# Government and Politics

## Forms of Government

Most people generally agree that anarchy, or the absence of organized government, does not facilitate a desirable living environment for society, but it is much harder for individuals to agree upon the particulars of how a population should be governed. Throughout history, various forms of government have evolved to suit the needs of changing populations and mindsets, each with pros and cons. Today, members of Western society hold that democracy is the most just and stable form of government, although former British Prime Minister Winston Churchill once declared to the House of Commons, “Indeed it has been said that democracy is the worst form of government except for all those other forms that have been tried from time to time” (Shapiro 2006).

### Monarchy

Even though people in the United States tend to be most aware of Great Britain’s royals, many other nations also recognize kings, queens, princes, princesses, and other figures with official royal titles. The power held by these positions varies  from one country to another. Strictly speaking, a monarchy is a government in which a single person (a monarch) rules until he or she dies or abdicates the throne. Usually, a monarch claims the rights to the title by way of hereditary succession or as a result of some sort of divine appointment or calling. As mentioned above, the monarchies of most modern nations are ceremonial remnants of tradition, and individuals who hold titles in such sovereignties are often aristocratic figureheads.
A few nations today, however, are run by governments wherein a monarch has absolute or unmitigated power. Such nations are called absolute monarchies. Although governments and regimes are constantly changing across the global landscape, it is generally safe to say that most modern absolute monarchies are concentrated in the Middle East and Africa. The small, oil-rich nation of Oman, for instance, is an example of an absolute monarchy. In this nation, Sultan Qaboos bin Said ruled from the 1970s until his death in 2020, when his cousin, Haitham bin Tariq, became Sultan. The Sultan creates all laws, appoints all judges, and has no formal check on their power. Living conditions and opportunities for Oman’s citizens have improved to the point that the UN ranked the nation as the most improved in the world in the past (UNDP 2010), but many citizens who live under the reign of an absolute ruler must contend with oppressive or unfair policies that are installed based on the unchecked whims or political agendas of that leader.
In today’s global political climate, monarchies far more often take the form of constitutional monarchies, governments of nations that recognize monarchs but require these figures to abide by the laws of a greater constitution. Many countries that are now constitutional monarchies evolved from governments that were once considered absolute monarchies. In most cases, constitutional monarchies, such as Great Britain and Canada, feature elected prime ministers whose leadership role is far more involved and significant than that of its titled monarchs. In spite of their limited authority, monarchs endure in such governments because people enjoy their ceremonial significance and the pageantry of their rites.

### Oligarchy

The power in an oligarchy is held by a small, elite group. Unlike in a monarchy, members of an oligarchy do not necessarily achieve their statuses based on ties to noble ancestry. Rather, they may ascend to positions of power because of military might, economic power, or similar circumstances.
The concept of oligarchy is somewhat elusive; rarely does a society openly define itself as an oligarchy. Generally, the word carries negative connotations and conjures notions of a corrupt group whose members make unfair policy decisions in order to maintain their privileged positions. Many modern nations that claim to be democracies are really oligarchies. In fact, some prominent journalists, such as Paul Krugman, who won a Nobele laureate prize in economics, have labeled the United States an oligarchy, pointing to the influence of large corporations and Wall Street executives on U.S. policy (Krugman 2011). Other political analysts assert that all democracies are really just “elected oligarchies,” or systems in which citizens must vote for an individual who is part of a pool of candidates who come from the society’s elite ruling class (Winters 2011).
Oligarchies have existed throughout history, and today many consider Russia an example of oligarchic political structure. After the fall of communism, groups of business owners captured control of this nation’s natural resources and have used the opportunity to expand their wealth and political influence. Once an oligarchic power structure has been established, it can be very difficult for middle- and lower-class citizens to advance their socioeconomic status.

### Dictatorship

Power in a dictatorship is held by a single person (or a very small group) that wields complete and absolute authority over a government and population. Like some absolute monarchies, dictatorships may be corrupt and seek to limit or even eradicate the liberties of the general population. Dictators use a variety of means to perpetuate their authority. Economic and military might, as well as intimidation and brutality are often foremost among their tactics; individuals are less likely to rebel when they are starving and fearful. Many dictators start out as military leaders and are conditioned to the use of violence against opposition.
Some dictators also possess the personal appeal that Max Weber identified with a charismatic leader. Subjects of such a dictator may believe that the leader has special ability or authority and may be willing to submit to his or her authority. The late Kim Jong-Il, North Korean dictator, and his successor, Kim Jong-Un, exemplify this type of charismatic dictatorship.
Some dictatorships do not align themselves with any particular belief system or ideology; the goal of this type of regime is usually limited to preserving the authority of the dictator. A totalitarian dictatorship is even more oppressive and attempts to control all aspects of its subjects’ lives; including occupation, religious beliefs, and number of children permitted in each family. Citizens may be forced to publicly demonstrate their faith in the regime by participating in marches and demonstrations.
Some “benevolent” dictators, such as Napoleon and Anwar Sadat, are credited with advancing their people’s standard of living or exercising a moderate amount of evenhandedness. Others grossly abuse their power. Joseph Stalin, Adolf Hitler, Saddam Hussein, Cambodia’s Pol Pot, and Zimbabwe’s Robert Mugabe, for instance, are heads of state who earned a reputation for leading through fear and intimidation.

### Democracy

A democracy is a form of government that strives to provide all citizens with an equal voice, or vote, in determining state policy, regardless of their level of socioeconomic status. Another important fundamental of the democratic state is the establishment and governance of a just and comprehensive constitution that delineates the roles and responsibilities of leaders and citizens alike.
Democracies, in general, ensure certain basic rights for their citizens. First and foremost, citizens are free to organize political parties and hold elections. Leaders, once elected, must abide by the terms of the given nation’s constitution and are limited in the powers they can exercise, as well as in the length of the duration of their terms. Most democratic societies also champion freedom of individual speech, the press, and assembly, and they prohibit unlawful imprisonment. Of course, even in a democratic society, the government constrains citizens' total freedom to act however they wish. A democratically elected government does this by passing laws and writing regulations that, at least ideally, reflect the will of the majority of its people.
Although the United States champions the democratic ideology, it is not a “pure” democracy. In a purely democratic society, all citizens would vote on all proposed legislation, and this is not how laws are passed in the United States. There is a practical reason for this: a pure democracy would be hard to implement. Thus, the United States is a constitution-based federal republic in which citizens elect representatives to make policy decisions on their behalf. The term representative democracy, which is virtually synonymous with republic, can also be used to describe a government in which citizens elect representatives to promote policies that favor their interests. In the United States, representatives are elected at local and state levels, and the votes of the Electoral College determine who will hold the office of president. Each of the three branches of the U.S. government—the executive, judicial, and legislative—is held in check by the other branches.

### Summary

Nations are governed by different political systems, including monarchies, oligarchies, dictatorships, and democracies. Generally speaking, citizens of nations wherein power is concentrated in one leader or a small group are more likely to suffer violations of civil liberties and experience economic inequality. Many nations that are today organized around democratic ideals started out as monarchies or dictatorships but have evolved into more egalitarian systems. Democratic ideals, although hard to implement and achieve, promote basic human rights and justice for all citizens.

### Section Quiz

### Short Answer

### Further Research

The Tea Party is among the highest-profile grassroots organizations active in U.S. politics today. What is its official platform? Examine the Tea Party website to find out more information.

