Introduction to Sociology – Political Economy

Introduction to Sociology – Political Economy

well hi everybody and welcome back and we're just charging along toward the end of another happy semester here at NYU and today we continue to talk about political economy the or the sociology of the economy or economic sociology those terms mean more or less similar things so I can use them interchangeably and invite you all to do something like the same the the punchline which I hope I got across last time is that it it doesn't work to think of the economy the market or indeed economics and what it might be all about as something that is kind of a free-standing machine that has its own mechanisms its own instrumentality its own outcomes that can be understood apart from the social context in which it's located and by the way I might say that the history of economics over the last several decades and increasingly I think given the financial crisis we've just come through has been increasingly acknowledging the other social sciences and the way in which something like a sociological orientation might be appropriate to at least add into the conventional way in which economics functions in the field of economics does it does its work last time I indicated some of the reasons why I thought it is not just about the economy stupid or that the economy did be properly understood intelligently needs to be understood in in this kind of expanded way that I've been preaching about I mentioned contract that what keeps the market working of one of the fundamental aspects of not only of capitalism but barter systems any system that is based on exchange really that means any economic system rests on the idea that promises are promises and promises are cash and under the modern systems like capitalism that happens through government through courts through law and that means the state that means politics that means social organization and those are fundamental to making the economy work I also mention things like standards as simple as everybody drives on the right or everybody drives on the left or a standard for DVD or standard for radio frequencies things like that that enable technologies to evolve and for a market in those technologies to even exist the internet being the most recent and extraordinary far reaching of all of those things and in so many ways the internet and its technologies rest on in the first place government in investment in the United States through the Department of actually ironically maybe the Department of Defense but many other agencies and legal structures that have been put in place to help guide it and make it possible the question though is besides these sort of obvious things that almost everyone agrees are necessary pieces of what makes markets work how much regulation do we need to what degree should the system be engineered or regulated so that you get certain outcomes as opposed to others and one particular sort of vexing issue is to what degree should authorities in some large sense or we as citizens or economists and people who are interested and people in the business world itself worry about things like inequality the existence of safety nets mechanisms to provide for those who are less fortunate to what degree not only would those things be decent which is a kind of moral and maybe religious issue but to what extent is it actually necessary for there to be something like an economy at all and then we start getting on to more controversial and fuzzy zones of exactly how that should work and to what extent it should exist not just for moral reasons but to provide for those outcomes of greatest good for greatest number of at least approximating those kinds of goals more closely than they would otherwise be approximated now one mechanism that the government uses not only our government virtually but virtually all governments are what economists call transfer payments that is transfer moving things from one place to another and the way a transfer payment is typically done or frequently done is through taxation or through special fees that move money from one party to another so if you have for example a progressive income tax which means that the rich pay more as a proportion of their income than the poor do which is quite common in various cultures you are transferring wealth from the rich to the poor and then this gets reflected in their standard of living and the closing of the inequality gap to some degree to whatever degree that you do it but transfer payments can also go the other way so for example in the United States we can when we do our taxes which many of us people who actually make money have done in the last week or so me always at the last minute one one sees very quickly that one of the great benefits to owning a home in the United States and to have one that is mortgaged is that you can deduct household mortgage payments this is one of the things by the way that keeps people trying to get into ownership of housing and causes them to keep refinancing their properties and stay in high levels of debt because the government is in effect subsidizing the entire enterprise and by allowing you to deduct mortgage payments in the interest part which are typically the by far the greatest part in in your payments at least in the initial ten years of your loan then you are allowing people to receive a transfer payment so the general fund money that would go for schools roads welfare payments to the poor of health clinics whatever those might be that money is made less available for the purposes that government might want to put it to which would go to everybody in general maybe even targeted to the poor and instead goes to those who happen to have owned homes that are mortgaged it is not the case that poor people are have higher debts in their mortgages than rich people more affluent people have larger mortgages and pay a larger percent of their income for retiring the mortgages on their homes so now we get to a different kind of transfer so a progressive income tax may be moving money from the rich to the poor but a little element like the home mortgage deduction moves money from the general public to the more affluent or from it could be argued from those who are less well-off to those who are better off this is not trivial because the amount of money that the government