Economic Sociology
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Economies from simple to complex
– The Salt and Spice trades
– The Emergence of Complex Economies
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Institutional creation of the market
– The Soviet experiment
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Contemporary economies
– Differences between U.S and Europe
– Development of a Global economy
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Organizations and work
– In which organizations are coworkers most supportive?
– Organizational Ecology
– Women in organizations
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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.
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These rules may be formal (e.g. laws)
or informal (e.g. norms of doing
business)
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If people break the rules, the economy
breaks down
People don’t trust others enough to
exchange with them
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Example, think
about dollars or any
paper currency
Paper currencies
make exchange
easier
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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
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No formal economies in hunting and
gathering societies
Just informal exchange of gifts, goods
and services (barter)
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Similarly, no formal economy in
horticultural society, although plenty of
barter
No money is involved, although protomoney (shells, jewelry, ivory, precious
metals) may be used
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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!
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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 LipitIshtar of Isin (ca. 1870 bc) all laid out
rules for the use of money.
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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
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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
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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
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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.
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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.
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Sometimes governments make
mistakes on a massive scale
E.g. Hyperinflation
E.g. The Soviet Experiment
The Soviet experiment
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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.
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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.
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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
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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
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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.
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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
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We now have a truly global economy.
Certain products are sold throughout
the world, such as Coke, Pepsi,
Hollywood movies, and even Barbie
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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.
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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
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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
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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
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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
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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.
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The periphery is made up of industries
dominated by many very small firms.
– Wages tend to be low and job security is low.
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The size of a firm helps shape the
institutions and culture of the
organization
Mom and pop shops run differently to
large corporations!
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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?
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Organizations with many jobs involving
complex tasks have the most coworker support.
Organizational Ecology
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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.
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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
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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
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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.