### References

Balz, Dan. 2014. "For GOP, demographic opportunities, challenges await". The Washington Post. Retrieved December 11, 2014. (http://www.washingtonpost.com/politics/for-gop-demographic-opportunities-challenges-await/2014/11/29/407118ae-7720-11e4-9d9b-86d397daad27_story.html)
Dunbar, John (2012). “The Citizen’s United Decision and Why It Matters” The Center for Public Integrity. October 18, 2012. Retrieved October 2, 2014 (http://www.publicintegrity.org/2012/10/18/11527/citizens-united-decision-and-why-it-matters)
Krugman, Paul. 2011. “Oligarchy, American Style.” New York Times, November 3. Retrieved February 14, 2012 (http://www.nytimes.com/2011/11/04/opinion/oligarchy-american-style.html).
O'Dell, Rob and Penzenstadler, Nick. 2019. "You elected them to write new laws. They're letting corporations do it instead." USA Today. (https://www.usatoday.com/in-depth/news/investigations/2019/04/03/abortion-gun-laws-stand-your-ground-model-bills-conservatives-liberal-corporate-influence-lobbyists/3162173002/)
PBS Online. “Gilded Age.” 1999. The American Experience. Retrieved February 14, 2012 (http://www.pbs.org/wgbh/amex/carnegie/gildedage.html).
Represent.US. 2014. "The U.S. Is an Oligarchy? The Research Explained." (https://bulletin.represent.us/u-s-oligarchy-explain-research/)
Schulz, Thomas. 2011. “The Second Gilded Age: Has America Become an Oligarchy?” Spiegel Online International, October 28. Retrieved February 14, 2012 (http://www.spiegel.de/international/spiegel/0,1518,793896,00.html).
UNDP. 2010. "Five Arab Countries Among Top Leaders in Long-Term Gains." United Nations. (http://hdr.undp.org/en/mediacentre/news/announcements/title,21573,en.html)
Winters, Jeffrey. 2011. “Oligarchy and Democracy.” American Interest, November/December. Retrieved February 17, 2012 (http://www.the-american-interest.com/article.cfm?piece=1048).
Zucman, Gabriel. 2019. "Global Wealth Inequality." Annual Review of Economics. May 2019. (https://gabriel-zucman.eu/files/Zucman2019.pdf)


# Government and Politics

## Politics in the United States

When describing a nation’s politics, we should define the term. We may associate the term with freedom, power, corruption, or rhetoric. Political science looks at politics as the interaction between citizens and their government. Sociology studies politics as a means to understand the underlying social norms and values of a group. A society’s political structure and practices provide insight into the distribution of power and wealth, as well as larger philosophical and cultural beliefs. A cursory sociological analysis of U.S. politics might suggest that Americans' desire to promote equality and democracy on a theoretical level is at odds with the nation’s real-life capitalist orientation.
Lincoln's famous phrase “of the people, by the people, for the people” is at the heart of the U.S. system and sums up its most essential aspect: that citizens willingly and freely elect representatives they believe will look out for their best interests. Although many Americans take free elections for granted, it is a vital foundation of any democracy.  When the U.S. government was formed, however, African Americans and women were denied the right to vote. Each of these groups struggled to secure the same suffrage rights as their White male counterparts, yet this history fails to inspire some Americans to show up at the polls and cast their ballots. Problems with the democratic process, including limited voter turnout, require us to more closely examine complex social issues that influence political participation.

### Voter Participation

Voter participation is essential to the success of the U.S. political system. Although many Americans are quick to complain about laws and political leadership,  in any given election year roughly half the population does not vote (United States Elections Project 2010). Some years have seen even lower turnouts; in 2010, for instance, only 37.8 percent of the population participated in the electoral process (United States Elections Project 2011). Poor turnout can skew election results, particularly if one age or socioeconomic group is more diligent in its efforts to make it to the polls.
Certain voting advocacy groups work to improve turnout. Vote.org focuses on absentee voting, mail-in voting, and similar practices. Native Vote is an organization that strives to inform Native Americans about upcoming elections and encourages their participation. National Council of La Raza and Voto Latino strive to improve voter turnout among the Latino population. William Frey, author of Diversity Explosion, points out that the number of  Hispanic people, Asian people, and multiracial populations is expected to double in the next forty years (Balz 2014).

### Race, Gender, and Class Issues

Although recent records have shown more minorities voting now than ever before, this trend is still fairly new. Historically, African Americans and other minorities have been underrepresented at the polls. Black men were not allowed to vote at all until after the Civil War, and Black women gained the right to vote along with other women only with the ratification of the Nineteenth Amendment in 1920. For years, African Americans who were brave enough to vote were discouraged by discriminatory legislation, passed in many southern states, which required poll taxes and literacy tests of prospective voters. Literacy tests were not outlawed until 1965, when President Lyndon Johnson signed the Voting Rights Act.
The 1960s saw other important reforms in U.S. voting. Shortly before the Voting Rights Act was passed, the 1964 U.S. Supreme Court case Reynolds v. Sims changed the nature of elections. This landmark decision reaffirmed the notion of “one person, one vote,” a concept holding that all people’s votes should be counted equally. Before this decision, unequal distributions of population enabled small groups of people in sparsely populated rural areas to have as much voting power as the denser populations of urban areas. After Reynolds v. Sims, districts were redrawn so that they would include equal numbers of voters.
Unfortunately, in June 2013 the Supreme Court repealed several important aspects of the 1965 Voting Rights Act, ruling that southern states no longer need the stricter scrutiny that was once required to prohibit racial discrimination in voting practices in the South. Following this decision, several states moved forward with voter identification laws that had previously been banned by federal courts. Officials in Texas, Mississippi, and Alabama claim that new identification (ID) laws are needed to reduce voter fraud. Opponents point to the Department of Justice statistics indicating that only twenty-six voters, of 197 million voters in federal elections, were found guilty of voter fraud between 2002 and 2005. "Contemporary voter identification laws are trying to solve a problem that hasn’t existed in over a century” (Campbell, 2012). Opponents further note that new voter ID laws disproportionately affect minorities and the poor, potentially prohibiting them from exercising their right to vote.
Evidence suggests that legal protection of voting rights does not directly translate into equal voting power. Relative to their presence in the U.S. population, women and racial/ethnic minorities are underrepresented in the U.S. Congress. White men still dominate both houses. And until the inauguration of Barack Obama in 2009, all U.S. presidents had been White men.
Like race and ethnicity, social class also has influenced voting practices. Voting rates among lower-educated, lower-paid workers are lower than for people with higher socioeconomic status that fosters a system in which people with more power and access to resources have the means to perpetuate their power. Several explanations have been offered to account for this difference (Raymond 2010). Workers in low-paying service jobs might find it harder to get to the polls because they lack flexibility in their work hours and quality daycare to look after children while they vote. Because a larger share of racial and ethnic minorities is employed in such positions, social class may be linked to race and ethnicity influencing voting rates. New requirements for specific types of voter identification in some states are likely to compound these issues, because it may take additional time away from work, as well as additional child care or transportation, for voters to get the needed IDs. The impact on minorities and the impoverished may cause a further decrease in voter participation. Attitudes play a role as well. Some people of low socioeconomic status or  minority race/ethnicity doubt their vote will count or voice will be heard because they have seen no evidence of their political power in their communities. Many believe that what they already have is all they can achieve.
As suggested earlier, money can carry a lot of influence in U.S. democracy. But there are other means to make one’s voice heard. Free speech can be influential, and people can participate in the democratic system through volunteering with political advocacy groups, writing to elected officials, sharing views in a public forum such as a blog or letter to the editor, forming or joining cause-related political organizations and interest groups, participating in public demonstrations, and even running for a local office.

### The Judicial System

The third branch of the U.S. government is the judicial system, which consists of local, state, and federal courts. The U.S. Supreme Court is the highest court in the United States, and it has the final say on decisions about the constitutionality of laws that citizens challenge. As noted earlier, some rulings have a direct impact on the political system, such as recent decisions about voter identification and campaign financing. Other Supreme Court decisions affect different aspects of society, and they are useful for sociological study because they help us understand cultural changes. One example is a recent and highly controversial case that dealt with the religious opposition of Hobby Lobby Stores Inc. to providing employees with specific kinds of insurance mandated by the Patient Protection and Affordable Care Act. Another example is same-sex marriage cases, which were expected to be heard by the Court; however, the Court denied review of these cases in the fall of 2014. For now, the rulings of federal district courts stand, and states can continue to have differing outcomes on same-sex marriage for their citizens.