spends but we don't call it spending because it's a tax deduction but it's actually the same as spending the amount of money the government loses let's put it that way through the mortgage deduction it's many times greater than all the money the government spends on low-income housing so if you want to know what is the federal government's housing program it is to provide mortgage assistance for those who can afford it which tends to be those better off poorest the poorest population of course rent and they don't own and therefore they are untouched by this by this benefit so that's where the country spends its money it's a transfer payment from the rural population and the less well-off to the better off now these kinds of details and that's what they are are peppered through our tax structure and our fee structure at the state level at the national level at the city level it's boring and tedious stuff only accountants are really interested in it even people when they do their taxes just want they come to speed right through it and let me get to the bottom line here of what's my refund going to be or what do I have to pay this kind of complicated stuff is then invisible largely to the general public and is not much a point in discussion and indeed politically right now anybody who would want to eliminate the home mortgage deduction will be will be touching a third rail of politics if you try to take it away the masses of the affluent will rise up angry because that's one of our sacred parts of our tax code but it's a mechanism again through which a transfer is done from one group of people to the other well this did a little discussion this little sidebar that I've given on inequality excuse me on on transfer payments is a way of getting into the discussion of inequality more generally and how that works and to what degree we should worry about it this little spiel I've just given you is in emanates from a concern about inequality if you don't care about inequality then why not steal from the poor and give to the rich or or or worry about it vice versa just just let the market do its thing well here's one of the arguments from within the market itself and that is that if you create a situation where there is too much inequality you will create predicaments you will create situations where the mass of the population cannot buy the products that are being produced through their own labor through the manufacturing sector and in numbers of countries that is the dilemma and that is the predicament and it is a reason to be concerned but there are other things that are more indirect that create a set of concerns and one is the tendency that markets have toward monopoly so if left on its own and people say this from Marx to Adam Smith that is across the intellectual traditions that have given birth to both conservative and liberal orientations to the world left and right if left on its own there will be a tendency for economic power to be concentrated the biggest company will buy out the smaller company which will then buy out still the smaller company after that and it will be bought by the still bigger company the big will the big fish will eat the less big fish until you have a very very few fish and having then a monopoly means that you've eliminated the competitive market the very thing that the whole thing was premise taun you will have an oligopoly an economic oligopoly and with that comes the end of economic progress and any possible justification in the sense of there being a way in which everyone will be made better off so the whole thing including eventually vast numbers of the rich or better off will lose if you let that if you let that take place and there will be decreasing Lee an opportunity to do anything about it because there will be also a loss of shared power in other realms and now here is where we start getting again to the connection between in this case the political on the one hand and the economic the other because once a monopolies are in force once one group of people has disproportionate economic power they will so the argument goes translate that economic power into political and social power and so in the United States those who give to campaign contributions tend on the whole to be more affluent those who represent the capitalist class obviously can afford to give more than other people when that starts to happen then you can start changing the rules of the game for example what is the standard going to be are we going to drive on the right are we going to drive on the left is the standard for DVD is going to be my standard or someone else's standard and they start then influencing and controlling the means of production itself the chance of another person getting in to compete all of this then starts building monopolization oligopolies build further capacity to block out any alternative competition of using the political structure and so again the thing goes more and more toward one outcome as opposed to the other think about what it takes to participate in the political structure in the United States we we really concentrate on the right to vote that's been a hard-won win because as I mentioned last time it was only white men with property who had the ability to vote in the United States and that through the suffrage movement the civil rights movement the the civil war many things have happened to expand that that voting right but voting is of course only one mechanism through which to participate especially when mass media so determined what is in our heads and so determined remember those issues about the agenda setting that media do that give us the movies in brain about what might be going on in the political world and what might not it takes income to own a newspaper even if there is freedom of the press the freedom of the press really belongs to anyone who happens to own a newspaper or own a television outlet increasingly if you can get a good website then maybe you can get into and that's a site of change otherwise though there's certainly differential capacities to participate to make a campaign contribution is to influence or potentially have an influence beyond being able to vote and if you think about go to one end of the society that the street people the men who make their living the men without accounts that Dounia writes about on sixth Avenue how