- Allows people to survive even without a

Soc Sci 2 central power

> SUPPLY AND DEMAND

Adam Smith - The Wealth of Nations

- what good

- Amount of good

Background: - At what price can the good be sold and people

- no one was talking about subsistence and are still willing to pay

politics

- DID NOT INVENT ECONOMICS — gathered all SUPPLY: amount of goods MADE AVAILABLE to
information about it
the public

DEMAND: the amount of goods the people

Political Enemy REQUIRE; needs and wants

- relationship of economics and politics

S > D = low price

• politics: taxation, authority

S < D = high price

• economics: market

- State and market interaction

* price indicates what a supplier can do

• What relationship between the state and the

market (economics and politics) is correct?
Law of supply and demand is self-correcting
1. Prevents over-pricing

History
2. Induces producers to produce products the
- no issue of subsistence due to abundance of society wants

resources
3. Tells you why high prices are self-curing
- No issue between supply and demand
diseases

- Began with Industrial Revolution

4. Explains why people in the same industries
have the same incomes and wages

CONCEPTS
* wage: daily, everyday work

1) Wealth * income: comes from profession; paid

- Sum of all goods the society consumes
for skills
- “GDP”

- Every produce of every citizen

4) Competition
- To be wealthier: increase production of - Work along with self-interest

- To avoid monopolies

every members of the society

5) Division of Labor
2) Self-interest
- Good
- Long process divided into smaller tasks

- Allows increase in production of every - “Men want to get the most of their time and
member
energy”

- Maximize their pursuance of self-interest

- Do what you’re good at doing

- ** leads to capitalism

a) increase efficiency of labor

3) Wealth is not constant b) Separate trade from industry

- Wealth is not in lands; wealth is in labor

• Some people are good at selling but not
- Value of something is dependent on labor
producing and vice versa

c) Advancement of society as a result of division

4) Laws of the market: SUPPLY AND of labor

DEMAND
- Allows members to pursue their self- Division of Labor

interests and still remain together

1. Increases dexterity: chances of committing a
- Guides others to pursue their self-interests mistake is slim to none

while satisfying others

2. time-saving: increases time for more work

3. Requires the application of machines

1
BOOKS David Ricardo - On the Principle of
Political Economy and Taxation
2) CAPITAL
- how to accumulate wealth

- How division of labor contributes to wealth

Background:
- 1772-1823

3) GOVERNMENT POLICY - Stock broker

- minimalist role of the government

- Where does the money go to?

- laissez-faire: let things be

- Distribution of wealth

- Capitalism and liberalism: little restriction from - England was getting wealthier but the
the government because free market people are still poor

encourages competition

CONCEPTS
Minimalist role of the government

a) defense from aggression

“Self-interest will give dire results when it comes
- Safe environment is good for business
to the distribution of wealth”

- Safety and development go together

- Internal and external safety

Free competition

b) Establish an exact administration of justice

1. Agricultural laborers: gives labor; gets wages

- People can be tricked

2. Capitalists: give capital; get profit

- Written contracts
3. Land-owner: give land; get rent

c) Maintenance of public works

- roads/bridges
• Farmers give more labor but they get the least

- Large storages
• Problematic distribution

5) TAXES 1) Law of rent

- revenue of the people
- Right to use; not rent to own

- Taxes and collection of taxes

- Periodic payments

- Land lease is longer because agricultural

Rules for Taxation
land needs more time to profit

a) taxes must be proportionate to income

- Ability to pay
Differential Rent

- Big income = large consumption of the - dependent on fertility of land

resources
- 1 hectare in Tuguegarao vs 1 hectare in
- Equalizing
Tagaytay

b) Amount must be certain and not arbitrary

- High rent is good as it may cheapen wages

c) Payment at a convenient time

- High rent = fertile = less cost in production
d) Collection must not be costly

- Tax payment thru banks

2) Landowner
- Gives the least effort

Invisible Hand
- Income is not affected by competition

- coordinates choices of people in the society

- “unique beneficiaries of the produce”

- Coordinates buyers and sellers without policies

- Landowner of quality land vs not

- No difference

- Lands are being converted to industrial if

they have low fertility

3) Law of diminishing returns

- Applies to lands

- Lands get less fertile as you use them

- More costly for capitalist

- More costly production

2
 - Increase wages (because of the cost of 11) Law of comparative advantage

living)
- Sometimes it’s more advantageous to
- Lower profits
import than export

- Trade 20 usd cost of beer production for 10

Interest of landowner is opposite with that of the usd beer from other countries; you can use
interests of the laborers and capitalists
the extra 10 usd for your production of
- capitalist: poorest
products you’re good at producing

