Internal
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 Review Notes on   IS 12:  The Economy
External
Links
  Syllabus, Online Course 
Link
  Resources 
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Outline on IS 12:  The Economy
 
Link
Economic Sociology  
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   Economic Sectors  
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A Socio Historical Analysis   
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   Hunter Gatherer Society  
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   Agricultural Societies  
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   Industrial Societies  
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   The Post Industrial Age  
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   Stratification in Post Industrial Societies  
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   Post Modernism  
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Economic Systems  
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   Pure Capitalism  
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   Socialism  
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   Socialist Nations  
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   The Transition to Socialism  
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   Market Socialism  
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   Communism  
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   Mixed Economies, State Capitalism
 
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           Mixed Economies:  3 Capitalist Models in Competition in the 21st Century   
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                   The New Deal, aka a Corporatist System / Cooperative Capitalism   
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                   Reaganomics, aka Neo Liberalism, Corporate Dominated Capitalism   
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                   The Asian Model, aka a Planned Economy   
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Capitalism & Profit Maximization
 
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   Monopoly Capitalism  
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   Multinational Corporations  
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   Interlocking Directorates   
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   Market Concentration  
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Globalization  
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   The Effects of Globalization  
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   The Effects of Globalization in the US  
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   Deindustrialization  
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   Global Content  
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   Trade Policy  
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   NAFTA  
     Review: Unemployment  
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   Economic Cycles  
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   Globalism & Tribalism  

 
Internal
Links

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 Outline on the  Economy & the Social Sciences
External
Links
  -  Supplement:  Fareed Zalaria.  How to Restore the American Dream, 2010 
Link
  -  Supplement:  Fareed Zalaria & David Von Drehle.  America is in Decline; No America is Still Number One, 2011 
Link
  -  Project:  Economics & Bargaining
Link
  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
Link
  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  
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CONSUMER DEMAND HAS INCREASED & BECOME MORE DIFFERENTIATED
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Since 1950 there has been a shift in the 1st World from goods to services because
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-  the goods market has generally been saturated
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-  people have the disposable income to consume services such as travel & entertainment
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-  an older population desires more services
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  -  service industries have developed & become more efficient & affordable for the middle classes  
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The Labor Movement has historically been concentrated in the goods producing sector, & has been slow to organize the service producers
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The aggressiveness of employers since the Reagan Era has also made it difficult for Labor to move into the new service sectors
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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
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Lower skill jobs are hard to organize because:
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-  workers are easily replaced 
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-  it is difficult to recoup organizing costs on low wage jobs 
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Higher skill jobs are hard to organize because: 
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-  professionals are independent minded & have an ideology opposed to unions because they view it as blue collar 
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-  professionals are highly paid & so see little benefit in a union 
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EMPLOYER INTERESTS HAVE EXPANDED, SLIGHTLY, TO INCLUDE STAKEHOLDERS
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Private sector firms are ultimately answerable to their shareholders 
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Though today many firms consider other stakeholders such as 
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      Labor 
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      The Community 
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      The Environment 
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      The Consumers 
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      The Govt 
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      etc. 
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Shareholders seek a higher risk adjusted return than other investments 
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As environmental conditions change, e.g. a shift from producer to service economy, etc., a firm may shift production & labor 
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Firms leave previous markets & enter new ones 
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The historic increase in mergers & acquisitions since the 1980s reflects the mobility of capital 
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A firm can spin off a lower earning division, forcing unions to deal w/ successor owners 
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Internal
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 Outline on  Economic Sectors
External
Links
  -  Project:  Economic Systems
Link
  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  

 
External
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Chart on a  Socio Historic Analysis
External
Links
  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?   

 
Top
 
External
Links
Summary of an Socio Historical Overview
Approximate Time Period
Top
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  
Top
 
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  
Top
 
Socio Historical Time Line:  1775 to Present








 
External
Links

Top

Outline on  Hunter Gatherer Societies
circa 1.5 mm BP - 10 K BC
External
Links
  - Project:  What knowledge is needed to develop from a H-G society to an Ag society?
Link
  Review: A socio historical overview demonstrates that humanity has experienced distinct stages & milestones in its development  
Link
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  
Link
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
 
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All types of relationships, economic, familial, etc. were essentially egalitarian in the H-G Era
 
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Egalitarian relationships were upset / abandoned w/ the development of agriculture, causing for the first time, class conflict
 
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Gender differentiation existed in H-G society, but there was total equality  
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In H-G society, racial differentiation was recognized only in the context of tribal ("nationalistic") differentiation & therefore was not a basis for inequality/discrimination  
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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  
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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 )
 
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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, a hearth area 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
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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  
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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
 

 
Top
 
Table Summarizing a Socio Historical Overview
PW
External
Links
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  

 
Top
 
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

 
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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
External
Links
  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
External
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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  
Link
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
External
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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  
Link
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
 

