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of material goods ADAM SMITH (1723-1790) – THE WEALTH OF NATIONS -during Scottish Enlightenment (burst of intellectual activity) -concept of wealth was revolutionized Mercantilism -wealth of nations based on golds -nationalist/protectionist -pro-exporting, anti-importing (coming-in of money) -purpose is to get as much wealth as you can -aim is to maximize the flow of gold Physiocrats -criticized the monopoly of trade -wealth is not constant (because the wealth of nation is based on land, to increase it conquer other land) -if you‟re the state, you should ensure that everyone can maximize their interest -Smith wanted to show that the pursuit of individual self-interest, under competitive nature it can promote harmonious order self-interest + competition = harmonious order 1. How is it possible that when you pursue your self-interest, you are still with other people? 2. How is it in the pursuit of your self-interest, you also pursue the interest of other people? 3. How does as society survive, ____ Answer: because of the law of the market Law of Supply and Demand -it will tell you what goods to produce, quantity and prices competition – „coz we‟re competing with one another, important to balance the self-interest -beauty: 1. prevent over-pricing 2. producers are now induced to what society needs 3. explains why high prices is a self-curing (?) disease -since we‟re economic man by nature, we know what‟s best for us Invisible Hand -comes from the market -coordinates the independent decisions of the buyers -automatic, equalib___ -not the government, it‟s nothing -makes sure you get what you want from the market -…. specialization Division of Labor -revolutionizing the process -you have the tendency to do your best 1. led to increase in the production labor 2. led to the separation of trade and industry 3. there was the advancement of societies ^why? – dexterity. time-saving = required the application of machines requirements: 1. there must be a sufficiently large markets for your goods 2. there must be advance in transportation and communication -role of the gov‟t when it comes to the market none (laissez-faire, let them be alone) 3 Duties of the Gov’t When It Comes to the Market 1. must provide defense from oppression/aggression 2. establish an exact administration of justice 3. the maintenance of public goods DAVID RICARDO (1772-1823) –THE PRINCIPLES OF POLITICAL ECONOMY AND TAXATION -when you look at political economy, look at the laws -where does the wealth of the nation go -the law of supply and demand has led to undesirable consequences in agricultural societies Involved in the Produciton: contribution/share 1. farmers –agricultural laborers labor, wages 2. capitalists capital, profit (has money) 3. landowner – gives land rent (has land) rent – periodic payments that users made to the owner -based on the quality of the land -pays for the produce of the earth differential rent – for the differences in the quality and location of the land rent is specific kind (most based on labor) – the unique beneficiaries over time the Law of Diminishing Returns -????? -constant input same amount of output -since there are less available fertile land, the capitalists will compete for the fertile land -interest of the landlord is always opposite the farmers and the capitalists always “looser” = capitalist increase in rent & wages = lost farmers wages, 2 Prices: 1. Natural Price – minimum wage for food, clothing and shelter 2. Market Price – actual amount that the laborer gets What will happen? MP >NP = MP<NP = even if there‟s a surplus -farmers‟ lives will never improve -farmers are addicted to the “delights of domestic society” -they will not be cured (incurable) -if there‟s surplus, what the farmers do they bear more children (increase in population) -farmers are condemned to a life of subsistence capitalists -created for profits -only 1 purpose on earth = to accumulate -capital is also preserved labor -they don‟t squander their money division of labor -landowners are the only ones who gain corns laws -tariffs on grains -against the limitation of importation
Law of Comparative Advantage Country Buy Production Beer/Barrel A B $2 $4
Sell Grains/Sack $5 $10
-state became tool for coercion change in FP: industrial revolution, invention of steam engines 4. Capitalism -market became bigger -it‟s a question of who has capital and who does not FP: 1. capital (bourgeois) 2. labor (proletariat) –sells the things that make us human -in capitalism, labor is simply an extension of machines bet. capital and labor middle class – will serve as buffers, eventually will be gone Value of Labor 1. exchange value – “Natural Price of Wages” – where supply and demand intersect 2. used value – value of the product produced 3. surplus value – difference bet. 1 & 2. “profit” 4 Kinds of Alienation -brought about by system of discrimination & exploitation -would be done by proletariat to revolt against the capitalists 1. Alienated from the Product of Your Labor -you can‟t even enjoy it 2. Alienated from Your Self -labor is labor, no expression of self -you became fragment of man, labor is not source of happiness anymore, it becomes labor for survival 3. Alienated from Your Nature -nature as a human being -nature of man: rest, sleep, you need recreation -no socialization, since when you‟re not doing work, you‟re not doing anything 4. Alienation from Other Men -no more interaction with other people, you had nothing in common -before proletariat would revolt, capitalist system should be in crisis (threatened by internal contradiction and accumulation of capital, there‟s also accumulation of poverty and misery – leads to overproduction of goods, capitalist system would not be able to sustain significant productive route) -as the state becomes economically rich, the number of poor increases Proletariat Revolution (before going to stage 5 & 6) -concentration of wealth and production -increasing unemployment & misery of working classes -greater frequency and severity of crisis -disappearance of middle class *has to be a violent revolution, why? bourgeois class will not give up voluntarily their property and control of means of production; change will never be brought by persuasion of the bourgeois class; intention is to take away the means of production from the bourgeois class 5. Socialism (1st Stage) -proletariat became the ruling class -centralized all instruments of production -to liquidate the properties of the bourgeois -after revolution, transition period
