Chapter 13
The Economy
In Conflict and Order:
Understanding Society, 11th edition
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Capitalism and Socialism
• Capitalism in its pure form involves:
– The private ownership of the means of
production
– Pursuit of personal profit
– Competition
– A government policy of allowing the
marketplace to function unhindered
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Capitalism and Socialism
• Socialism its pure form involves:
– Democracy throughout the social structure
– Equality-equality of opportunity, equality rather
than hierarchy in making decisions, and
equality in sharing benefits to society
– Efficiency in providing the best conditions to
meet the material needs of the citizens
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The Corporation-Dominated
Economy
• Monopolistic Capitalism
– Negative consequences of the trend toward
megamergers
• It increases the centralization of capital
• It increases the power of huge corporations over
workers
• The benefits to local communities are diminished
• It reduces the number of jobs
• It increases corporate debt
• It is nonproductive
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The Corporation-Dominated
Economy
• Interlocking directorates
– The linkage between corporations that results
when an individual serves on the board of 2
companies or when 2 companies each have a
director on the board of a third company
• Transnational Corporations
– The power of the largest corporations in the
U.S. is increased by their international
activities.
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Capitalism and Inequality
• Concentration of Corporate Wealth
– In the business community wealth is centralized
in a relatively few corporations, and this
concentration is increasing.
• Concentration of Private Wealth and Income
– Wealth is also concentrated among individuals
and families.
• Concentration of Want and Misery
– The poor are concentrated among certain social
categories, especially people of color and
families headed by women.
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Work in U.S. Society
• Owners and managers of firms and
factories control workers in several ways
– Through scientific management
– Through bureaucracy
– Through extortion
– By monitoring worker behavior
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Work in U.S. Society
• Alienation
– The separation of human beings from each
other, from themselves, and from the products
they create
• Dangerous Working Conditions
– A sweatshop is a substandard work
environment where workers are paid less than
the minimum wage, workers are not paid
overtime premiums and other labor laws are
violated.
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Work in U.S. Society
• Labor unions have declined in numbers
and power.
• This has resulted in lower real wages and
benefits, less-safe conditions, and a
declining middle class.
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Discrimination in the Workplace
• Women and minorities have long been the
objects of discrimination in U.S. industry.
• Two features of the U.S. economy promote
these inequities: a segmented labor
market and capitalist patriarchy.
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Discrimination in the Workplace
• Segmented Labor Market (or the dual labor
market)
– The primary sector is compose of large,
bureaucratic organizations with relatively
stable production and sales.
– The secondary sector is composed of marginal
firms in which product demand is unstable.
• Male Dominance at Work
– Men tend to make the rules and enforce them
and men receive unequal (i.e. greater)
rewards.
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Discrimination in the Workplace
• Unemployment
– The official government data on
unemployment hid the actual amount by
undercounting the unemployed.
• People not actively seeking work (discouraged
workers) are not counted
• People who work at part-time jobs are counted as
fully employed
– Unemployment has positive consequences for
some people.
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Figure 13.1 – Female-to-Male Earnings Ratio and Median
Earnings of Full-Time, Year-Round Workers 15 Years Old and
Over by sex: 1960 to 2003
Source: U.S. Census Bureau. “Income, Poverty, and Health Insurance Coverage in the United States,” Current
Population Reports, Series P60-226 (August 2004), p.6.
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Capitalism in Crisis
• U.S. capitalism is facing four crises:
– The primacy of profit over human considerations
– The propensity of corporate managers to
increase profitability by reducing the workforce
and lowering wages
– Corporate scandals that illuminate the greed and
cronyism at the heart of laissez-faire capitalism
– The lack of central planning to solve current
problems and anticipate future ones
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Capitalism in Crisis
• Two facts about institutions of society
– Although they are interrelated, the economy is
the most dominant and shapes each of the
other institutions.
– The particular way that an institution is
organized is at once a source of stability and
a source of problems.
Copyright © Allyn and Bacon 2007