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Economic Sociology. Economies from simple to complex The Salt and Spice trades The Emergence of Complex Economies Institutional creation of the market The Soviet experiment Contemporary economies Differences between U.S and Europe Development of a Global economy Organizations and work
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Economic Sociology • Economies from simple to complex • The Salt and Spice trades • The Emergence of Complex Economies • Institutional creation of the market • The Soviet experiment • Contemporary economies • Differences between U.S and Europe • Development of a Global economy • Organizations and work • In which organizations are coworkers most supportive? • Organizational Ecology • Women in organizations
An economy is the exchange of goods, rights, services, and money between people • It is a social interaction. • Like most social interactions, it is governed by social rules.
These rules may be formal (e.g. laws) or informal (e.g. norms of doing business)
If people break the rules, the economy breaks down • People don’t trust others enough to exchange with them
Example, think about dollars or any paper currency • Paper currencies make exchange easier
Paper money is intrinsically worthless, but because of the rules governing its production people trust that it has value • When those rules break down (e.g. governments print too much money) hyperinflation results, and the paper money becomes worthless
Economies from simple to complex • No formal economies in hunting and gathering societies • Just informal exchange of gifts, goods and services (barter)
Similarly, no formal economy in horticultural society, although plenty of barter • No money is involved, although proto-money (shells, jewelry, ivory, precious metals) may be used
The salt and spice trades were the first long distance trades • Both contain essential nutrients that are hard to come by naturally • People liked to add them to their food!
Metal money is introduced in agrarian societies of the Middle East • The law codes of the king of Ur (ca. 2050 bc), the Code of Hammurabai (ca. 1760 bc), the Codex of Eshnunna (ca. 1930 bc), and the Codex of Lipit-Ishtar of Isin (ca. 1870 bc) all laid out rules for the use of money.
Many of the early voyages of exploration were made to find new ways to get to the source of spices (southern and southeast Asia) • E.g. Columbus’s voyages
The emergence of complex economies • First complex economies were in Italy during the Renaissance • Different methods of carrying payments were developed (promissory notes and bills of exchange) • Forerunners of checks
In the Netherlands, other institutions were developed that facilitated the emergence of complex economies • Courts of law to enforce contracts
Institutional creation of the market • Institutions that provided certainty to producers and traders—certainty that they would own the results of their labors and certainty that they would get a fair price for their products—typically promoted the emergence of complex trading economies.
In today’s world, governments are responsible for creating and enforcing the institutions that promote the working of the economy • E.g. a sound currency, enforced laws, etc.
Sometimes governments make mistakes on a massive scale • E.g. Hyperinflation • E.g. The Soviet Experiment
The Soviet experiment • The Bolshevik Revolution in Russia (1917) ushered in a group of people led by Vladimir Lenin who were determined to turn Russia into the kind of socialist society that Karl Marx had envisioned as a human utopia.
This involved getting rid of private property—the private ownership of goods, land, vehicles, buildings, stocks, companies, etc. • Not a good idea! • Many people fled to the U.S. and this time.
Stalin turned the Soviet Union into an autocracy, with him in charge and everybody and everything subservient to him. • Stalin instituted a complete command economy in which rules for what and how much was to be produced was determined not by the market, but by government committee
Communal farming proved a disaster • The initial result was a steep drop in agricultural production • This resulted in one of the most terrible famines of all time—the Ukrainian famine of 1932–1933. • The number of famine victims throughout the Soviet Union is estimated to be 6–8 million
Contemporary economies • Contemporary economies in rich world countries run mostly on market principles • They using the institutions that are derived from the institutions pioneered in northern Italy, The Netherlands, and Britain.
Although there are differences between market economies in Europe and America, for example. • More government intervention in labor market in Europe.
Development of a global economy • We now have a truly global economy. Certain products are sold throughout the world, such as Coke, Pepsi, Hollywood movies, and even Barbie
As of January 26th, 2010, outside of US and Canada, the film has reached a box office of $1,303,885,198 compared to Titanic's $1,242,413,080.
In addition, many products are now made throughout the world • Just as national economies work because of institutions, so does the global economy. In addition to the institutional rules of each country that companies must obey, there are also the rules laid out by the World Bank, International Monetary Fund, and the United Nations
There are also international organizations to catch crooks and administer justice, including Interpol, the UN Security Council, and the International Criminal Court.
Organizations and Work • The workings of any company or organization also rely on institutions—both formal and informal. • These rules can be very different from company to company
There are often similarities between organizations in the same industry or economic sector. • E.g. Two manufacturing companies are probably more alike that two companies in the tourist industry
Sociologists have also divided industries into sectors—the core or primary sector and the periphery or secondary sector. • The core is made up of industries dominated by a few large firms. • Wages tend to be high and job security is high. • The periphery is made up of industries dominated by many very small firms. • Wages tend to be low and job security is low.
The size of a firm helps shape the institutions and culture of the organization • Mom and pop shops run differently to large corporations!
Regional differences in the way firms operate, depending on local situations and local consumer markets • Some organizations in some regions become home to particular ethnic groups, and this influences the way each organization operates. • E.g. Hispanics in construction industry in Charlotte, North Carolina
Which organizations have the most co-worker support? • Organizations with many jobs involving complex tasks have the most co-worker support.
Organizational Ecology • This area examines the environment in which organizations compete and the process by which organizations emerge, grow, change, and die. • Organizational ecologists have found that when a new technology is developed, such as television broadcasting or the Internet, many companies are set up to make use of the new technology.
After awhile, most of these new companies go out of business, resulting in only a few large, dominant companies in the industry • E.g. dot.com bubble in 1990s
Women in organizations • Some organizations have the reputation of being “woman friendly” and some do not. • Woman-friendly companies have programs such as paid maternity leave and flexible schedules. • Organizations that have these policies tend to be those that employ women in higher prestige, higher earning jobs
The most equitable country for the wages of full-time workers is Australia. • In terms of authority in the workplace, in most countries women have less authority on the job than men • Women have the most supervisory authority in Australia and the United States and the least in Norway and Japan.
