ECONOMY, SOCIETY, AND

CULTURAL CHANGE
LESSON 5
The Importance of Economic Structure

KARL MARX – FATHER OF

SCIENTIFIC SOCIALISM

A Preface to a Critique of Political Economy (1859)

In the social production of their life, men enter into definite relations that are
indispensable and independent of their will; these relations of production
correspond to a definite stage of development of their material forces of production.
The sum total of these relations of production constitutes the economic structure of
society - the real foundation, on which rises a legal and political superstructure and
to which correspond definite forms of social consciousness.
 Marx basically argues that the different kinds of social
relations that are generated by the economic production
of human beings shape the entire life, beliefs, and
activities of the members of that particular society.

EXAMPLE: Feudal Society

 The assertion of Marx is also a truism in another way.

The Hidden Injuries of Class Inequalities

 As documented by Senett and Cobb (1972), the “hidden

injuries” of class among American workers are quite
common among lower-class individuals.

Hidden injuries of class focuses on how individuals feel

when dealing with people in a higher standing.

Theory of Oscar Lewis Culture of Poverty

The Political Economy of Inequalities

 The distribution of wealth in society will always be

dependent on its economic structure. One of the major
impacts of economy on society is on defining the status and
class.

 For Marx, class refers to relations among people who share

the same class interests in relation to the means of
production.
5 TYPES OF CLASS

1. Bourgeoisie or Capitalist
2. Proletariat or Working-class
3. Petty Bourgeoisie or Big Landowners
4. Peasant Class
5. Dangerous Class or Lumpenproletariat
System of Stratification as Source of Inequalities

 Some sociologists, however, extend the definition of class to

include not only access to the means of production like land,
capital, and technologies but also to the social prestige attached
to one’s social position. Hence, some sociologists use the term
“Stratification”.

 2 SYSTEMS OF SOCIAL STRATIFICATION:

1. Caste System
2. Class System
STATUS AND
CLASS

Status refers to life chances that are determined by social honor

or prestige.

Class is Weber
defined by framed class
the VS in terms of
life chances
ownership
in the
of property.
market.
Karl Marx
 In contemporary sociology, it is Pierre Bourdieu (1930-2002), a
French sociologist, who dealt extensively with class
inequalities by arguing that capital does not refer only to
economic assets, but also includes cultural, symbolic, and
social capital.

CULTURAL CAPITAL refers to the forms of knowledge, educational credentials, and

artistic taste that a person acquires from family background, which give them
higher status in society.

SOCIAL CAPITAL refers to resources based on group membership , relationships,

and networks of influence and support.

SYMBOLIC CAPITAL is the acquisition of a reputation for competence and an image

of respectability and honorability.
 ECONOMY
AND
GLOBALIZATIO
N
Globalization through Free Trade Agreement

• Giddens (2002)
“In the new global electronic economy, fund managers,
banks, corporations, as well as millions of individual
investors, can transfer vast amounts of capital from one
side of the world to another at a click of a mouse. As they
do so, they can destabilize what might have seemed rock-
solid economies- as happened in the events in Asia”
Technology as a medium of transactions

Financial crisis
- Financial crisis has become global due to the integration of the world
economies.

Globalization
-progressive growth of economic activities which transcends any kind of
geographical border
-trade liberalization
- international trade
The original and
  continuing fundamental goal of economic internalization is
 
free trade.
 
   
  European Union (EU), North American Free
 
  Trade Agreement (NAFTA), Asia-Pacific
 
Economic
  Economic Cooperation (APEC), Association
 
internalization
  of Southeast Asian Nations (ASEAN), and
 
  the Common Market of the South
 
  (MERCOSUR).
 
   
   
Free  trade  
  Prevent another version of
 
  the Great Depression
 
  (1929-1933)
 
   
   
   
Multilateral
 
 
 International Trade
trade
 
Organization (ITO)
 
 
 
Economic globalization today is facilitated by the interlocking of
nation-states through free market agreements by supra-national
organizations such as the International Monetary Fund (IMF), World
Bank, WTO, NAFTA, Transpacific Partnership (2005), and APEC.

World Trade Organization (WTO)- only global international

organization dealing w the rules of trade between nations.