KARL MARX (1818-1883) and Friedrich Engels (1820-1895) – THE COMMUNIST MANIFESTO -the real problem comes from/is the state nature of man (Economic of Philosophical Manuscripts) -materialistic (relationship to people and to nature) -always w/ transformation of nature & also transforms himself -labor triumphs over nature -labor is the most important -labor makes you who you are relationship with men: man is a social being (capacity to live together) Why is labor social? -always related to production -man by nature is social Dialectal Materialism -materialist conception of history -economic determinism Forces of Production (dictates) (calls for a type) Relations of Production FP + RP Political, Cultural & Ideological (superstructure) – bases for society, if you want to change it, change the FP FP -anything to produce material needs, includes labor -roles of the people in the production -sources of all changes in the society -fundamental cause of historical change -technical relations=roles in the division of labor categories of FP: 1. capital (anything not labor) 2. labor Stages: 1. Primitive Communism -no FP -no private property -common property -no division of labor except for gender -no inequality, no subjection -no social classes change in FP: domestication of animals 2. Pastoral Societies -there‟s now concept of private property (domesticated animals) -there came masters (have animals) and slaves (none) change in FP: domestication of plants 3. Agricultural Societies/ Feudalism -FP (animals and plants -landowners vassals (don‟t have lands) -social classes -concept of family (basic unit of society) -labor became very important -new: guilds, artisans, merchants‟ -concept of monogamy, states -limited capitalism -state is a product of economic development -state is the mediator/referee, to balance different interest
10 Plans of Socialism 1. abolish all property in land & application of rest -no private land 2.heavy progressive & graduated income tax -make it painful *&exhaustive to maintain private property 3. abolish all inheritance rights 4. confiscation of all property of “rebels” & immigrants 5. centralization of credit in the hands of the state -only the state can lend money 6. centralization of communication & transportation
-people will be dispersed -make people understand & understand why 7. extension of factories & ___ of production 8. equal obligation to work 9. more equitable distribution of population 10. free education & abolition of child labor 6. Communism (2nd Stage-Mature) -culmination of humanities -reach our utopian existence -class conflict will disappear -exploitation will end -man will do whatever he wants, happiness of labor comes back you know you’re here: 1. 9/10th of population do not have private property 2. no private family, you‟re loyal to the state 3. no more nationality (red earth), no religion, no more state as tool of coercion, state as administrator of things Why would communism not work? – find out!! MAX WEBER (1864-1920) – LEGITIMATE ORDER AND TYPES OF SOCIETY -physically and mentally ill -discussed why capitalism fits US (due to religion – protestant – being industrial is important to them) -Theory of Social & Economic Relation -concept of legitimate order (why do men obey?) order (cultural, economic, social, political order) -there is order when these are guided by certain norms legitimate – the rights to do something
Bureaucracy – people who remained in positions -most ideal kind of rational legal authority 1. there‟s hierarchy 2. impersonal rules, not base on personal preferences but based on performance 3. there‟s written rules of conduct 4. promotions is based on achievements (meritocracy) 5. there‟s specialized division of labor 6. it‟s efficient (reason why capitalism thrives) *that‟s why capitalism will not fall, that‟s why it thrives EMILE DURKHEIM (1864-1920) – THE DIVISION OF LABOR IN SOCIETY -French, Father of Modern Sociology -established Sociology as a discipline -examples of work: *relationship is not about quantity only but also quality (logical cooperation) *social facts – not value-free, depends on society *collective representations – symbols that remind you who you are, emotional attachments) *looked at suicides – might be egoistic (man becomes socially isolated or feels that he has no place in the society), anomic (o too low of a degree of regulation, great stress or change), altruistic (for a good cause), & fatalistic (under tight regulation). *looked at division of labor (the social aspects to it) – separation & specification of work, social harmony stems from division of labor functions of division of labor 1. provided the necessary conditions for the development of society 2. source of civilization – material & intellectual development 3. promotes social solidarity – creates bond among people 2 types of social solidarity 1. mechanical – exist during the pre-literate/pre-modern society -based on similarities, stems from homogeneity of society, principle of resemblance, characterized by low population, laws then were repressive, everybody can do everything 2. organic – what we have now, living organism, very dependent on each other, have organized structures, high population, laws are restitutive (you‟re being restored) why do we have social location? -used concept of friendship 1. same with us 2. different from us – compliment what we don‟t have -kind of friendship in division of labor -solidary – association of the same solidarity – different but relate, cohesion *morality in division of labor changed the way we interact with each other*people are increasingly performing different tasks*specialization will pull people together
general reasons why humans act the way we do 1. it‟s in your interest 2. traditions & customs require you to do those things 3. you believe in the legitimacy of orders -even in the deliberate disobedience, the validity of the order would be recognized how do we guarantee the legitimacy of order? 2 types of legitimate order: 1. By Convention – customs & traditions -fear of social disapproval 2. Law - formal, went to a process that everybody agreed on, there is consensus 4 Bases of Legitimacy (what makes a certain order valid) 1. tradition – what exist has been tried and tested 2. affectual attitudes – emotional attachments (act of loyalty, out of love . . .) 3. rational beliefs – agree on logical consequences 4. legality from the p.ov. of the recepients (you can have power w/o authority but not authority w/ power) Power – you can make some do something they don‟t want to do -ability to exercise your will over their resistance Authority – legitimate use of power, legitimate forms of authority 3 Types of Authority (ideal types) 1. traditional authority – elders, monarchy, believe in the existing system (patriarchal, military rules, feudalism) 2. charismatic authority – personal qualities, purely perception, what‟s important is that the followers believe you 3. rational legal authority – comes from law, clear & precise, based on the belief of the legality of the law
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