### Summary

The success and validity of U.S. democracy hinges on free, fair elections that are characterized by the support and participation of diverse citizens. In spite of their importance, elections have low participation. In the past, the voice of minority groups was nearly imperceptible in elections, but recent trends have shown increased voter turnout across many minority races and ethnicities. In the past, the creation and sustenance of a fair voting process has necessitated government intervention, particularly on the legislative level. The Reynolds v. Sims case, with its landmark “one person, one vote” ruling, is an excellent example of such action.

### Section Quiz

### Short Answer

### Further Research

The 1965 Voting Rights Act was preceded by Lyndon Johnson’s signing of the 1964 Civil Rights Act. Both articles were instrumental in establishing equal rights for African Americans. Check out Cornell University’s website on this civil rights to learn more about this civil rights legislation.

### References

Bingham, Amy. 2012. “Voter Fraud: Non-Existent Problem or Election-Threatening Epidemic?” ABC News, September 12. Retrieved October 2, 2014 (http://abcnews.go.com/Politics/OTUS/voter-fraud-real-rare/story?id=17213376)
Cooper, Michael. 2013. “After Ruling, States Rush to Enact Voting Laws” The New York Times, July 5. Retrieved October 1, 2014 (http://www.nytimes.com/2013/07/06/us/politics/after-Supreme-Court-ruling-states-rush-to-enact-voting-laws.html?pagewanted=all&_r=0)
Dinan, Stephen. 2013. “Supreme Court Says Voting Rights Act of 1965 is No Longer Relevant” The Washington Times, June 25. Retrieved October 1, 2014 (http://www.washingtontimes.com/news/2013/jun/25/court-past-voting-discrimination-no-longer-held/?page=all)
IT Chicago-Kent School of Law. 2014. U.S. Supreme Court Media OYEZ. Retrieved October 7, 2014 (http://www.oyez.org/)
Lopez, Mark Hugo and Paul Taylor. 2009. “Dissecting the 2008 Electorate: the Most Diverse in U.S. History.” Pew Research Center.  April 30. Retrieved April 24, 2012 (http://pewresearch.org/assets/pdf/dissecting-2008-electorate.pdf).

Raymond, Jose. 2010. “Why Poor People Don’t Vote.” Change.org, June 6. Retrieved February 17, 2012.
United States Elections Project. 2010. “2008 General Election Turnout Rates.” October 6. Retrieved February 14, 2012 (http://elections.gmu.edu/Turnout_2008G.html).
United States Elections Project. 2011. “2010 General Election Turnout Rates.” December 12. Retrieved February 14, 2012 (http://elections.gmu.edu/Turnout_2010G.html).


# Government and Politics

## Theoretical Perspectives on Government and Power

Sociologists rely on organizational frameworks or paradigms to make sense of their study of sociology; already there are many widely recognized schemas for evaluating sociological data and observations. Each paradigm looks at the study of sociology through a unique lens. The sociological examination of government and power can thus be evaluated using a variety of perspectives that help the evaluator gain a broader perspective. Functionalism, conflict theory, and symbolic interactionism are a few of the more widely recognized philosophical stances in practice today.

### Functionalism

According to functionalism, the government has four main purposes: planning and directing society, meeting social needs, maintaining law and order, and managing international relations. According to functionalism, all aspects of society serve a purpose.
Functionalists view government and politics as a way to enforce norms and regulate conflict. Functionalists see active social change, such as the sit-in on Wall Street, as undesirable because it forces change and, as a result, undesirable things that might have to be compensated for. Functionalists seek consensus and order in society. Dysfunction creates social problems that lead to social change. For instance, functionalists would see monetary political contributions as a way of keeping people connected to the democratic process. This would be in opposition to a conflict theorist who would see this financial contribution as a way for the rich to perpetuate their own wealth.

### Conflict Theory

Conflict theory focuses on the social inequalities and power difference within a group, analyzing society through this lens.  Philosopher and social scientist Karl Marx was a seminal force in developing the conflict theory perspective; he viewed social structure, rather than individual personality characteristics, as the cause of many social problems, such as poverty and crime.  Marx believed that conflict between groups struggling to either attain wealth and power or keep the wealth and power they had was inevitable in a capitalist society, and conflict was the only way for the underprivileged to eventually gain some measure of equality.
C. Wright Mills (1956) elaborated on some of Marx’s concepts, coining the phrase power elite to describe what he saw as the small group of powerful people who control much of a society.  Mills believed the power elite use government to develop social policies that allow them to keep their wealth. Contemporary theorist G. William Domhoff (2011) elaborates on ways in which the power elite may be seen as a subculture whose members follow similar social patterns such as joining elite clubs, attending select schools, and vacationing at a handful of exclusive destinations.

### Conflict Theory in Action

Even before there were modern nation-states, political conflicts arose among competing societies or factions of people. Vikings attacked continental European tribes in search of loot, and, later, European explorers landed on foreign shores to claim the resources of indigenous groups. Conflicts also arose among competing groups within individual sovereignties, as evidenced by the bloody French Revolution. Nearly all conflicts in the past and present, however, are spurred by basic desires: the drive to protect or gain territory and wealth, and the need to preserve liberty and autonomy.
According to sociologist and philosopher Karl Marx, such conflicts are necessary, although ugly, steps toward a more egalitarian society. Marx saw a historical pattern in which revolutionaries toppled elite power structures, after which wealth and authority became more evenly dispersed among the population, and the overall social order advanced. In this pattern of change through conflict, people tend to gain greater personal freedom and economic stability (1848).
Modern-day conflicts are still driven by the desire to gain or protect power and wealth, whether in the form of land and resources or in the form of liberty and autonomy. Internally, groups within the U.S. struggle within the system, by trying to achieve the outcomes they prefer. Political differences over budget issues, for example, led to the recent shutdown of the federal government, and alternative political groups, such as the Tea Party, are gaining a significant following.
The Arab Spring exemplifies oppressed groups acting collectively to change their governmental systems, seeking both greater liberty and greater economic equity. Some nations, such as Tunisia, have successfully transitioned to governmental change; others, like Egypt, have not yet reached consensus on a new government.
Unfortunately, the change process in some countries reached the point of active combat between the established government and the portion of the population seeking change, often called revolutionaries or rebels. Libya and Syria are two such countries; the multifaceted nature of the conflict, with several groups competing for their own desired ends, makes creation of a peaceful resolution more challenging.
Popular uprisings of citizens seeking governmental change have occurred this year in Bosnia, Brazil, Greece, Iran, Jordan, Portugal, Spain, Turkey, Ukraine, and most recently in Hong Kong. Although much smaller in size and scope, demonstrations occurred in the aftermath of the killing of George Floyd in the summer of 2020. Some of these and related demonstrations went on for months. Small numbers of these protests or protesters were violent, and many leaders in both the protest movement and government acknowledge that the protests had changed focus to reflect general anti-government sentiments, rather than focusing on racial justice.

### Symbolic Interactionism

Other sociologists study government and power by relying on the framework of symbolic interactionism, which is grounded in the works of Max Weber and George H. Mead.
Symbolic interactionism, as it pertains to government, focuses its attention on figures, emblems, or individuals that represent power and authority. Many diverse entities in larger society can be considered symbolic: trees, doves, wedding rings. Images that represent the power and authority of the United States include the White House, the eagle, and the American flag. The Seal of the President of the United States, along with the office in general, incites respect and reverence in many Americans.
Symbolic interactionists are not interested in large structures such as the government. As micro-sociologists, they are more interested in the face-to-face aspects of politics. In reality, much of politics consists of face-to-face backroom meetings and lobbyist efforts. What the public often sees is the front porch of politics that is sanitized by the media through gatekeeping.
Symbolic interactionists are most interested in the interaction between these small groups who make decisions, or in the case of some recent congressional committees, demonstrate the inability to make any decisions at all. The heart of politics is the result of interaction between individuals and small groups over periods of time. These meetings produce new meanings and perspectives that individuals use to make sure there are future interactions.