- landowner: real winner

4) Undifferentiated units of energy

- Labor of farmers vs tailor

- farmers: “anyone can steer a carabao”

- tailor: how they make clothes differ

5) Natural price
- Refers to wages that are enough for one’s
substinence

6) Market price
- Actual amount paid to the laborer

NP > MP = misery
NP < MP = happiness

* laborers will either way still live in the margins

7) Laborers still live in the margins

- Addicted to the delights of society

- Fiesta after harvest

- Drinking

- Can’t be cured of their addiction

- Will buy TVs, washing machines, etc

instead of saving up

- Lots of children

- Will think of them as an extra hand to

help rather than an extra mouth to feed

8) Rise and fall of wages

- Not exempted from supply and demand

- Affects NP and MP

9) Capitalists
- Absorbs changes in the rent, cost of
production, and wages

- purpose: accumulate wealth and reinvest

them

- Capital is a form of preserved labor

10) Law of population

- Faster increase in population that
replenishing resources cannot catch up
anymore

- Population is a problem for capitalists

3
John Stuart Mill - Principle of Political 1. Competition

2. Customs

Economy
3. Slavery

4. Ownership of/by peasants (produce is not

Background consumed because it’s the same with
- workers own cooperatives that drive economic other peasants)

production

- Laws of distribution are created by man

** recognized that landowners are also capitalists

- Human laws and institutions = how wealth ** capitalists also put in labor

should be distributed

BOOK 3

CONCEPT
3) Exchange

1) Production - exchange and value

2) Distribution - Dependent on supply and demand

3) Exchange - Value is relative

4) Effect of social progress on products - How much one can save if he/she made it

5) Role of government - Depends on what it means for the quantity

of another

BOOK 1 BOOK 4
1) Production 4) Effect of social progress on products

- Requisites of production: labor, natural

objects, capital
A. Increase knowledge

B. Improved protection of citizens and property

Labor
C. Transformation of taxes

- agent of production
D. Avoidance of war

- Types of labor:
E. Increase prosperity of the people

a) labor that creates objects for human use (cut - More opportunities

tree to make a chair, plant for food)

- Don’t waste people’s labor

b) Labor that renders beings to be serviceable - Don’t provide useless jobs

(professions; teacher, doctor, guard)

- More effective employment

c) Labor that gives pleasure/entertainment F. Education

(prostitution, actors)
- More chances of better employment

- Problematic because entertainment/

pleasure is subjective
Social Progression is not infinite

- production may not improve anymore

Capital
- Capital should go back to the country

- accumulated stock of labor

- Productive employment
BOOK 5
- Saved wealth devoted to production
5) Role of government

- functions of the government

For production to work • Necessary: inseparable from the government;

- Cooperation
security: not privatized; private interests;
- Combination of labor
taxation: government has authority

- Identify production on a small and large scale

• Optional: subject to questioning

** production of land (limited by law of ** security: goes beyond physical security and
diminishing returns) vs production of labor and includes roads

capital
** distribution: governed by laws made by
humans

2) Distribution

- factors that affect property allocation/

distribution

4
Karl Marx and Friedrich Engels - The Economic Interpretation of History

Communist Manifesto 1. Primitive Communism

- Division of labor based on gender

Background - Private property: none

- Early Capitalism
- Raising of children is a community
- capitalists: capital
responsibility

- proletariat: labor
- No inequality - no domination

- Oversupply of labor
- Forces of production: labor and tools

- No safety standards
- relations: classless

- Children below 10 years old work

- Better dexterity than adults

2. Pastoralism

- Agricultural < industrial

- Domestication of animals

- Problems in sanitation lead to spread of - Private property: animals

diseases
- Relations: master and slave

CONCEPTS 3. Feudalism

1) Man - Domestication of plants

- Neither good nor bad

- Private property: land

- “man by nature is a producer”

- production: focused on land

- Materialist starting point

- Relations: lords and vassals; master and
- Different from animals
slave; guilds

- Conscious relationship with nature

** others

2) Man with nature - Merchants

- Transformative
- Family as the basic economic unit of society
- Change materials to get what you need
(land and inheritance)

- Behavior changes; works both ways

- State (product of feudalism)

- Nature will be manipulated by man

- Form government due to conflicts (used as an
instrument of oppression)

3) Man with other men

- Labor is social = related to production
4. Capitalism

- Social being
- “longest stage of human development”

