1. THE SOCIAL INSTITUTION RESPONSIBLE FOR
ORGANIZING THE PRODUCTION, DISTRIBUTION,
AND CONSUMPTION OF GOODS AND SERVICES 1 1 1 1 1 1

2. Social Institution
A stable and widely accepted cluster of values, norms, statuses, roles and groups that develops around a basic need in society. As such, an institution is a complex phenomenon, much more complicated than the mere sum of its parts.
Major Social Institutions:
The economy
The political system
Religious systems
The educational system
The health system
The family

3. Social Institutions Are the Environment which Influence, and Give Meaning to, the Individual

4. Social Institutions INSTITUTIONS
Organized patterns of beliefs and behaviors centered on basic social needs, adapting to a specific segment of society in question--rural doctor vs. urban specialist.
Functionalism:
Interrelated and interdependent, resist change, integrated, promote stability. Focus: How they fulfill essential system requirements, Self-correcting;
Replacing personnel
Teaching new recruits
Producing and distributing goods and services
Preserving Order
Providing and maintaining a sense of purpose

5. Social Institutions INSTITUTIONS Conflict:
The outcome and functioning of institutional structures is not necessarily efficient nor desirable.
Order is negotiated, but not all groups have equal footing.
Organization of major institutions is built upon the interests and control of dominant groups. Preserve status quo, inhibit change by maintaining relationships of inequality in Schools, Politics, Economics. (Source of Social Problems)

6. Social Institutions Symbolic Interaction: INSTITUTIONS
Workers engage in informal interactions to structure their work environment reality
Communication: formal vs. informal: a remark by corporate executive becomes viewed as an order, nurses making decisions for doctors.
Real and varied negotiations over roles and status

7. Historical Review of the Economy
Agricultural Revolution (roughly 5,000 years ago)
Four factors gave rise to the economy as a social institution
Agricultural technology - surplus of food
Specialized work – Artisans and tradespersons; not everyone needed to produce food
Permanent settlements- people could lead more stable lives
Trade – the exchange of surpluses, or other valuables could occur between settlements
Industrial Revolution
New sources of energy
Centralization of work in factories
Mass production
Over-specialization – artisans used to make entire product at home; now a worker only one small part
Wage labor
Post Industrial Economy
From tangible products to ideas
From mechanical skills to literacy skills
From factories to ……………….. anywhere

8. The Transformation of the Medium of Exchange
The Medium of Exchange - the means by which people value and exchange goods and services.
Mediums of exchange have progressed over time:
Barter - direct exchange
Money - places a value on items.
Debit cards and E-cash - digital currency.

9. ECONOMIC EXPANSION KEY FACTORS: AGRICULTURAL TECHNOLOGY
PRODUCTIVE SPECIALIZATION
PERMANENT SETTLEMENTS
EXPANDED TRAVEL AND TRADE
WORK WORLD BECAME SEPARATE FROM THE WORLD OF THE FAMILY
COTTAGE INDUSTRIES FLOURISHED AS PERSONS WORKED AT JOBS AND IN HOMES PRODUCING MARKET GOODS 2 2 2 2 2 2 2

10. Preindustrial Societies
The earliest human groups had a subsistence economy, living off of the land.
Horticultural societies began breeding animals and cultivating plants.
This allowed them to settle in one area.
Agricultural societies formed after the invention of the plow, and individuals created more than what was needed for survival.
This surplus led to a division of labor and social stratification; class and caste.

11. TERMINOLOGY SOCIAL STRATIFICATION SOCIAL CLASS
CLIMBING SOME
LADDERS IS MORE
EASILY DONE THAN
CLIMBING THE
LADDER OF SOCIAL
SUCCESS!
SOCIAL STRATIFICATION
THE DIVISION OF SOCIETY INTO RANKED CATEGORIES OF PEOPLE
EACH ENJOYING DIFFERENT LEVELS OF ACCESS TO SCARCE AND VALUED RESOURCES
CHIEFLY PROPERTY, PRESTIGE, AND SOCIAL POWER
SOCIAL CLASS
A CATEORY OF PEOPLE WHO SHARE A COMMON POSITION IN A VERTICAL HIERARCHY OF DIFFERENTIAL SOCIAL REWARD
STRUCTURED SOCIAL STRATIFICATION
WHEN STRATIFICATION IS BUILT INTO SOCIETY
AS WITH THE AMERICAN CLASS SYSTEM