Many economists believe that trade liberalization is favorable to

democracy. A democracy that starts with a liberal economy is likely to
strengthen democratic rule.
Globalization is reducing the power of
governments to provide what their
population required all over the world.
Transnational Corporations (TNCs) and
international capital have become de facto
new world government. Their increasing
control all over the global economy is
underpinned by their free trade orthodoxy.
When Corporations Rule the World
•Transnational Corporations (TNCs) is a company or enterprise that
operates in several countries around the world.
Low taxes in other countries
Cheaper cost labor
Access to a wider market =
Relaxed environmental laws PROFIT
But TNCs differ to MNCs.
•MNCs are Multinational Corporations.
According to ILO Report, “the essential nature
of the multinational enterprises lies in the fact
that its managerial headquarters are located
in one country, while the enterprise carries
out operations in number of countries”.
IBM Computers from USA

Siemens from Germany

Honda and Sony from Japan

“ Transnationality a function of the extent
to which a firm’s activities are located
abroad. It refers to the geographic spread
of firms and implies the existence of a
home country and one or more host
countries” (UNCTAD, 2007).
TNCs bring much needed capital to developing countries through direct foreign investments.
These investments, in turn, create jobs and employment for the countries. One scholar cites
the case of McDonald's: On January 31, 1990, the first McDonald's restaurant opened in the
Soviet Union and a worldwide company record of 30,567 customers were served However,
the important point for this book has nothing to do with the fact that you can now buy a Big
Mac in Russia. The point is that a private TNC from an industrialized nation can move into an
LDC and make a profit while helping to organize very disorganized and unproductive
economic sectors (eg agriculture, electricity, transportation, and food service) of society. The
infrastructure built by the TNC can (and probably will) have positive ripple effect across
many other sectors of the nation (Hanson 2008, 129). Although INCS are subject to regulation
by the nation-states, their transnational reach appears to endow them with a superior position
of power. Their investment decisions can be crucial to the economic well-being not only of a
nation, but of whole regions. To secure economic growth and political stability, nation-states
have to compete globally for investments INCS benefit from that competition and, therefore,
appear to shape the global political agenda to their advantage. This enormous power of TNCS
makes many scholars and even governments wormed and critical of TNCS' operations.
The potential power and extent of TNCS' influence are described by the UNCTAD (2007): The
universe of TNCS is large, diverse and expanding. By the early 1990s, there were an estimated
37,000 INCS in the world, with 170,000 foreign affiliates. Of these, 33,500 were parent corporations
based in developed countries. Today, there are an estimated 7,000 TNCS in the world, with more
than 770,000 foreign affiliates. These affiliates generated an estimated $4 5 trillion in value added,
employed some 62 million workers and exported goods and services valued at more than $4 trillion
(UNCTAD 7006, 3). As a result, John Medeley (2009), a strong critic of TNCS, points at the
difference between the poor of developing countries and the TNCS: "The starkest contrast
between the poor and the TNCS is that the poor have little power. And while the corporations
have gained from the changes in the global economy, the poor have lost, often from those same
changes" (7). Medeley further adds TNCS have successfully persuaded people in developing
countries to adopt products such as Coca-Cola, Seven-Up, Pepsi, Kentucky Fried Chicken,
beef burgers, cigarettes and soon as part of their way of life. Such goods cost a sizeable
proportion of the poor's earnings, with the result that traditional and usually more nutritious foods
cannot be afforded, and health suffers. By consuming inappropriate products, the poor have less
money to buy basic necessities. (7) TNCS are not only blamed for the poverty of developing
countries. Many critic also point to the environmental problems that arise from the operations of
TNCS in the developing countries such as mining, logging, and agriculture.
The petrochemical company Chevron is guilty of some of the
worst environmental and human rights abuses in the
world, according to International Labor Rights Forum For
instance, from 1964 to 1992, Texaco (which transferred
operations to Chevron after being bought out in 2001)
unleashed a toxic "Rainforest Chernobyl" in Ecuador by
leaving over 600 unlined oil pits in pristine northern Amazon
rainforest and dumping IN billion gallons of toxic production
water into rivers used for bathing water ("The 14 Worst
Corporate Evildoers" 2005). Politically, many anti-
globalization activists protest the powerlessness of developing
countries to check the unbridled operations of TNCS.
Coca Cola Company, perhaps the most widely recognized corporate
symbol on the planet, is another example. According to International
Labor Rights Forum, “the company leads in the abuse of workers'
rights, assassinations, water privatization, and worker discrimination.
Between 1989 and 2002, eight union leaders from Coca-Cola bottling
plants in Colombia were killed alter protesting the company's labor
practices Hundreds of other Coca-Cola workers who have joined or
considered Joining the Colombian union SINALTRAINAL have been
kidnapped, tortured, and detained by paramilitaries who are hired to
intimidate workers to prevent them from unionizing" ("The 14 Worst
Corporate Evildoers" 2005). In the West, governments insist on high
environmental standards and TNC operations are carefully scrutinized.
In developing countries, however, legal requirements are lower and
TNCS can get away with more violations.
In the past, many economists believe that it is not the moral responsibility of
TNCs to act fairly and to operate based on sustainable development. The sole
responsibility of business leaders is to generate and maximize profits within
the prevailing legal framework. Today, however, owing to the pressure from
anti-globalization movements, ecology movements, and even governments,
many TNCs are now moving toward corporate social responsibility (CSR)
and developing an ethical standard for their worldwide operations. CSR
"refers to any activity that promotes the welfare of any stakeholder of a
business corporation. Sometimes, CSR refers to Philanthropic programs
targeting communities or employees. Other times, it refers to commitments to
promote the welfare of suppliers It also refers to a variety of activities
designed to enhance environmental stewardship (sustainability), More
generally, it refers to the vague intention to better society (corporate
citizenship)" (Ludescher and Mahsud 2010, 123).
World Capitalist System, Neoliberalism, and Inequality

