand workplace safety, to prevent child labor, etc. are all meddling by the core

Thus, in general non core countries want free trade, but labor advocates point out that the workers are frequently given the choice of non living wage, unsafe jobs, or no jobs

Internal
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Outline on NAFTA 1993

External
Links

- Project: Free Trade, NAFTA, Protectionism

- See Also: USDA Foreign Agricultural Service (FAS): NAFTA http://www.fas.usda.gov/itp/Policy/nafta/nafta.asp

NAFTA HAS OPENED UP TRADE IN NO AM, BUT THERE IS WIDESPREAD DISAGREEMENT ON THE COSTS & BENEFITS TO THE US, MEX, & CANADA

NAFTA is an acronym for the North American Free Trade Agreement

NAFTA was ratified by Canada, Mexico & the US in 1993 & went into effect in early 1994

NAFTA unites Canada, Mexico, & the US in one of the world's largest free trade zones

NAFTA builds on a free trade agreement btwn the US & Canada that became effective in 1989

Under NAFTA, tariffs on most goods produced & sold in No Am are to be gradually eliminated over 10 years

Trade of a few additional products will continue to be restricted for another 5 years. The first reductions took place in 1994

NAFTA also establishes rights & obligations regarding trade in services, intellectual property, & intl investment

The provisions of NAFTA could serve as models for future global & regional trade agreements

NAFTA's GOALS WERE TO LIBERALIZE TRADE, REDUCE TARIFFS, & ELIMINATE TRADE BARRIERS

NAFTA attempted to:

a. remove trade barriers

b. reduce & eliminate many tariffs

c. eliminate other barriers such as inspections, etc.

NAFTA's BENEFITS INCLUDE LOWER PRICES, INCREASED DEMAND, & LOWER LABOR COSTS

The benefits of NAFTA include:

a. all countries see lower prices for goods & services because they can now buy the cheapest product from which-ever country

b. the producing countries should see more demand

c. competition puts more pressure on producers, labor & wages

NAFTA made it easier for US corps to relocate plants to Mexico

NAFTA supporters:

- believe that the US, Canada, & Mexico would all benefit from increased trade & larger markets

- maintain that those plants would move there regardless of how difficult it was, & that NAFTA would create other jobs in the US by opening Mexican & Canadian markets

- argued that the Clinton administration had gotten improved envl protection in Mexico, while NAFTA opponents argued that the controls were weak & ineffective

THE POLITICAL ALLIES WHICH PASSED NAFTA CONSISTED OF AN UNLIKELY COALITION OF FREE TRADER CLINTONITES & REAGAN REPUBLICANS, & WAS OPPOSED BY LIBERTARIAN REPUBLICANS & LABOR UNION DEMOCRATS

NAFTA was proposed by Bush Sr. during his 1988-1992 administration

NAFTA became a big campaign issue for 1992 election

Bush & Clinton supported it

Perot opposed it

Labor strongly opposed NAFTA & campaigned against President Bush, Sr.

When Clinton was elected in 1992, his support of NAFTA was a major wedge btwn the President & Labor

Labor points out that whatever the advantages, NAFTA has negative points that should not be overlooked

NAFTA generated extensive opposition in the US because of concerns that it would result in a loss of US jobs

Opponents feared the job losses would result from increased Mexican imports & from a shift in US production to Mexican plants

Environmental groups feared NAFTA would increase air & water pollution, particularly in the US Mexican border region

THE WEAKNESSES OF NAFTA ARE IT CAN ELIMINATE JOBS IN ONE NATION, IT HAS NO WKRS RIGHTS FOR MEX, JOBS ARE SHIFTED TO LOW WAGE NATIONS, NO ENVL SAFEGUARDS, DISPUTES OVER GOVT SUBSIDIES, SWEATSHOP CONDITIONS IN SOME NATIONS, WEAK WKPLACE SAFETY

For Labor, the weaknesses of NAFTA include that

a. there are not enough employment safeguards

b. Mexican workers are exploited; for example they have no minimum wage & no OSHA

c. Mexican wages are not a 'living wage' even in Mexico

Mexican wages are 12.5% of US wages

Canadian wages are 7.5% above US wages

d. there are not enough envl safeguards

e. Canadian workers & firms are subsidized by the govt

Canadian health care is subsidized & is considered to be one of the best systems in the world

Certain industries in the US are subsidized such as pork, tobacco, steel, etc.

Certain industries in the US are protected from imports such as cars, lumber, airplanes, etc.