much political influence do they have how much capacity for politics do they have in what sense do they even imagine that they have any bearing whatsoever on who the next mayor will be or who the next president will be compared to compared to other people who are who are better off who know how to write account campaign contribution to know what's going on to write a letter to try to influence or even as it's happened in American politics to just buy outright a politician or a political outcome that you want want to have now there are I've been arguing so far for worrying about equality and inequality because of the market itself but there are other reasons to worry about equality and inequality I just sort of dismissed them as the moral and religious reasons but there are other concrete reasons more concrete than some general orientation toward a shared humanity and that we are each our brothers keepers and we need to be aware of that so for example security in the United States just as really any country is not achieved through police just like sewers are the source of our health in the main not the doctors so it is that the source of our security is not the police but instead each other we are and you can go back to George Herbert Mead and the way we constitute our very selves we are constantly alert to the behavior of others we've tried to trace that out in some detail how that works and one of those things were oriented toward is that is the problem of others being in trouble and when others are in trouble the least we do is call for help but often and the world is just massively true evident it is evidently on evident on a massive scale in the world that people do come to each other's aid and they do so even I shouldn't say even I might even say especially in a city like New York which is so vast and supposedly based on people paying no attention to one another and letting everybody fend for themselves even in New York especially in New York maybe that's the way it works now this system of watching out for each other and integrating our watching with the police and those who are of higher authority the dean's office the guard at the door here at NYU that goes on because of the because we regard it as legitimate that is we each of us is the integrator of everyday behavior with those authority structures and it's only because we regard those authority structures as legitimate and because we regard one another as legitimate that this whole vast apparatus is able to actually function and so you have to ask yourself what is the basis of it all what what is the basis of and sociologists use this word a lot legitimacy the legitimacy of one another to be sharing this space this room the city this university what gives us that sense about each other that we are legitimate and that the authorities that are quote above us but which if we're thinking we live in a democracy are actually under us what makes us think that that is legitimate well then the same thing that makes us think our money is legitimate and that our dollars actually stand for something so we think our our Co Americanists stands for something now that starts being undermined at least a bit when people are different and people are different for all sorts of reasons ethnicity race sexuality all of those things come into play and our constant source of of argument and tension and change change for the better in many regards I think but then there is economic variation so that again we'll get back to the sidewalk that denier writes about and the kinds of people that they are not in some of the essential sense and that's what the near is trying to figure out is it essential that they are they essentially different or is it circumstance that makes them different if we push on circumstance we see that they have low levels of education they have low economic capacity they are not entitled to a conversation with a passerby they are not able to really command a place to live a bed an apartment and the other decencies of life as things evolve they are different at least at these surface levels but these surface levels start meaning something and so what what what I'm talking about then is a way in which we start distrusting people who are living differently than we are and at a certain economic level that kind of distrust starts to set in they after all could take our stuff and change their lives and I'm often wondering as I go around New York again a person of my age unable to sprint anymore and I'm sometimes walking around with hundreds of dollars in my pocket and I'm thinking where is my mugger uh well you know what where is my mugger because it it just makes so much sense in a way for someone to take my stuff at different times in our history people become paranoid about that about the fact that muggers are all around some people still are and they invest in all sorts of security apparatus as they watch where they go they watch where their children go they can't leave their children out in front of the restaurant in the stroller which for example I live briefly in Sweden people routinely do that because the babe who wants my baby the baby's fine out in out in the thing but we're like we've got boogie men that will come and take our babies and boogie men will come and take our wallets and class denigration having people be so different from each other becomes a basis for this erosion of security and in the case of some parts of the world of an economy at all and so in the poorest countries of the world where a wealth tends to be monopolized and or centered in in in elites where there is no middle class where the middle class is not gainfully employed where there's not a system of mutual respect where there is not a democracy really in almost any sense there is a lack of legitimacy and the economic system and people who worry about for example sub-saharan Africa and the difficulties of creating economic development in that part of the world see it as this whole combination of social political and economic forces that combined in a way that kind of makes things very very difficult well let's talk more about our country and the way in which it operates by the way I meant to mention this in the beginning in our search for a deviance and where it comes from I wanted you to know that cocaine can deal I'm not a drug pusher here but you have a