- Private property: capital

4) Dialectical materialism
- How you produce what you need results to Classes
certain relationships of production

Capitalist proletariat

5) Forces of production (how) - Directing role

- Materials of production (tools, factories, - Sells labor

lands, and machines)

- Became undifferentiated; labor is now not
- Labor
unique

- Led to starvation wages

6) Relations of production - Wholeness of being an individual is being

- Social roles
exploited

- Property and class relations

- Technical relations
Proletariat

- lives so long as they can find labor

7) Base structure - Hired so long as they can add to capital

- economic, social, and cultural institutions

- Can complete human history: experiences total
alienation; totally dehumanized

8) Superstructure - Truly revolutionary

- politics, ideology, culture, and religion

- Unique consciousness

5
- Liberate humanity: nothing to lose; will fight all- - Capitalists eat each other

out
- Capital is accumulating only to fewer and
fewer people

** in the beginning, there’s a middle class: will be - Capital growth and growth in poverty

gone and will sink to being a proletariat

- Overproduction and underconsumption

- Imperialism becomes the endpoint: within the

Economic Theory of Marx
country, outside the society

- labor becomes a commodity

- 3 kinds of value
Emerging Militant Proletariat Class

- fearless forecast

1. Exchange value of labor

- War between capitalists and proletariats

- Smith’s natural price of wage

- Destroy all classes

2. Use value of labor

- Inevitably, proletariats will win via a violent
- Price of produce
revolution

3. Surplus value of labor

- UV - EV = SV
5. Socialism

- can happen through revolution of proletariat vs

Doctrine of Surplus Value
capitalism

- surplus value: beyond necessary; acquired - Bloody revolution

without compensation and through the work of - Why do you have to kill?

others
- Change the system entirely and they are still
- Kind of theft because the surplus value does a part of the system if they are still alive

not go back to the laborers, but to the

capitalists
Proletariat becomes the ruling class

- main purpose of the state is to liquidate the

Crisis of Capitalism
assets; political supremacy

- own structure of capitalism will destroy it

- Centralize production: 10 planks of socialism

1. Alienation of Proletariat 1. Abolish property and land ownership

A. Alienation from the product of your labor: - Main factor of production

creator normally lords over his creation

2. Heavy, progressive tax

B. Alienated from yourself: labor is an - Too expensive to retain private property

expression of who you are; labor 3. Abolish inheritance

becomes a means of survival and - Perpetuating private property

humans have become an appendage of 4. Confiscate all properties immigrants and

the machine
rebels

C. Alienated from your nature: person is not - Rebels are capitalists

meant to work all the time; balanced life; 5. Centralization of credit in the state

it now becomes work and preparing for - Interest is paid back to the state

work
6. Centralization of communication and
D. Alienated from other men: proletariat transportation

don’t have anything in common with - Still a form of property

capitalists; see other proletariats as - Control information

competition
- Divide population

7. Extend factories and instruments of

2. Capitalism’s doom production

- Practical opportunity for the revolution

8. Equal obligation of everyone to work

- Capitalism must be in a crisis

9. More equal distribution of the population

- Threatened by internal contradictions

10. Free education and abolition of child labor

- Phenomenal productive growth :

decreased number of people who can ** socialism = pre-communism

afford to buy
- Shortest

- Wealth and property

- Cleaning society of all traces of capitalism

6
- Means of production is owned by the state
Max Weber - The Theory of Social and
Economic Organization
Communism

- bring back the “charm” in your labor

- Able to do whatever you want, not necessarily Background

what you’re good at
- German

- Everything is owned by the state

- Mother: protestant

- The state provides everything

- Studied law

- May lead to tyrannical rule

- Contrary to human nature

Virtue of Capitalism

- We do better when we are rewarded

- capitalism is actually good but people turned it
- Tend to relax when we’re given even without into about greed

working hard
- Related to productivity

- Culmination of our development

- Similar to Plato and expects humans to mature

Catholicism: too relax

- Classless society
Protestantism: favored because it has slightly
- No class conflict
more religious control

- No exploitation because everyone’s wants is

satisfied
Modern Capitalism — moral

Man becomes a master of his own identity

Protestants

1. No private capital
- special tendency to develop economic
2. No private family: originally in history, there’s rationalism

really no family
- Satisfaction comes from wealth creation and
3. No nationality: red earth; all proletariats not materials obtained from wealth

around the world are revolutionizing

- Work and business: give glory to God —
4. No religion: “opium of the masses”; provides different outlook in life and work

an illusion that hinders people from being

truly happy
1. Love for hardwork

2. Hate for wasteful time

The State will disappear

3. Absolute control over self (body and
- remove state as a tool of oppression; so it still emotions) — control their appetites

exists
4. Profit: productive use of resources

- Administration of production
5. Proving one’s faith in worldly activity

Economic Activities
The idea of having a ‘calling’
- more organized
- idea of pre-destination