12. INDUSTRIALIZATION INTRODUCED FIVE NOTABLE CHANGES TO WESTERN SOCIETIES
NEW FORMS OF ENERGIES
STEAM-FUELED MACHINE OPERATION
CENTRALIZATION OF WORK
IMPERSONAL FACTORIES REPLACED COTTAGE INDUSTRIES
MANUFACTURING AND MASS PRODUCTION
TURNING RAW MATERIALS INTO A WIDE RANGE OF PRODUCTS
SPECIALIZATION
DIVERSE DIVISION OF LABOR AND LOWER OVERALL SKILL REQUIREMENTS
WAGE LABOR
WORKING FOR STRANGERS WITH INTENSE SUPERVISION 3 3 3 3 3 3

13. POSTINDUSTRIAL ECONOMY FROM THE TANGIBLE TO THE INTANGIBLE
BASED ON SERVICE WORK AND HIGH-TECH
FROM THE TANGIBLE TO THE INTANGIBLE
CREATING AND MANIPULATING SYMBOLS IN MODERN SOCIETY
MECHANICAL TO LITERACY SKILLS
SPEAKING, WRITING, AND COMPUTER KNOWLEDGE
DECENTRALIZATION OF WORK
FLEX-TIME, FAX MACHINES, “OFFICE ON THE GO” 4 4 4 4 4

14. SUCH EVOLUTION ALSO IMPACTED ECONOMIC SECTORS
SECTORS OF THE ECONOMY
SUCH EVOLUTION ALSO IMPACTED ECONOMIC SECTORS
PRIMARY SECTOR
GENERATION OF RAW MATERIALS FROM THE ENVIRONMENT
LOW INCOME COUNTRIES = 63% OF ECONOMY
HIGH INCOME COUNTRIES = 4% OF ECONOMY
SECONDARY SECTOR
TRANSFORMATION OF RAW MATERIALS INTO MANUFACTURED GOODS
GROWTH RAPID IN ALL INDUSTRIALIZED NATIONS OR THOSE ENTERING THE PHASE
TERTIARY SECTOR
ECONOMY GENERATES SERVICES RATHER THAN GOODS
LOW INCOME COUNTRIES = 22% OF ECONOMY
HIGH INCOME COUNTRIES = 70% OF ECONOMY 5 5

15. 6 6

16. Economy and Society
Economy – the organization of the means by which necessary and/or desired goods and services are produced and distributed among the members of a society or a group within that society
Capitalism – an economic system in which the means of production are privately owned and market forces determine production and distribution
Socialism – an economic system in which the means of production are collectively owned and the state directs production and distribution

17. CAPITALISM PRIVATE OWNERSHIP OF PROPERTY PURSUIT OF PERSONAL PROFIT
KEY CONCEPT OF CAPITALISM
PURSUIT OF PERSONAL PROFIT
SIMPLY A “MATTER OF DOING BUSINESS”
FREE COMPETITION
THE “INVISIBLE HAND” IS AT WORK SO LEAVE THE MARKET ALONE 5 7 7 7

19. Economy and Society The Spirit of Capitalism
Adam Smith – “The Wealth of Nations “ Every individual endeavors to employ his capital so that its produce may be of the greatest value. He generally neither intends to promote the public interest nor knows how much he is promoting it. He intends only his own security, only his own gain, and he is thus led by an invisible hand to promote an end which was no part of his intentions.” Which hand is it?

20. Economy and Society The Spirit of Capitalism
“Rational Choice” an individual’s choice, if unfettered by external forces, will be rational, and based upon their perceptions of what is best for themselves. Adam Smith introduced this concept when arguing for capitalism. Acceptance of the rational choice model requires additional assumptions that are macro in nature, as they claim influence upon most of the social institutions which make up any society.

21. How does one make a “rational choice”?
Who decides what choices we have?
What is rational?
How does the process occur?