### Summary

Sociologists use frameworks to gain perspective on data and observations related to the study of power and government. Functionalism suggests that societal power and structure is predicated on cooperation, interdependence, and shared goals or values. Conflict theory, rooted in Marxism, asserts that societal structures are the result of social groups competing for wealth and influence. Symbolic interactionism examines a smaller realm of sociological interest: the individual’s perception of symbols of power and their subsequent reaction to the face-to-face interactions of the political realm.

### Section Quiz

### Short Answer

### Further Research

Functionalism is a complex philosophical theory that pertains to a variety of disciplines beyond sociology. Visit the entry devoted to functionalism on  for a more comprehensive overview.

### References

Domhoff, G. William. 2011. “Who Rules America?” Sociology Department at University of California, Santa Cruz. Retrieved January 23, 2012 (http://www2.ucsc.edu/whorulesamerica/).
Marx, Karl. 1848. Manifesto of the Communist Party. Retrieved January 09, 2012 (http://www.marxists.org/archive/marx/works/1848/communist-manifesto/).


# Work and the Economy

## Introduction to Work and the Economy

What if the U.S. economy thrived solely on basic bartering instead of its bustling agricultural and technological goods? Would you still see a busy building like the one shown in ?
In sociology, economy refers to the social institution through which a society’s resources are exchanged and managed. The earliest economies were based on trade, which is often a simple exchange in which people traded one item for another. While today’s economic activities are more complex than those early trades, the underlying goals remain the same: exchanging goods and services allows individuals to meet their needs and wants. In 1893, Émile Durkheim described what he called “mechanical” and “organic” solidarity that correlates to a society’s economy. Mechanical solidarity exists in simpler societies where social cohesion comes from sharing similar work, education, and religion. Organic solidarity arises out of the mutual interdependence created by the specialization of work. The complex U.S. economy, and the economies of other industrialized nations, meet the definition of organic solidarity. Most individuals perform a specialized task to earn money they use to trade for goods and services provided by others who perform different specialized tasks. In a simplified example, an elementary school teacher relies on farmers for food, doctors for healthcare, carpenters to build shelter, and so on. The farmers, doctors, and carpenters all rely on the teacher to educate their children. They are all dependent on each other and their work.

Economy is one of human society’s earliest social structures. Our earliest forms of writing (such as Sumerian clay tablets) were developed to record transactions, payments, and debts between merchants. As societies grow and change, so do their economies. The economy of a small farming community is very different from the economy of a large nation with advanced technology. In this chapter, we will examine different types of economic systems and how they have functioned in various societies.
Detroit, once the roaring headquarters of the country’s large and profitable automotive industry, had already been in a population decline for several decades as auto manufacturing jobs were being outsourced to other countries and foreign car brands began to take increasing portions of U.S. market share. According to State of Michigan population data (State of Michigan, n.d.), Detroit was home to approximately 1.85 million residents in 1950, which dwindled to slightly more than 700,000 in 2010 following the economic crash. The drastic reduction took its toll on the city. It is estimated that a third of the buildings in Detroit have been abandoned. The current average home price hovers around $7,000, while homes nationwide sell on average for around $200,000. The city has filed for bankruptcy, and its unemployment rate hovers around 30 percent.

### The Wage Gap in the United States

The Equal Pay Act, passed by the U.S. Congress in 1963, was designed to reduce the wage gap between men and women. The act in essence required employers to pay equal wages to men and women who were performing substantially similar jobs. However, more than fifty years later, women continue to make less money than their male counterparts.  According to a report released by the White House in 2013, full-time working women made just 77 cents for every dollar a man made (National Equal Pay Taskforce 2013). Seven years later, the gap had only closed by four cents, with women making 81 cents for every dollar a man makes (Payscale 2020).
A part of the White House report read, “This significant gap is more than a statistic—it has real-life consequences. When women, who make up nearly half the workforce, bring home less money each day, it means they have less for the everyday needs of their families, and over a lifetime of work, far less savings for retirement.”
As shocking as it is, the gap actually widens when we add  race and ethnicity to the picture. For example, African American women make on average 64 cents for every dollar a White male makes. Latina women make 56 cents, or 44 percent less, for every dollar a White man makes. African American and Latino men also make notably less than White men. Asian Americans tend to be the only minority that earns as much as or more than White men.
Certain professions have their own differences in wage gaps, even those whose participants have higher levels of education and supposedly a more merit-based method of promotion and credit. For example, U.S. and Canadian scientists have a significant wage gap that begins as soon as people enter the workforce. For example, of the PhD recipients that have jobs lined up after earning their degree, men reported an initial salary average of $92,000 per year, while women's was only $72,500. Men with permanent jobs in the life sciences reported an expected median salary of $87,000, compared with $80,000 for women. In mathematics and computer sciences, men reported an expected median salary of $125,000; for women, that figure was $101,500 (Woolston 2021).

### Recent Economic Conditions

In 2015, the United States continued its recovery from the “Great Recession,” arguably the worst economic downturn since the stock market collapse in 1929 and the Great Depression that ensued.
The 2008 recession was brought on by aggressive lending, extremely risky behavior by investment firms, and lax oversight by the government. During this time, banks provided mortgages to people with poor credit histories, sometimes with deceptively low introductory interest rates. When the rates rose, borrowers' mortgage payments increased to the point where they couldn't make payments. At the same time, investment firms had purchased these risky mortgages in the form of large bundled investments worth billions of dollars each (mortgage-backed securities or MBS). Rating agencies were supposed to rate mortgage securities according to their level of risk, but they typically rated all MBS as high-quality no matter what types of mortgages they contained. When the mortgages defaulted, the investment firms' holdings went down. The massive rate of loan defaults put a strain on the financial institutions that had made the loans as well as those that had purchased the MBS, and this stress rippled throughout the entire economy and around the globe.
With the entire financial system on the verge of permanent damage, the U.S. government bailed out many of these firms and provided support to other industries, such as airlines and automobile companies. But the Recession couldn't be stopped. The United States fell into a period of high and prolonged unemployment, extreme reductions in wealth (except at the very top), stagnant wages, and loss of value in personal property (houses and land).
Starting in 2009, however, employment began to tick back up as companies found their footing. By 2012, most of the country's employment rates were similar to the levels prior to the Great Recession. However, for most segments of the population, median income had not increased, and in fact it has receded in many cases. The size, income, and wealth of the middle class have been declining since the 1970s— effects that were perhaps hastened by the recession. Today, wealth is distributed inequitably at the top. Corporate profits have increased more than 141 percent, and CEO pay has risen by more than 298 percent.
Although wages had not increased, and certain parts of the economy, such as brick-and-mortar retail (department stores and similar chains) were doing poorly, the economy as a whole grew from the time after the Great Recession through 2020. Unemployment reached a historic low in late 2019. COVID-19 changed all that. As you may have experienced yourself, entire industries suffered incredible losses as they were forced to shut down or severely reduce operations. Some people were laid off from their jobs, while others had their hours or wages reduced. Unemployment skyrocketed again, reaching a new high of nearly 15 percent, only about six months after it had been at its record low. Industries as diverse as hospitality and mining reported massive decreases in employment, and part-time workers in particular were hard hit. By early 2021, the overall unemployment rate had returned to  generally normal levels. The impact on those who had gone without work for so long, however, was significant (Congressional Research Service 2021).

