1. Capitalism and the Economy
Chapter 10
Capitalism and the Economy
Lecture PowerPoint
© W. W. Norton & Company, 2008

2. Creative Class Creative Class
A category of workers in multiple occupations and industries united by the fact that creativity is central to their productive work
In high demand by companies and, as an extension, cities and towns, which are going to great efforts to attract them
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Copyright © 2008 W.W. Norton & Company, Inc.

3. Creative Class
American workers are more productive than ever yet job insecurity is high. As a result, many people are working longer hours, especially people at higher income levels, in order to prove loyalty or achieve marginal benefits.
Photo Courtesy of AP Photo.
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Copyright © 2008 W.W. Norton & Company, Inc.

4. A Brief History of Capitalism
The feudal system, which preceded capitalism in Europe, began to change as early as the fifteenth century with the enclosure movement, which forced people off what had been public land and sent them looking for work in cities.
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Copyright © 2008 W.W. Norton & Company, Inc.

5. A Brief History of Capitalism
Beginning in the eighteenth century, new farming technologies led to an agricultural revolution that:
Helped increase the population and the value of land
Innovated manufacturing and transportation technology by creating a demand for a larger labor pool to fill new jobs
Connected to industrialization was the transition from barter to the use of a legal currency to buy and sell goods, and from agreements between individuals to contracts between corporations
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6. Theorizing the Transition to Capitalism
Adam Smith
Argued that competition, driven by people’s inherent self-interest and drive to trade, helps maintain a cohesive society
Stated that specialization is a key to increased productivity and innovation, and that the use of money, as opposed to barter, makes trading more efficient
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7. Theorizing the Transition to Capitalism
Georg Simmel
Saw the evolution of monetary payment systems—from piecework payment to wage labor to a salary—as a force to depersonalize exchange
Felt this was a positive change that helped create separate public and private spheres and gave workers more freedom to enjoy the private, or leisure, sphere
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8. Theorizing the Transition to Capitalism
Karl Marx
Argued that capitalism created alienation in workers—alienation from the products they produced, alienation from the production process, alienation from one another, and alienation from themselves and their creative tendencies
Predicted both that capitalism would ultimately destroy itself and that the working class would rise against the capitalist class, leading to a period first of socialism and then communism
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9. Theorizing the Transition to Capitalism
Max Weber
Linked the rise of capitalism to technology as much as ideas, specifically ideas and beliefs connected to the Protestant Reformation
Saw capitalism in a negative light, not because he thought it caused alienation as Marx did, but because he thought people became obsessed with working and making money that they could never enjoy
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10. Recent Changes in Capitalism
The Ford Motor Company’s idea of the family wage was based on a very limited definition of family:
It favored married men with children over single men or married men without children, and it reinforced the notion that women should not work.
The fact that women have often been paid less than men has served to deter them from seeing work as a lifelong choice.
The wage structure was one factor that made women see marriage as the only way to have financial security.
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Copyright © 2008 W.W. Norton & Company, Inc.

11. Recent Changes in Capitalism
Compared to people in many other industrialized countries and some developing countries, Americans work longer hours and have fewer vacation benefits and less generous family leave policies.
While more American companies are offering family friendly policies such as flextime and “flexspace,” employees are not necessarily taking advantage of them in great numbers.
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Copyright © 2008 W.W. Norton & Company, Inc.

12. Recent Changes in Capitalism
Studies show that working mothers are less depressed and have higher self-esteem than mothers who do not work, yet they are also more likely to feel tired and anxious and they have higher divorce rates.
While globalization is not a new phenomenon, the current period of globalization has a number of new elements, and it has clearly demarcated the division between the world’s rich and poor. The question is whether globalization can truly be a force to close that gap or if it serves only to widen it.
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Copyright © 2008 W.W. Norton & Company, Inc.

13. The Reign of the Corporation
A corporation is a juristic person—an entity that has all the legal rights, duties, and responsibilities of a person—and corporations structure economic life around the world.
Photo Courtesy of Getty.
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Copyright © 2008 W.W. Norton & Company, Inc.

14. The Corporate Psychopath
The overriding objective of corporations is to make profits for their shareholders, and in order to do this they must find ways to beat the competition.
Sometimes these efforts lead corporations to cross the line of legality, or at least to come close.
There is constant tension for corporations in terms of pressures to be environmentally responsible, which can add to overall costs, and pressures to be profitable.
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Copyright © 2008 W.W. Norton & Company, Inc.

15. The Corporate Psychopath
Employees exert pressure on corporations.
This is seen in the form of asking for better wages, benefits, and working conditions, all of which add to a corporation’s costs and make it less profitable.
But not providing these things may also have a negative cost in terms of loss of workers, a strike, or lower productivity.
When workers formally come together in order to make such demands as a group, they have formed a union. There has been a significant decline in unionization rates in the United States since the 1970s.
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Copyright © 2008 W.W. Norton & Company, Inc.

16. The Corporate Psychopath
There has been a lot of concern in the United States about job loss due to offshoring (when a company moves operations overseas to cut costs) and due to the presence of illegal immigrants, who are often paid less than a United States citizen would be.
Some people argue that illegal immigrants have an important role in the economy, not taking jobs from Americans but doing jobs that Americans won’t do.
Others argue that illegal immigrants are ultimately a drain on social services and should be deported with no option for getting legal working papers or citizenship.
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17. Concept Quiz
1. Despite working more hours and being more productive than ever, American employees still express a lot of concern about ________. a) stagnating wages b) vacation benefits c) family leave policies d) job security
Answer: D
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18. Concept Quiz
2. Which of the following factors played a role in the development of capitalism? a) new farming technologies b) a decrease in the value of land c) the enclosure movement d) the movement of large numbers of the landed class to urban centers e) Both A and C f) Both A and B
Answer: E
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19. Concept Quiz
3. The idea that competition, not conflict, helps maintain social cohesion was put forward by _________. a) Max Weber b) Emile Durkheim c) Georg Simmel d) Adam Smith
Answer: D
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20. Concept Quiz
4. According to Karl Marx, workers in a capitalist economy are alienated from the product(s) they produce because _________. a) they have no part in conceptualizing those products b) specialization has them focusing on one small step in a complex production process c) for the most part they could never afford to buy those products d) All of the above
Answer: B
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21. Concept Quiz
5. How did the Ford Motor Company’s introduction of the family wage help construct the idea of the traditional family?
a) It encouraged large families as the more children a family had, the higher the wage.
b) It encouraged women to stay at home because the wage was higher if a man’s wife did not work.
c) It encouraged men to marry and have children as the wage was not available to single men or married men without children.
d) All of the above
Answer: C
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22. Concept Quiz
6. Americans work ______ hours as/than citizens of other industrialized nations, but have _______ vacation benefits. a) fewer; better b) more; better c) about the same; better d) more; worse
Answer: D
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Copyright © 2008 W.W. Norton & Company, Inc.

23. Figure 10.1 | Male and Female Median Earnings, 1959-2006

24. Figure 10.2 | Mothers in the Workforce, 1975-2004

25. Figure 10.3 | Annual Vacation Days and Holidays Worldwide (pt. 1)

26. Figure 10.3 | Annual Vacation Days and Holidays Worldwide (pt. 2)

27. Figure 10.4 | Champagne-Glass Distribution

28. Figure 10.5 | Share of Workers Covered Under Collective Bargaining Agreements

29. Figure 10.6 | The Price of a Pair of Shoes: Nike Air Pegasus, 1995

30. Figure 10.7 | Likely Vote of Nonunion Workers