2014 12 17 economic sociology - summary with comments _1

Economic Sociology summary Marta Karcz

1

Chapter 1

Science and pseudo-science

a) Internal consistency

b) Evidence

c) Reduction of error

d) Social organization

Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions

about the universe. Science helps to understand and control the material and biological reality. So called Dead ends the

scientific researches that dont find explanation, are referred to as pseudo-science for example Astrology, homeopathy, i.e.

herbal healing.

a) Internal consistency: logical statements, no contradictions, conceptual clarity. For example mathematic language is

consistent.

b) Evidence: A good theory and a confrontation with data and facts. In natural sciences this includes experiments.

This cycle consists of theory and evidence in

continual confrontation.

Deductive reasoning works from the more general to the more specific ("top-down" approach). We might begin with

thinking up a theory about our topic of interest. We then narrow that down into more specific hypotheses that we

can test. We narrow down even further when we collect observations to address the hypotheses. This ultimately

leads us to be able to test the hypotheses with specific data -- a confirmation (or not) of our original theories.

Inductive reasoning works the other way, moving from specific observations to broader generalizations and

theories. Informally, we sometimes call this a "bottom up". In inductive reasoning, we begin with specific

observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that we

can explore, and finally end up developing some general conclusions or theories.

Reduction of error: it is not about making no mistakes, but about reducing the number of errors. In science, errors

become less frequent and less fundamental. A very strong indicator of pseudo-science: its a new/ancient

knowledge, therefore its valid.
StefMarkeringHomeopathy is not herbal healing. The former is psudo-science, the latter in prinxiple is not.


2

2. Can sociology be scientific?

a) Difference 1: the experimental design

b) Difference 2: human action

c) Behaviour, action and social action

Sociology can meet scientific standards, but it can also turn pseudo-scientific. It differs from natural sciences because:

1. Sociology can hardly be built on experiments, 2. Sociology deals with humans and their interactions.

An experiment is historically the oldest technique to come to scientific judgements. It is also the purest and most

certain way to arrive to valid and reliable conclusions.

An experiment is an orderly procedure carried out with the goal of verifying, refuting, or establishing the validity of

a hypothesis.

Experiment in its pure form: OXO model.

1. Randomized distribution in 2 groups (experimental vs control group)

2. Former gets stimulus, and the latter does not

3. Observation (measurement) before and after stimulus

The data is randomly distributed into two groups. The first data is stimulated,

and afterwards based on observation, we compare the two, before and after the stimulus.

TheOXO model leads to reliable and valid conclusions. Experiments are the best way to testing casual relationships. The

reason why OXO model is good, is that it isolates the effect of the stimulus.

Quazi experiment an empirical study used to estimate the causal impact of an intervention on its target population. Quasi-experimental research shares similarities with the traditional experimental design or randomized controlled trial, but they specifically lack the element of random assignment to treatment or control. Instead, quasi-experimental designs typically allow the researcher to control the assignment to the treatment condition, but using some criterion other than random assignment (e.g., an eligibility cut off mark). In some cases, the researcher may have control over assignment to treatment condition. Quasi-experiments are subject to concerns regarding internal validity, because the treatment and control groups may not be comparable at baseline. With random assignment, study participants have the same chance of being assigned to the intervention group or the comparison group. As a result, differences between groups on both observed and unobserved characteristics would be due to chance, rather than to a systematic factor related to treatment (e.g., illness severity).


3

Quasi-experiments

Departs in at least one respect from experimental ideal type Often: experiments in the real world (=field experiment), so with diminished control Also: non-randomized distribution of groups Differences with survey:

Intervention by the researcher

Mimics experimental design

Control group in a scientific experiment is a group separated from the rest of the experiment where the independent variable

being tested cannot influence the results. This isolates the independent variable's effects on the experiment and can help rule

out alternate explanations of the experimental results.

Control groups can also be separated into two other types: positive or negative. Positive control groups are groups where the

conditions of the experiment are set to guarantee a positive result. A positive control group can show the experiment is

functioning properly as planned. Negative control groups are groups where the conditions of the experiment are set to cause

a negative outcome. Control groups are not necessary to all scientific experiments. Controls are extremely useful where the

experimental conditions are complex and difficult to isolate.

Solomon experiment Solomon Asch, an American psychologist, conducted what is now considered a classic experiment in social psychology about conformity (social pressure).

Asch told the participants that the purpose of the experiment was to test ones visual abilities. The real purpose was to test levels of conformity in group situations. There was a group of eight participants in each trial; however, seven of these were confederates, meaning that they knew the real purpose of the experiment but they pretended to be participants. The group was then given two images. One was an image of three lines of varying length and the other was an image of one line which matched the length of one of the lines in the first picture.

Placebo-controlled studies are a way of testing a medical therapy in which, in addition to a group of subjects that receives the treatment to be evaluated, a separate control group receives a sham "placebo" treatment which is specifically designed to have no real effect. Placebos are most commonly used in blinded trials, where subjects do not know whether they are receiving real or placebo treatment. Often, there is also a further "natural history" group that does not receive any treatment at all. The purpose of the placebo group is to account for the placebo effect, that is, effects from treatment that do not depend on the treatment itself. Such factors include knowing one is receiving a treatment, attention from health care professionals, and the expectations of a treatment's effectiveness by those running the research study. Without a placebo group to compare against, it is not possible to know whether the treatment itself had any effect.

Human action:

The object of sociology is: conscious sentient beings. Action of people is fundamentally different from logic of laws in

nature. Illustration: water boiling and people in a sauna. Basically explanations in sociology are: accounting for reasons

(and therefore beliefs, values, motives, intentions). Sociology does less but also more than natural sciences. Illustration: a

railway station. Basic strategy: ask people.

Definition: Sociology is the science of social phenomena, made up of social actions.

Sociology is the scientific study of human social behaviour and its origins, development,

organizations, and institutions. It is a social science that uses various methods of empirical

investigation and critical analysis to develop a body of knowledge about human social actions,

social structure and functions. A goal for many sociologists is to conduct research which may

be applied directly to social policy and welfare, while others focus primarily on refining the

theoretical understanding of social processes.


4

Spurious correlation - a correlation between two variables (e.g., between the number of electric motors in the home and grades at school) that does not result from any direct relation between them (buying electric motors will not raise grades) but from their relation to other variables Action is what an agent can do. Social action refers to an act which takes into account the actions of and reactions of individuals (or 'agents'). According to Max Weber, "an Action is 'social' if the acting individual takes account of the behaviour of others and is thereby oriented in its course".(Secher 1962)

Types of social actions:

Instrumental rational: a social action pursued after evaluating its consequences and consideration of the various

means to achieve it. They are usually planned and taken after considering costs and consequences.

Value rational: is a social action which is taken because it leads to a valued goal, regardless of other consequences. (The end justifies the means.) It is one of Max Weber's four action types.

Affectual (emotional): is a social action caused by an emotion (revenge, love, loyalty, etc.). Those actions are taken

due to one's emotions, to express personal feelings. For example, cheering after a victory, crying at a funeral would

be emotional actions.

Traditional (habitual): is a social action taken by tradition. They are actions which are carried out due to tradition,

because they are always carried out in such a situation. An example would be putting on clothes or relaxing on

Sundays. Some traditional actions can become cultural artefacts

Chapter 2

Two approaches of a scientific

discipline, e.g. economics:

1. Object: the economy

2. Basic assumption: maximizing

behaviour

In sociology, this is also the case:

3. Object: social action and social

structures

4. Basic assumption: reality is

socially constructed

Starting point: in biology, the main thing that kept us alive was instinct. Humans, developed preferences and societies, like

for example food, coffee, chilli peppers (hedonic reversal)

Hedonic reversal : when people get addicted to (or get to like) something they didnt like at first. Very few people like coffee

or chilli peppers or cigarettes at the beginning, but they get addicted to it anyway.
http://en.wikipedia.org/wiki/Social_actions#CITEREFSecher1962StefMarkeringStefMarkeringBehaviour is any observable phenomenon by a human.Action: behaviour that can be described as having an intention.StefMarkeringStefMarkeringPlease consult the illustration from class (alternative music and youth deviance)StefMarkeringNo! It is an actiona based on customary practice, therefore: habitual.StefMarkering??? Do not understand thisStefMarkeringThat is not the point. The point is that there is an innate distaste for these products, which we overcome through socialization.