 
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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
External
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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
External
Links
  -  Project:  Post Modernism & Optimism
Link
  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
 
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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 
External
Links
  -  Project:  Economic Systems
Link
  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
 
Link
See Also:  A Socio Historical Overview  
Link
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
External
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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  

 
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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
 
Link
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  

 
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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

 
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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
 

 
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 Outline on the  Communism
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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  

 
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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  

 
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 Outline on the   Mixed Economies:  3 Capitalist Models in Competition in the 21st Century
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  -  Project:  Compare the Mixed Economies:  The 3 Capitalist Models 
Link
  -  Supplement:  Command & Control.  Fixing capitalism means taking power back from business.  Time Magazine.   Jan 30. 2012.  pp. 45-46. 
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  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 
 
Link
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   

 
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Table on the Competing Forms of Capitalism
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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   

 
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 Outline on the  New Deal
aka a Corporatist System / Cooperative Capitalism
External
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-  Supplement:  New Deal Programs 
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  -  Supplement:  The New Deal 
Link
  -  Supplement:  The Power Steering.  How Chrysler's Intalian boss drives an American revival. Time Magazine.  Dec. 19, 2011.  pp. 36-41. 
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  -  Video:  The German Economic System.  News Hour.  Feb, 2012.       9:50 min
Link
 
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. 
Link
  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   

 
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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
Link
  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
Link
  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 
 
Link
Market Concentration   
Link
Interlocking Directorates   

 
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 Outline on  Corporations
External
Links
  -  Supplement:  The Fortune 500, 1998,  1 - 50 
Link
  -  Supplement:  The Fortune 500, 1998,  51 - 100 
Link
  -  Supplement:  The Fortune 500, 1998, Overview of GM 
Link
  -  Supplement:  The Fortune 500, 2000, 1-50 
Link
  -  Supplement: The Global 100, 1998, 1-51
Link
  -  Supplement:  The Global 100, 1998, 51-100 
Link
  -  Resource:  The Table on a Comparison of Corporations' & Nations' Income, 2005
Link
 
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 
Link
 
-  Project:  Video: The Corporation 
Link
 
-  Video: The Corporation:  Segment 1:  Intro:  A Few Bad Apples        18:09 minutes 
Link
Link
-  Video: Barbarians at the Gate     1993.  1 hr 47 min
Link
  -  Video: The Milton Friedman Choir performs "The Corporation"     2:53 minutes 
Link
  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  
  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

 
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
Links

Top

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  

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

 
Top
 
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
Internal
Links
  -  Project:  Globalization & the Standardization of Culture
Link
 
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
 
 Link
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  
  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  
  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 that some countries or regions:
 
 
- extract raw materials
 
 
- process raw materials
 
 
- make the raw materials into parts
 
 
- assemble parts
 
 
- consume finished good
 
 
- Example:  the Plastic Hoover vacuum & the Ford "World Car"
 
 
There are over 800 mm people are tied directly to global mkt in US, Europe, Japan are the core & 
 
 
The core nations have have totally globalized economies & many other peripheral countries are partially globalized  
 
Global culture(s) are rising & falling
Strong cultures are infectious. 
What is the most well known word in the world? 
 
 
Global forces are so powerful, they are affecting the global environment
 
 
There are FIVE features of the global economic & cultural systems
 
  The features of global econ & cultural systems include   
 
1.  complementarity, which occurs when demand in one place is complemented by supply in another
 
 
2.  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, whichis 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
 
 
There are FOUR factors affecting globalization & local economic development, including that 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 70's only a few peripheral nations were open to international trade & only 33 % of the workers in centrally planned economies:  SU, China, etc. & in the core countries 33 % workers not in the world system because of trade barriers, etc.
 
 
Today, only 10% of the entire world's workers are outside of the global economy
 
 
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  
  Theories of globalization include sustainable development theory, modernization theory, dependency theory, & world systems theory  
  Sustainable development theory examines how nations can encourage economic growth in a way that will benefit those nations & their people and not just multinational corporation 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
Links
  -  Project:  Video: CNN 3:  Famine Foretold  3:10 minute
Link
  -  Video:CNN 3:  Famine Foretold
Link
 
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  
  hGlobalization 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
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Links
  -  Project:  Video: CNN 5:  The Hispanic Economic Gap
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  -  Video: CNN 5:  The Hispanic Economic Gap    2:10 min
Link
  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 classesvery 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
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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
 

 
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 Outline on   NAFTA   1993
External
Links
  -  Project:  Free Trade, NAFTA, Protectionism 
Link
  -  See Also: USDA Foreign Agricultural Service (FAS):  NAFTA          http://www.fas.usda.gov/itp/Policy/nafta/nafta.asp 
Link
  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 
External
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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  

 
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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

 
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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

 
 
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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 

 
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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 
External
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  Project:  Modernism v. Tribalism
Link
  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
 
 Link
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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