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LEARNING OBJECTIVES
CHAPTER 8 • Summarize historical changes to the economy.
THE ECONOMY AND WORK • Assess the operation of capitalist and socialist economies.
CHAPTER 16 IN THE TEXTBOOK • Understand professions
DR. LIN (ELAINE) SHI

SPRING 2025

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OPENING CASE
Here’s a quick quiz about the U.S. economy. (Hint: All six
questions have the same correct answer.) FROM THE OPENING CASE
• Which U.S. business do more than 250 million people around the
• Economy is widely considered the most influential of all social institutions.
world visit each week?
• Which business sells products made by more than 100,000 • As the story of Walmart’s expansion suggests, the economy of the United
companies?
States—and the economic system of the entire world—is dominated by a number
• Which U.S. company opened 1,160 stores around the world in
2011?
of giant corporations.
• Which U.S. company buys more than $18 billion worth of goods • Who benefits from these megabusinesses? Who loses? What is it like to work for
each year from China, making it a larger trading partner for one of these corporations?
China than the United Kingdom?
• Which U.S. company employs 2.2 million people around the • To answer these questions, sociologists study how the economy operates as well
world, including approximately 1.3 million in the United States? as the nature of work and what jobs mean to each of us.
• Which single company actually grew in size during the recent
economic downturn?

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THREE TECHNOLOGICAL
T H E E C O N O M Y: H I S T O R I C A L O V E R V I E W REVOLUTIONS
The Agricultural Revolution
• The economy is the social institution that organizes a society’s production, distribution, and
• The earliest human societies were made up of hunters and gatherers
consumption of goods and services. living off the land. In these technologically simple societies, there was
• Goods are commodities ranging from necessities (food, clothing, shelter) to luxury items (cars, no distinct economy. Rather, producing and consuming were part of
family life.
swimming pools, yachts).
• When people harnessed animals to plows, beginning some 5,000 years
• Services are activities that benefit others (for example, the work of priests, physicians, teachers, and ago, a new agricultural economy was created that was fifty times more
productive than hunting and gathering.
computer software specialists).
• The resulting surplus meant that not everyone had to produce food, so
• We value goods and services because they ensure survival or because they make life easier or more many took on specialized work: making tools, raising animals, or
building dwellings. Soon towns sprang up, linked by networks of
interesting.
traders dealing in food, animals, and other goods.
• Also, what people produce as workers and what they buy as consumers are important parts of social • These four factors—agricultural technology, job specialization,
identity. permanent settlements, and trade—made the economy a distinct social
institution.
• How goods and services are distributed, too, shapes the lives of everyone by giving more resources to
some and fewer to others.

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THREE
TECHNOLOGICAL THE INDUSTRIAL
REVOLUTIONS REVOLUTION
The Industrial Revolution Industrialization changed the economy in five
fundamental ways:
• By the mid-eighteenth century, a second technological
revolution was under way, first in England and then in 1. New sources of energy. Throughout history,
North America. “energy” had meant the muscle power of people or
animals. But in 1765, the English inventor James
• The development of industry was even more powerful
Watt introduced the steam engine. One hundred
than the rise of agriculture in bringing change to the
times more powerful than animal muscles, early
economy.
steam engines soon drove heavy machinery.

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THE INDUSTRIAL
REVOLUTION THE INDUSTRIAL
REVOLUTION
2. Centralization of work in factories. Steam-powered
4. Specialization. Centuries ago, people worked at home,
machines soon moved work from homes to factories, the making products from start to finish. In the factory, a worker
centralized and impersonal workplaces that housed the repeats a single task over and over, making only a small
contribution to the finished product.
machines.
5. Wage labor. Instead of working for themselves, factory
3. Manufacturing and mass production. Before the workers became wage laborers working for strangers, who often
Industrial Revolution, most people grew or gathered raw cared less for them than for the machines they operated.

materials such as grain, wood, or wool. In an industrial The Industrial Revolution gradually raised the standard of living
as countless new products and services fueled an expanding
economy, the focus shifts so that most people work to turn
marketplace.
raw materials into a wide range of finished products such
Yet the benefits of industrial technology were shared very
as processed foods, furniture, and clothing. unequally, especially at the beginning.

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T H E I N F O R M AT I O N T H E I N F O R M AT I O N R E V O L U T I O N
REVOLUTION AND
POSTINDUSTRIAL SOCIETY
AND POSTINDUSTRIAL SOCIETY
The Information Revolution has introduced new kinds of
• By about 1950, the nature of production was changing once products and new forms of communication and has altered the
again. The United States was creating a postindustrial character of work. In general, there have been three significant
economy, a productive system based on service work and changes:
high technology. 1. From tangible products to ideas.
• Automated machinery (and later, robotics) reduced the role The industrial era was defined by the production of goods;
of human labor in factory production and expanded the in the postindustrial era, people work with symbols.
ranks of clerical workers and managers. Computer programmers, writers, financial analysts,
advertising executives, architects, editors, and all sorts of
• The postindustrial era is marked by a shift from industrial consultants make up more of the labor force in the
work to service work. information age.
• Driving this change is a third technological break-through:
the computer.

