Reaction 3 for ECO/SOC 935

I find the concept of class division rather intriguing. I already knew that there were economical classifications corresponding to people’s income and standard of living. For example, the middle class is the segment of the population which generally has a stable income, a higher education, and some but not several economical hardships. Accordingly, the upper class is the wealthier section of the population, with easier access to better quality of education, more income and more economical influence. Obviously, the working class with correspondingly lower income comprehends the vast majority of people. They include also the underemployed, the working poor, and the destitute. I also knew that ascending the social ladder from one class to the next is not something many people are able to accomplish during the course of their lifetime and it may take several generations. Sadly, the middle class seems to be shrinking, and the gap between the very rich and the extremely poor is widening.

What I did not know was that there were more than one ways of describing how the classes worked. In fact, there are three categories for social classes: the Individual Attributes approach, the Opportunity Hoarding approach, and the Domination and Exploitation approach. The first associates class mainly with personal characteristics, the material conditions and the quality of life of individuals, the second is about how certain social groups can control resources while limiting other groups’ access, and thus form classes, and the third identify class with the amount of control people in advantaged economic positions hold over the lives and activities of people in other groups. This way of identifying class seems to highlight the intentional and systematic divisions that those more privileged impose upon those with fewer resources.

It also strikes me as innovative what I learned from Jerry Mander, Erik Olin Wright and Joel Rogers. They suggest a different approach to taxation; their interesting and novel ideas seem to offer a balanced solution to the present income tax. Notably, I appreciate Mander’s point of taxing advertisements. He mentions that publicity should be counted as “mental pollution” and should be taxed by the amount employed. I think this would be a plausible way of cutting down on the consumerist drive that capitalist corporations wish to instill in the public. Additionally, the notion of Progressive Consumption Taxation that Olin Wright and Rogers write about makes sense to me. It is a tax on the part of the income people use to buy goods instead of a tax on their total income. Furthermore, the rate of the tax would steeply increase as the level of consumption rises. In addition to curbing consumerism, this method of taxation would work toward easing the weight of taxation off of the shoulders of the poor. The weight would be distributed more equitably across the population, as opposed to the model in which taxation is equal for everyone. The difference between “equality” and “equity” is that equality can be achieved without fairness: everyone is given the same amount of a resource, and then they are on their own. Equity means that everyone is given the resources needed to be on the level as everyone else, and therefore have a fair opportunity.

I cannot think of any remaining questions I have after viewing this week’s material. But what I think shocked me most was the fact that certain corporations have gotten to the point of creating advertisements for their merchandise that actually teach children to nag their parents for a specific product (Olin Wright & Rogers 109). I believe this is advertisement possibly at its worst. Adults sometimes can realize that they only think they want something because a TV advertisement told them so, although this is not always the case (Cole noted in the use of Apple products, but the phenomenon work for all advertising); but children cannot make this distinction. I believe that this kind of publicity should be stopped and that opposition should persist, even though past efforts have been shockingly put down.

Works Cited

Cole, Nicki Lisa. “Apple’s Seductive Brand Promise: Cultural Capital & Social Mobility.” The Society Pages. (2013). Web. 7 September 2013.

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

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Reaction 2 for ECO/SOC 935

One of the most important takeaways from the assigned materials, in my opinion, is the realization that our current economical structure cannot endure forever. Both capitalism and communism have been destined to fail since their inception. Communism simply happened to fail first. Because of this, the people’s erroneous interpretation is that capitalist ways will endure forever. The driving forces of capitalism, such as the corporations that benefit from it, definitely want people to believe that “perpetual growth is the rational and achievable goal of national economies” (Heinberg), since this had been the general idea so far.

Separation of land from the theoretical primary ingredients of the economy (labor, land and capital) in the 19th and 20th c. led to neglect the fact that land is finite. Yet, natural resources cannot be substituted by some other form of capital. “The human condition exists within, and entirely depends upon Nature” (Heinberg), and thus ignoring this fact will lead to grave problems, as we are now soberly realizing. Yale University scholar Immanuel Wallerstein states in his book World Systems Analysis that “We are in the capitalist system when the system gives priority to the endless accumulation of capital … Endless accumulation is quite a simple concept: It means that people and firms are accumulating capital in order to accumulate still more capital, a process that is continual and endless” (qtd. in Mander 10). In other words, the capitalist system depends on continuous growth and expansion, but since the inputs, i.e. the natural resources are not endless, the growth and expansion will eventually grind to a halt.

Mander says that capitalism is amoral. Capitalism’s sole purpose is the development of individual and corporate wealth. “It has no other job, and no interest in ‘right or wrong,’ or human welfare, or communities, or in the well-being of the natural world, except as resources for itself” (Mander 14-15). The Four Horsemen film proves Mander’s point by denouncing banks of forming a “criminal conspiracy” to charge more interests on loans to the Blacks and Hispanics. Banks lobbied successfully against States’ legislature that prescribed prosecution in cases of racial lending. Their goal was to open the way to lending and charging more to minorities. This specific fact has particularly intrigued me. I know that businesses cannot discriminate between races when hiring new employees. Insurance and healthcare providers are also controlled against redlining. So my question is how could those banks ultimately reverse the law pretending to help minorities while going after their limited resources and not get exposed and punished?