22. Economy and Society The Spirit of Capitalism
Capitalism rests on principles that are supported by rational choice theory. These principles include:
Free-Market Competition – economic forces will guarantee the greatest good for the greatest number of people (utility) within a society, provided that the government does not compete with , or hinder, private enterprise; laissez-faire *
Private Ownership – private individuals, alone or in groups, own the means of production
Pursuit of Profit – the pursuit of profit will produce the greatest good for the greatest number of people because it ensures that successful risk takers earn profit, the consumer saves money, and the society becomes more efficient and vigorous
* Marx asserted that un-regulated capitalism contained the forces which would be self-destructive; greed and power.

23. PURSUIT OF COLLECTIVE GOALS
COLLECTIVE OWNERSHIP
LIMITS THE RIGHT TO OWN PROPERTY
FORM A CLASSLESS SOCIETY
PURSUIT OF COLLECTIVE GOALS
PURSUIT OF PROFITS STANDS AT ODDS WITH COLLECTIVE GOOD
GOVERNMENT CONTROL OF THE ECONOMY
CENTRALLY CONTROLLED ECONOMY
CONSUMERS SHOULD NOT DRIVE ECONOMY (WHY?) 8 8 8

24. Economy and Society Socialism
Under socialism the government plays a direct role in the economy by assuming ownership of a society’s strategic businesses, industries, and resources
In theory, the means of production are held in trust by the government for the benefit of all citizens
An item’s value is based upon the work that goes into it; profit is excess value withheld from the worker (Marx)
Criticisms of Socialism
Socialism merely replaces the forces of competition with the forces of vast bureaucracies in order to control the economy
Socialism leads to a lack of incentive and creativeness
Socialism tends to be more resistant to adaptation and change than capitalism

25. CAPITALISM SOCIALISM ECONOMIC PRODUCTIVITY ECONOMIC EQUALITY
GDP IS $13,500.00
ECONOMIC EQUALITY
MORE INCOME DISPARITY
OVERALL WELL-BEING
A HIGH QUALITY OF LIFE, BUT GREATER DISPARITIES
PERSONAL FREEDOMS
ARE THE HEART OF A CAPITALISTIC SYSTEM; THE NEED CREATIVE FORCES
ECONOMIC PRODUCTIVITY
GDP IS $5,000.00
ECONOMIC EQUALITY
LESS INCOME DISPARITY
OVERALL WELL-BEING
LOWER STANDARDS OF LIVING, BUT LESS DISPARITY
PERSONAL FREEDOM
STRESS IS PLACED UPON FREEDOM FROM BASIC NEEDS
MANY SOCIALIST ECONOMIES HAVE FAILED DUE TO
UNDERPRODUCTION, LOW LIVING STANDARDS, LARGELY
INEFFECTIVE CENTRAL GOVERNMENTS, AND OVERLY
RIGID CONTROL OF INFORMATION AND PERSONAL MOVEMENT.

26. Economy and Society Unemployment and Profits
Case study, last page of handout
What are the social costs of profit achieved by the elimination of jobs?
What are the corporation’s responsibility to society for the social consequences of downsizing?
How does the fact that businesses create jobs, generate income, pay taxes, and infuse the culture with new technology answer some of the above questions?
How does the anxiety of job loss, either real or imagined, affect the individual worker, the social interaction between workers (competition), and the relationships between management and line employees?
Are unions a means for the workers to eliminate some of the negative aspects of competitive capitalism? Are they functional, even to those who own the majority of the assets of our society?

27. The Future Trade among nations will increase greatly.
Not all nations will benefit equally.
Computer driven production will continue to reduce the number of workers needed.
Technology also creates new jobs.
Our future will consist of a divided society; a small affluent group and a larger less affluent group. (What do you think?)