### References

National Equal Pay Task Force. 2013. "Fifty Years After the Equal Pay Act: Assessing the Past, Taking Stock of the Future." Retrieved December 15, 2014. (http://www.whitehouse.gov/sites/default/files/equalpay/equal_pay_task_force_progress_report_june_2013_new.pdf).
Payscale.com. 2020. "State of the Gender Pay Gap 2020." Payscale.com. (https://www.payscale.com/data/gender-pay-gap)
State of Michigan, The. n.d. "Detrioit's Financial Crisis: What You Need to Know." Retrieved December 15, 2014. (http://www.michigan.gov/documents/detroitcantwait/DetroitFactSheet_412909_7.pdf).
U.S. Department of Agriculture. 2014. "Supplemental Nutrition Assistance Program Participation and Costs." Retrieved December 15, 2014. (http://www.fns.usda.gov/sites/default/files/pd/SNAPsummary.pdf).
Woolston, Chris. 2021. "Pay gap widens between men and women scientists in North America." Nature Career News. February 11 2021. (https://www.nature.com/articles/d41586-021-00387-3)


# Work and the Economy

## Economic Systems

The dominant economic systems of the modern era are capitalism and socialism, and there have been many variations of each system across the globe. Countries have switched systems as their rulers and economic fortunes have changed. For example, Russia has been transitioning to a market-based economy since the fall of communism in that region of the world. Vietnam, where the economy was devastated by the Vietnam War, restructured to a state-run economy in response, and more recently has been moving toward a socialist-style market economy. In the past, other economic systems reflected the societies that formed them. Many of these earlier systems lasted centuries. These changes in economies raise many questions for sociologists. What are these older economic systems? How did they develop? Why did they fade away? What are the similarities and differences between older economic systems and modern ones?

### Economics of Agricultural, Industrial, and Postindustrial Societies

Our earliest ancestors lived as hunter-gatherers. Small groups of extended families roamed from place to place looking for subsistence. They would settle in an area for a brief time when there were abundant resources. They hunted animals for their meat and gathered wild fruits, vegetables, and cereals. They ate what they caught or gathered their goods as soon as possible, because they had no way of preserving or transporting it. Once the resources of an area ran low, the group had to move on, and everything they owned had to travel with them. Food reserves only consisted of what they could carry. Many sociologists contend that hunter-gatherers did not have a true economy, because groups did not typically trade with other groups due to the scarcity of goods.

### The Agricultural Revolution

The first true economies arrived when people started raising crops and domesticating animals. Although there is still a great deal of disagreement among archeologists as to the exact timeline, research indicates that agriculture began independently and at different times in several places around the world. The earliest agriculture was in the Fertile Crescent in the Middle East around 11,000–10,000 years ago. Next were the valleys of the Indus, Yangtze, and Yellow rivers in India and China, between 10,000 and 9,000 years ago. The people living in the highlands of New Guinea developed agriculture between 9,000 and 6,000 years ago, while people were farming in Sub-Saharan Africa between 5,000 and 4,000 years ago. Agriculture developed later in the western hemisphere, arising in what would become the eastern United States, central Mexico, and northern South America between 5,000 and 3,000 years ago (Diamond 2003).
Agriculture began with the simplest of technologies—for example, a pointed stick to break up the soil—but really took off when people harnessed animals to pull an even more efficient tool for the same task: a plow. With this new technology, one family could grow enough crops not only to feed themselves but also to feed others. Knowing there would be abundant food each year as long as crops were tended led people to abandon the nomadic life of hunter-gatherers and settle down to farm.
The improved efficiency in food production meant that not everyone had to toil all day in the fields. As agriculture grew, new jobs emerged, along with new technologies. Excess crops needed to be stored, processed, protected, and transported. Farming equipment and irrigation systems needed to be built and maintained. Wild animals needed to be domesticated and herds shepherded. Economies began to develop because people now had goods and services to trade. At the same time, farmers eventually came to labor for the ruling class.
As more people specialized in nonfarming jobs, villages grew into towns and then into cities. Urban areas created the need for administrators and public servants. Disputes over ownership, payments, debts, compensation for damages, and the like led to the need for laws and courts—and the judges, clerks, lawyers, and police who administered and enforced those laws.
At first, most goods and services were traded as gifts or through bartering between small social groups (Mauss 1922). Exchanging one form of goods or services for another was known as bartering. This system only works when one person happens to have something the other person needs at the same time. To solve this problem, people developed the idea of a means of exchange that could be used at any time: that is, money. Money refers to an object that a society agrees to assign a value to so it can be exchanged for payment. In early economies, money was often objects like cowry shells, rice, barley, or even rum. Precious metals quickly became the preferred means of exchange in many cultures because of their durability and portability. The first coins were minted in Lydia in what is now Turkey around 650–600 B.C.E. (Goldsborough 2010). Early legal codes established the value of money and the rates of exchange for various commodities. They also established the rules for inheritance, fines as penalties for crimes, and how property was to be divided and taxed (Horne 1915). A symbolic interactionist would note that bartering and money are systems of symbolic exchange. Monetary objects took on a symbolic meaning, one that carries into our modern-day use of cash, checks, and debit cards.
As city-states grew into countries and countries grew into empires, their economies grew as well. When large empires broke up, their economies broke up too. The governments of newly formed nations sought to protect and increase their markets. They financed voyages of discovery to find new markets and resources all over the world, which ushered in a rapid progression of economic development.
Colonies were established to secure these markets, and wars were financed to take over territory. These ventures were funded in part by raising capital from investors who were paid back from the goods obtained. Governments and private citizens also set up large trading companies that financed their enterprises around the world by selling stocks and bonds.
Governments tried to protect their share of the markets by developing a system called mercantilism. Mercantilism is an economic policy based on accumulating silver and gold by controlling colonial and foreign markets through taxes and other charges. The resulting restrictive practices and exacting demands included monopolies, bans on certain goods, high tariffs, and exclusivity requirements. Mercantilist governments also promoted manufacturing and, with the ability to fund technological improvements, they helped create the equipment that led to the Industrial Revolution.

### The Industrial Revolution

Until the end of the eighteenth century, most manufacturing was done by manual labor. This changed as inventors devised machines to manufacture goods. A small number of innovations led to a large number of changes in the British economy. In the textile industries, the spinning of cotton, worsted yarn, and flax could be done more quickly and less expensively using new machines with names like the Spinning Jenny and the Spinning Mule (Bond 2003). Another important innovation was made in the production of iron: Coke from coal could now be used in all stages of smelting rather than charcoal from wood, which dramatically lowered the cost of iron production while increasing availability (Bond 2003). James Watt ushered in what many scholars recognize as the greatest change, revolutionizing transportation and thereby the entire production of goods with his improved steam engine.
As people moved to cities to fill factory jobs, factory production also changed. Workers did their jobs in assembly lines and were trained to complete only one or two steps in the manufacturing process. These advances meant that more finished goods could be manufactured with more efficiency and speed than ever before.
The Industrial Revolution also changed agricultural practices. Until that time, many people practiced subsistence farming in which they produced only enough to feed themselves and pay their taxes. New technology introduced gasoline-powered farm tools such as tractors, seed drills, threshers, and combine harvesters. Farmers were encouraged to plant large fields of a single crop to maximize profits. With improved transportation and the invention of refrigeration, produce could be shipped safely all over the world.
The Industrial Revolution modernized the world. With growing resources came growing societies and economies. Between 1800 and 2000, the world’s population grew sixfold, while per capita income saw a tenfold jump (Maddison 2003).
While many people's lives were improving, the Industrial Revolution also birthed many societal problems. There were inequalities in the system. Owners amassed vast fortunes while laborers, including young children, toiled for long hours in unsafe conditions. Workers’ rights, wage protection, and safe work environments are issues that arose during this period and remain concerns today.