5

World openness: people can become totally different from each other, even though they bear the same genetic code.

Problem: freedom from instinctual control may create infinite desires, like for example consumption.

Regulation in culture is helpful as it defines what to desire and provides rules on how to handle it. The social construction

plays a crucial role here.

Social construction: The culture is above us, coordinating out actions and aspirations, creating order, and it is also within

us, creating perception that the order around us is natural.

Role: is a set of connected behaviours, rights, obligations, beliefs, and norms as conceptualised by people in a social

situation. It is an expected or free or continuously changing behaviour and may have a given individual social status or

social position. It is vital to both functionalist and interactionist understandings of society.

The sick role is a term used in medical sociology regarding sickness and the rights and obligations of the affected

The general idea is that the individual who has fallen ill is not only physically sick, but now adheres to the specifically patterned social role of being sick. Being Sick is not simply a state of fact or condition, it contains within itself customary rights and obligations based on the social norms that surround it. The theory outlined two rights of a sick person and two obligations:

Rights: o The sick person is exempt from normal social roles exempted if legitimised by a medical doctor o The sick person is not responsible for their condition - innocence

Obligations: o The sick person should try to get well duty to see sickness as undesired o The sick person should seek technically competent help and cooperate with the medical professional duty

to seek competent, professional help.

There are three versions of sick role: 1. Conditional 2. Unconditionally legitimate 3. Illegitimate role: condition that is stigmatized by others.

Thomas theorem: Behaviour is based on our interpretations of reality, not on reality itself. The reality as we see it is a result of our collective work.

The Thomas Theorem can help us understand how everyday aspects of our society are socially constructed. For instance the country you live in doesnt actually exist (in the sense that there arent lines on the ground). It only exists in our minds. However, where you live has huge consequences on your life. Think of some other examples of everyday social constructions.

Have you ever done something because you misunderstood the reality you were in? All of have at one point or another. Describe one experience in your life.

Quintessential: social constructions are inter-subjective, both

personal and objective. Social construction is dependent on

existence in our heads and out there (with others).

However: physical reality may bite back! Cases:

Tenskwatawas vision and the virgin cleansing myth
StefMarkeringA social role is a set of expectations about behaviour, tied to certain positions (so not actual persons, but what they 'perform': the student, the professor, the policeman...


6

Externalization

Objectivation

Internalization

Case 1:

Tenskwatawa, charismatic religious Indian leader

7/11/1811, battle of Tippe-canoe. Orders to kill the American military commander

Harrison, promising that the warriors would become invulnerable from bullets. Attack partly fails,

dozens were killed.

Case 2: the virgin cleansing myth is the mistaken belief that having sex with a virgin girl cures a man of HIV, AIDS, or

other sexually transmitted diseases. Anthropologist Suzanne Leclerc-Madlala has recognized the myth as a potential factor

in infant rape in South Africa., but also in 16th-century Europe (syphilis). Discussion about the incidence, but the

mechanism is clear: certain definitions of the situation determine behaviour.

Holly trinity:

Internalization is what makes social constructions robust (e.g.

conscience)

Core of social construction is: humans become social when the external

contours of their culture are replicated inside their minds and

their personalities

Learning is process of mirroring how we think the others perceive us:

The looking-glass self

Strong self-fulfilling mechanisms between self and significant others (cfr. the looking-glass self)

Externalization means to put something outside of its original borders, especially to put a human function outside of the human body. In a concrete sense, by taking notes, we can externalize the function of memory which normally belongs in the brain. In a more abstract sense, by making excuses, we can externalize the guilt associated with our actions.

Internalization is the process of consolidating and embedding one's own beliefs, attitudes, and values when it comes to

moral behaviour. The accomplishment of this may involve the deliberate use of psychoanalytical or behavioural methods.

Objectification means treating a person as a thing, without regard to their dignity. Like for e.g., ownership of a person.

Looking-glass self is a social psychological concept, created by Charles Horton Cooley in 1902, stating that a person's self

grows out of society's interpersonal interactions and the perceptions of others. The term refers to people shaping their self-

concepts based on their understanding of how others perceive them. Because people conform to how they think others think

them to be, it's difficult, or arguably impossible, to act differently from how a person thinks he or she is perpetually

perceived. Cooley clarified it in writing that society is an interweaving and interworking of mental selves. The term "looking

glass self" was first used by Cooley in his work, Human Nature and the Social Order in 1902.
http://en.wikipedia.org/wiki/BehavioralStefMarkeringEven if they are not in line with how the physical reality actually operates.StefMarkeringi.e.: we take the constructions into ourselves (we learn'' them) through socialization and make them oursStefMarkeringThat is not what we mean here. Objectivation means that social sconstruction acquie an objective meaning, they exist outide of us (among others because so many others acquired the same definitions of the situation).


7

Deviance describes actions or behaviors that violate social norms, including formally enacted rules (e.g., crime), as well as informal violations of social norms. Norms are rules and expectations by which members of society are conventionally guided. Deviance is an absence of conformity to these norms. Social norms differ from culture to culture. For example, a deviant act can be committed in one society that breaks a social norm there, but may be normal for another society. Viewing deviance as a violation of social norms, sociologists have characterized it as "any thought, feeling, or action that members of a social group judge to be a violation of their values or rules "or group" conduct, that violates definitions of appropriate and inappropriate conduct shared by the members of a social system. The departure of certain types of behaviour from the norms of a particular society at a particular time and "violation of certain types of group norms, where behavior is in a disapproved direction and of sufficient degree to exceed the tolerance limit of the community.

Merton's strain theory

Robert K. Merton discussed deviance in terms of goals and means as part of his strain/anomie theory. Where Durkheim states that anomie is the confounding of social norms, Merton goes further and states that anomie is the state in which social goals and the legitimate means to achieve them do not correspond. He postulated that an individual's response to societal expectations and the means by which the individual pursued those goals were useful in understanding deviance. Specifically, he viewed collective action as motivated by strain, stress, or frustration in a body of individuals that arises from a disconnection between the society's goals and the popularly used means to achieve those goals. Often, non-routine collective behavior (rioting, rebellion, etc.) is said to map onto economic explanations and causes by way of strain. These two dimensions determine the adaptation to society according to the cultural goals, which are the society's perceptions about the ideal life, and to the institutionalized means, which are the legitimate means through which an individual may aspire to the cultural goals.

Cultural goals: depend on the society and the time frame. Right now the most common cultural goals in Belgium are finishing university, get a master and start working, earn money and buy a house.

Merton described 5 types of deviance in terms of the acceptance or rejection of social goals and the institutionalized means of achieving them:

1. Innovation is a response due to the strain generated by our culture's emphasis on wealth and the lack of opportunities to get rich, which causes people to be "innovators" by engaging in stealing and selling drugs. Innovators accept society's goals, but reject socially acceptable means of achieving them. (e.g.: monetary success is gained through crime). Merton claims that innovators are mostly those who have been socialised with similar world views to conformists, but who have been denied the opportunities they need to be able to legitimately achieve society's goals.

2. Conformists accept society's goals and the socially acceptable means of achieving them (e.g.: monetary success is gained through hard work). Merton claims that conformists are mostly middle-class people in middle class jobs who have been able to access the opportunities in society such as a better education to achieve monetary success through hard work.

3. Ritualism refers to the inability to reach a cultural goal thus embracing the rules to the point where the people in question lose sight of their larger goals in order to feel respectable. Ritualists reject society's goals, but accept society's
http://en.wikipedia.org/wiki/File:Mertons_social_strain_theory.svgStefMarkeringStrictly speaking, conformism is no type of deviance or adaprtation, as one follows means and goals


8

institutionalised means. Ritualists are most commonly found in dead-end, repetitive jobs, where they are unable to achieve society's goals but still adhere to society's means of achievement and social norms..