Strike in Mexico

Reynosa, Mexico has four auto plants w/ 70,000 workers

Workers at an auto plant in Reynosa, Mexico struck over inadequate profit sharing of only $30 per worker

The UAW did an econ analysis, pointing out the high levels profits to the manufacturers

The UAW's analysis of profits at the plants in Reynosa, Mexico won an increase in profit sharing to $44 w/ food coupons worth $32

It is in the interest of Am workers to see that all workers around the world are treated fairly

THE EFFECTS OF NAFTA INCLUDE US JOB GAINS & LOSSES, LABOR ABUSE, ECON INSTABILITY IN MEX, MANY SPECIFIC TRADE DISPUTES

Labor & Perot predicted the loss of many jobs to Mexico as a result of NAFTA

Job losses have happened to some extent, in that NAFTA made wages open for negotiation because of intl competitive pressure thus reversing the Labor's historic gain where they had reduced the wage differentials & created a stable wage base for the mid class

There has been some job loss, but growth in the US econ has covered up the southern job migration

Labor abuse in Mexico is widespread

Mexican plants sometimes have guards to keep workers in line & keep reporters, unionists, activists, etc. out

The UAW wants US manufacturers w/ plants in Mexico to treat workers fairly

NAFTA did not create as many US jobs as its backers promised & more jobs have gone South than anticipated

The US trade surplus w/ Mexico narrowed in 1994 because of the surge in US imports from Mexico

The surge in Mexican imports relative to US exports to Mexico is evidence that NAFTA did not create as many jobs as predicted

The Clinton Administration estimated that NAFTA created 320,000 jobs

The Dept of Labor estimated that NAFTA eliminated 215,000 jobs

NAFTA supporters question all these job figures

The devaluation of the Mexican peso hurt the Mex econ thus limiting the predicted level of Am product purchases by Mexs

One of the major reasons for the decline of the peso was because Mexico owed so much money to the intl community, & was at risk in paying it back

The devaluation of the peso lowered the standard of living of average Mexicans

The envl protections of NAFTA are weak in that there are many cases of illegal hazardous waste disposal, an increase in birth defects, & a lack of water & sewage treatment

NAFTA, globalization, deindustrialization, & other "sudden impact" trade policies have created competition which has reduced growth in the Am standard of living

In the 1950s & 60, the US standard of living rose rapidly, but since then the average wages of Am. workers have grown more slowly & the wages of younger wkrs w/o a college education have declined resulting in increased income inequality since around 1980

MEXICO HAS EXPERIENCED ECON INSTABILITY AS A RESULT OF NAFTA

NAFTA has not helped Mexican workers, furthermore, globalization has not helped non core workers primarily because "free trade" is occurring at a faster rate than societies & wkrs can adapt

Wages in Mexico, the US & Canada have fallen since NAFTA was implemented

The ultimate effect of free trade, NAFTA, etc. is that core workers lose jobs, or must work at a lower wage, the env is harmed, all while corp profits have grown

In response to opposition to the pact in the US, the three countries agreed in 1993 to supplement NAFTA w/ three side agreements

The three pacts or side agreements to NAFTA established commissions to monitor developments related to envl & labor issues and to help solve problems that may arise as regional trade & investment expands

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Outline on the Economic Cycle

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An economic cycle is the period movement of the economy btwn growth & decline as measured by changes in economic factors such as growth, unemployment, inflation, etc.

A boom is a period of rapid expansion, generally accompanied by low unemployment & rising profits

A boom is a peak period of stability w/ high employment & profits

A bust is a period of economic retraction, generally accompanied by high unemployment & falling profits

A recession is a less severe bust

A depression is a severe bust

In the US, in general it is said the economy is in recession whenever the economy contracts for 3 consecutive quarters, & conversely, the economy is in an expansion period, a boom, whenever the economy grows for 3 consecutive quarters

Nations generally experience economic cycles over about a decade

Periods of boom & bust have become worldwide in scale

Unemployment, inflation & the business cycle are perennial econ problems

In the 1990s, economic slowdowns occurred not only in the US, but throughout the industrialized world, including Japan & nearly all of Europe

Globalization has created conditions such that national economies are so closely connected that when one economy suffers, they all suffer

Economists say, "When the US sneezes, Japan (Europe) catches the flu."

Functionalists see the econ cycle as the economy's process of self correction in that during a bust inefficient suppliers go bankrupt & eliminated, leaving only efficient producers, worker's wages which may have become excessive during a boom, workers are laid off from businesses w/ an over capacity, etc.

Conflict theorists note that during a bust, some people gain at the expense of others in that the most efficient enterprises are not necessarily the ones that survive, corp. profits do not necessarily fall during a bust, lay-offs keep maintain a reserve army of labor reminding workers to stay in line, & not ask for too much money, etc.

In mixed & socialist economies, workers' welfare is considered in decisions regarding layoffs, & profits are often sacrificed in order to retain workers

In mixed & socialist economies, less efficient businesses that are profitable may be allowed to continue operation during a bust in order to keep workers working

The concern of mixed & socialist economies for workers over profits has made them less profitable than private enterprises but the standard of living for the middle classes is higher

Marx & other conflict theorists hold that the econ cycle itself is useful to the owners of capital

For Marx, the reserve army of labor functions to remind workers that they can easily be replaced & keeps them from demanding too much in the way of wages & benefits

During a boom, there is pressure to increase wages & during a recession, w/ a reserve army of labor, when workers resist the lowering of wages, employers can threaten to replace them w/ workers from the reserve army of labor

In the meat packing & airlines industries, striking workers were replaced during the 1980s