### Postindustrial Societies and the Information Age

Postindustrial societies, also known as information societies, have evolved in modernized nations. One of the most valuable goods of the modern era is information. Those who have the means to produce, store, and disseminate information are leaders in this type of society.
One way scholars understand the development of different types of societies (like agricultural, industrial, and postindustrial) is by examining their economies in terms of four sectors: primary, secondary, tertiary, and quaternary. Each has a different focus. The primary sector extracts and produces raw materials (like metals and crops). The secondary sector turns those raw materials into finished goods. The tertiary sector provides services: child care, healthcare, and money management. Finally, the quaternary sector produces ideas; these include the research that leads to new technologies, the management of information, and a society’s highest levels of education and the arts (Kenessey 1987).
In underdeveloped countries, the majority of the people work in the primary sector. As economies develop, more and more people are employed in the secondary sector. In well-developed economies, such as those in the United States, Japan, and Western Europe, the majority of the workforce is employed in service industries. In the United States, for example, almost 80 percent of the workforce is employed in the tertiary sector (U.S. Bureau of Labor Statistics 2011).
The rapid increase in computer use in all aspects of daily life is a main reason for the transition to an information economy. Fewer people are needed to work in factories because computerized robots now handle many of the tasks. Other manufacturing jobs have been outsourced to less-developed countries as a result of the developing global economy. The growth of the Internet has created industries that exist almost entirely online. Within industries, technology continues to change how goods are produced. For instance, the music and film industries used to produce physical products like CDs and DVDs for distribution. Now those goods are increasingly produced digitally and streamed or downloaded at a much lower physical manufacturing cost. Information and the means to use it creatively have become commodities in a postindustrial economy.

### Capitalism

Scholars don’t always agree on a single definition of capitalism. For our purposes, we will define capitalism as an economic system in which there is private ownership (as opposed to state ownership) and where there is an impetus to produce profit, and thereby wealth. This is the type of economy in place in the United States today. Under capitalism, people invest capital (money or property invested in a business venture) in a business to produce a product or service that can be sold in a market to consumers. The investors in the company are generally entitled to a share of any profit made on sales after the costs of production and distribution are taken out. These investors often reinvest their profits to improve and expand the business or acquire new ones. To illustrate how this works, consider this example. Sarah, Antonio, and Chris each invest $250,000 into a start-up company that offers an innovative baby product. When the company nets $1 million in profits its first year, a portion of that profit goes back to Sarah, Antonio, and Chris as a return on their investment. Sarah reinvests with the same company to fund the development of a second product line, Antonio uses his return to help another start-up in the technology sector, and Chris buys a small yacht for vacations.
To provide their product or service, owners hire workers to whom they pay wages. The cost of raw materials, the retail price they charge consumers, and the amount they pay in wages are determined through the law of supply and demand and by competition. When demand exceeds supply, prices tend to rise. When supply exceeds demand, prices tend to fall. When multiple businesses market similar products and services to the same buyers, there is competition. Competition can be good for consumers because it can lead to lower prices and higher quality as businesses try to get consumers to buy from them rather than from their competitors.
Wages tend to be set in a similar way. People who have talents, skills, education, or training that is in short supply and is needed by businesses tend to earn more than people without comparable skills. Competition in the workforce helps determine how much people will be paid. In times when many people are unemployed and jobs are scarce, people are often willing to accept less than they would when their services are in high demand. In this scenario, businesses are able to maintain or increase profits by not increasing workers' wages.

### Capitalism in Practice

As capitalists began to dominate the economies of many countries during the Industrial Revolution, the rapid growth of businesses and their tremendous profitability gave some owners the capital they needed to create enormous corporations that could monopolize an entire industry. Many companies controlled all aspects of the production cycle for their industry, from the raw materials, to the production, to the stores in which they were sold. These companies were able to use their wealth to buy out or stifle any competition.
In the United States, the predatory tactics used by these large monopolies caused the government to take action. Starting in the late 1800s, the government passed a series of laws that broke up monopolies and regulated how key industries—such as transportation, steel production, and oil and gas exploration and refining—could conduct business.
The United States is considered a capitalist country. However, the U.S. government has a great deal of influence on private companies through the laws it passes and the regulations enforced by government agencies. Through taxes, regulations on wages, guidelines to protect worker safety and the environment, plus financial rules for banks and investment firms, the government exerts a certain amount of control over how all companies do business. State and federal governments also own, operate, or control large parts of certain industries, such as the post office, schools, hospitals, highways and railroads, and many water, sewer, and power utilities. Debate over the extent to which the government should be involved in the economy remains an issue of contention today. Some criticize such involvements as socialism (a type of state-run economy), while others believe intervention is necessary to protect the rights of workers and the well-being of the general population.

### Socialism

Socialism is an economic system in which there is government ownership (often referred to as “state run”) of goods and their production, with an impetus to share work and wealth equally among the members of a society. Under socialism, everything that people produce, including services, is considered a social product. Everyone who contributes to the production of a good or to providing a service is entitled to a share in any benefits that come from its sale or use. To make sure all members of society get their fair share, governments must be able to control property, production, and distribution.
The focus in socialism is on benefitting society, whereas capitalism seeks to benefit the individual. Socialists claim that a capitalistic economy leads to inequality, with unfair distribution of wealth and individuals who use their power at the expense of society. Socialism strives, ideally, to control the economy to avoid the problems inherent in capitalism.
Within socialism, there are diverging views on the extent to which the economy should be controlled. One extreme believes all but the most personal items are public property. Other socialists believe only essential services such as healthcare, education, and utilities (electrical power, telecommunications, and sewage) need direct control. Under this form of socialism, farms, small shops, and businesses can be privately owned but are subject to government regulation.
The other area on which socialists disagree is on what level society should exert its control. In communist countries like the former Soviet Union, China, Vietnam, and North Korea, the national government exerts control over the economy centrally. They had the power to tell all businesses what to produce, how much to produce, and what to charge for it. Other socialists believe control should be decentralized so it can be exerted by those most affected by the industries being controlled. An example of this would be a town collectively owning and managing the businesses on which its residents depend.
Because of challenges in their economies, several of these communist countries have moved from central planning to letting market forces help determine many production and pricing decisions. Market socialism describes a subtype of socialism that adopts certain traits of capitalism, like allowing limited private ownership or consulting market demands. This could involve situations like profits generated by a company going directly to the employees of the company or being used as public funds (Gregory and Stuart 2003). Many Eastern European and some South American countries have mixed economies. Key industries are nationalized and directly controlled by the government; however, most businesses are privately owned and regulated by the government.
Organized socialism never became powerful in the United States. The success of labor unions and the government in securing workers’ rights, joined with the high standard of living enjoyed by most of the workforce, made socialism less appealing than the controlled capitalism practiced here.

### Socialism in Practice

As with capitalism, the basic ideas behind socialism go far back in history. Plato, in ancient Greece, suggested a republic in which people shared their material goods. Early Christian communities believed in common ownership, as did the systems of monasteries set up by various religious orders. Many of the leaders of the French Revolution called for the abolition of all private property, not just the estates of the aristocracy they had overthrown. Thomas More's Utopia, published in 1516, imagined a society with little private property and mandatory labor on a communal farm. A utopia has since come to mean an imagined place or situation in which everything is perfect. Most experimental utopian communities had the abolition of private property as a founding principle.
Modern socialism really began as a reaction to the excesses of uncontrolled industrial capitalism in the 1800s and 1900s. The enormous wealth and lavish lifestyles enjoyed by owners contrasted sharply with the miserable conditions of the workers.
Some of the first great sociological thinkers studied the rise of socialism. Max Weber admired some aspects of socialism, especially its rationalism and how it could help social reform, but he worried that letting the government have complete control could result in an "iron cage of future bondage"  from which there is no escape (Greisman and Ritzer 1981).
Pierre-Joseph Proudhon (1809−1865) was another early socialist who thought socialism could be used to create utopian communities. In his 1840 book, What Is Property?, he famously stated that “property is theft” (Proudhon 1840). By this he meant that if an owner did not work to produce or earn the property, then the owner was stealing it from those who did. Proudhon believed economies could work using a principle called mutualism, under which individuals and cooperative groups would exchange products with one another on the basis of mutually satisfactory contracts (Proudhon 1840).
By far the most important influential thinker on socialism is Karl Marx. Through his own writings and those with his collaborator, industrialist Friedrich Engels, Marx used a scientific analytical process to show that throughout history, the resolution of class struggles caused changes in economies. He saw the relationships evolving from slave and owner, to serf and lord, to journeyman and master, to worker and owner. Neither Marx nor Engels thought socialism could be used to set up small utopian communities. Rather, they believed a socialist society would be created after workers rebelled against capitalistic owners and seized the means of production. They felt industrial capitalism was a necessary step that raised the level of production in society to a point it could progress to a socialist and then communist state (Marx and Engels 1848). These ideas form the basis of the sociological perspective of social conflict theory.