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T H E I N F O R M AT I O N R E V O L U T I O N T H E I N F O R M AT I O N R E V O L U T I O N
AND POSTINDUSTRIAL SOCIETY AND POSTINDUSTRIAL SOCIETY
2. From mechanical skills to literacy skills. 3. From factories to almost anywhere.
The Industrial Revolution required that workers have Industrial technology drew workers into factories located
mechanical skills, but the Information Revolution near power sources, but computer technology allows people
requires literacy skills: speaking and writing well and, of to work almost anywhere. Laptop and wireless computers
course, knowing how to use a computer. People able to and cell phones now turn the home, a car, or even an
communicate effectively are likely to do well. airplane into a “virtual office.” What this means for
everyday life is that new information technology blurs the
line between our lives at work and at home.

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SECTORS OF THE ECONOMY

THE GLOBAL ECONOMY
The three revolutions just described reflect a shifting balance among the three sectors of a
society’s economy. • New information technology is drawing people
• The primary sector is the part of the economy that draws raw materials from the around the world closer together and creating a
natural environment.
global economy, economic activity that crosses
• The primary sector—agriculture, raising animals, fishing, forestry, and mining—is
largest in low-income nations. national borders.
• The secondary sector is the part of the economy that transforms raw materials into • The development of a global economy has five
manufactured goods.
major consequences:
• This sector grows quickly as societies industrialize. It includes operations such as
refining petroleum into gasoline and turning metals into tools and automobiles. • First, we see a global division of labor:
• The tertiary sector is the part of the economy that involves services rather than goods. Different regions of the world specialize in one
• About 85 percent of the U.S. labor force is in service work, including secretarial sector of economic activity.
and clerical work and positions in food service, sales, law, health care, law
enforcement, advertising, and teaching (U.S. Department of Labor, 2014; World
Bank, 2015).

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THE
THE GLOBAL ECONOMY GLOBAL
ECONOMY
• New information technology is drawing people
around the world closer together and creating a • Second, an
global economy, economic activity that crosses
increasing number
national borders.
of products pass
• The development of a global economy has five major
through more than
consequences:
• First, we see a global division of labor: Different one nation.
regions of the world specialize in one sector of
economic activity.

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THE GLOBAL
ECONOMY
• Third, national governments no longer
control the economic activity that takes place
within their borders.
• In fact, governments cannot even • A fourth consequence of the global economy is that a small number of businesses,
regulate the value of their national operating internationally, now control a vast share of the world’s economic activity.
currencies because dollars, euros, pounds
• Based on the latest available data, the 2,000 largest multinational companies (with
sterling, and yen are traded around the sales of about $38 trillion) account for half of the economic output of the entire world
clock in the financial markets of New (Forbes, 2014; World Bank, 2015).
York, London, and Tokyo.

THE GLOBAL ECONOMY

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ECONOMIC
THE GLOBAL ECONOMY S Y S T E M S : PAT H S
TO JUSTICE
• Fifth and finally, the globalization of the economy raises concerns about the
• Every society’s economic system makes a
rights and opportunities of workers. statement about justice by determining who is
• The world is still divided into 194 politically distinct nations. But increasing entitled to what.

international economic activity makes nationhood less significant than it was • Two general economic models are capitalism
even a decade ago. and socialism.

• No nation anywhere in the world has an

economy that is completely one or the other;
capitalism and socialism represent two ends
of a continuum along which all real-world
economies can be located.

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C A P I TA L I S M C A P I TA L I S M
• Capitalism is an economic system in which natural resources and the means of producing goods
and services are privately owned.
• Justice in a capitalist system amounts to freedom of the marketplace, where
An ideal capitalist economy has three distinctive features: a person can produce, invest, and buy according to individual self-interest.
• 1. Private ownership of property. • The increasing popularity of Walmart, described in the opening to this
• E.g., factories, real estate, and natural resources chapter, reflects the fact that people think they get a lot for their money
• 2. Pursuit of personal profit. when shopping there.
• The profit motive is the reason people take new jobs, open new businesses, or try to improve • The United States is considered a capitalist nation because most businesses
products. M aking money is considered the natural way of economic life. are privately owned. However, it is not purely capitalist because
• Scottish philosopher Adam Smith (1723–1790) claimed that as individuals pursue their self- government plays a large role in the economy.
interest, the entire society prospers (1937, orig. 1776). • E.g., the country’s schools, roads, parks and museums, the U.S. Postal
• 3. Competition and consumer choice. Service, the Amtrak railroad system, and the entire U.S. military, the
• A purely capitalist economy is a free-market system with no government interference. Internet, taxation and other forms of regulation
• Adam Smith stated that a freely competitive economy regulates itself by the “invisible hand” • The U.S. government also sets minimum wage levels, enforces
of the law of supply and demand. workplace safety standards, regulates corporate mergers, provides
• Consumers regulate a free-market economy, Smith explained, by selecting the goods and farm price supports, and supplements the income of a majority of its
services offering the greatest value. people in the form of Social Security, public assistance, student loans,
• As producers compete for the customer’s business, they provide the highest-quality goods at and veterans’ benefits.
the lowest possible prices. à from narrow self-interest comes the “greatest good for the
greatest number of people”