right to know that cocaine might just help your toothache or in this case your dentist is the probably a better alternative the sewers won't do any good but cocaine in in ascending order of preference I would go sewers cocaine dentist dentist is your I think your best shot anyway that little issue aside how do we understand a power in America and sociologists have struggled with this for a long time as have political scientists to what how can we figure out the way in which this economic dominance connects to determines results from other kinds of dominance like political dominance and cultural dominance sitting on the board of the Metropolitan Opera for example and making a vast amount of money like say Bernie Madoff or say Bill Gates what is the connection what are the linkages and how concentrated is it well really our our leader in this is Karl Marx who said it is highly concentrated and that all dynamics were to point to it becoming more and more concentrated it is in just Marx like I said before Adam Smith also had worries at least worries along those lines in more modern times we go back to see right mills the author of the sociological imagination that we began the course with and see right Mills besides his very famous book the sociological imagination wrote another very famous book and it's called the power elite and that very phrase the power elite has come into common English language use and indeed translated all over the world as a common phrase through Searight mills coinage and the fame that this book earned the idea earlier in the it in the mid 20th century what did Mills you mean by the power elite he meant that wait a minute and he's speaking to 1950s America the America of Pat Boone that I played for you a long ago he's saying to 1950s America which is just dominated by this idea that the United States is the greatest country on earth the richest country on earth the most democratic country on earth and that indeed there is one person one vote and a story that tells you that we run the country together that's what a democracy means and it has been democracy accomplished that was a much more dominant view of the world than it is today when I think there's more recognition that some people have more power and some people have more access to government authority than do others see right mills actually tried to specify who of what this power elite consisted of and that writing as he did at the height of the Cold War he said that first of all it was the military that they were an important part of the power elite he also thought that political leaders counted for quite a bit but the piece that has most held the attention of everyone over the years is the idea that it is those who own the means of production and run it so it's the corporate Titans those who are heads of Finance and corporate capital who make up the power elite and that they and their fingers go everywhere that they constitute the important offices in the in the government in the federal government for example the Secretary of Treasury Secretary of Defense not the Secretary of Health Education and Welfare who cares about that there's really nothing at stake it's these other major major enterprises and they then are interlinked with these other organizations and institutions like the Metropolitan Opera the Board of Trustees of Harvard University the trustees and now it counts a lot as of NYU these are the the movers and shakers and that more than anything else that capacity to rule is anchored in finance and money and ownership of the means of production who rules America that's another book title and that's the title of an author named William dumb Hoff and I'll spell that word for you because some of you may want to go look at his many books do M is in Mary H Oh double f as in Frank dumb Hoff William dumb Hoff and he wrote a book called who rules America and in more specific terms than even than see right mills he tried to answer that question and he did it by looking at all of the linkages and tracing them in a quasi scientific way across the boards of directors of all these various agencies who where do our secretaries of state come from in the United States what families do they come from and the same with the Department of the Treasury and the same with the boards of the Metropolitan Opera and how are they related to one another and then what you find out is that wait a minute the person who is on the board of Citibank is also on the board of Harvard and simultaneously on the board of the Metropolitan Opera and simultaneously on the board of the Council on Foreign Relations which is a very important lobbying group in the United States and so what you start building is a kind of pyramid in which a very few people maybe a couple of hundred occupy the positions at the top of the system and they are able to integrate across the whole structure through these interlocking directorates that's the term that's used I'm a director at Citicorp and I'm a director at NYU a trustee at NYU the same person sits on both boards that means I can guide things appropriately we're both institutions are involved so I may say look the NYU Medical Center has got to play ball with the health insurance companies and I say that because by being both on the board of the NYU Medical Center and on the board of the healthcare company the drug company and now I can unite those two concerns in terms of congressional law that says for example it's illegal to import inexpensive drugs into the United States from other countries that would be just one of a zillion gazillion examples it's because of the interlocking directorates that I know what's going on in banking what I know what's going on in education I know what's going on in terms of the charities like the Metropolitan Opera and because I'm in this place to know simultaneously what's going on across numbers of corporations and NGOs and organizations I am in a position my capacity for ruling and that's the word dumb HOF uses ruling my capacity is much increased and then when you put together a small group of these people who go to the same belong to the same country clubs who went to the same colleges the Ivy League primarily who vacation in the same spot in Bermuda what you start getting then is this capacity for a ruling class to function as a ruling class and and run the country and