4. Retreatism is the rejection of both cultural goals and means, letting the person in question "drop out". Retreatists reject the society's goals and the legitimate means to achieve them. Merton sees them as true deviants, as they commit acts of deviance to achieve things that do not always go along with society's values.

5. Rebellion is somewhat similar to retreatism, because the people in question also reject both the cultural goals and means, but they go one step further to a "counterculture" that supports other social orders that already exist (rule breaking). Rebels reject societys goals and legitimate means to achieve them, and instead create new goals and means to replace those of society, creating not only new goals to achieve but also new ways to achieve these goals that other rebels will find acceptable.

Chapter 3

Structure of chapter 3:

1. Introduction: sociology and modern times

2. The concept of modernity 3. Effects and correlates of modern

society


9

There is a paradoxical two-sided relation between the discipline of sociology and the modern world:

the modern condition is a quintessential focus of sociology sociology is a product of modern society

Illustrations of sociological observations in the pre-modern societies (Ibn Khaldun, ancient Greeks) However, sociology in the contemporary sense only emerged around the turn of the 18th-19th century (Scottish Enlightenment, Tocqueville, Marx)

Sociology in modern times. This implies that sociology has a privileged relation with modern times in two ways:

1. Without the modern view of society (as a man-made social construction), sociology were unthinkable modern worldview is a necessary condition for sociology to emerge

2. Sociology emerged as an attempt to remedy the typical ills of modern times sociology can be understood as an attempt to understand / manage modern social problems

The emergence of modern society? Basic intuition is that contemporary society differs fundamentally in comparison to traditional one:

1. Science and technique 2. Universal and sustained education 3. Division of labour 4. Market expansion 5. New attribution of political power (e.g. democracy) 6. Urbanization 7. A strong individual conscience (individualism)

Modernization theory - is a theory used to explain the process of modernization within societies. Modernization refers to a model of a progressive transition from a 'pre-modern' or 'traditional' to a 'modern' society. The theory looks at the internal factors of a country while assuming that, with assistance, "traditional" countries can be brought to development in the same manner more developed countries have. Modernization theory attempts to identify the social variables that contribute to social progress and development of societies, and seeks to explain the process of social evolution.

Modernization ratio:

The social consequences of an increase in the ratio of inanimate to animate power

Animate power: manual labour, energy from animals

Inanimate power: power from other sources (wind, water, coal, fossil fuel, nuclear energy,)

The ratio is a simple equation:

R

World Openness is an overarching concept or philosophy that is characterized by an emphasis on transparency and free unrestricted access to knowledge and information as well as collaborative or cooperative management and decision making rather than a central authority.
StefMarkeringThis is not in place here


10

We will sketch 4 interconnected characteristics of modern society: 1. Specialization 2. Change of inequality 3. The modern class structure 4. The nation state

Specialization:

Individual level: division of labour and tasks. People who perform them become more specialized longer chains of interdependence Illustration: products, e.g. clothes, used by medieval man versus contemporaries

Alternative definition: An agreement within a community, group, or organization under which the members most

suited (by virtue of their natural aptitude, location, skill, or other qualification) for a specific activity or task

assume greater responsibility for its execution or performance.

Institutionally: differentiation. Also the institutions of society have become more specialized, clustered in social systems Illustration: the loss of the church of power in civil administration

Differentiation is a term in system theory (found in sociology.) From the viewpoint of this theory, the principal feature of

modern society is the increased process of system differentiation as a way of dealing with the complexity of its environment.

This is accomplished through the creation of subsystems in an effort to copy within a system the difference between it and

the environment. The differentiation process is a means of increasing the complexity of a system, since each subsystem can

make different connections with other subsystems. It allows for more variation within the system in order to respond to

variation in the environment. Increased variation facilitated by differentiation not only allows for better responses to the

environment, but also allows for faster evolution (or perhaps sociocultural evolution), which is defined sociologically as a

process of selection from variation; the more differentiation (and thus variation) that is available, the better the selection.

Social Roles refer to the expectations, responsibilities, and behaviors we adopt in certain situations. The ideas for expected or

normal behavior are reinforced both by the individual and by society. Each of us takes on many different roles, and we

shift among them throughout our lives and throughout each day. For example, a working mother starts her day in the role of

a mom, in which she is expected to feed her children and get them ready for school. At the office she shifts to the role of

project manager, where she oversees projects in a timely and professional manner. On her lunch break she may take on the

role of friend, in which she listens to a co-workers problems. If she fails to fulfil any of these roles she may face

consequences, such as the loss of a relationship or loss of a job.

Change of inequality: industrialization destroyed the great pyramid of feudal social order

Status distance decreased, social distance increased Occupational mobility: job opportunities no longer attributed by birth Separation of home and work possibilities to take up different social roles at home and work Allowed for the rise of autonomous individuals Egalitarianism: many cultural transformations (Reformation, Enlightenment, 18th century revolutions) laid the

foundations of the idea that people had intrinsically the same (equal) rights Important side-effect and condition of many modern inventions, e.g. of democracy: literacy Egalitarian society coincides with simpler and more fluid differences, mainly based on wealth:

from feudal reciprocities to the contract


11

Egalitarianism is a trend of thought that favours equality for all people. Egalitarian doctrines maintain that all humans are equal in fundamental worth or social status. The term has two distinct definitions in modern English. It is defined either as a political doctrine that all people should be treated as equals and have the same political, economic, social, and civil rights

or as a social philosophy advocating the removal of economic inequalities among people or the decentralization of power. Some sources define egalitarianism as the point of view that equality reflects the natural state of humanity.

Modern class structure

Marx saw a fundamental division between owners of the means of production (bourgeoisie) and those who had to sell their labour (proletariat)

He saw all proletarians to be in the same boat, eventually leading to their acting together to revolutionize economic relations

Weber saw considerable differences in power and life chances between wage earners He created a more differentiated class scheme Also, the occupational and therefore class structure changed dramatically, e.g. agricultural workers in

20th century evolved in most European countries from > 50% to


12

and economic situation and, consequently, being more changeable over time. The precise measurements of what determines social class in society has varied over time. The term "class" is etymologically derived from the Latin classis, which was used by census takers to categorize citizens by wealth, in order to determine military service obligations. In the late 18th century, the term "class" began to replace classifications such as estates, rank, and orders as the primary means of organizing society into hierarchical divisions. This corresponded to a general decrease in significance ascribed to hereditary characteristics, and increase in the significance of wealth and income as indicators of position in the social hierarchy.

EGP class scheme:

The nation state :

Modern world is a world governed by state authority Central characteristics: (1) violence monopoly, (2) controlling a territory Created a stark division between the public and the private world

Illustration: changes in how we see patronage personal bonds and taste are not allowed to dictate the public sphere any more

At the same time, the personal sphere has become more free

The nation state is a geographical area that self-identifies as deriving its political legitimacy from serving as a sovereign nation. The state is a political and geopolitical entity, while the nation is a cultural and ethnic one. The term "nation state" implies that the two coincide, but "nation state" formation can take place at different times in different parts of the world, and has become the dominant form of world organization. The concept of the nation state can be compared and contrasted with that of the multinational state, city state, empire, confederation, and other state formations with which it may overlap.


13

Violence monopoly: in sociology, the concept which states that the state alone has the right to use or authorize the use of physical force. It is widely regarded as a defining characteristic of the modern state. In his lecture Politics as a Vocation (1918), the German sociologist Max defines the state as a human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory. Under feudalism, no lords, including the king, could claim a monopoly over the use of violence, since their vassals promised to serve them but remained free to exercise power in their fiefdoms. Moreover, the king and the landed nobility had to share power or compete with the Roman Catholic Church. The modern state, according to Weber, emerged by expropriating the means of political organization and domination, including violence, and by establishing the legitimacy of its rule.

