Transcript THE SOCIAL INSTITUTION RESPONSIBLE FOR ORGANIZING THE PRODUCTION, DISTRIBUTION, AND CONSUMPTION OF GOODS AND SERVICES.

THE SOCIAL INSTITUTION RESPONSIBLE FOR
ORGANIZING THE PRODUCTION,
DISTRIBUTION,
AND CONSUMPTION OF GOODS AND SERVICES
Social Institution
• A stable and widely accepted cluster of values,
norms, statuses, roles and groups that develops
around a basic need in society. As such, an
institution is a complex phenomenon, much more
complicated than the mere sum of its parts.
• Major Social Institutions:
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The economy
The political system
Religious systems
The educational system
The health system
The family
Social Institutions Are the
Environment which Influence, and
Give Meaning to, the Individual
Social Institutions
• INSTITUTIONS
• Organized patterns of beliefs and behaviors centered
on basic social needs, adapting to a specific segment of
society in question--rural doctor vs. urban specialist.
• Functionalism:
• Interrelated and interdependent, resist change,
integrated, promote stability. Focus: How they fulfill
essential system requirements, Self-correcting;
– Replacing personnel
– Teaching new recruits
– Producing and distributing goods and services
– Preserving Order
– Providing and maintaining a sense of purpose
Social Institutions
• INSTITUTIONS
• Conflict:
• The outcome and functioning of institutional structures
is not necessarily efficient nor desirable.
• Order is negotiated, but not all groups have equal
footing.
• Organization of major institutions is built upon the
interests and control of dominant groups. Preserve
status quo, inhibit change by maintaining relationships
of inequality in Schools, Politics, Economics. (Source of
Social Problems)
Social Institutions
• INSTITUTIONS
• Symbolic Interaction:
Workers engage in informal interactions to structure
their work environment reality
Communication: formal vs. informal: a remark by
corporate executive becomes viewed as an order,
nurses making decisions for doctors.
Real and varied negotiations over roles and status
Historical Review of the Economy
• Agricultural Revolution (roughly 5,000 years ago)
– Four factors gave rise to the economy as a social institution
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Agricultural technology - surplus of food
Specialized work – Artisans and tradespersons; not everyone needed to produce food
Permanent settlements- people could lead more stable lives
Trade – the exchange of surpluses, or other valuables could occur between settlements
• Industrial Revolution
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New sources of energy
Centralization of work in factories
Mass production
Over-specialization – artisans used to make entire product at home; now a worker only one small
part
– Wage labor
• Post Industrial Economy
– From tangible products to ideas
– From mechanical skills to literacy skills
– From factories to ……………….. anywhere
The Transformation of the
Medium of Exchange
• The Medium of Exchange - the means by
which people value and exchange goods
and services.
• Mediums of exchange have progressed over
time:
– Barter - direct exchange
– Money - places a value on items.
– Debit cards and E-cash - digital currency.
ECONOMIC EXPANSION
KEY FACTORS:
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AGRICULTURAL TECHNOLOGY
PRODUCTIVE SPECIALIZATION
PERMANENT SETTLEMENTS
EXPANDED TRAVEL AND TRADE
WORK WORLD BECAME SEPARATE
FROM THE WORLD OF THE FAMILY
• COTTAGE INDUSTRIES FLOURISHED AS
PERSONS WORKED AT JOBS AND IN
HOMES PRODUCING MARKET GOODS
Preindustrial Societies
• The earliest human groups had a subsistence economy,
living off of the land.
• Horticultural societies began breeding animals and
cultivating plants.
– This allowed them to settle in one area.
• Agricultural societies formed after the invention of the
plow, and individuals created more than what was needed
for survival.
– This surplus led to a division of labor and social
stratification; class and caste.
TERMINOLOGY
• SOCIAL STRATIFICATION
– THE DIVISION OF SOCIETY INTO RANKED
CATEGORIES OF PEOPLE
• EACH ENJOYING DIFFERENT LEVELS OF
ACCESS TO SCARCE AND VALUED
RESOURCES
– CHIEFLY PROPERTY, PRESTIGE, AND SOCIAL
POWER
• SOCIAL CLASS
– A CATEORY OF PEOPLE WHO SHARE A
COMMON POSITION IN A VERTICAL
HIERARCHY OF DIFFERENTIAL SOCIAL
REWARD
• STRUCTURED SOCIAL
STRATIFICATION
– WHEN STRATIFICATION IS BUILT INTO
SOCIETY
• AS WITH THE AMERICAN CLASS SYSTEM
CLIMBING SOME
LADDERS IS MORE
EASILY DONE THAN
CLIMBING THE
LADDER OF SOCIAL
SUCCESS!