Another point Mander makes is that capitalism is intrinsically inequitable. I tend to agree with this assertion, because I have seen some of the disparity between poverty in the midst of affluence. Mander states that “the central function of capitalism is to help people with wealth to seek more wealth and greater dominance; the separation between rich and non-rich within countries and among them inevitably becomes steadily greater” (15). The Four Horsemen film proves this notion as well. Now, this coming part surprised me, for I never thought regular banks could do this kind of thing. The film points out that banks actually create money through lending. They then have the money to speculate prices. Finally, when people at the bottom of the financial pyramid need to buy something, they must go back to the banks to receive loans, and the vicious circle starts over. This is also the reason why the top-down approach does not always work: “by the time the money reaches the people at the bottom of our money pyramid, it has lost its purchasing power.” (Four Horsemen film)

Finally, Mander believes that capitalism undermines democracy. “The system has an intrinsic need to dominate and undermine democracy, and also public consciousness, so as to control its rules, benefit more easily, and advance its primary self-interest: expanding growth, profit, and wealth” (Mander 15). I can understand his point of view, because there are some clear instances in which the government favors big corporations’ interests over the people’s welfare. One unambiguous example is the huge bailout of 2008, which was voted against by 80% of the American population, but, since it was favorable to many corporations, was carried out anyway (Four Horsemen film). In essence, there is “socialism for the rich and capitalism for the poor” as the Four Horsemen film sharply puts it. So, big corporations wish to operate in the free market when times are good for them, but are quick to demand government subsidies when they risk bankruptcy. This reflects the previously stated idea that capitalism controls the rules in order to benefit with more ease. Additionally, the Four Horsemen film stated that the corporations buy their way by employing an average of five lobbyists per congress person, something the less affluent cannot ever afford.

Works Cited

Heinberg, Richard. The End of Growth. Gabriola Island: New Society Publishers, 2011. Web excerpt retrieved from: http://www.postcarbon.org/article/159540-economics-for-the-hurried-part

Mander, Jerry. The Capitalism Papers: Fatal Flaws of an Obsolete System. Berkley: Counterpoint, 2012. Print.

Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.

The Four Horsemen. Dir. Ross Ashcroft. Guerrilla Films, 2012. Retreived from: https://www.youtube.com/watch?v=5fbvquHSPJU

Reaction 1 for ECO/SOC 935

First of all, I think that the notion of freedom, as many Americans value it, is virtuous, but can also lead to some economic issues. It is important that people enjoy autonomy and the ability to choose for their personal development, growth and sense of well being. All this, however, needs to be balanced with the common good and the respect of other people’s freedoms. Hence, personal rights need to be balanced with personal responsibility towards the well being and development of others.

Additionally, I find that when the idea of libertarianism is applied to economics, it falls somewhat short. In fact, libertarianism has produced such a monetary gap between someone with little to medium economic means and the media tycoon mentioned in the book, that the former would unquestionably have a critically more restricted financial freedom and, therefore, choice than the latter.

Furthermore, this economic inequality could actually backfire. People will trade so long as they have something to gain from the transaction. When “no one can improve without someone else being worse off,” (Olin Wright and Rogers 42) then Pareto Optimality has been reached.
When people from the working poor have exhausted their tradable assets, they have only their skills and labor left to trade. These people may be forced to accept two or more jobs to survive financially, but they will be worse off in terms of their well-being or prosperity, as the book puts it. They will have less time to relax and recharge after a hard day, to spend with family, and to follow their personal interests.

Consequently, what stunned me was the amount of financial disparity there is reported between the richest people in this society and the poorest ones. I was especially surprised by empirical data and ratios of American CEO to average worker salaries.

Something I definitely agree with is that the free market economy drives much innovation and growth. For example, ever since the iPad became popular in 2010, many other brands started making tablets. To compete with each other, all these brands had the incentive to innovate their products with newer and better features. Yet, there is at least one drawback. If the leading firm in an oligopoly is well ahead of the others and perceives no threat, it will have less of an incentive to invest in innovation. It would only do so if it had to reassert itself as the leading company after another had drawn near.

Although I do agree with this point, I do not agree with the arguments against state interference in the market. It was helpful for me to read this segment, because I did not always understand why certain people do not wish the government to engage in the economy. I can understand the points of the state incompetence thesis and the state malevolence thesis, but I believe that if the government is offering to make life financially easier for lower classes then its concrete proposals should be taken into consideration and given some weight.

Works Cited
Olin Wright, Erick, and Joel Rogers. American Society: How it Really Works. New York: Norton, 2011. Print.