Chapter 4

II. Capitalism, markets and firms Economic organization

Structure of chapter 4; 1. The concept of economic organization

2. Capitalism a) Definition

b) Other forms c) Types of capitalism

3. Corporate (industrial) districts a) Definition: the regional perspective

b) Flexible specialization or Fordist regimes? 4. Globalization

Two feasible approaches:

Firms and other organised forms the organization of the whole economy

Definition nr 1 of capitalism:

The pursuit of profit, forever renewed profit Central prerequisite: private property rights

Definition nr 2:

Capitalism is an economic system in which trade, industry, and the means of production are controlled by private owners with the goal of making profits in a market economy. Central characteristics of capitalism include capital accumulation, competitive markets and wage labour. In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged.

Alternative form of economic organization:


14

Redistribution of income and wealth is the transfer of income, wealth or property from some individuals to others caused by a social mechanism such as taxation, monetary policies, welfare, charity, and divorce or tort law. Today, income redistribution occurs in some form in most democratic countries. In a progressive income tax system, a high income earner will pay a higher tax rate than a low income earner. Two common types of governmental redistribution of wealth are subsidies and vouchers (such as food stamps). These "transfer payment" programs are funded through general taxation, but benefit the poor, who pay fewer or no taxes. While the persons receiving transfers from such programs may prefer to be directly given cash, these programs may be more palatable to society, as it gives society some measure of control over how the funds are spent.

Reciprocity is the expectation that people will respond favourably to each other by returning benefits for benefits, and responding with either indifference or hostility to harm. The social norm of reciprocity often takes different forms in different areas of social life, or in different societies. Responding to a positive action with another positive action; rewarding kind actions. As a social construct, reciprocity means that in response to friendly actions, people are frequently much nicer and much more cooperative than predicted by the self-interest model; conversely, in response to hostile actions they are frequently much nastier and even brutal.

Exchange theory includes two approaches to social interaction and relationships. The first approach views people and individuals in particular, as rationally trying to get what they want or need by exchanging valued resources with others. The second approach focuses on exchanges between groups or social systems as a whole and believes that by participating in a social system based on loyalty and sharing; individuals may contribute and derive benefits from their overall participation in the system.

Types of capitalism:

1. Classical typology of capitalism

Rational Free market trade and production Speculation and finance

Political Predatory political profits Profit through force/domination Unusual deals with political authorities

Traditional Markets for some sectors Co-existence with autarkic systems
StefMarkeringthis 2nd apporach is a different meaning, not what we conceptualised


15

2. Contemporary typologies

Esping-Andersens typology of welfare states

1. Liberal regimes 2. Social-democratic regimes 3. Continental regimes

(Taken from a website commenting of the Esping-Andersens theory)

1. Liberal welfare states the main features are means-tested assistance, modest universal transfers or modest social-insurance plans Benefits cater mainly to a clientele of low-income, usually working class, state dependants. In it; the limits of welfare equal the marginal propensity to opt for welfare instead of work. Entitlement rules are therefore strict and often associated with stigma; benefits are typically modest. Examples: the United State, Canada and Australia. He does not specifically mention the UK in this section but judging from other comments, the UK is probably close to this model. Slides: Liberal regimes

Genesis: 19th-century English political economy Mainly in Anglo-Saxon countries Weak or inexistent social-democratic or Christian-democratic movements Three core features:

1. Only bad risks not having roof over your head, etc. 2. Stress on welfare (residual systems) 3. Market oriented (ex: tax subsidies for buying HC insurance)

2. Social-democratic welfare states High levels of benefits and services provided by the state. All strata are incorporated under one universal insurance system, yet benefits are graduated according to accustomed earnings. This model crowds out the market [meaning the private sector providing such things as pension plans]The ideal is not to maximise dependence on the family, but capacities for individual independence. The state opts to take direct responsibility of caring for children, the aged and the helpless. It is committed to allow women to choose work rather than the household [presumably he means with lots of state-provided child-care from an early age.] The Scandinavian social democrats werecapable of building a welfare state with features of sufficient luxury to satisfy the wants of a more discriminating public [by which I think he means those who were better off]. Examples: the Scandinavian countries.

Slides: Social-democratic regimes

Main difference: magnitude of redistribution Concentrated in Scandinavian countries Three core features:

1. Anti-market, strongly state oriented 2. Universalism: religious, theological, and philosophical concepts with universal application or applicability.

Universalism is a term used to identify particular doctrines considering all people in their formation. 3. Egalitarian: is a trend of thought that favours equality for all people. Egalitarian doctrines maintain that all

humans are equal in fundamental worth or social status Consequence: active labour market policy (employment, training)

3. Conservative/corporatist welfare states These feature social insurance more than social assistance [means-tested benefits]. In other words, most of the benefits for unemployment or sickness are entitlements based on insurance contributions previously made. Also the contributions made and the benefits received vary according to the income of the individual. This is known as the Bismark model as opposed to the Beveridge model in which all contributions and benefits were to be at a


16

flat rate. the corporatist regimes are also typically shaped by the Church, and hence strongly committed to the preservation of traditional familyhood. Social insurance typically excludes non-working wives, and family benefits encourage motherhood. the state will only interfere when the familys capacity to service its members is exhausted. Examples: Austria, France, Germany and Italy.

Slides: Continental regimes

Genesis: 19th-century conservative ideas:

Absolutist etatism

Catholic social doctrine (Rerum Novarum, 1891)

Christian democratic or conservative political elites

Mainly in continental European countries

Two central features:

Arrangements segmented in professional groups

Familiarism When a person of a certain race is comfortable with other people of the same race, this is familiarism.

Consequence: passive labour market policy (employment, training)

Industrial district was initially introduced as a term to describe an area where workers of a monolithic heavy industry (ship-building,

coal mining, steel, ceramics, etc.) live within walking-distance of their places of work. The term was used by Alfred Marshall in his The

Principles of Economics (1890, 1922). Marshall talks of a.... "thickly peopled industrial district". The term was also used in political

struggle. The 1917 handbook of the IWW states: "In order that every given industrial district shall have complete industrial solidarity

among the workers in all industries as well as among the workers of each an INDUSTRIAL DISTRICT COUNCIL is formed ..." The

term also appears in English literature. For instance, in a short story of 1920 by D. H. Lawrence, You Touched Me (aka 'Hadrian'):

"Matilda and Emmie were already old maids. In a thorough industrial district, it is not easy for the girls who have expectations above

the common to find husbands. The ugly industrial town was full of men, young men who were ready to marry. But they were all colliers

or pottery-hands, mere workmen." Recent evolution of the use of the term Within the study of economics, the term has evolved and now

implies the ways in which economic specialisation arises through clustering in a particular industry-zoned urban area. Since the 1980s,

the term has become connoted with an important element of dynamic industrial development in Central and Northeastern Italy, where

after the Second World War clusters of small and medium-sized enterprises (SME) experienced strong growth. Industrial districts in

Central and Northeastern Italy have a coherent location and a narrow specialisation profile, e.g. Prato in woollen fabric, Sassuolo in

ceramic tiles or Brenta in ladies' footwear.
http://en.wikipedia.org/wiki/Woolenhttp://en.wikipedia.org/wiki/Sassuolohttp://en.wikipedia.org/wiki/Brenta,_LombardyStefMarkeringnot discussed


17

Slides: Definition Novelty: not national or other boundaries, as in states or federated parts Instead: geographical and social boundaries Groups of competing and related firms in a network

Flexible specialization or Fordist regimes?Why would firms stay apart in a network and not integrate into a hierarchical integrated large scale structure?