INDUSTRIALIZATION INTRODUCED FIVE
NOTABLE CHANGES TO WESTERN SOCIETIES
• NEW FORMS OF ENERGIES
– STEAM-FUELED MACHINE OPERATION
• CENTRALIZATION OF WORK
– IMPERSONAL FACTORIES REPLACED COTTAGE INDUSTRIES
• MANUFACTURING AND MASS PRODUCTION
– TURNING RAW MATERIALS INTO A WIDE RANGE OF
PRODUCTS
• SPECIALIZATION
– DIVERSE DIVISION OF LABOR AND LOWER OVERALL SKILL
REQUIREMENTS
• WAGE LABOR
– WORKING FOR STRANGERS WITH INTENSE SUPERVISION
• POSTINDUSTRIAL ECONOMY
– BASED ON SERVICE WORK AND HIGH-TECH
• FROM THE TANGIBLE TO THE INTANGIBLE
– CREATING AND MANIPULATING SYMBOLS IN
MODERN SOCIETY
• MECHANICAL TO LITERACY SKILLS
– SPEAKING, WRITING, AND COMPUTER
KNOWLEDGE
• DECENTRALIZATION OF WORK
– FLEX-TIME, FAX MACHINES, “OFFICE ON THE
GO”
SECTORS OF THE ECONOMY
SUCH EVOLUTION ALSO IMPACTED ECONOMIC SECTORS
• PRIMARY SECTOR
– GENERATION OF RAW MATERIALS FROM THE
ENVIRONMENT
• LOW INCOME COUNTRIES = 63% OF ECONOMY
• HIGH INCOME COUNTRIES = 4% OF ECONOMY
• SECONDARY SECTOR
– TRANSFORMATION OF RAW MATERIALS INTO
MANUFACTURED GOODS
• GROWTH RAPID IN ALL INDUSTRIALIZED NATIONS OR THOSE
ENTERING THE PHASE
• TERTIARY SECTOR
– ECONOMY GENERATES SERVICES RATHER THAN GOODS
• LOW INCOME COUNTRIES = 22% OF ECONOMY
• HIGH INCOME COUNTRIES = 70% OF ECONOMY
SIZE OF ECONOMIC SECTORS
by Income Level of Country and Percent of Economic Output
70
60
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40
30
20
10
0
68
63
32
15
22
40
28
28
4
Low-Income
PRIMARY SECTOR
Middle-Income
SECONDARY SECTOR
High-Income
TERTIARY SECTOR
Estimates based on The World Bank, 1995
Economy and Society
• Economy – the organization of the means by which
necessary and/or desired goods and services are produced
and distributed among the members of a society or a group
within that society
• Capitalism – an economic system in which the means of
production are privately owned and market forces
determine production and distribution
• Socialism – an economic system in which the means of
production are collectively owned and the state directs
production and distribution
CAPITALISM
• PRIVATE OWNERSHIP OF
PROPERTY
– KEY CONCEPT OF CAPITALISM
• PURSUIT OF PERSONAL PROFIT
– SIMPLY A “MATTER OF DOING
BUSINESS”
• FREE COMPETITION
– THE “INVISIBLE HAND” IS AT WORK
SO LEAVE THE MARKET ALONE
Economy and Society
• The Spirit of Capitalism
• Adam Smith – “The Wealth of Nations “ Every individual
endeavors to employ his capital so that its produce may be of
the greatest value. He generally neither intends to promote
the public interest nor knows how much he is promoting it.
He intends only his own security, only his own gain, and he is
thus led by an invisible hand to promote an end which was
no part of his intentions.” Which hand is it?
Economy and Society
• The Spirit of Capitalism
• “Rational Choice” an individual’s choice, if unfettered by
external forces, will be rational, and based upon their
perceptions of what is best for themselves. Adam Smith
introduced this concept when arguing for capitalism.
Acceptance of the rational choice model requires
additional assumptions that are macro in nature, as they
claim influence upon most of the social institutions which
make up any society.