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SOCIALISM SOCIALISM
Socialism is an economic system in which natural resources and the
means of producing goods and services are collectively owned. 3. Government control of the economy.
In its ideal form, a socialist economy rejects each of the three • Socialism rejects capitalism’s laissez-faire approach in
characteristics of capitalism just described in favor of three opposite favor of a centrally controlled or command economy
features:
operated by the government. Commercial advertising
1. Collective ownership of property.
thus plays little role in socialist economies.
• Government controls such property and makes housing and other goods
available to all.
2. Pursuit of collective goals.
• The individualistic pursuit of profit goes against the collective
orientation of socialism. Individuals are expected to work for the
common good of all.

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SOCIALISM SOCIALISM AND COMMUNISM

• Justice in a socialist context means not competing to gain wealth
but meeting everyone’s basic needs in a roughly equal manner. Many people think of socialism and communism as the same thing, but they are not.

• Venezuela, Cuba, North Korea, the People’s Republic of China, • Communism is a hypothetical economic and political system in which all members of a society are socially equal.
and more than two dozen other nations in Asia, Africa, and Latin • Karl Marx viewed socialism as one important step on the path toward the ideal of a communist society that abolishes
America model their economies on socialism, placing almost all all class divisions.
wealth-generating property under state control (The Wall Street
Journal/Heritage Foundation, 2015). • In many socialist societies today, the dominant political party describes itself as communist, but the communist
goal has not been achieved in any country.
• The extent of world socialism declined during the 1990s as most
of the countries in Eastern Europe and the former Soviet Union Why?
geared their economies toward a market system.
• For one thing, social stratification involves differences in power as well as wealth. Socialist societies have reduced
• More recently, however, voters in Bolivia, Venezuela, Ecuador, economic differences by regulating people’s range of choices. In the process, government did not “wither away,” as
and other nations in South America have elected leaders who Marx imagined it would. Rather, government has grown, giving socialist political elites enormous power and
have moved the national economies in a socialist direction. privilege.
• Marx might have agreed that a communist society is a utopia. Yet Marx considered communism a worthy goal.

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W E L FA R E
D AT O N G C A P I TA L I S M A N D
SOCIETY ⼤同社会 S TAT E C A P I TA L I S M
• 《礼记·礼运篇》首次提出了“大同”之说。记曰：昔者仲尼与于
蜡宾。事毕，出游于观之上，喟然而叹。仲尼之叹，盖叹鲁也。 • Some nations of Western Europe, including
言偃在侧曰：“君子何叹？”孔子曰：“大道之行也，与三代之
Sweden and Italy, have market-based economies
英，丘未之逮也，而有志焉。”于是藉孔子言，描述了“大同”
社会的情景: but also offer broad social welfare programs.

• 大道之行也，天下为公。选贤与能，讲信修睦。故人不独亲 • Analysts call this type of economic system welfare

其亲，不独子其子，使老有所终，壮有所用，幼有所长，鳏、寡、
孤、独、废疾者皆有所养。男有分，女有归。货恶其弃于地也， capitalism 福利资本主义, an economic and
不必蔵于己；力恶其不出于身也，不必为己。是故谋闭而不兴， political system that combines a mostly market-
盗窃乱贼而不作，故外户而不闭。是谓大同。
based economy with extensive social welfare
• Great Harmony: Everyone does his or her best to contribute to programs.
the society, and everyone lives well.

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W E L FA R E C A P I TA L I S M S TAT E C A P I TA L I S M
• Under welfare capitalism, the government owns some
of the largest industries and services, such as • Another blend of capitalism and socialism is state capitalism,
transportation, the mass media, and health care. an economic and political system in which companies are
• In Greece, France, and Sweden, almost half of privately owned but cooperate closely with the government.
economic production is “nationalized,” or state-
• State capitalism is the rule among the nations along the Pacific
controlled.
Rim.
• Most industry is left in private hands, although it is
subject to extensive government regulation. • Japan, South Korea, and Singapore are all capitalist countries,
• High taxation (aimed especially at the rich) funds a but their governments work in partnership with large
wide range of social welfare programs, including companies, supplying financial assistance and controlling
universal health care and child care. foreign imports to help their businesses compete in world
• In Sweden, for example, government-provided social markets (Gerlach, 1992).
services represent 29 percent of all economic output.