Latter is called the Fordist regime (cf. Fords automobile construction) Former may perform better in some circumstances Observation: sometimes there is a competitive advantage in production in many small or medium-sized

firms working together, especially when one has to adjust production frequently May also facilitate tax evasion

Flexible specialization or Fordist regimes? Case 1: North-Italy (Emilia Romagna), knitwear Case 2: ICT Well-known ideal-typical comparison between Silicon Valley and Route 128 Former is example of loose network, latter of Fordist regime In the longer run, Silicon, Valley outperformed Route 128

Globalization:

Definition: Originally: the expansion of modern capitalism throughout the world. Primarily a geographical phenomenon, therefore: expansion. It seems to weaken the importance of boundaries of nation-states. Globalization literature emerged in the 90s, and is interdisciplinary. New approach: distinction between world and global economy. Global economy is an economy with the capacity to work as a unit in real time on a planetary scale

Characteristics of the global economy, in essence there are those four elements:

1. Basic idea: the emergence of a new economy, driven by new kind of infrastructure technology (how information is processed through infrastructure)

2. Firms evolve from multinational to transnational corporations (horizontal, networked, less strict national roots) 3. Coordination through legal regimes: sets of transnational rules that govern the interaction of international

exchange, e.g. arbitration or the Americanization of international commercial legislation, Europeanization of product regulation

4. Global culture: Diffusion of Western models in politics, education and business throughout the world

Legal regimes: A legal regime is a system of principles and rules governing something, and which is created by law. It is framework of legal rules.

Diffusion: is a social process through which cultural knowledge, practices, and materials spread from one social system to another. As opportunities for interaction across cultures increases, so does the rate of diffusion.
StefMarkeringnot discussed


18

Chapter 5

Ideal typical markets & the genesis of

capitalism

1. The essence of change: market dynamics

a. Characteristics of markets

b. Starting point: crises c. Ideal typical markets

1.a. Market characteristics (6)

1. Markets are based on a particular kind of property, i.e. control over resources 2. Markets tend to expand (people, goods, relationships, territory) up to a certain point 3. Markets tend to give rise to higher order (superordinate) and dependent (subordinate) markets 4. Cost-accelerating tendencies (or decreasing profits) within superordinate markets often entail crises and transition to

another leading market sector.

Two important superordinate markets tend to play a significant role:

5. Politics and warfare are superordinate and competitive markets themselves. E.g. warfare leads to growth of production markets at a lower level.

6. Another important superordinate market consists of the production and circulation of cultural goods of distinction: status goods.

Market expansion: a growth strategy in which an organisation targets existing products to new markets, market development by targeting new geographic markets, new demographic or psychographic segments, or totally new users. Markets and social structures tend to expand over long periods of time to include more people or goods or relationships, especially more territory. Expansion in these respects may go on at the same time that participation becomes more restricted, especially for producers and sellers as against labourers and consumers.

Extensive growth: the expansion of the quantity of inputs in order to increase the quantity of outputs, opposite to that of intensive growth. For example, GDP growth caused only by increases in population or territory would be extensive growth. Thus, extensive growth is likely to be subject to diminishing returns. It is therefore often viewed as having no effect on per-capita magnitudes in the long-run.

Intensive growth: Increases in aggregate economic activity, or growth, may be generated by adding more labor and capital or by improving skills and technology. Development economists call the latter "intensive growth" because labor and capital work harder. Growth is driven by enhanced productivity (higher output per unit of input) rather than augmented factor supplies. Theory predicts that all growth in a steady-state, long-run equilibrium will be attributable to technological progress (intensive growth).
StefMarkeringPlease look at the note in the slides on the conceptualization of property as central to exchange


19

Superordinate: of higher degree in condition or rank.

Markets for a particular item of exchange, tent to give rise to superordinate markets that trade on terms of trade themselves. In the LR distance exchanges become commodities that can be traded in their own market. Superorder markets may be pyramided upon one another. Money, debts, mortgages etc can become objects of superordinate media traded in yet further markets.

Subordinate market: means "ranks beneath." In finance, the term usually refers to the claims a creditor has on a company's assets relative to other creditors. These markets are dependent.

Status good: production and circulation of cultural goods of distinction.

1.b. Starting point: crises

Every period has a system: a leading market sector In the long run, markets tend to undergo crises, sometimes serious enough to end the continuation of that system Crises also affect politics, as states are dependent on material resources

1.c. Ideal typical markets (4)

Kinship markets: Alliances through intermarriage. Property form: women Slave markets: Slavery primarily is a form of exchange, not production. Property form: people (slaves). Agrarian-coercive markets Patrimonial households, economy cantered around land rent. Rational capitalism Market transactions permeate society and the economy beyond a certain tipping point.

2.a. Characteristics of kinship markets

Typical for stateless societies Sexual property is principal form From that follow control over children, inheritance, residence, household goods Total relations: marriage alliance equals military, political, economic, religious alliance Kinship capitalism is investment in relatives Long-term tendency of increasingly male-centred system of sexual property Basic distinction between conservative and aggressively expansive kinship strategies Latter: dynamic based on extension of alliances by emerging elite groups Intensified by the emergence of pseudo-kin, kinship ties by fiat. Leads to the emergence of kinship capitalists versus kinship proletariat Former accumulate power/wealth, giving rise to early states, households as elementary unit: patrimonialism

3.a. Characteristics of slave markets

First structural tendency toward capitalism Historically: various forms of slavery

Greece: debt-slavery

Islamic societies: military / administrative slavery

Russia, medieval Korea: agricultural slavery

US (south): slave plantations

Primarily focus on ancient Greece & Rome,as chattel slave markets were leading sector there Expansionary dynamic: warfare fed slave supply


20

Military/slave dynamic expands internally and geographically (conquest and barbarian entrepreneurs) Innovations in productive sector (military): Military hardware: bronze and iron weapons and armour, engineering, fortifications, muttered galleys,... Military spill overs in civil economy: road building, construction industry. Slave market drove growth through subordinate and superordinate markets Subordinate: slaves stimulate productive sectors and bureaucracy, up to 30-40 % of Roman labour force Superordinate markets of politics and army: politicians and generals as class investing in expeditions

Subordinate: agriculture, mining, forestry, crafts, transport, commerce: virtually all economic activity became dominated by slaves and ex-slaves. Only exceptions: military and subsistence farming

3.b. Crisis of Roman slave markets

Soldiers evolved from small-scale entrepreneurs (own weapons, land at home) to army of proletarians working for wages (army weapons, lost land during conscription) for entrepreneur (general)

earlier soldiers-landholders were subjugated by their own products (slaves) Supply of slaves dried up after A.D. 200 throughend of military conquests (geopolitical cause) Alternative: creation of semi-peripheral powers, leading to collapse through incursive migrations

3* Islamic slave markets

Differed from Roman system in bypassing the investment of slaves in the productive economy Slaves were not used in subordinate markets, but in the military and in government bureaucracies Origin : after 800, attempt to avert loss of power to feudal lords. Central business was not capturing slaves; were purchased on markets strong impetus to spread of world markets

4.a. Characteristics of agrarian- coercive markets

Definition: type of society based upon agricultural production and a militarized state

Two main subtypes: rent versus tax coercion (gov. by force)


21

. Rent coercion is decentralized, gives rise to expansion due to exchange of display goods by landed military class:

1. Ceremonial gift networks or potlatches 2. Status display in supernatural dimension: aristocratic patronage of churches (become players themselves,

fuelling competition and expansion)

Coercion is essentially the overwhelming of the will of another by force or threat of force, or through less noticeable forms such as fraud. The use of coercion is the means by which a person or group of people impose their will upon another or others. (Coercion can also be used to forcibly or fraudulently take the property of others.). Whenever I pay "taxes", I'm being coerced indirectly, and I'm also indirectly supporting the coercion perpetrated by terrocrats (terrorist bureaucrats or coercive "government" agents) - by paying their wages to practice more coercion. Terrocrats use this "tax"-money to pay more terrocrats to further coerce others through their "tax" and other "systems", and to murder people in their "wars", amongst countless other atrocities.