by extension have a great deal of influence across the world now I should tell you that there's a great deal of debate about all that I've just given you I've given you the see right Mills William dum Hoff orientation and some people say that is much exaggerated we do for example have social mobility in the United States both Hillary Hillary both bill and Hillary Clinton came from more modest backgrounds Bill Clinton from truly modest backgrounds Hillary from something a more upper-middle but not from a kind of elite background and of course President Obama we need say no more an extraordinary upward movement from family origin whether hits his African family or its his us family either way it's extraordinary and those kinds of things are not rare in the United States and sociologists have looked very hard at social mobility that's what we call it what enables people to get ahead and what we find as you might predict the greatest predictor of school attainment of grades in school of social mobility of who's going to end up a doctor and who's going to end up a corporation president the one key thing is indeed where you come from how much money your family had is going to determine how much money you have that is overwhelmingly it compared to any other single variable compared to any other single variable but there are other variables some of which we can kind of get our fingers around and some of which we just don't understand and some sociologists have just called it luck so the way we usually think about it is that a third of your life chances and determining how how you're going to do in the world comes from your own family's wealth a third more or less comes from how much education and the quality and type of education and certification you were able to get and then finally and those two first two things are related of course but then finally the the rest is murky and some just called it luck so we've got these three factors education family income family of origin and luck but that leaves some space doesn't it and it means that a theory like the power elite and who rules America can only be approximately right it can't be completely right or it doesn't seem like it's completely right so sociologists asked these questions this is what an income system would look like if we were all bees in the United States we would just all go round and there's a flower for everybody and we would all get all the all the nectar that we needed and there is something like socialism communism if you're a slow B of course you may not do so well because there's as far as I know no welfare structure for anybody to bring a B what they need if they can't get out there and get it themselves but put that aside and the fact that the bees don't have any welfare that I know about and just use that as a model oh my this looks just awful doesn't it but I'm gonna try to I don't even have a pointer to help you out with it but I think we can still work together we can still work together on this maybe you should look at that arrow you see that arrow and it's pointing to 50% but it's actually right there at 40% what this is asking about is how much of the country's wealth does the top 1% get and how has that changed over time so in the back I know you can't see it but nearest to me we start with 1920 and this table only goes up to the year 2000 because that's the most recent data I could find in tabular form like this and so what you have is a look what I can do look at that is it a duck is it a bunny it's a duck is it about so here I can be my I can be my own pointer you see so there we go and I can't reach it I'm I'm too short to to be a pointer oh except if I find a tool with which even chimpanzees can do so the this is where I wanted you to look except I'm not tall enough because 40% is where we want to go the top 1% of the American population in the year 2000 have 40 percent of all the wealth so rather than the all the bees being equal in their search for honey what we know is is that the richest 1% of the population Bill Gates and and somewhat and down from Bill but not real far down from Bill they have 40 percent of the wealth and that is a lot of concentration it's a lot of concentration compared to for example other countries of the world which are including other rich industrial countries wealth is less concentrated the US and Britain tend to be highly concentrated in terms of the amount of wealth that goes to the richest portion of the population and you can see that that top 1% starting in what is it toward the the night in the 1970s beginning in about 1980 they are getting a larger and larger proportion headed toward 50% it raises an interesting question of what's stopping them from having 90 percent and all of us in this room being poor or virtually all I think would be then locked out in the economics in the economic structure that's really maybe the only piece of this thing that I'm going to make you look at except that here it is in prose the top 1% of the US population has 40% of all wealth the last time we were at numbers like that was in 1930 at the at the moment of the just before the Depression hit in its full height so we've had other times of great inequality as what we're always having great inequality that's what this table shows you we are an unequal Society and that's consistent over time but what's happened over the last since the 1980s is that we've become more unequal and of course if we trace this out past the year 2000 it would become even more extreme because the build-up the fortune building that happened before the last our current depression before it set in two years ago given the the Bush tax cuts on the wealthy and other phenomenon that are like transfer payments changes in the tax code further did this in increased the proportion of the total national wealth held by the top one percent so this is a more conservative rendering of what of the point that I'm trying to make here's another way of just looking at it this shows you what the top 1% make in constant dollars from 1980 to the year 2005 it carries it a little bit further and you can see that the phenomenon I just spoke of the top 1% gets a tremendous boost toward the latter part of the period in terms of how much wealth they have and now the annual income of someone in the top 1% is is over a million dollars that's out of date – so I I assume it's more than a million dollars all of these are in constant dollars for those of you who understand that idea in other words the fact that money is worthless and inflation is taken over or it's marched on that's all accounted for it this is in constant dollars you can look down the bottom and see the middle 60% and bottom 20% are represented by those two lines and you can see there's hardly any change in from 1980 to 2000 five and that is a symptom of a larger phenomenon which is that all through the burgeoning prosperities of the last 30 years there has been very little participation in that prosperity by ordinary people in the United States it has been much skewed in the direction of of the rich that what real economic growth and increase in wealth that that we've had has not been so well shared well I'm going to talk about the next slide in a minute I just want to I just want to set it up for you because now we're gonna ask about the world how does the world look and how does the world work well you know of course that the u.s. although highly unequal is a very rich country it's by no means any more the richest country is not the richest industrial country especially when you add in things like health care and the other things that are provided in welfare states like Sweden and Denmark but in terms of income it's not wealthy hardly at all compared to looks and board Abu Dhabi where NYU is going to go over and get some it's it's those are but those are odd you might say odd cases well the they're odd cases but they help I think to explain a larger phenomenon as we look around the world because we see that income inequality wealth inequality is very skewed across the world and within societies as well third-world poverty remains persistent although it's changing to some degree and I'm going to talk about that but here let's just look at the world distribution of household wealth and what you can see the first bar the red bar is the percent of the world population in a particular country or set of countries the first set of bars is the United States and Canada and right right here the red bar is the number of people we have compared to the rest of the world we have about 5 percent in two countries and then you can see above it how much household wealth we have and it's depending upon how you measure it thirty five thirty percent of all the household wealth generated in the world is just in the United States and Canada and you can see how that contrasts with other parts of the world but Europe is also obviously rich in in the same way small population Asia looks like it's rich but it has a vast population much larger than the vastly larger than in the United States and so Asia is this is all 2000 year 2000 data Asia is indeed much less wealthy than is the u.s. Asia on the whole another way of looking at the world's richest and poorest this is the champagne glass distribution these are just in other ways of displaying the same phenomenon and what you can see is that up at the top the place where the actual champagne would be if you allow for the olive to be in the in in the next little neck piece that all of the area that the that the vodka or gin is in is the is the richest top 20 percent and that top 20 percent the reason why it's wide is because that richest 20% controls 82 percent 83% of of the world's income and that the poorest 20 percent which you is is that blue thing at the bottom is 1.4 percent of the world's income so it's just no wonder there are a lot of poor people in the world and they are in other places than in the United States and then within countries you find also variation and the red bar is the percent of the world population in each country that highest red bar is night yuria and then the other bars are the measures of wealth and income and you can see in that disproportion between the red bars and the other bars how a poor how poor Africa is because the the poverty the percent of the world wealth that is in those countries some of them are so small they can hardly even be that can hardly hardly even be graphed hardly even show up they are so close to being zero percent of the world's wealth in those poor in those poor countries I'm not ready for this I'm not ready for this I'm not ready for this okay I'll get to I'll get to this unhappy guy in just a moment how do we then explain this a third world poverty and sociologists economists political scientists have put a great deal of effort into trying to figure it out why is it that the laws of the economy the laws of economics laws and quote marks aren't doing their thing and that although lots of things are tried although these poor countries have been integrated into the world economy have markets in some form or another for a very long time they don't seem to be gaining they should be according to Adam Smith and those laws of the economy because they should be capitalizing on what the economists call their comparative advantage remember I talked about I exchanged my chocolate chip cookies for your shoes and that way we make wonderful things happen in the world and the reason I do the chocolate chip cookies is because I do the best cookies I know my grandma's secret recipe I have a way to get those chocolate chips in exactly the right form and you have a comparative advantage in shoemaking and so each of us going to our comparative advantage makes market magic happen so it should happen also at the National excuse me at the national level and in your readings of the case is made of Canada in particular of successful comparative advantage that Canada we also know from the last discussion had beavers and beavers turned out to be a really great thing especially when beaver hats that became a huge fashion in Europe and everybody wanted to beaver hat and the place to get a beaver was the interior of North America and Canada was the spot and a lot of beavers lost their lives in a great beaver genocide in order to provide for the hats men of in Europe and and so the Canadians exploited their advantage in beavers and and then in wheat and in other things as well they also had something of a comparative advantage and this is less in the economic theory itself in that North America had its own little way of doing genocide and all the local people were caused to disappear more or less in a relatively short period