### Convergence Theory

We have seen how the economies of some capitalist countries such as the United States have features that are very similar to socialism. Some industries, particularly utilities, are either owned by the government or controlled through regulations. Public programs such as welfare, Medicare, and Social Security exist to provide public funds for private needs. We have also seen how several large communist (or formerly communist) countries such as Russia, China, and Vietnam have moved from state-controlled socialism with central planning to market socialism, which allows market forces to dictate prices and wages and for some business to be privately owned. In many formerly communist countries, these changes have led to economic growth compared to the stagnation they experienced under communism (Fidrmuc 2002).
In studying the economies of developing countries to see if they go through the same stages as previously developed nations did, sociologists have observed a pattern they call convergence. This describes the theory that societies move toward similarity over time as their economies develop.
Convergence theory explains that as a country's economy grows, its societal organization changes to become more like that of an industrialized society. Rather than staying in one job for a lifetime, people begin to move from job to job as conditions improve and opportunities arise. This means the workforce needs continual training and retraining. Workers move from rural areas to cities as they become centers of economic activity, and the government takes a larger role in providing expanded public services (Kerr et al. 1960).
Supporters of the theory point to Germany, France, and Japan—countries that rapidly rebuilt their economies after World War II. They point out how, in the 1960s and 1970s, East Asian countries like Singapore, South Korea, and Taiwan converged with countries with developed economies. They are now considered developed countries themselves.

To experience this rapid growth, the economies of developing countries must be able to attract inexpensive capital to invest in new businesses and to improve traditionally low productivity. They need access to new, international markets for buying the goods. If these characteristics are not in place, then their economies cannot catch up. This is why the economies of some countries are diverging rather than converging (Abramovitz 1986).
Another key characteristic of economic growth regards the implementation of technology. A developing country can bypass some steps of implementing technology that other nations faced earlier. Television and telephone systems are a good example. While developed countries spent significant time and money establishing elaborate system infrastructures based on metal wires or fiber-optic cables, developing countries today can go directly to cell phone and satellite transmission with much less investment.
Another factor affects convergence concerning social structure. Early in their development, countries such as Brazil and Cuba had economies based on cash crops (coffee or sugarcane, for instance) grown on large plantations by unskilled workers. The elite ran the plantations and the government, with little interest in training and educating the populace for other endeavors. This restricted economic growth until the power of the wealthy plantation owners was challenged (Sokoloff and Engerman 2000). Improved economies generally lead to wider social improvement. Society benefits from improved educational systems, and people have more time to devote to learning and leisure.

### Theoretical Perspectives on the Economy

Now that we’ve developed an understanding of the history and basic components of economies, let’s turn to theory. How might social scientists study these topics? What questions do they ask? What theories do they develop to add to the body of sociological knowledge?

### Functionalist Perspective

Someone taking a functional perspective will most likely view work and the economy as a well-oiled machine that is designed for maximum efficiency. The Davis-Moore thesis, for example, suggests that some social stratification is a social necessity. The need for certain highly skilled positions combined with the relative difficulty of the occupation and the length of time it takes to qualify will result in a higher reward for that job and will provide a financial motivation to engage in more education and a more difficult profession (Davis and Moore 1945). This theory can be used to explain the prestige and salaries that go with careers only available to those with doctorates or medical degrees.
The functionalist perspective would assume that the continued health of the economy is vital to the health of the nation, as it ensures the distribution of goods and services. For example, we need food to travel from farms (high-functioning and efficient agricultural systems) via roads (safe and effective trucking and rail routes) to urban centers (high-density areas where workers can gather). However, sometimes a dysfunction––a function with the potential to disrupt social institutions or organization (Merton 1968)––in the economy occurs, usually because some institutions fail to adapt quickly enough to changing social conditions. This lesson has been driven home recently with the bursting of the housing bubble. Due to risky lending practices and an underregulated financial market, we are recovering from the after-effects of the Great Recession, which Merton would likely describe as a major dysfunction.
Some of this is cyclical. Markets produce goods as they are supposed to, but eventually the market is saturated and the supply of goods exceeds the demands. Typically the market goes through phases of surplus, or excess, inflation, where the money in your pocket today buys less than it did yesterday, and recession, which occurs when there are two or more consecutive quarters of economic decline. The functionalist would say to let market forces fluctuate in a cycle through these stages. In reality, to control the risk of an economic depression (a sustained recession across several economic sectors), the U.S. government will often adjust interest rates to encourage more lending—and consequently more spending. In short, letting the natural cycle fluctuate is not a gamble most governments are willing to take.

### Conflict Perspective

For a conflict perspective theorist, the economy is not a source of stability for society. Instead, the economy reflects and reproduces economic inequality, particularly in a capitalist marketplace. The conflict perspective is classically Marxist, with the bourgeoisie (ruling class) accumulating wealth and power by exploiting and perhaps oppressing the proletariat (workers), and regulating those who cannot work (the aged, the infirm) into the great mass of unemployed (Marx and Engels 1848). From the symbolic (though probably made up) statement of Marie Antoinette, who purportedly said, “Let them eat cake” when told that the peasants were starving, to the Occupy Wall Street movement that began during the Great Recession, the sense of inequity is almost unchanged. Conflict theorists believe   wealth is concentrated in the hands of those who do not deserve it. As of 2010, 20 percent of Americans owned 90 percent of U.S. wealth (Domhoff 2014). While the inequality might not be as extreme as in pre-revolutionary France, it is enough to make many believe that the United States is not the meritocracy it seems to be.

### Symbolic Interactionist Perspective

Those working in the symbolic interaction perspective take a microanalytical view of society. They focus on the way reality is socially constructed through day-to-day interaction and how society is composed of people communicating based on a shared understanding of symbols.
One important symbolic interactionist concept related to work and the economy is career inheritance. This concept means simply that children tend to enter the same or similar occupation as their parents, which is a correlation that has been demonstrated in research studies (Antony 1998). For example, the children of police officers learn the norms and values that will help them succeed in law enforcement, and since they have a model career path to follow, they may find law enforcement even more attractive. Related to career inheritance is career socialization—learning the norms and values of a particular job.
Finally, a symbolic interactionist might study what contributes to job satisfaction. Melvin Kohn and his fellow researchers (1990) determined that workers were most likely to be happy when they believed they controlled some part of their work, when they felt they were part of the decision-making processes associated with their work, when they have freedom from surveillance, and when they felt integral to the outcome of their work. Sunyal, Sunyal, and Yasin (2011) found that a greater sense of vulnerability to stress, the more stress experienced by a worker, and a greater amount of perceived risk consistently predicted a lower worker job satisfaction.

### Summary

Economy refers to the social institution through which a society’s resources (goods and services) are managed. The Agricultural Revolution led to development of the first economies that were based on trading goods. Mechanization of the manufacturing process led to the Industrial Revolution and gave rise to two major competing economic systems. Under capitalism, private owners invest their capital and that of others to produce goods and services they can sell in an open market. Prices and wages are set by supply and demand and competition. Under socialism, the means of production is commonly owned, and the economy is controlled centrally by government. Several countries’ economies exhibit a mix of both systems. Convergence theory seeks to explain the correlation between a country’s level of development and changes in its economic structure.

### Section Quiz

### Short Answer

### Further Research

Green jobs have the potential to improve not only your prospects of getting a good job, but the environment as well. Visit this web site to learn more about the green revolution in jobs
One alternative to traditional capitalism is to have the workers own the company for which they work. To learn more about company-owned businesses check out this website.