Two mechanisms fuel expansionary dynamic of rent-coercion:

. Feudal dynamic

. Corporate religious capitalism

. Feudal dynamic: two mechanisms (not only in Europe, probably also in China):

1. Expansion through rising surplus extraction* Rural landlords press rent of peasants upward. Peasants respond by increasing production, Effect: productive expansion by (1) colonizing wastelands, (2) intensified cultivation (technological innovation) and (3) military expansion (landlords as military producers)

2. Expansion through status displayStatus competition between nobles (housing, cuisine, clothing & jewellry, patronage in art,..) around household for political weight cash need led to monetization of the countryside

. Corporate religious capitalism

Monastic sectors approximated rational capitalism: o Free factors of production, o Political support of exchange and property rights o Universalistic and disciplined ethic

Advantage: escaped household organization of politics and production: o More or less freely recruited labor force o Monasteries as firms: reinvestment of profits in production o Reform movements: org. autonomy from aristocratic patronage

Strong superordinate markets: banking, universities, indulgences

Tax coercion Centralized state prefers to impose tax coercion directly to farmers:

If powerful enough, the state may eliminate market.

If king is weak, he will fuel competition further by status display

monasteries were often founded as agents of weak states

Potlatch: a ceremonial feast of the American Indians of the northwest coast marked by the host's lavish distribution of gifts or sometimes destruction of property to demonstrate wealth and generosity with the expectation of eventual reciprocation


22

After AD 1300, two mechanisms:

Feudal dynamic: crisis has to be understood against the background of the rival form: state tax coercion o Accessible land was used up, no easily accessible external territories for conquest o Emerging power of absolutist state (tax coercion) with strong superordinate markets (e.g. venality of public

offices) Corporate religious capitalism:

o Europe: Reformation (end of superordinate markets, monasticism,confiscation of ecclesiastical properties) o China: confiscation of Buddhist monastic property after AD 1050 o Japan: continuation of Chinese market dynamic, ended after 1600s

5.a. Characteristics of capitalist markets

Before: large sectors of socio-economic life remainself-sufficient & autarkic. Long and slow process, with a tipping point if certain proportion of economy is market driven Alternative interpretation: several tipping points:

o Takeoff: early form in monastic traditions, world systemaround Middle East (12th-13th centuries), 16th century Europe.

o Next dimension: England, 18th-19th century. Not only a question of market penetration, even more of pyramiding of sub- & superordinate markets Pyramiding in one integrated system:

o Financial markets, where profit is divorced from production o Education: a currency-like inflation due to the expansion of educational participation and credentials

In modern capitalism, everything is commodified, except the most central commodities of the pre vious systems: o Sexual property o Slavery o Venality of office, tax farming

Capitalist succes is its geographical diffusion

Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems. Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade. If a self-sufficient economy also refuses all trade with the outside world then it is called a closed economy. Autarky is not necessarily an economic phenomenon; for example, a military autarky would be a state that could defend itself without help from another country.

The failure of socialist autarky: o Communist regimes are not a next step, rather resistance of powerful agrarian-coercive states to pulling in

world capitalist markets o State-administered industrialism is extension of tax coercion. o Lacks innovative and expansionary internal dynamic. o Already before 1989 they were pulled in, opening borders to Western business.

Autarky was not perfect, as borders were never really closed: o Military rivalry (hardware technology) o Cultural products created demand in the East.


23

Chapter 6

Relevance

Historical character of economic systems

Interesting debate about the role of regions in development of economic organization

Challenges the idea of the Western invention of capitalism

Interesting discussion about the takeoff of the gap between Europe and the rest of the world

Puts the recent changes in China into a long term perspective

China was a forerunner in many technological innovations:

Gunpowder: 11th century invention, adopted by the West in the late 13th century

Navigation: 7 major naval expeditions (1405-1431), 1,681 ships built in the first phase alone (1404-1407)

Printing: block printing was invented in the 9th century (Europe: 15th century) We learn that Europe / the West has not always been the forerunner (economically and otherwise) China seems to have been ahead in economic organization, innovations, wealth Consensus: head start under the Song (960-1279) and Yuan (1279-1368) dynasties Some assert that development came to a standstill under the Ming dynasty (1368-1644)

Max Weber and Chinese religions:

According to Weber, West invented capitalism and its core institutions (chapter 4). Central problem is twofold:

How and why has capitalism emerged in the West?

Why has this not taken place elsewhere Special attention to the role of religion in societies as a hypothetical facilitator China: especially in WEWR or The economic ethic of the world religions (written 1915-1917, published as a

whole in 1920)

Historical revisionism is the reinterpretation of orthodox views on evidence, motivations, and decision-making processes surrounding a historical event. Though the word revisionism is sometimes used in a negative way, constant revision of history is part of the normal scholarly process of writing history.

Two religions co-exist: Confucianism and Taoism, they were not in conflict or competition, but stratified.

Confucianism

Carried by the imperial ruling class (Mandarins)

Basic ideal: Tao, middle way, gentlemanlike way of life
StefNotitieHere the logic of the argument is missing a bit. Reason why we discuss the 'classical view' first, then first weber, afterwards Landes as illustrations of the classical view


24

Confucianism is an ethical and philosophical system, on occasion described as a religion, developed from the teachings of the

Chinese philosopher Confucius ( Kng Fz, or K'ung-fu-tzu, lit. "Master Kong", 551479 BCE). Confucianism originated as an "ethical-socio-political teaching" during the Spring and Autumn Period. Following the official abandonment of Legalism in China after the Qin Dynasty, Confucianism became the official state ideology of the Han. Nonetheless, from the Han period onwards, most Chinese emperors have used a mix of Legalism and Confucianism as their ruling doctrine. The disintegration of the Han in the second century CE opened the way for the soteriological doctrines of Buddhism and Taoism to dominate intellectual life at that time.

Taoism

Magical worldview of ordinary people

Reality full of ghosts

Economic traditionalism dominates: no mining or agricultural innovations

Taoism, or Daoism, is a philosophical, ethical, and religious tradition of Chinese origin that emphasizes living in harmony with the Tao (also Romanised as Dao). The term Tao means "way", "path" or "principle", and can also be found in Chinese philosophies and religions other than Taoism. In Taoism, however, Tao denotes something that is both the source and the driving force behind everything that exists.

David Landes Poverty and Wealth

Late 20th centruy attempt to take up Webers central question again: for the last thousand years, Europe (the West) has been the prime mover of development and modernity (p. xxi)*

He broadens the original focus from religion to culture. China

Acknowledges original head start, mainly in technology

Strongly stresses the standstill that grew out of cultural triumphalism

Examples and indicators of the statis

Capital moved inland from Nanking to Bejing early 15th century, marking a symbolic break with outward orientation.

Gunpowder was invented in China, but never developed beyond the use of incendiaries (flame lances, fireworks). West built its military supremacy on further innovations (corning of powder, combination with metallurgical developments).

After 7 maritime expeditions, China turned inward: in 1525 the last oceangoing ships were destroyed and the owners arrested.

Printing was developed in 9th century China, but never led to either the takeoff in commercial printing or the explosion of diffusion of dissenting ideas, as it did in the West.

Technologically: ideographical writing restricted the Chinese to block printing, while movable type developed in the West (Gutenberg, 1452)

The Revisionist view:

The classical view has been challenged, particularly in the past decades. Starting points of the revision:

o Gap is overrated until the Industrial Revolution (ca. 1800). o Innovation in China did not stop in the Ming dynasty, but slowed down for structural reasons o Market systems and monetization were quite developed o Consumption was a driving force of marketization, also in China
StefMarkeringLandes'


25

Advantage as a trap?

Technological advancement at the beginning of the Ming dynasty (14th cent.) is clearly not contested Possible explanation for the relative stagnation is a high-level equilibrium trap (Mark Elvin):

o Fast population growth o The relative standstill is due to a disadvantageous population-land ratio o An oversupply of cheap labour and expensive capital favoured labour-intensive answers o Therefore the Chinese lacked the incentive to innovate a lack of constraints hampered technological

innovations Mark Elvin is noted for his high level equilibrium trap theory to explain why an industrial revolution happened in Europe but not in China, despite the fact that the state of scientific knowledge was far more advanced in China much earlier than in Europe. Essentially, Elvin proposed that pre-industrial production methods were extremely efficient in China, which obviated much of the economic pressure for scientific progress. At the same time, a philosophical shift occurred, where Taoism was gradually replaced by Confucianism as the dominant intellectual paradigm, and moral philosophy and the development of rigid social organization became more important than scientific inquiry among intellectuals.