of time which created this open land that could be exploited beavers for you beavers for me and beavers for the heads of Europe and so it came to pass so but so the Canadian model suggests that if you just leave things alone Oh kill people true you'll it things will emerge more or less okay but you're also reading about imperialism and the fact that the Canadian model doesn't seem to apply yes the British conquered Canada and a success was made of it Canada is now right up there our friendly neighbor to the north where the people have health care but not guns but they are still seemed happy but the other peoples of the world subject to the Imperial colonial pressures they did not do so well and that may be that lasting effect which we call neo imperialism is still carrying on in these other parts of the world and so there were systems in order to get out the raw materials of Asia Africa you had to get a labor supply in that meant servitude at South America that meant slavery on a very large scale and it meant monopolization of resources so at one time King Leopold of Belgium used the Congo simply as his personal plantation virtually the entire country was controlled by one person and virtually all the wealth of what was produced went to one person and that was King Leopold of Belgium a vast exploitation of nature a vast exploitation of human labor and a vast dependency is then created so let's talk about the pendency among economists especially those I made only those really of the left I think they use the phrase dependency a lot and it's come to be called dependency theory so one notion is is that the more interlinked a country let's say in the third world becomes to the United States or the rich countries of the world the more opportunities they will have for exploiting their comparative advantage and hence raising themselves up the alternative phenomenon of way of talking about it is no the more contact they have the more dependent they becomes and it's not dependency in like a mommy and her child it's instead the dependency of a master to a slave and the way it works is for example that the Western that Europe and the West need bananas and so let's talk about Guatemala it turns out bananas grow very well there Honduras bananas grow extremely well there so what you do through the colonial enterprise is that you generate banana plantations and you convert more and more of the land to banana plantations people from Europe and North America come and run those plantations indeed own those plantations the country then is converted from a in effect gardening for its own food supply to producing one crop bananas or coffee or whatever it may be now they're in a pickle because the continued capacity of that country to survive is dependent on people wanting bananas and at a given price if the price of banana goes down and I invite you to go to your supermarket and see how cheap bananas are those cheap prices of our bananas translates to very low wages for the people who raise and pick them and they are what came to be called among critics of the dependence that results they are and this was the phrase used banana republics it's quite an irony that that term is now the name of a trendy chain of of clothing stores frequented by people whose politics would probably be very much in opposition to Banana Republic and the regime of imposing banana republics anyway dependency theory says that's what they now are they can't raise the foodstuffs that they need for their diet there's no basis for creating for example a manufacturing economy much less a service economy or a learning economy or a design based economy or higher education oriented economy they are just in bananas and you can only go so far with bananas and by being a banana republic so that's what did it and it's a terrible kind of outcome and that these other countries of the world the third-world are mired in these past sets of relationships of political structures of class divisions of allocations of wealth internally to the elites of the rest of the world and to their own elites as well as they have evolved over the century and a lack of security that kind of security I was talking about that so much of what goes on in the economic sphere and in the political sphere depends upon that kind of security and legitimacy and belief that people would have in their own efficaciousness and capacity to influence outcomes oh that is undermined in an unhappy way well so we get to the idea that we are the enemy we northern European North American white people have done in the world and the rest of the world now there are let me let me critique that let's step back from that and see if we want to go for that whole hog well one thing is is that people who think this way and talk this way have been charged with Eden ism like the Garden of Eden like you believe that before the Europeans came there was just aaden's in the rest of the world these people never fought you've seen movies and stuff and childhood stories that they just do Kumbaya and pass on great lessons from the gods and are kind to animals because they are they got the ecology thing all built in them well when you actually look we don't know a lot about the history of the world before the white man came we don't really know that much the records start to be very spotty but we do know that for example in Hawaii before there was contact over a third of all the indigenous species some people say 2/3 had been destroyed by the Hawaii themselves so this kind of idea that indigenous people somehow worry about other species and can know when the limits are reached and prevent extinction is not true there have been many many cuts extinctions over the history of the world and some of them are human and they happened before capitalism we also know that people will kill each other and they've done that for the eons and they've done that before capitalism and there was racism internal racism all kinds of of hatred and violence that went on then just as it goes on now within racial groups the former Yugoslavia and its vast internal bloodiness among people who we think look all the same and what's the big deal what are you fighting about and then of course also within Africa and within regions of Africa a much conflict so we have to be worried not to impose a kind of romantic vision on cultures that are not