Chapter 13: The Economy and Work

Table of Contents

1. The Economy
2. Contemporary Economic Systems
3. Perspectives On Economy And Work
4. The Social Organization Of Work
5. Unemployment
6. Worker Resistance And Activism
7. The Global Economy In The Twenty-First Century

I. The Economy

1. The economy is the social institution that ensures the maintenance of society through the production, distribution, and consumption of goods and services.
   
   
2. While some services are produced by human labour, others are produced by capital (wealth owned or used in business).
   
   
3. While economists attempt to explain how the limited resources and efforts of a society are allocated among competing ends, sociologists focus on interconnections between the economy, other social institutions, and the social organization of work.
   
   
4. Historical Changes in Economic Systems
   1. In preindustrial societies, most workers engage in primary sector production-the extraction of raw materials and natural resources from the environment.
      
      
   2. Industrialization brings sweeping changes to the economy as new forms of energy and machine technology proliferate as the primary means of producing goods and most workers engage in secondary sector production-processing raw materials into finished goods.

3. A postindustrial economy is based on tertiary sector production-the provision of services (such as food service, transportation, communication, education, and entertainment) rather than goods.

II. Contemporary Economic Systems

1. Capitalism is an economic system characterized by private ownership of the means of production, from which personal profits can be derived through market competition and without government intervention. "Ideal" capitalism has four distinctive features:
   1. Private ownership of the means of production
   2. Pursuit of personal profit
   3. Competition
   4. Lack of government intervention
      
      
2. However, ideal capitalism does not exist in Canada for a number of reasons, including the presence of:
   1. Oligopolies-where several companies control an entire industry (e.g., the music industry, where a few companies control many labels).
      
      
   2. Shared monopolies-where four or fewer companies supply 50 percent or more of a particular market.
      
      
   3. Conglomerates created by mergers and acquisitions across industries-combinations of businesses in different commercial areas, all owned by one holding company (e.g., media holding companies, owning radio/TV stations, cable TV companies, book publishing firms, etc.).

4. Interlocking corporate directorates-members of the board of directors of one corporation who also sit on the board(s) of other corporations. These result in corporate arrangements that benefit the corporations but not necessarily the public.
   
   
5. Government intervention often occurs in the form of regulations after some individuals and companies in pursuit of profits have run roughshod over weaker competitors; however, much "government intervention" has been in the form of aid to business (tax credits, loan guarantees, etc.).
   
   
3. Socialism is an economic system characterized by public ownership of the means of production, the pursuit of collective goals, and centralized decision making.
   1. Public ownership of the means of production existed prior to the early 1990s in the former Soviet Union, where the state owned all of the natural resources and almost all the capital; however, leaders abandoned government ownership because the system was unresponsive to the needs of the marketplace and offered no incentive for increased efficiency.
      
      
   2. Pursuit of Collective Goals: Equality in decision making replaces hierarchical relationships (such as between owners and workers); everyone shares in the goods and services produced.
      
      
   3. Centralized Decision Making: In theory, economic decisions are based on the needs of society; the government is responsible for facilitating production and distribution of goods and services. Central planners set wages and prices to ensure that the production process works.
      
      
4. A mixed economy combines elements of a market economy (capitalism) with elements of a command economy (socialism). Sweden, Great Britain, and France have mixed economies, sometimes referred to as democratic socialism-an economic and political system that combines private ownership of some of the means of production, governmental distribution of some essential goods and services, and free elections.
   1. Compared with capitalist economies, the government in a mixed economy plays a larger role in setting rules, policies, and objectives.

2. The government is heavily involved in providing services such as medical care, child care, and transportation.

III. Perspectives On Economy And Work

1. Functionalists view the economy as a vital social institution because it is the means by which goods and services are produced and distributed.
   1. When the economy runs smoothly, other parts of society function more effectively; however, if the system becomes unbalanced, maladjustment occurs.
      
      
   2. The business cycle is the rise and fall of economic activity relative to long-term growth in the economy.
      1. Peaks (high points) occur when "business" has confidence in the country's economy. During a peak (or expansion period), plants are built, raw materials are ordered, workers are hired, and production increases. Upward mobility for workers and their families becomes possible.
         
         
      2. Once the peak is reached, however, the economy turns down because too large a surplus of goods has been produced. In part, this is due to inflation-a sustained increase in prices that results in people no longer having the money to purchase the goods that have been produced.

3. Eventually, this produces a distrust of the economy, resulting in a recession-a decline in an economy's total production that lasts six months or longer. To get out of the trough in the economic cycle, the government lowers interest rates in an attempt to spur the beginning of the next expansion period.
   
   
2. From a conflict perspective, business cycles are the result of capitalist greed; in order to maximize profits, capitalists suppress the wages of workers.
   1. As the prices of the products increase, the workers are not able to purchase them in the quantities that have been produced.
      
      
   2. Consequently, surpluses occur that cause capitalists to reduce production, close factories, lay off workers, and thus contribute to the growth of the reserve army of the unemployed, which then helps to reduce the wages of the remaining workers. In some situations, workers are replaced with machines or non-unionized workers.

IV. The Social Organization Of Work

1. Sociologists who focus on microlevel analysis are interested in how the economic system and the social organization of work affect people's attitudes and behaviour. Interactionists examine factors that contribute to job satisfaction or feelings of alienation.
   
   
2. Job Satisfaction and Alienation
   1. Job satisfaction refers to an attitude that people experience about their work, which results from (a) their job responsibilities, (b) the organizational structure in which they work, and (c) their individual needs and values.
      
      
   2. Self-actualization occurs when people feel a sense of accomplishment and fulfilment as a result of their work. Studies have found that worker satisfaction is highest when employees have some degree of control over their work and are not too closely supervised.
      