On the other hand: expansion of market transactions internally and even externally. Strongly driven by a luxury market (see 3.c)

Production: Marketization and Modernization

Strong indicators that despite technological changes, trade pushed markets forward. Interesting paradox: trade was despised by the elite (cfr. Weber), but the mercantile economy nevertheless grew,

finally changing the dominant culture Economy was largely monetized during early Ming period (15th century). Two important reasons for this market expansion and monetization:

Population increase forced some to handicraft and trade

Taxation favoured monetization.

Consumption: Commodification of a luxury culture

Some authors take a different approach, focusing on elite consumption as a driving force behind monetization and market expansion (compare to ch. 6, expansion of markets in agrarian-coercive systems).

During Ming a refined culture of connoisseurship developed, with a strong stress on art consumption: o Lifestyle books and prose fiction (commodified) o Decorative arts such as painting were commercialized even during late Song (13th century)

In general, China paid more attention to luxuries than the West

China today

Communist-nationalist revolution after WWII From 1980s on: introduction of market mechanisms in China First: decrease of central planning 1990s: price mechanism through markets Second: growth of marketplaces (factor 20 in volumes) Finally: foreign direct investements

o rapid economic growth (8.6% annually since 1980)


26

Chapter 7

Structure of chapter 7:

1. Firms in economic theory a) The firm as a black box

b) Alternative 1: Adam Smith c) Alternative 2: transaction cost economics

2. Sociological approaches (1): Max Weber a) The nature of the firm

b) Historical emergence c) Entrepreneurs and bureaucrats

3. Sociological approaches (2): sociology of work 4. Sociological approaches (3): business groups

1.a. The firm as a black box

Starting points:

Organizations Environment Diversity

In early economics:

Firms were central actors Importance of the internal structure

was underrated Hardly any external relations

1.b. Alternative 1: Adam Smith

Distinction in risk-taking between private co-partner and joint stock company Also: difference in interests between owner and manager

1.c. Alternative 2: transaction cost economics

Coase, The nature of the firm: Two distinct ways of organizing production:

Market Firm [Hybrid form: long-term contractual

relationships]

Which governance structure?

The one with the lowest transaction cost:

1. The ex-ante costs of drafting, negotiating and safeguarding an agreement (notary etc.)

2. the ex post costs of maladaptation and adjustment that arise when contract execution is misaligned as a result of gaps, errors, omissions and unanticipated disturbances

in short: the cost of running the economic system.


27

In general three types of transaction costs (North):

1. Information costs are costs such as those incurred in determining that the required good is available on the market, which has the lowest price, etc. Cost of research. Reduced thanks to internet.

2. Protection costs are the costs of making sure the other party sticks to the terms of the contract, and taking appropriate action (often through the legal system) if this turns out not to be the case

3. Measurement costs decreased when states introduced standardized measures

In general the firm when transactions are:

1. Frequent 2. Uncertain 3. In need of special investments

Critiques:

1. Power is disregarded - Firms are first and foremost a distinctive manner of division and attribution of power. 2. The functionalist - fallacy - The effect of arrangements (efficiency) is at the same time its cause.

Fallacy - a mistaken belief, especially one based on unsound arguments.

What is the functionalist fallacy?

Starting point is the functional explanation: beneficial consequences B explain phenomenon A This type of explanation can only be valid if one of two mechanisms is shown to be present:

1. A feedback loop explaining why B reinforces A. Example: natural selection 2. The presence of an intention to produce B, whereby the intention is the real cause of A.

Example: a successful marketing strategy

Sociological approaches: Max Weber 1. The nature of the firm.

Firm is closed economic relationship (as opposed to market relations)

Oriented toward the economy Central goal: profit making Opposed to household Rational-legal domination (not traditional)

2. Historical emergence

The slow invention of firms Alternative institutional inventions:

Household as trade unit


28

Commenda: Economic relationship between two merchants, one investor and one selling abroad. Necessitated early form of capital accounting.

A form of trust in use in the middle ages in which goods are delivered to another for a particular enterprise (as for marketing abroad)

Rational firm is Western invention:

Separation of individual and firm property (Florence, 14th century)

Juristic personality

3. Entrepreneurs, bureaucrats, owners

Entrepreneur:

Different mentality from bureaucrat

Methodical and leading spirit

Bureaucrat:

Specialization and training

Duty and status honour

Managers and clerical workers

Interest difference with owners

Workers:

No property, dependent on employment

Methodical and disciplined

Sociology of work

Informal relationships:

Different responses to individual incentives

Weak impact of morality on behaviour

Professions: a paid occupation, especially one that involves prolonged training and a formal qualification.

Professional groups become professions

Application of social closure: is a concept that was first introduced by Max Weber and refers to the practice of preserving privilege by restricting other peoples access to resources and rewards. It can take many forms, from residential segregation to marriage rules that forbid unions with anyone from outside the privileged group to keeping women out of old boys networks.

Entrance dependent on abstract knowledge

Entrance dependent on institutionalized cultural capital

Business groups

Definition:

Approach inspired by network theory, applied to firms (not individuals)

a collection of legally separate firms that are bound together in some formal and/or informal ways

Is a collection of parent and subsidiary corporations that function as a single economic entity through a common source of control. The concept of a group is frequently used in tax law, accounting and (less frequently) company law to attribute the rights and duties of one member of the group to another or the whole.

Sources of ties:

ownership relations

principles of solidarity

authority structure

moral economy, Finance

relations to the state

Applications:

Keiretsu (Japan), chaebol (Korea)

Ties between firms through members of boards

Industrial districts


29

Keiretsu: A keiretsu (, lit. system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings. It is a type of informal business group. The keiretsu maintained dominance over the Japanese economy for the last half of the 20th century.

Chaebol: (from chae: wealth or property + pol: faction or clan) refers to a South Korean form of business conglomerate. They are typically global multinationals owning numerous international enterprises, controlled by a chairman who has power over all the operations. The term is often used in a context similar to that of the English word "conglomerate". The term was first used in 1984. There are several dozen large Korean family-controlled corporate groups which fall under this definition. The chaebol has also played a significant role in South Korean politics. In 1988, a member of a chaebol family, Chung Mong-jun, president of Hyundai Heavy Industries, successfully ran for the National Assembly of South Korea. Other business leaders also were chosen to be members of the National Assembly through proportional representation. Since 2000, Hyundai has played a role in the thawing of North Korean and South Korean relations.

Chapter 8

1. The birth of modern organizations 2. Non-competitive forms of homogeneity

3. Mechanisms of isomorphic change 3.1.Coercive isomorphism

3.2. Mimetic processes 3.2. Normative pressures

In general, organization studies often focus on differences between organizations and firms DiMaggio & Powells influential approach turns the question around: what makes organizations converge, become

more alike? This question is grounded in a more historical foundation Starting point: the immense success of organizations in modern life Thought experiment: core differences between your day and that of a random medieval (wo)man

ubiquity of organizations in our daily lives These questions indeed refer to the diffusion of one modern type of organization rather than the differentiation of

organized types We call these modern organizations bureaucratic From this apparent historical success of bureaucratic organizations in modern life follow a number of questions:

What distinguishes modern organizations from earlier organized forms?

What makes these modern organizations so successful that they have come to permeate modern societies so thoroughly?