like us and particularly because obviously yes they did suffer through that contact and yes that contact may be the basis of their continuing misery in some way but what way would that be another caution about buying into this whole dependency theory orientation that the left primarily carries is that some countries have emerged from poverty in the third world and become very rich so Singapore Hong Kong South Korea Taiwan to some degree Thailand these are often called the five Tigers of Asia how do we explain that and of course the rise now of China which was always supposed to be such a sleeping giant so mired in mysticism of a first of Confucianism and then of its own peculiar distinctive versions of communism that it would never rise or India which is now growing rapidly and the long-standing example of Japan which is one of the richest countries of the world so those countries did it despite in in in many instances starting from very little and indeed mass poverty well how do we do it how do we explain it again it's much debated but what we can see or what I think most people see is that obviously there is a relationship between the political structures and social organization and the kind of economy that is going to evolve and the way it's going to be set up and how productive it's going to be and how rich that country is going to be and so the the depressing news about the poverties in the third world needs to be balanced by the fact that some countries have grown dramatically in their wealth and that when you look at the peoples of the world on the whole which includes China and India you see a increase in well-being of populations in a way that I think that those who think that the colonial legacy or the dead hand of the past is eternal and cannot be ever worked with must not be true a Singapore for example has a very strong government that did their little transformation through high levels of welfare housing government housing for the entire population higher education high levels of education for the entire population these are strong political systems that in no way presume that the economic system will take care of itself they're highly interventionist highly regulatory but of all those countries I named in parts of the world they do it in different ways so we get to the bottom line which is the same bottom line as I was working with last time as well that markets are constituted through non market forces that's true within the United States it's true as we look across the world that ace heredity race hierarchy and gender remember about jog jobs segregation of women and the way the American economy has been constituted through job segregation as massive a phenomenon in its way probably a slavery in terms of predicting specific outcomes all of those things are organized differently across different societies and make it happen not only within our country but on a global scale the way in which each country is integrated into this international system includes especially global system of the world and how it is that all of that is organized this I'll just give you as an anecdote who owns the park this is from this is the poster from Berkeley California during the height of the student movement and the students took over and the hippies and whatnot of Berkeley of the Berkeley Heights took over a park owned by the university the university plan to build dorms on it and they took it over and they said no this is the people's Park and that's what they called it and governor Reagan went berserk and called in the troops and it became a kind of national simple world symbol of the rise the revolution that is about to come and this is one of the posters of that time who owns the park some day a petty official will appear with a piece of paper called a land title which states that the University of California owns the land of the people's Park where did that piece of paper come from what is it worth a long time ago Castagna knowing Indians lived in the area now called Berkeley and then it traces through the way in which the land was taken from the Indians by the Mexicans the Mexicans then in fact were conquered by the people coming from the east the wasps who who obtained it from them and transferred it and transferred it and the evil of families of the Bay Area the imperialists and then it ends up here who owns the park well what I'm gonna do is now play you whoa there's my arrow I want to play you Randy Newman does anybody know randy newman's and music okay let's just see if we can get it come on baby okay pray for Randy Newman well here's the best way to listen to this anyway it's what you want to do is get a martini glass put an olive in it pour some gin or vodka and go to iTunes and buy this song called the great nations of Europe and that will give you dependency theory and so much more so I invite you to do that and thanks for coming

6 thoughts on “Introduction to Sociology – Political Economy

  1. yes, those countries did not have to endure many successive generations of intentionally inflicted trauma whereby losing coping mechanisms along the way  explains why Asian countries bounced back

  2. A tax-deduction has nothing to do with a transfer. In fact – a deduction is exactly the opposite. It is a NON-transfer. The deduction means that there will be a certain amount of NO money that is being transferred NOWHERE, but that WOULD have been transferred without the deduction. This sloppy thinking is all to common in other sciences than economics and is based on the lack of understanding of the basic principle of taxation. If you tax the benefits of an activity, you also have to give a deduction for the costs of that activity. Thats why you get a deduction for the amount of transportation you have to do, in order to obtain the taxable working income you gain from work. The same goes for interest. The government WILL tax you for an interest surplus, and thus they have to give you a deduction for the opposite – namely the cost of interest on your mortgage.

    Perhaps sociologists should stick to sociology instead of explaining the economics they don't understand.

  3. great professor! I love this guy. He is more honest and courageous than most professors whom are afraid and hesitant to speak or shed light on these type of topics.

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