      
   3. Alienation occurs when workers' needs for identity and meaning are not met, and when work is done strictly for material gain, not for a sense of personal satisfaction. According to Marx, workers are resistant to having very little power and no opportunities to make decisions about what to do or how to do it in the workplace.
      
      
3. Occupations are categories of jobs that involve similar activities at different work sites.
   1. Historically, occupations have been classified as blue-collar (factory and craft workers who did manual labour) and white-collar (office workers and professionals) employment; however, many contemporary workers do not fit either of these categories.
      
      
   2. Sociologists establish broad occupational categories by distinguishing between employment in the primary labour market (high-paying jobs with good benefits that have some degree of security and the possibility for future advancement) and the secondary labour market (low-paying jobs with few benefits and very little job security or possibility for future advancement).
      
      
4. Professions are high-status, knowledge-based occupations that have five major characteristics: (a) abstract, specialized knowledge; (b) autonomy; (c) self-regulation; (d) authority; and (e) altruism.
   1. Reproduction of professionals: the emphasis on education provides a disproportionate advantage early in life to children whose parents are professionals. Race and gender also are factors in access to the professions.

2. Some professions are undergoing deprofessionalization, losing some of the characteristics of a profession
   
   
5. The term "manager" often is used to refer to executives, managers, and administrators who typically have responsibility for workers, physical plants, equipment, and the financial aspects of a bureaucratic organization.
   1. Scientific Management (Taylorism) was developed by industrial engineer Frederick Winslow Taylor to increase productivity in factories by teaching workers to perform a task in a concise series of steps; paying workers only for the number of units they produced also contributed to the success of Taylorism.

2. Mass Production through Automation (Fordism) incorporated hierarchical authority structures and scientific management techniques into the manufacturing process. Assembly lines, machines, and robots became a means of technical control over the work process.
   
   
6. Lower Tier of the Service Sector and Marginal Jobs
   1. Positions in the lower tier of the service sector are part of the secondary labour market, characterized by low wages, little job security, few chances for advancement, higher unemployment, and very limited (if any) unemployment benefits (e.g., janitors, waitresses, messengers, lower-level sales clerks, typists, file clerks, migrant labourers, and textile workers).
      
      
   2. Many jobs in this sector are marginal jobs that differ from the employment norms of the society in which they are located. In Canada, the employment norms dictate that a job should: (a) be legal; (b) be covered by government work regulations; (c) be relatively permanent; and (d) provide adequate pay with sufficient hours of work each week to make a living.
      
      
   3. More than 3 million workers were employed in the retail trade and other consumer services in 1991. Women are disproportionately likely to be in this sector of the labour market.
      
      
   4. Some manufacturing jobs also may be marginalized, especially in peripheral industries in highly competitive economic sectors (such as garment or microelectronics manufacturing).
      
      
7. Contingent work is part-time work, temporary work, and subcontracted work that offers advantages to employers but often is detrimental to the welfare of workers.
   1. Employers benefit by hiring workers on a part-time or temporary basis; they are able to cut costs, maximize profits, and have workers available only when they need them. In 1994, almost one million Canadians were temporary workers.

V. Unemployment

1. There are three major types of unemployment: (1) cyclical unemployment occurs as a result of lower rates of production during recessions in the business cycle; (2) seasonal unemployment results from shifts in the demand for workers based on conditions such as weather or seasonal demands such as holidays and summer vacations; and (3) structural unemployment arises because the skills demanded by employers do not match the skills of the unemployed or because the unemployed do not live where the jobs are located.
   
   
2. Structural unemployment often results from capital flight, the investment of capital in foreign facilities.

3. The unemployment rate is the percentage of unemployed persons in the labour force actively seeking jobs. In July 1996, 10 percent of the labour force was unemployed. The rate was higher for youth, disabled persons, and Aboriginal Canadians.

VI. Worker Resistance And Activism

1. Labour Unions
   1. Labour unions have been credited with gaining an eight-hour work day, a five-day work week, health and retirement benefits, sick leave and unemployment insurance, and workplace health and safety standards for many employees through collective bargaining-negotiations between labour union leaders and employers on behalf of workers.
      
      
   2. Union membership in Canada has declined during the 1980s and 1990s as economic recessions and massive layoffs in government and industry have reduced the number of union members and severely weakened the bargaining power of unions.
      
      
   3. Difficult times may lie ahead for unions. The growing diversity of the workforce, the increase in temporary and part-time work, the threat of global competition, and the replacement of jobs with technology are just some of the challenges that lie ahead.

VII. The Global Economy In The Twenty-First Century

1. The End of Work?
   1. Jeremy Rifkin feels that globalization, competition, and technology will lead to the end of work as we know it. He feels we are moving into a postindustrial, information-based economy in which factory work, clerical work, middle management, and many other traditional jobs will soon fall victim to technology.
      
      
   2. If Rifkin's analysis is correct, we must face two important questions: first, what does society do with the millions of people who are not needed by employers; second, how do we persuade the top 20 percent that receive the benefits of increased productivity to share those benefits with the other 80 percent of the population?
      
      
2. The trends examined in this chapter will produce dramatic changes in the organization of the economy and work in the next century. Workers increasingly may be fragmented into two major divisions-those who work in the innovative, primary sector and those whose jobs are located in the growing secondary, marginal sector of the labour market. Knowledge will increasingly become the factor that differentiates the rich from the poor.
   
   
3. Global Economic Interdependence and Competition
   1. Most futurists predict that multinational corporations will become even more significant in the global economy of the twenty-first century, and these corporations will become even less aligned with the values of any one nation.
      
      
   2. The chasm between rich and poor nations will probably grow wider as developed countries purchase fewer raw materials from developing countries and more products and services from each other.

3. A global workplace is emerging in which telecommunications networks will link workers in distant locations.

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