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R E L A T I V E A D VA N T A G E S O F
C A P I TA L I S M A N D S O C I A L I S M R E L AT I V E A D VA N TA G E S O F
C A P I TA L I S M A N D S O C I A L I S M
Which economic system works best?
ECONOMIC PRODUCTIVITY
• Comparing economic models is difficult • A commonly used measure of economic output is gross domestic product (GDP), the total value of all goods and
because all countries mix capitalism and services produced annually.

socialism to varying degrees. • Per capita (per-person) GDP allows us to compare the economic performance of nations of different population
sizes.
• In addition, nations differ in cultural attitudes • The output of mostly capitalist countries at the end of the 1980s—before the fall of the socialist systems in the
toward work, access to natural resources, Soviet Union and Eastern Europe—varied somewhat but averaged about $13,500 per person. The comparable
figure for the mostly socialist former Soviet Union and nations of Eastern Europe was about $5,000. This
levels of technological development, and
means that the capitalist countries outproduced the socialist nations by a ratio of 2.7 to 1 (United Nations
patterns of trade. Development Programme, 1990).
• A recent comparison of socialist North Korea (estimated per capita GDP of $1,800) and capitalist South Korea
($24,156) provides an even sharper contrast (Central Intelligence Agency, 2015; World Bank, 2015).

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R E L AT I V E A D VA N TA G E S O F
R E L AT I V E
C A P I TA L I S M A N D S O C I A L I S M
A D VA N T A G E ECONOMIC EQUALITY
S OF
• The distribution of resources within a population is another important measure of how well an
C A P I TA L I S economic system works.
M AND • comparative study of Europe in the mid-1970s, when that region was split between mostly
SOCIALISM capitalist and mostly socialist countries, compared the earnings of the richest 5 percent of the
population and the poorest 5 percent (Wiles, 1977). Societies with capitalist economies had an
income ratio of about 10 to 1; the ratio for socialist countries was about 5 to 1.

• Capitalist economies support a higher overall standard of living, but with greater income
inequality; socialist economies create more economic equality but with a lower overall living
standard.

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R E L A T I V E A D VA N T A G E S WORK IN THE POSTINDUSTRIAL

O F C A P I TA L I S M A N D
SOCIALISM
ECONOMY
• The Decline of Agricultural Work
PERSONAL FREEDOM
• From Factory Work to Service Work
• Perhaps the closest any country has come to “having it
PROFESSIONS
all” is Denmark, where welfare capitalism combines a
market economy with broad government programs that • Many types of jobs today are called professional—we hear of professional tennis players,
provide for the welfare of all citizens. professional housecleaners, ven professional exterminators.
• As distinct from amateur (from the Latin for “lover,” meaning someone who does something just
for the love of doing it), a professional performs some task to make a living.
• But does this term mean something more? What exactly is a profession?

• A profession is a prestigious white-collar occupation that requires extensive formal education.

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PROFESSIONS
PROFESSIONS
• People performing this kind of work make a profession, or public
• 2. Self-regulating practice. The typical professional is self-employed, “in private
declartion, of their willingness to work according to certain ethical
principles.
practice,” rather than working for a company. Professionals oversee their own
• Professions include the ministry, medicine, law, academia, architecture,
work guided by a code of ethics.
accountancy, and social work.
An occupation is considered a profession to the extent that it demonstrates the
• 3. Authority over clients. Because of their expertise, professionals are sought out
following four basic characteristics (Goode, 1960; Ritzer & Walczak, 1990): by clients, who value their advice and follow their directions.
• 1. theoretical knowledge. Professionals have a theoretical understanding of
their field rather than mere technical training. Anyone can master first-aid • 4. Community orientation rather than self-interest. The traditional professing
skills, for example, but physicians have a theoretical understanding of
human health. This means that tennis players, housecleaners, and of duty states an intention to serve others rather than merely to seek income.
exterminators do not really qualify as professionals.

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PROFESSIONS
• In almost all cases, professional work requires not just a college
degree but also a graduate degree.

• Many occupations that do not qualify as true professions nonetheless

may seek to professionalize their services. Claiming professional
standing often begins by renaming the work to suggest special,
theoretical knowledge, moving the field away from its original,
lesser reputation.
• Stockroom workers become “inventory supply managers,” and
exterminators are reborn as “insect control specialists.”

• Interested parties may also form a professional association that

certifies their skills and ethical conduct. This organization then
licenses its members, writes a code of ethics, and emphasizes the
work’s importance in the community.

• To win public acceptance, a professional association may also

establish schools or other training facilities and publish a
professional journal.

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