This mgt. strategy of replacing strikers was successful because the reserve army of labor, i.e. the unemployed, had grown to over 11.4 mm workers

Recessions can be very profitable

During the 1900s, the share of Am corp income going to profits, as opposed to wages, has generally been higher after recessions than before

During the 1991-92 recession, some workers received wage freezes & wage cuts, & give backs on employee health insurance, & other benefits

During the boom of the mid 1990s, wages & benefits recovered somewhat, more so for well educated workers, but the general trend was that lay offs turned into downsizing & jobs were not replaced, instead lower wage jobs appeared in different sectors

An example of the lack of recovery of wages for workers during a boom is that during the boom in SW VA, coal mining jobs averaging $42,000 were replaced w/ service jobs averaging $28,000

Graph: Economic Cycles 1800 to 1980

The Graph on Economic Cycles 1800 to 1980 demonstrates that historically the economy has suffered cycles of booms & busts

Bar Graph: Economic Cycles & Construction Output: 1960 to 2002

The Bar Graph on Economic Cycles 1960 to 2002 demonstrates that recently the economy has had limited cycles of booms & busts

Graph: Unemployment Cycles 1991 to 2002

The Graph on Unemployment Cycles 1991 to 2002 indicates that the economy employment & unemployment cycles which make a steady income difficult to achieve for workers

Chart: Texas Employment Trends & Oil Prices: 1970 to 1980

The Chart on Texas Employment Trends & Oil Prices: 1970 to 1980 demonstrates that employment is related to internal & external forces in the econ

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Outline on Globalization & Tribalism

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- Project: Modernism v. Tribalism

Benjamin Barber holds that the core nations w/ their forces of globalization are in an inexorable conflict w/ the semi peripheral & peripheral nations w/ their forces of tribalism

For many the conflict btwn globalization & tribalism is best understood as a conflict btwn modernism & traditionalism since globalization & tribalism are aspects or subsets of each, respectively

Barber refers to these two segments of the world as McWorld & Jihad

Tribalism is based largely upon traditional authority & grounds its value system in religious fundamentalism, & tribal nationalism

Tribalism is embraced by Christian fundamentalists, Islamic fundamentalists, & other religious fundamentalists, political extremists, warlords, & others, some of who live in core nations

Tribalists are found not only in Islamic fundamentalist circles, but also in Christian fundamentalist circles, politically based right wing "Patriots" who oppose Bush Sr.'s "New World Order" et al

For Barber, the future will be a battle btwn the forces of industrialization, rationality, modernization, etc. & the forces of development, religious fundamentalism, & localism

For Barber both globalization & tribalism are threats to democracy

One of the effects of globalization is that it increases the power of multinational corps. to a point where many of them are more powerful than many nation states, thus replacing the democratic based decisions of nations w/ the economic based decisions of multinational corps

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See Also: The Effects of Globalization

Tribalism eschews democracy in favor of tradition, basing such fundamental democratic values as human rights & freedom of choice on tradition, religion, patriarchy, etc.

Under tribalism, nation states are fragmented into ethnic & religious factions

Factionalization, often called Balkanization, has occurred in the modern era in the former Soviet Union, in the Balkans, Canada, & Africa

The former Soviet Union has split into dozens of ethnically based countries

French Canadians, Canadian Natives Indians demand that Quebec & Indian Lands become independent

The former Yugoslavia is in a cold peace resulting from the conflict btwn Serbs, Albanians, Croatians, & Bosnian Muslims

In Africa, Rwanda is torn by conflict btwn Hutus & Tutsis, Sudan & Ethiopia are dominated by warlords

In 2003, Afghanistan is dominated by warlords & the US is fighting to ensure this does not happen in Iraq

The action by either of the global forces of globalization or tribalism strengthens the resolve & resources of the other

Globalization & tribalism are in a dialectical relationship in that in its strength, each sews the seeds of its own destruction which will be harvested by the other

As globalization develops, its features of exploitation of the less powerful strengthens the forces of tribalism in that they try to fight exploitation & modernization

The 9-11 attack on the World Trade Centers was an attack by some of the forces of tribalism on the globalized West

The US responded to the forces of tribalism by giving aid to forces of globalization such as multinational corps, by expanding the global reach of its military, by developing a pre emptive doctrine of war, & by attempting to westernize & modernize Afghanistan, Iraq, & the rest of the "axis of evil"

The US reaction to the tribalist attacks of 9-11 have decimated some tribalist forces, but even Vice President Cheney wonders whether the west is destroying the forces of tribalism as fast as they may recruit them

The tribalists react to the globalized attacks on Afghanistan, Iraq & other nations by recruiting more fighters, martyrs, etc. which, when they gain enough strength, they attack the West, provoking a counter-attack

Americanization denotes that the forces of globalization are attempting to create a world culture, that absorbs other cultures, replacing it w/ a fundamentally American culture

See Also: Americanization

The concept of the global village denotes that humanity is & can live in relative harmony, recognizing the value of a multitude of cultures

The global village embraces globalization w/o cultural & economic destruction

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