- Production is for everyone

- Live your life as if you’re one of the chosen few
who can go to Heaven

Absence of alienation
- A “spotless”, “well-ordered” life — extreme
self-control

Everything is owned in common

1. Self-limiting consumption

Criticisms of Marx’s theory 2. Compulsion to save

1. Contentment does not come from material

things alone
* Strongly-shaped characteristics by religion can
2. No blueprint of how to implement it
affect wealth production

* Protestant ethic matched well with capitalism

CONCEPTS

1) Legitimate Order
- Picking your nose at a certain place only is
not in the law

7
Legitimacy vs Legality
Authority: legitimate use of power

- legitimacy: includes others; may be formal or - e.g. parents can exercise power and authority
not
over you

- legality: in the laws

Ideal types of authority

Legality vs Morality

- the case of death penalty

a) Traditional authority

- Based on traditions; tribes

Legitimacy
- e.g. gerontocracy, patriarchalism,
- rightness to command
patrimonalism

- e.g. Marcos won but the people don’t want to - Based on traditional rights

follow him
- e.g. at home father is always followed

b) Charismatic authority

Order
- Personal qualities over a person

- Structure
- Easy to harness but also very tricky

- Guidelines
- Rests on the appeal of leaders

- e.g. you can’t take food from people you just c) Rational-legal authority

met
- Most stable

- categories:
- Authority is backed up by law

- Convention
- Law is impersonal (in theory)

• Customs and traditions from older - constitution, political procedures, elections

generations
- Clear and legal basis of exercising authority

• Established

• e.g. “mano po”

- Law
3) Bureaucracy
• Result of people’s consensus
- each section, division, office, department —
• Provides what you can and can’t do
have their own goals

• Formal
- Coordinated within the same department

- Larger — more bureaucratic

Why do we obey?

— bases for legitimacy

Character traits of Bureaucracy

1. Hierarchical

1. tradition: confusing; concept behind is not - Different levels of authority

clear; you may be just doing it for the sake of - Higher you go, more authority

doing
2. Impersonal

2. Affectual attitudes: emotional attachment; - Goal-oriented

loyalty; “utang na loob”

- Rules should not favor anyone

3. Rational beliefs: you hate a person who was 3. Written rules of conduct

an organization who pursues justice; opposite - Do’s and dont’s

of affectual attitudes; believe in the principles

- Compatible with the rules of the department

4. legality: the law; immaterial of fear or loyalty

4. Meritocracy

- Promotion based on merit

2) Authority - Irregardless of the person

5. Specialized division of labor

Book: Three types of legitimate order

- Work is compounded

- viewpoint of why you have authority over a - Data goes up, policy goes down

person
6. Efficiency

- Power vs authority

Power: realize your will over the resistance of

another; make them do something even if they
don’t want to; make use of force

8
Emile Durkheim - The Division of - Humane and secular belief system: less
religious; more dependent on science; reason
Labor in Society

vs revelation

- Religion of individualism: labor becomes more

Background
and more individualized

- French sociologist

- Jewish
3) Social cohesion
- Family of rabbis
- Division of labor determine the relations of
friendship

CONCEPTS
- Does not solely concern the exchange of
1) Division of Labor in Society goods and services (solidarity and
- Creates social harmony
coherence among friends)

- Characterized by cooperation
- Difference merge together only when they
- Separation and specialization of work complement

among people

- Society is becoming more and more

specialized

2) Functions of Division of Labor

- Necessary conditions for development and
progress

- Source of civilization

- Increased wealth

- Material and intellectual development

- Form of social solidarity

3) Solidarity
- Has two types: Mechanical and Organic

Mechanical Solidarity

- principle of resemblance: people do the same

things; it’s okay if someone dies

- Segmental social structure

- Little independence with each other

- Low population and density

- Repressive penal laws: not allow different

attitudes

- Does not thrive in diversity; thrives in uniformity

- “replacement parts”

Organic Solidarity

- rests on division of labor

- Society will not thrive in similarity of skills

- Organized social structures

- Fused market and growth of cities

- Interdependence: so many needs and not all

can perform for these needs

- High population and density

- Restitutive law: restore what the person lost;

replacement is hard to find