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# Work and the Economy

## Globalization and the Economy

### What Is Globalization?

Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single world market. Often, the process begins with a single motive, such as market expansion (on the part of a corporation) or increased access to healthcare (on the part of a nonprofit organization). But usually there is a snowball effect, and globalization becomes a mixed bag of economic, philanthropic, entrepreneurial, and cultural efforts. Sometimes the efforts have obvious benefits, even for those who worry about cultural colonialism, such as campaigns to bring clean-water technology to rural areas that do not have access to safe drinking water.
Other globalization efforts, however, are more complex. Let us look, for example, at the North American Free Trade Agreement (NAFTA). The agreement was among the countries of North America, including Canada, the United States, and Mexico, and allowed much freer trade opportunities without the kind of tariffs (taxes) and import laws that restrict international trade. Often, trade opportunities are misrepresented by politicians and economists, who sometimes offer them up as a panacea to economic woes. For example, trade can lead to both increases and decreases in job opportunities. This is because while easier, more lax export laws mean there is the potential for job growth in the United States, imports can mean the exact opposite. As the United States imports more goods from outside the country, jobs typically decrease, as more and more products are made overseas.
Many prominent economists believed that when NAFTA was created in 1994 it would lead to major gains in jobs. But by 2010, the evidence showed an opposite impact; the data showed 682,900 U.S. jobs lost across all states (Parks 2011). While NAFTA did increase the flow of goods and capital across the northern and southern U.S. borders, it also increased unemployment in Mexico, which spurred greater amounts of illegal immigration motivated by a search for work. NAFTA was renegotiated in 2018, and was formally replaced by the United States-Mexico-Canada Agreement in 2020.
There are several forces driving globalization, including the global economy and multinational corporations that control assets, sales, production, and employment (United Nations 1973). Characteristics of multinational corporations include the following: A large share of their capital is collected from a variety of different nations, their business is conducted without regard to national borders, they concentrate wealth in the hands of core nations and already wealthy individuals, and they play a key role in the global economy.
We see the emergence of global assembly lines, where products are assembled over the course of several international transactions. For instance, Apple designs its next-generation Mac prototype in the United States, components are made in various peripheral nations, they are then shipped to another peripheral nation such as Malaysia for assembly, and tech support is outsourced to India.
Globalization has also led to the development of global commodity chains, where internationally integrated economic links connect workers and corporations for the purpose of manufacture and marketing (Plahe 2005). For example, in maquiladoras, mostly found in northern Mexico, workers may sew imported precut pieces of fabric into garments.
Globalization also brings an international division of labor, in which comparatively wealthy workers from core nations compete with the low-wage labor pool of peripheral and semi-peripheral nations. This can lead to a sense of xenophobia, which is an illogical fear and even hatred of foreigners and foreign goods. Corporations trying to maximize their profits in the United States are conscious of this risk and attempt to “Americanize” their products, selling shirts printed with U.S. flags that were nevertheless made in Mexico.

### Aspects of Globalization

Globalized trade is nothing new. Societies in ancient Greece and Rome traded with other societies in Africa, the Middle East, India, and China. Trade expanded further during the Islamic Golden Age and after the rise of the Mongol Empire. The establishment of colonial empires after the voyages of discovery by European countries meant that trade was going on all over the world. In the nineteenth century, the Industrial Revolution led to even more trade of ever-increasing amounts of goods. However, the advance of technology, especially communications, after World War II and the Cold War triggered the explosive acceleration in the process occurring today.
One way to look at the similarities and differences that exist among the economies of different nations is to compare their standards of living. The statistic most commonly used to do this is the domestic process per capita. This is the gross domestic product, or GDP, of a country divided by its population. The table below compares the top 11 countries with the bottom 11 out of the 228 countries listed in the CIA World Factbook.
There are benefits and drawbacks to globalization. Some of the benefits include the exponentially accelerated progress of development, the creation of international awareness and empowerment, and the potential for increased wealth (Abedian 2002). However, experience has shown that countries can also be weakened by globalization. Some critics of globalization worry about the growing influence of enormous international financial and industrial corporations that benefit the most from free trade and unrestricted markets. They fear these corporations can use their vast wealth and resources to control governments to act in their interest rather than that of the local population (Bakan 2004). Indeed, when looking at the countries at the bottom of the list above, we are looking at places where the primary benefactors of mineral exploitation are major corporations and a few key political figures.
Other critics oppose globalization for what they see as negative impacts on the environment and local economies. Rapid industrialization, often a key component of globalization, can lead to widespread economic damage due to the lack of regulatory environment (Speth 2003). Further, as there are often no social institutions in place to protect workers in countries where jobs are scarce, some critics state that globalization leads to weak labor movements (Boswell and Stevis 1997). Finally, critics are concerned that wealthy countries can force economically weaker nations to open their markets while protecting their own local products from competition (Wallerstein 1974). This can be particularly true of agricultural products, which are often one of the main exports of poor and developing countries (Koroma 2007). In a 2007 article for the United Nations, Koroma discusses the difficulties faced by “least developed countries” (LDCs) that seek to participate in globalization efforts. These countries typically lack the infrastructure to be flexible and nimble in their production and trade, and therefore are vulnerable to everything from unfavorable weather conditions to international price volatility. In short, rather than offering them more opportunities, the increased competition and fast pace of a globalized market can make it more challenging than ever for LDCs to move forward (Koroma 2007).
The increasing use of outsourcing of manufacturing and service-industry jobs to developing countries has caused increased unemployment in some developed countries. Countries that do not develop new jobs to replace those that move, and train their labor force to do them, will find support for globalization weakening.

### Summary

Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single world market. There are benefits and drawbacks to globalization. Often the countries that fare the worst are those that depend on natural resource extraction for their wealth. Many critics fear globalization gives too much power to multinational corporations and that political decisions are influenced by these major financial players.

### Section Quiz

### Short Answer

### Further Research

The World Social Forum (WSF) was created in response to the creation of the World Economic Forum (WEF). The WSF is a coalition of organizations dedicated to the idea of a worldwide civil society and presents itself as an alternative to WEF, which it says is too focused on capitalism.  Learn more about the WSF here rights.

### References

Abedian, Araj. 2002. “Economic Globalization: Some Pros and Cons.” Papers from the Sixth Conference of the International Environment Forum, World Summit on Sustainable Development. Johannesburg, South Africa. Retrieved January 24, 2012 (http://iefworld.org/dabed02.htm).
Bakan, Joel. 2004. The Corporation: The Pathological Pursuit of Profit and Power. New York: Free Press.
Bhagwati, Jagdish. 2004. In Defense of Globalization. New York: Oxford University Press.
Boswell, Terry and Dimitris Stevis. 1997. “Globalization and International Labor Organization.” Work and Occupations 24:288–308.
Central Intelligence Agency (CIA). 2014. "The World Factbook: Country Comparison: GDP Per Capita (PPP)." Retrieved December 15, 2014. (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html).
Koroma, Suffyan. 2007. “Globalization, Agriculture, and the Least Developed Countries.” United Nations Ministerial Conference on the Least Developed Countries. Istanbul, Turkey.
Plahe, Jagjit. 2005. “The Global Commodity Chain Approach (GCC) Approach and the Organizational Transformation of Agriculture.” Monash University. Retrieved February 6, 2012 (http://www.buseco.monash.edu.au/mgt/research/working-papers/2005/wp63-05.pdf).
Parks, James. 2011. “Report: NAFTA Has Cost 683,000 Jobs and Counting,” AFL-CIO Blog, May 3. Retrieved February 6, 2012 (http://blog.aflcio.org/2011/05/03/report-nafta-has-cost-683000-jobs-and-counting).
Sassen, Saskia. 2001. The Global City: New York, London, Tokyo. Princeton, NJ: Princeton University Press.
Speth, James G., ed. 2003. Worlds Apart: Globalization and the Environment. Washington, DC: Island Press.
The United Nations: Department of Economic and Social Affairs. 1973. “Multinational Corporations in World Development.” New York: United Nations Publication.
Wallerstein, Immanuel. 1974. The Modern World System. New York: Academic Press.