The dominant answer to these questions makes use of the concept of bureaucracy and the difference in meaning between the everyday use of the word and its social-scientific denotation

In everyday use it refers to inefficiency and lack of effectiveness; historically the opposite is the case Bureaucracy: concept developed by Max Weber, referring to a specifically modern type of organization


30

According to Weber, the following characteristics of bureaucracies are quintessential:

1. Fixed jurisdictional power in official duties or functions 2. Principle of office hierarchy in an ordered system of super- and subordination 3. Separation between the private life and professional activities, physically (the office) and regulatory (e.g.

monies) 4. Expert training, technical learning and specialization 5. General rules as the guiding basis of action

The accepted idea is that the bureaucratic form has become universal because of its advantages over alternative forms: it is more precise, speedy, stable, less ambiguous and even cheaper

In short, it is competitive advantages that fuelled bureaucratization of the world DiMaggio & Powell assert that in contemporary society, homogenization is also driven by non-competitive causes

Bureaucratization: to cause to become bureaucratic or to resemble a bureaucracy.

Organizational field is defined as "sets of organizations that, in the aggregate, constitute a recognized area of institutional life; key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products".

Social connectedness is the measure of how people come together and interact. At an individual level, social connectedness involves the quality and number of connections one has with other people in a social circle of family, friends, and acquaintances. Going beyond these individual-level concepts, it involves relationships with beyond one's social circles and even to other communities. This connectedness, one of several components of community cohesion, provides benefits to both individuals and society.

Structural equivalence refers to the extent to which two nodes are connected to the same others -- i.e., have the same social environments. It is often hypothesized that structurally equivalent nodes will be similar in other ways as well, such as in attitudes, behaviors or performance.

2. Non-competitive forms of homogeneity Central thesis: organizational innovations (e.g. management techniques or financial reporting procedures), tend to

distribute throughout organizational fields When innovations are invented, diffusion follows a non-linear pattern (e.g. quadratic) Diffusion: the process of the dissemination (broadcasting) of a phenomenon throughout the population Result: within organizational fields, organizations homogenize over time

To disseminate in terms of the field of communication, means to broadcast a message to the public without direct feedback from the audience.

Organizational field: a recognized area of institutional life, with organizations related through
StefMarkeringthis is a strange wording. Rather: ... two nodes have a similar structural positions in a network


31

These forms of diffusion are not primarily inspired by competitive pressures They may have beneficial effects, to the extent that conformity of organizations creates advantages, e.g.

access to a standardized labour market

compliance to formal and informal rules status advantages for its management, etc.

3. Mechanisms of isomorphic change

Ideal typically three mechanisms exist that push isomorphic change: 1. Coercive 2. Mimetic 3. Normative

Analytically these types are distinct, empirically they often blur The types may have complicated interaction effects, mainly mutually reinforcing

Homogeneity is the state of being homogeneous. Pertaining to the sciences, it is a substance where all the constituents are of the same nature; consisting of similar parts, or of elements of the like nature.

Cultural homogenization is the homegenisation of different cultural practices into one blended, uniform cultural practices that do not allow easy identification of the characteristics of many cultures. It means over the years, peoples of two or more cultures have interacted and intermingles in such a manner as to lose their individual cultural identities and merged into a one uniform culture than does not show any trace of diversity of different cultures among the people.

Coercive isomorphism induces an organization to adopt change through a. pressures from organizations from which the former is dependent b. Cultural and regulatory expectations in society

A privileged factor of course is state regulation, directly and indirectly Case: standardized reporting mechanisms, e.g. financially but also business plans

Mimetic processes occur when diffusion follows from uncertainty avoidance One tends to mimic peers in the cases of:

a. ambiguous goals (What is the problem?) b. unclear solutions (How to solve the problem?)

Typical central factors fostering mimetic isomorphism are textbooks, consulting firms and other media that distribute ideas

Normative pressures Professionalization is the final source of diffusion of innovations, denoted as normative pressure Professionalization: the collective struggle of members of an occupation to

(a) define the conditions and the methods of their work, (b) control the production of producers, and (c) establish legitimation for occupational autonomy though a cognitive base

Successful case: medical doctors Professionalization fosters isomorphism though to important and central characteristics:

(a) Production of specific knowledge though university specialists that control the emergence of innovations (b) Elaboration of professional networks though which innovations diffuse

Universities and training institutes function as centres of the development and promulgation of legitimate practices Important mechanism: recruitment Recruitment tends to become homogenous to the extent that a profession is successful Creates the homosexual reproduction of management

isomorphism
StefMarkeringthrough its?


32

Effect: the selection effect creates a strong impetus of homogenization of management though anticipatory socialization

Uncertainty avoidance: "a society's tolerance for uncertainty and ambiguity". It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. The uncertainty avoidance dimension expresses the degree to which a person in society feels uncomfortable with a sense of uncertainty and ambiguity. The fundamental issue here is how a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? Countries exhibiting strong Uncertainty avoidance Index or UAI, maintain rigid codes of belief and behavior and are intolerant of unorthodox behavior and ideas. Weak UAI societies maintain a more relaxed attitude in which practice counts more than principles. People in cultures with high uncertainty avoidance tend to be more emotional.

Homogamy: marriage between individuals who are, in some culturally important way, similar to each other.

Homosexual Reproduction (Weird explanation from the internet)

From a website: "I am Kronar, Son of Man. For a hundred generations, my fathers have kept the bloodline pure. Free from

Woman's taint." Kronar, Son of Kronar, Oglaf

It's not unusual to see a same-sex couple with a child. This arrangement can happen in many ways: children informally

looked after by two same-sex platonic friends, adopted children looked after by their parent's same-sex roommate, adopted

kids of an actual same-sex couple, natural children of one (usually divorced) partner who view the other same-sex partner as

a parent, etc...

But what about the child who is born to two genetic parents of the same sex?

Theoretically it should be possible even for two women to have a biological child by a process called haploidization, or

through creating sperm cells from one of the two mother's bone marrow. This would theoretically mean that all of their

children would be female due to the lack of a Y chromosome.

For males, there is research being conducted on the creation of male eggs, which consists of removing the nucleus of an ovum

and replacing it with the nucleus of a sperm. This new egg would then be fertilized by sperm from the other father. The

process has been documented in mice and its viability in human reproduction is still being developed. It is also theoretically

possible to achieve male pregnancy by implanting an embryo in the abdominal cavity, but risk factors make it unlikely that

this will be tested.

Anticipatory socialization is the process, facilitated by social interactions, in which non-group-members learn to take on the values and standards of groups that they aspire to join, so as to ease their entry into the group and help them interact competently once they have been accepted by it. It is the process of changing one's attitudes and behaviours, in preparation for a shift in one's role. Words commonly associated with anticipatory socialization include grooming, play-acting, training and rehearsing.

When people are blocked from access to a group they might have wanted to join, they reject that group's values and norms,

and instead begin the anticipatory socialization process with groups that are more receptive to them. People doing this, for

example economically disadvantaged teenagers who aspire to become drug dealers rather than professionals, are sometimes

criticized as lacking motivation, however sociologists say they are simply making a pragmatic adjustment to the

opportunities available to them.
http://tvtropes.org/pmwiki/pmwiki.php/Webcomic/OglafStefMarkeringMeans that matching tends to happen on the basis of common characteristics, e.g. in marriage (homogamy). Here it is applied to recruitment of management, where like tens to select like.StefMarkeringSo formal education plays an important role here (thinjk about the role of business schools)


33

Distinction

between:

Unconditional norms:

do x, not y

Conditional norms:

if others do x, then do y

Chapter 9

Structure of this chapter

1. Introduction and definition

2. Features:

a. Sanctions

b. Distinction from other

phenomena

3. Externalities

4. Applications:

a. Codes of honour

b. Norms of etiquette

c. Norms of tipping

Social norm: A social norm is an injunction to act or to abstain from acting

Sanction direct punishment or loss of opportunities (ostracism).

Causal efficiency of norms is rooted in sanctions.

Multiplier: adding third-party sanctions to the second-party punishment (gossip)

General foundation of social sanctions: emotions of shame (violator) and of contempt (observer).

Problem: what motivates the sanctioned to inves

2014 12 17 economic sociology - summary with comments _1

Documents