How does one make a “rational choice”?
Who decides what
choices we have?
How does the
process occur?
What is rational?
Economy and Society
• The Spirit of Capitalism
• Capitalism rests on principles that are supported by rational
choice theory. These principles include:
– Free-Market Competition – economic forces will guarantee the
greatest good for the greatest number of people (utility) within a society,
provided that the government does not compete with , or hinder, private
enterprise; laissez-faire *
– Private Ownership – private individuals, alone or in groups, own the
means of production
– Pursuit of Profit – the pursuit of profit will produce the greatest good
for the greatest number of people because it ensures that successful risk
takers earn profit, the consumer saves money, and the society becomes
more efficient and vigorous
– * Marx asserted that un-regulated capitalism contained the forces
which would be self-destructive; greed and power.
• COLLECTIVE OWNERSHIP
– LIMITS THE RIGHT TO OWN
PROPERTY
– FORM A CLASSLESS SOCIETY
• PURSUIT OF COLLECTIVE
GOALS
– PURSUIT OF PROFITS STANDS AT
ODDS WITH COLLECTIVE GOOD
• GOVERNMENT CONTROL OF
THE ECONOMY
– CENTRALLY CONTROLLED
ECONOMY
– CONSUMERS SHOULD NOT DRIVE
ECONOMY (WHY?)
Economy and Society
• Socialism
• Under socialism the government plays a direct role in the
economy by assuming ownership of a society’s strategic
businesses, industries, and resources
• In theory, the means of production are held in trust by the
government for the benefit of all citizens
• An item’s value is based upon the work that goes into it; profit
is excess value withheld from the worker (Marx)
• Criticisms of Socialism
– Socialism merely replaces the forces of competition with the
forces of vast bureaucracies in order to control the economy
– Socialism leads to a lack of incentive and creativeness
– Socialism tends to be more resistant to adaptation and change
than capitalism
CAPITALISM
• ECONOMIC PRODUCTIVITY
– GDP IS $13,500.00
• ECONOMIC EQUALITY
– MORE INCOME DISPARITY
• OVERALL WELL-BEING
– A HIGH QUALITY OF LIFE,
BUT GREATER DISPARITIES
• PERSONAL FREEDOMS
– ARE THE HEART OF A
CAPITALISTIC SYSTEM;
THE NEED CREATIVE
FORCES
SOCIALISM
• ECONOMIC PRODUCTIVITY
– GDP IS $5,000.00
• ECONOMIC EQUALITY
– LESS INCOME DISPARITY
• OVERALL WELL-BEING
– LOWER STANDARDS OF
LIVING, BUT LESS DISPARITY
• PERSONAL FREEDOM
– STRESS IS PLACED UPON
FREEDOM FROM BASIC
NEEDS
MANY SOCIALIST ECONOMIES HAVE FAILED DUE TO
UNDERPRODUCTION, LOW LIVING STANDARDS, LARGELY
INEFFECTIVE CENTRAL GOVERNMENTS, AND OVERLY
RIGID CONTROL OF INFORMATION AND PERSONAL MOVEMENT.
Economy and Society
• Unemployment and Profits
• Case study, last page of handout
• What are the social costs of profit achieved by the elimination of jobs?
• What are the corporation’s responsibility to society for the social
consequences of downsizing?
• How does the fact that businesses create jobs, generate income, pay taxes,
and infuse the culture with new technology answer some of the above
questions?
• How does the anxiety of job loss, either real or imagined, affect the individual
worker, the social interaction between workers (competition), and the
relationships between management and line employees?
• Are unions a means for the workers to eliminate some of the negative aspects
of competitive capitalism? Are they functional, even to those who own the
majority of the assets of our society?
The Future
• Trade among nations will increase greatly.
• Not all nations will benefit equally.
• Computer driven production will continue
to reduce the number of workers needed.
• Technology also creates new jobs.
• Our future will consist of a divided society;
a small affluent group and a larger less
affluent group. (What do you think?)