30. THE WORKFORCE THE DUAL LABOR MARKET LABOR UNIONS PRIMARY LABOR MARKET
EXTENSIVE BENEFITS TO WORKERS
SECONDARY LABOR MARKET
MINIMAL BENEFITS TO WORKERS
LABOR UNIONS
ORGANIZED LABOR SEEKING BETTER WAGES AND BENEFITS FOR MEMBERS
DECLINE OF UNIONS
LOSS OF HIGHLY UNIONIZED JOBS
CONCESSIONS HAVE INCLUDED DISSOLUTION OF UNIONS
MANY TEMPORARY WORKERS THESE DAYS 9 9 9

31. TRAITS OF PROFESSIONALS:
THEORETICAL KNOWLEDGE
EXTENSIVE SCHOOLING
SELF-REGULATED TRAINING
PARTICIPATION IN ASSOCIATIONS
AUTHORITY OVER CLIENTS
FOLLOW MY SUGGESTIONS
ORIENTATION TO COMMUNITY
NOT THE PAY, BUT THE HELP
PARAPROFESSIONALS
NOT ABLE TO CLAIM FULL PROFESSIONAL STATUS
SELF-EMPLOYMENT
EARNING A LIVING WITHOUT WORKING FOR A LARGE CORPORATION
WOMEN FIND FREEDOM AND OPPORTUNITY 11 11 11

32. Work in U.S. Society
Today, farmers make up just over 2% of the work force.
The Quiet Revolution - the many women who have joined the ranks of paid labor.
The Underground Economy - activities that people do not report to the government.
Teleworking - our current technology has allowed several million workers to return home.

34. TO HAVE OR NOT HAVE TECHNICAL EXPERTISE …THAT WILL BE THE QUESTION IN THE FUTURE
COMPUTERS ARE:
“Conflict model”
“DE-SKILLING” LABOR
MACHINES MAKE DECISION-MAKERS OBSOLETE
MAKING WORK MORE ABSTRACT
UNDERSTANDING RATHER THAN “DOING”
LIMITING WORKSPACE INTERACTION
ISOLATES WORKERS
INCREASING CONTROL OVER WORKERS
ELECTRONIC MONITORS 15 15 15

35. Globalization???? ECONOMIC CONCENTRATION
AN ORGANIZATION WITH A LEGAL EXISTENCE, INCLUDING RIGHTS AND LIABILITIES, APART FROM THOSE OF ITS MEMBERS
ECONOMIC CONCENTRATION
IN 2002, WAL-MART WAS THE LARGEST
$214 BILLION IN REVENUE
700,000 EMPLOYEES
CONGLOMERATES - SEVERAL SMALLER CORPORATIONS
STRATEGY FOR DIVERSIFYING
INTERLOCKING DIRECTORATES
COMPETITION IS A GREY AREA
MONOPOLY: DOMINATION OF A MARKET BY ONE CORPORATION
OLIGOPOLY: DOMINATION OF A MARKET BY A FEW CORPORATIONS
Globalization???? 16 16 16

36. Economy and Society Sociological Analysis of the Economy Functionalism
Social stability is achieved by an efficient distribution of goods and services, the production of wealth and power on a large scale, and, innovation and change which obviates the necessity of a revolution.
Conflict
Capitalism creates an inequity of wealth and power that benefits an elite. This elite not only controls the corporate world, but also uses their resources to influence the political order for their own interests, at the expense of others.
Symbolic Interaction
Career socialization can lead to multiple outcomes for the individual, and businesses and the media create role models and ideas about work and what that means to individuals. Governments also work to create loyalty to specific economic systems for both idealistic and pragmatic reasons.

37. CEO Cash and Stock-Based Compensation Changes, Layoff Decisions, and Shareholder Value (2007)
Jeffrey T. Brookman University of Nevada, Las Vegas Saeyoung Chang University of Nevada, Las Vegas - Department of Finance Craig G. Rennie University of Arkansas - Sam M. Walton College of Business Financial Review, Forthcoming
Abstract:      The CEOs of firms announcing layoffs receive 22.8% more total pay in the subsequent year than other CEOs. These pay increases result almost entirely from increases in stock-based compensation and are found to persist. In addition, layoff announcements are accompanied by shareholder value increases averaging $40 million to $95 million. One-time labor cost savings from layoffs average $65 million. We conclude CEOs receive pay increases following layoffs as rewards for past decisions and to motivate value-enhancing decisions in the future.
Keywords: Corporate Governance, Compensation, Layoffs
JEL Classifications: G34, J33, J63
Accepted Paper Series