Chapter 2

Wealth and Power: The Bias of the System - More on Chapter 2

Book s Thesis
n

n n

P. 30: The thesis of this book is that the problems of U.S. society result from the distribution of power and the form of the economy. Eitzen et al argue that to understand social problems one must examine the political and economic realities of interest groups and also power, powerlessness, and domination .the state is not a neutral agent of the people but its biases in favor of those with wealththe upper social classes and the largest corporations. Contrary to popular belief, the authors claim that the U.S. system does not produce a society that is democratic, just , and equal in opportunity. Rather, we find that the United States is an upside-down society, with the few benefitting at the expense of the many. Our society itself is the source of social problems. Part of the problem is our mode of economic production

Modes of Production: Capitalism

Capitalism: a mode of economic production whose basis is the private ownership of capital. An economic system in which capitalists own the means of production (land, machines, factories, commercial enterprises,) and distribution, and are able to purchase the labor of others, i.e., workers/proletariat. Economic development is proportionate to the accumulation and reinvestment of profits gained in a free market. (True modern capitalism occurred in 19th century USA and Europe)

Capitalism cont.
n

Capitalism depends on three conditions:

1. The private ownership of property 2. The pursuit of maximum profit 3. Competition based on the economic principles of supply and demand These principles come from .

Adam Smith (17231790)

n

A Scottish political economist philosopher, considered to be the father of modern capitalism Smith argued that the laws of the marketplace regulate prices and product-quality and that the concept of competition summarizes the basis of the laws of the marketplace.

Laissez-faire
n

Smith also argued for what has come to be known as laissez-faire, a government policy of allowing the marketplace to operate unhindered
In his view, a government policy of laissez-faire is needed for the three conditions of capitalism to work effectively

Economic Models: Welfare Capitalism: The USA

Welfare capitalism is a system of private, employer-based social welfare provisions that first gained prominence in the United States from the 1880s through the 1920s. Promoted by business leaders during a period marked by widespread economic insecurity, social reform activism, and labor unrest, it was based on the idea that Americans should look not to the government or to labor unions but to the workplace benefits provided by private-sector employers for protection against the fluctuations of the market economy. According to its proponents ,welfare capitalism was a new, more enlightened kind of capitalism, based on the ideals of corporate social responsibility and business-labor cooperation rather than unfettered individualism and class conflict.

Welfare Capitalism cont.

It was also a way to resist government regulation of markets, independent labor union organizing, and the emergence of a welfare state. For all its promise of industrial harmony, welfare capitalism was a way to keep private employers firmly in control of labor relations. Read more: http://www.answers.com/topic/welfare-capitalism

Critiques of Capitalism
n

there are many

These include:

Exploitation, greed, corruption, undue influence over people s livelihoods and over community, social institutions such as the government, media, education systems, health care, legal system. In short, the conditions that lead to the creation and perpetuation of many social problems.

Karl Marx
n

Karl Marx is the most famous critic of capitalism, outlining his objections in the Communist Manifesto of 1848 (at the same time Dickens was writing about exploitation of the poor and working class in England).

Karl Marx s Contributions to Sociology

1. Origins of the present conflict model of society 2. The insight that power originates in economic production and the basis of social order is the production of economic goods 3. The theory that social change is based on antagonism between the social classes and is evolutionary as human societies develop and move from one mode of economic system to another. Just as feudalism gave way to capitalism, In Marx s model, capitalism would give way to socialism, which would eventually give way to communisma utopia of communal living and ownership of the means of production with no state. So far, there has never been a communist state.

Marx s contributions cont.

4. False Consciousness: Ultimately many workers develop false consciousness, a state of mind where they work against their own class interests, adopting the values of capitalists. In other words, they may not be aware of their exploited position and their common plight.

Marx cont.
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5. Superstructure: Marx is also responsible for the insight that the social class that owns the means of economic of production molds societal values and non-economic institutions, such as education, religion, family, media, and government to maintain its control over the means of production.

Marx cont.
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Marx claimed that the economic base of a society is manifested in this superstructure of society. For example, individualism and competition are highly cherished American values because they help to preserve the status quo and are used to justify the huge economic chasm between the rich and the poor in the USA; they are reflected in the tendency to blame the poor for being poor; in such axioms as pull yourself up by your boot straps, when the going gets tough the tough get going, winner take all mentality, and glorification of rags to riches stories and the self-made person.

Marx cont.
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Marx was concerned about the social origins of worker alienation, i.e., being alienated from one s work, alienated from the product created by one's labor (whatever the product is, from a thing to a service), alienated from humanity, and alienated from the human species. Marx argued that human beings are creative beings and that when they are denied their creativity, they become alienated an unhealthy, undesirable condition that prevents the exercise and fulfillment of human nature..

Marx Cont.
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Class Consciousness: Marx was interested in developing worker class interests by helping them develop what he called Class Consciousness. Class Consciousness is a state where the working-class would become a class of themselves and for themselves.
To be a class of themselves, members of the working-class would have to realize that they are being exploited and to organize politically to change the laws of society. To be for themselves, the working-class would be conscious of their position and therefore, the working class would naturally do something to stop the exploitation.

Marx Cont.
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The union movement is an example of workers working for their class interests. Marx would argue that workers demanding universal health care as a right of citizenship is working for one s class interests and would argue that for a worker to believe otherwise is false consciousness, as is the demonization of unions by non-union workers, state and federal governments, etc.

