Economic SociologyEconomic Sociology

Economies from simple to complexEconomies from simple to complex– The Salt and Spice tradesThe Salt and Spice trades– The Emergence of Complex EconomiesThe Emergence of Complex Economies

Institutional creation of the marketInstitutional creation of the market– The Soviet experimentThe Soviet experiment

Contemporary economiesContemporary economies– Differences between U.S and EuropeDifferences between U.S and Europe– Development of a Global economy Development of a Global economy

Organizations and workOrganizations and work– In which organizations are coworkers most In which organizations are coworkers most

supportive?supportive?– Organizational EcologyOrganizational Ecology– Women in organizationsWomen 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. These rules may be formal (e.g. laws) or informal (e.g. norms of laws) or informal (e.g. norms of doing business)doing business)

If people break the rules, the If people break the rules, the economy breaks downeconomy breaks down

People don’t trust others enough People don’t trust others enough to exchange with themto exchange with them

Example, think Example, think about dollars or about dollars or any paper any paper currencycurrency

Paper currencies Paper currencies make exchange make exchange easiereasier

Paper money is intrinsically Paper money is intrinsically worthless, but because of the rules worthless, but because of the rules governing its production people trust governing its production people trust that it has valuethat it has value

When those rules break down (e.g. When those rules break down (e.g. governments print too much money) governments print too much money) hyperinflation results, and the paper hyperinflation results, and the paper money becomes worthlessmoney becomes worthless

Economies from simple Economies from simple to complexto complex No formal economies in hunting No formal economies in hunting

and gathering societiesand gathering societies Just informal exchange of gifts, Just informal exchange of gifts,

goods and services (barter)goods and services (barter)

Similarly, no formal economy in Similarly, no formal economy in horticultural society, although horticultural society, although plenty of barterplenty of barter

No money is involved, although No money is involved, although proto-money (shells, jewelry, proto-money (shells, jewelry, ivory, precious metals) may be ivory, precious metals) may be usedused

The salt and spice trades were The salt and spice trades were the first long distance tradesthe first long distance trades

Both contain essential nutrients Both contain essential nutrients that are hard to come by that are hard to come by naturallynaturally

People liked to add them to their People liked to add them to their food!food!

Metal money is introduced in Metal money is introduced in agrarian societies of the Middle Eastagrarian 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 Many of the early voyages of exploration were made to find exploration were made to find new ways to get to the source of new ways to get to the source of spices (southern and southeast spices (southern and southeast Asia)Asia)

E.g. Columbus’s voyagesE.g. Columbus’s voyages

The emergence of The emergence of complex economiescomplex economies First complex economies were in First complex economies were in

Italy during the RenaissanceItaly during the Renaissance Different methods of carrying Different methods of carrying

payments were developed payments were developed (promissory notes and bills of (promissory notes and bills of exchange)exchange)

Forerunners of checksForerunners of checks

In the Netherlands, other In the Netherlands, other institutions were developed that institutions were developed that facilitated the emergence of facilitated the emergence of complex economiescomplex economies

Courts of law to enforce contractsCourts of law to enforce contracts

Institutional creation Institutional creation of the marketof 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 In today’s world, governments are responsible for creating and responsible for creating and enforcing the institutions that enforcing the institutions that promote the working of the promote the working of the economyeconomy

E.g. a sound currency, enforced E.g. a sound currency, enforced laws, etc.laws, etc.

Sometimes governments make Sometimes governments make mistakes on a massive scalemistakes on a massive scale

E.g. HyperinflationE.g. Hyperinflation E.g. The Soviet ExperimentE.g. The Soviet Experiment

The Soviet experimentThe 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 disasterCommunal 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 Contemporary economieseconomies 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 Although there are differences between market economies in between market economies in Europe and America, for example.Europe and America, for example.

More government intervention in More government intervention in labor market in Europe.labor market in Europe.

Development of a Development of a global economyglobal 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 26As of January 26thth, , 2010, outside of 2010, outside of US and Canada, US and Canada, the film has the film has reached a box reached a box office of office of $1,303,885,198 $1,303,885,198 compared to compared to TitanicTitanic's 's $1,242,413,080.$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 Organizations and WorkWork The workings of any company or

organization also rely on institutions—both formal and informal.

These rules can be very different These rules can be very different from company to companyfrom company to company

There are often similarities between organizations in the same industry or economic sector.

E.g. Two manufacturing E.g. Two manufacturing companies are probably more companies are probably more alike that two companies in the alike that two companies in the tourist industrytourist 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 The size of a firm helps shape the institutions and culture of the institutions and culture of the organizationorganization

Mom and pop shops run Mom and pop shops run differently to large corporations! 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 Which organizations have the most co-worker have the most co-worker support?support? Organizations with many jobs

involving complex tasks have the most co-worker support.

Organizational EcologyOrganizational 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 Women in organizationsorganizations 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.