Economic globalization through the world

trade implies a division of labor between
societies.
Immanuel
Wallerstein
popularized
world system
analysis
Malcolm Waters (1995) states
that this international division of
labor widened the gap between
the poor and rich countries.
Neoliberalism is a plural set of ideas rather than a singular body of economic
theory (Plehwe, et al., 2006)
 its origin in the economic theory emerged from the Mount Pelerin Society,
the name of the small village close to Lake Geneva, under the leadership of
the Swiss businessman Albert Hunold and Friedrich August von Hayek
 was an attempt to challenge the growing power and influence of the state
over the market
basic to neoliberal economic theory is the claim of the superiority of the
market mechanism and competition-driven processes of capitalist
development over state-driven pathways of social and economic organization,
the limitation of government to the protection of individual rights, especially
property rights, privatization of state enterprisers and the liberalization of
formerly strictly regulated and government administered markets (Plehwe and
Walpen 2006, 27)
 GLOBALIZATION

Promotes Increases the

economic gap between
growth rich and poor
In 2006, scholars with the United Nations University’s World
Institute for Development Economics Research published
the first paper to tally, for the entire world, all the major
elements of household wealth, everything from financial
assets and debts to land, homes, and other tangible property.
This research, based on year 2000 data, found that the richest
1% of world adults, individuals worth at least $514,51,
owned 39.9% of the world’s household wealth, a total greater
than the wealth of the world’s poorest 95%, those adults
worth under $150,145 (“Global Inequality,” n.d.)
In the case of the Philippines,
the collective net worth of
the 50 wealthiest people in
the country in 2014 is
already equivalent to a
staggering 26% or 1/4 of the
country's Gross Domestic
Product (GDP).
WORLD RANK NAME NET WORTH AGE SOURCE
94 Henry Sy $12.7 billion 92 SM Investments
Corporation
250 John Gokongwei Jr. $5.8 billion 90 diversified
501 Lucio Tan $3.7 billion 82 diversified
544 George Ty $3.5 billion 84 banking
564 Enrique Razon Jr. $3.4 billion 57 ports
564 Tony Tan Caktiong $3.4 billion 64 Fast-food
630 David Consunjl $3.1 billion 95 construction
814 Andrew Tan $2.5 billion 64 diversified
1376 Roberto Coyiuto Jr. $1.5 billion 64 power
1376 Manuel Villar $1.5 billion 67 Real estate
1468 Ramon Ang $1.4 billion 63 diversified
1678 Eduardo Cojuangco $1.2 billion 81 Food, drinks
1795 Roberto Ongpin $1.1 billion 80 diversified
1940 Edgar Sia $1 billion 40 Fast-food
Is this a consequence of economic globalization? One observer
points out, “Globalization, then, continues to be a powerful
political talisman in the Philippines and is used to justify a set
of specific economic development policies. In particular, the
drive to attract export-oriented foreign direct investments has
been at the forefront of national economic strategy” (Kelly
2000, 160). Of course, the Philippines is not untouched by
globalization ever since colonizers set foot on the island. In
fact, Filipinos were already trading with merchants from
different parts of Asia.
Economic Globalization and the Environment