THE WORKFORCE
• THE DUAL LABOR MARKET
– PRIMARY LABOR MARKET
• EXTENSIVE BENEFITS TO WORKERS
– SECONDARY LABOR MARKET
• MINIMAL BENEFITS TO WORKERS
• LABOR UNIONS
– ORGANIZED LABOR SEEKING BETTER WAGES
AND BENEFITS FOR MEMBERS
– DECLINE OF UNIONS
• LOSS OF HIGHLY UNIONIZED JOBS
• CONCESSIONS HAVE INCLUDED DISSOLUTION OF
UNIONS
• MANY TEMPORARY WORKERS THESE DAYS
• TRAITS OF PROFESSIONALS:
– THEORETICAL KNOWLEDGE
• EXTENSIVE SCHOOLING
– SELF-REGULATED TRAINING
• PARTICIPATION IN ASSOCIATIONS
– AUTHORITY OVER CLIENTS
• FOLLOW MY SUGGESTIONS
– ORIENTATION TO COMMUNITY
• NOT THE PAY, BUT THE HELP
• PARAPROFESSIONALS
– NOT ABLE TO CLAIM FULL
PROFESSIONAL STATUS
• SELF-EMPLOYMENT
– EARNING A LIVING WITHOUT WORKING
FOR A LARGE CORPORATION
• WOMEN FIND FREEDOM AND OPPORTUNITY
Work in U.S. Society
• Today, farmers make up just over 2% of the
work force.
• The Quiet Revolution - the many women
who have joined the ranks of paid labor.
• The Underground Economy - activities that
people do not report to the government.
• Teleworking - our current technology has
allowed several million workers to return
home.
TO HAVE OR NOT HAVE TECHNICAL EXPERTISE
…THAT WILL BE THE QUESTION IN THE FUTURE
COMPUTERS ARE:
“Conflict model”
• “DE-SKILLING” LABOR
– MACHINES MAKE DECISIONMAKERS OBSOLETE
• MAKING WORK MORE
ABSTRACT
– UNDERSTANDING RATHER
THAN “DOING”
• LIMITING WORKSPACE
INTERACTION
– ISOLATES WORKERS
• INCREASING CONTROL
OVER WORKERS
– ELECTRONIC MONITORS
AN ORGANIZATION WITH A LEGAL EXISTENCE, INCLUDING RIGHTS
AND LIABILITIES, APART FROM THOSE OF ITS MEMBERS
• ECONOMIC CONCENTRATION
– IN 2002, WAL-MART WAS THE LARGEST
• $214 BILLION IN REVENUE
• 700,000 EMPLOYEES
• CONGLOMERATES - SEVERAL SMALLER CORPORATIONS
– STRATEGY FOR DIVERSIFYING
– INTERLOCKING DIRECTORATES
• COMPETITION IS A GREY AREA
– MONOPOLY: DOMINATION OF A MARKET BY ONE CORPORATION
– OLIGOPOLY: DOMINATION OF A MARKET BY A FEW CORPORATIONS
– Globalization????
Economy and Society
• Sociological Analysis of the Economy
• Functionalism
• Social stability is achieved by an efficient distribution of goods and services,
the production of wealth and power on a large scale, and, innovation and
change which obviates the necessity of a revolution.
• Conflict
• Capitalism creates an inequity of wealth and power that benefits an elite. This
elite not only controls the corporate world, but also uses their resources to
influence the political order for their own interests, at the expense of others.
• Symbolic Interaction
• Career socialization can lead to multiple outcomes for the individual, and
businesses and the media create role models and ideas about work and what
that means to individuals. Governments also work to create loyalty to specific
economic systems for both idealistic and pragmatic reasons.
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CEO Cash and Stock-Based Compensation Changes, Layoff Decisions, and Shareholder
Value (2007)
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Jeffrey T. Brookman
University of Nevada, Las Vegas
Saeyoung Chang
University of Nevada, Las Vegas - Department of Finance
Craig G. Rennie
University of Arkansas - Sam M. Walton College of Business
Financial Review, Forthcoming
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Abstract:
The CEOs of firms announcing layoffs receive 22.8% more total pay in the subsequent year
than other CEOs. These pay increases result almost entirely from increases in stock-based
compensation and are found to persist. In addition, layoff announcements are accompanied by
shareholder value increases averaging $40 million to $95 million. One-time labor cost savings
from layoffs average $65 million. We conclude CEOs receive pay increases following layoffs
as rewards for past decisions and to motivate value-enhancing decisions in the future.
Keywords: Corporate Governance, Compensation, Layoffs
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JEL Classifications: G34, J33, J63
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Accepted Paper Series