Economic Systems: Socialism

n n

Socialism: state ownership of capital Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy. The stage in Marxist-Leninist theory intermediate between capitalism and communism, in which collective ownership of the economy under the rule of the proletariat has not yet been successfully achieved.

Socialism
n

Socialism depends on five basic principles: 1. Democracy: an unyielding and uncompromising reliance upon the wishes of the public to determine the policies and practices of the state, the workplace, the schools, and the community 2. Egalitarianism: a commitment to equality of opportunity, equality in decision-making, and equality in sharing the benefits of society. The key is when all citizens receive the necessities of life

Socialism Cont.
3. Community: the means of cooperation and a sense of belonging 4. Public ownership of the means of production 5. Planning for common purposes to assure society that chaos, institutional coordination, and undue favoritism will not occur

Socialism cont.
n

There are very few socialist states: the People s Republic of China, Cuba, Laos, and Vietnam; past socialist states, include: Soviet Union, Czechoslovakia, East Germany, and other former eastern block states.

Critiques of Socialism
It minimizes individual freedom and choice n Government monopoly is inefficient n Taxes are too high n Motivation to succeed is stifled n These conditions create economic mediocrity
n

Social Democracies: Social Welfare States

n n

Mixture of capitalism and socialism (often wrongly called socialist or even communist) These follow the principles and policies of a social democratic party. States with prominent social democratic policies and parties: Sweden, Norway, Iceland, Denmark, Finland, Netherlands, Canada, Germany, Ireland, Israel, Japan, Italy, Switzerland, UK, and South Africa. (see Ch 1, p. 13) The USA is the only post-industrial society without a strong social democratic party.

Social Democracies cont.

n

Features: Social subsidies include: extensive support for the arts, public spaces, universal preschool education, housing, subsidies, healthcare, childcare facilities, and extended unemployment benefits Progressive taxation funds the state, as do sales and payroll taxes.

The U.S. Economy

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While the USA can be defined as a welfare capitalist economic system, make no mistake that there is a concentration of private and corporate wealth. Corporate wealth is seen in (p. 31-34) Monopolistic Capitalism Megamergers Interlocking Directorates

Interlocking Directorates defined

Direct Interlock: the linkage between corporations that results when an individual serves on the board of directors of two companies n Indirect Interlock: when two companies each have a director on the board of a third company
n

Transnational Corporations
American companies are expanding in overseas markets because profits tend to be higher n Semi-skilled and skilled jobs shift from U.S. to other countries n Wield power over world s economy.
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Concentration of Corporate Wealth

n

Real wealth is concentrated among a few individuals and corporations: examples in the book .p. 37)

Concentration of Private Wealth and Income

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Examples in the book

..(p. 37-38)

Consequences of Recent Tax Policies (p. 40)

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Exacerbate the unequal division of wealth in the United States, which is already the most unequal in the Western world Increase the national debt Reduce government spending for programs for the less fortunate Weaken public institutions that benefit society

Government by Interest Groups

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Special interest groups violate the principle of democracy Special interest groups deflect the political process for their own benefit Lobbyists speak only for the interests of the group they represent, not for the American people. Over time they have become more influential in federal governance.

Financing Political Campaigns

Campaign financing is one of the most undemocratic features of U.S. political system n Campaigns are funded by candidates and special interest groups n Contributors gain access to, and influence over, politicians and the votes they cast in the legislature
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Candidate Selection Process

n

Being wealthy or having access to wealth is essential The two-party system limits choices among candidates and creates a winner take all political system

Bias of the Political System

1.

Systemic imperatives: the economic and social constraints on political decision makers that promote the status quo: recent examples.
1. Bailouts, etc. and the awarding of record bonuses in US banking.

Power
2. The ability to get what one wants from someone else, by force, authority, manipulation, or persuasion

Government Aid
3. To the poor: only when the poor constitute a threat 4. To businesses: corporate welfare, subsidies and trickle-down economics (also known as voodoo economics as the rich have become increasingly richer since 1980 and the rest of the USA, less well off). See Table 2.1, p. 39.

Powerless Bear the Burden

n

n n

During wartime, the military draft affects the poor disproportionately and also recruits disproportionately from working and poor classes. The poor absorb the costs of societal changes Unemployment is maintained as government policy and in times of economic prosperity can be called healthy, as it keeps wages down, workers competing for jobs, etc.

Foreign Policy as Corporate Benefit

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n n

Military goods are sold to foreign governments, which benefits U.S. defense contractors U.S. supports foreign governments that support American corporations, even if the foreign government is tyrannical U.S. intervenes in foreign countries if U.S. business interests are threatened. USA gives billions of dollars in foreign aid to countries that then loan the money back to us, increasing national debt.

Bias Of The Current Political Economic System

It makes it harder for the government to solve social problems n The have-nots of society are not represented among the decision makers n The money chase creates part-time elected officials (on two or four year terms) and full-time, permanent fund raisers.
n

Bias Of The Current Political Economic System (Cont )

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Money diminishes the gap between the two major political parties; contrary to political and media rhetoric, the USA twoparty system creates political parties that are fundamentally not that different. The money chase in politics discourages voting and civic participation Special interest groups get special access to decision-makers and receive special treatment from them