classical theories of development

equated development solely with
economic growth or the rise of GNP
The productivist paradigm, or the belief in endless
growth, simply advocated for continuous growth and
rejected any notion of limits to the environment and
resources. If ever there were problems with the
environment, they were treated merely as technical
problems that can be solved through technological
advancement or “technological fix”. In this view, the
problem of vehicular pollution can easily be solved
through technology of producing low-emission engines
and fuels.
Take the EPA or Economic Partnership Agreement
between South Africa and the European Union as a case in
point. In 2007, the EPA resulted in the massive use of
water from the lake to grow cut flowers. The UK alone
imported 18,000 tons of flowers from Kenya in 2013, up
from about 10,000 tons in 2000. The flower growers draw
water out of the lake on an average of approximately
20,000 cubic meters a day. Lake Naivasha shrank last year
to about 75% of its 1982 size. At this rate, in another 50
years, it will shrink to a muddy pool of dead water. The
papyrus swamps that were the breeding grounds for fishes
have gone, even as the laboring population in the flowers
farms is increasing. People are facing severe problems of
food and water insecurity (Tandon 2009, 110).
An important factor in understanding the
necessary linkage between the rich and poor
countries in relation to global environmental
problems is the fact that most of the necessary
materials and resources for industrialization of the
west at the turn of the 20th century came at the
expense of other countries (Amin, 1977).
The global nature of the environmental
degradation can largely be limited to
the rise of the fossil fuel economy and
to the decreasing distance of time and
space in the relations between different
parts of the globe (Daly, 1996).

One of the most globalized issues

connecting globalization, inequality,
and environment is GLOBAL
WARMING that emerged in the late
1980s.
The rise of Ukay-Ukay
or
Wag-wagan Market
Consumerism - Consumerism is a social and economic order that
encourages the acquisition of goods and services in ever-increasing
amounts. Secondhand clothing markets are popular in developing
countries. Secondhand clothing are also known locally as ukay-ukay or
flea market of used imported clothes). The developing countries supply
raw materials and cheap labor for assembly; the developed countries
consume a low prices then dispose of the garments to buy more
products at cheap prices in the latest fashion. The disposed garments
are then used either by the lowest income group in developed nations
or back in developing countries where the secondhand clothing market
undermines local industries that would be a step on the way out of the
dependent position of developing countries in the world economy
(Kütting 2004, 98).
Cottons are extensively used in clothing and garment manufacturing.
The intensification of agricultural production methods has resulted in a
worldwide increase in pesticide use. There are several adverse effects of
pesticides on humans and on the environment. Excessive use of
pesticide leads to poisoning and adverse health conditions. The
chemical residues also damage the environment and natural ecosystem.
Local pesticide residues affect air and water quality. About 11% of
global pesticide sales and 249% of insecticides can be attributed to
cotton production (Myers and Stolton 1999). The World Bank cites
price factors and lack of local knowledge or the misinformation of
farmers as the main factors leading to excessive or inappropriate
pesticide use (Farah 1994).
Financial Literacy and Risk Management in the Runaway World

German sociologist Ulrich Beck popularized the

term "risk society" in late 1980s. In which Beck
defines as "a systematic way of dealing with
hazards and insecurities induced and introduced
by modernization itself”
The globalization of economy through trade and
new technologies provided the people of our
planet immense amount benefits and new exciting
possibilities. Yet, the consequences of economic
globalization seem to be a runaway world.
 Manufactured risks -are man-made risks having arisen as a
result of new technologies developed through advances in
scientific knowledge such as nuclear holocaust, global
warming, cloning genetically modified organisms (GMOs),
global financial crisis, cyber-attacks, and terrorism.

Reflexive society - a society where people constantly

monitor their lifestyle–people are more conscious of the
impact of globalization on their economic life.
Giddens Paradox -coined by Anthony Giddens in 2002
Financial Crisis
-1997 Asian Crisis
-Financial Crisis of 2007-2008
or the Global Financial Crisis
-Greek Debt Crisis
-The Great Depression
-The Credit Crisis of 1772
Financial literacy

Harrison (2006) defines financial literacy as comprising 2

key elements:
1. How well an individual can understand financial
information
2. How well an individual can use financial information to
manage his/her personal finances through both short-term
decision-making and long-term financial planning
Financial Literate Citizens?
 SUMMAR
Y
The economic structure is the pillar of social reproduction. Social relations that arise
from economic productions largely shape the way people behave and think.
Consequently, access to resources determines an individual’s position within a
stratified society. In turn, stratification can be based on class, status, and power. This
stratification system leads to inequalities. Today, with the growth of globalization
through free-trade agreements and the spread of transnational corporations, scholars
argue whether globalization promotes inclusive growth or exacerbates the existing
inequalities worldwide. Economic globalization is forcing people to be aware of
social risks that accompany globalization such as environmental problems and
climate change. Financial literacy is very important in this age of multiplying risks
especially when countries are shaken by successive financial crisis and financial
meltdown.
REPORTERS:

ROSTROLLO, ARLYN JOY

SORIA, ELLAINE JOY
ZUNIGA, FRANCIA DAPHNIE
MARIE