Economic Systems for Allocating Scarce Resources PDF

ECONOMIC SYSTEMS FOR ALLOCATING SCARCE RESOURCES Our plan...

ECONOMIC SYSTEMS FOR ALLOCATING SCARCE RESOURCES Our planet only has a finite number of resources. These also exist in finite quantities. The wants and needs of human beings are potentially limitless, however, and we must find MEET A SIGNIFICANT INDIVIDUAL: ÉMILE DURKHEIM ways of allocating resources between competing uses. (1858–1917) In small, simple social groups, this is relatively easy in the sense that there is less competition for resources between Along with Karl Marx and Max Weber, Émile Durkheim was one individuals. As we have seen, small groups organize of the fathers of sociology. Born in the Lorraine region, France, themselves in a communal way, working together to meet in 1858, Durkheim was an excellent student at school and the needs of the group. In complex societies, where people developed a strong work ethic that enabled him to gain entrance are more individualistic, and don’t work together to meet at the École Normale Supérieure in Paris. Eventually he taught the needs of the entire group, different systems of allocating at the University of Bordeaux and the Sorbonne. His efforts resources are needed. The following four broad categories were concentrated on developing the study of society as a single can be useful in thinking about the differences between discipline, rather than rooted in philosophy or history. He saw economic systems: the study of what is now known as sociology as an easily defined slavery subject in its own right. Durkheim lived during a time when feudalism France was undergoing significant social upheaval. As a result of capitalism the increasing prominence of the natural sciences at that time, communism. there was a fast-developing trend to study society’s problems in a scientific way in order to find their solutions, and this was encouraged through national government policy. In addition, Slavery there was a breakdown in national unity in the country, and a rise Many societies have made use of slavery to accomplish their of the role of the individual. objectives. This is the most violent of the four systems listed The Dreyfus Affair of 1894 was an incident of anti-semitism above. Individuals are deprived of their right to freedom, and miscarriage of justice against a captain of the French army, and are forced into work by a person to whom society has Alfred Dreyfus, who was falsely accused of communicating granted the power. Often, slaves belonged to particular military secrets to the Germans. The Dreyfus Affair was extremely groups of people (e.g. Jewish people in Ancient Egypt, or fractious and exposed many differences in opinion that had, until African slaves in the British empire). Slaves have been used that point, remained relatively underreported. It led to an intense as servants in the home, in the production of crops and for focus on the rights of an individual and their priority ahead of the construction of buildings and monuments. needs of the state. The press played a pivotal role in shaping the debate and questioned the actions of the government in response to the affair. Durkheim saw this as a clear indication that the rise of the individual takes place at the expense of social cohesion. 6 Individuals & Societies for the IB MYP 4&5: by Concept 10425798_01_I&S_for_the_IB_MYP_4&5_Ch01.indd 6 20/01/2020 13:10  The rest of the population were peasants, or serfs, who had few rights, and were tied to the land where they lived. They were essentially slaves to the landowner, without being property of the landowner. Without the freedom to move to places offering better situations, and without the education to build better circumstances for themselves, these people were left with little choice but to work the land and produce food and other goods for the landowners. Capitalism Figure 1.4 An ancient Roman fresco found in Pompeii, Italy, of a conversation between a family and their slave Capitalism is an economic system of production that is employed throughout most of the world today. In this system, ownership is of capital, rather than land as in the feudal system. Owners of capital, or capitalists, use the capital and employ workers to help turn raw materials into something of use or exchange value that can be sold. Most people work for businesses, which at some point were started by entrepreneurs and are still being invested in by owners of capital. Although it is common around the world, there are detractors of capitalism. Moral philosopher Adam Smith said: ‘It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address Figure 1.5 A Union soldier stands with African ourselves, not to their humanity but to their self- Americans on the plantation Thomas F. Drayton, Hilton love, and never talk to them of our necessities but of Head Island, South Carolina, 1862. Photo by Henry P. their advantages.’ Moore, May 1862 Feudalism Communism Feudalism was a system predominantly in place in Medieval For some individuals alive during the Industrial Revolution Europe, but also in other places such as Russia until Tsar in Europe, the changes they witnessed were not positive. Alexander II emancipated the serfs in 1861, and in Japan European writers such as Pierre-Joseph Proudhon, Pyotr until the start of the Meiji period in 1868. Broadly, this is a Kropotkin, Karl Marx and Friedrich Engels all wrote critically system of organizing production based on hereditary rule of the capitalist Industrial Revolution and explored the and land ownership. There was usually a monarch, who had historical development of the capitalist system. Their either inherited the title or acquired it by some claim of right revelations about the system led them to see it as no to it, and a group of landowners who managed production less oppressive of the average individual than slavery in the society. Production was mostly agricultural, together or feudalism. with some manufacturing of tools, weapons, textiles and carpentry items. The landowners also had hereditary titles which they could pass on to their descendants. 1 Why do individuals form social groups? 7 10425798_01_I&S_for_the_IB_MYP_4&5_Ch01.indd 7 20/01/2020 13:10  What is equality? THINK–PAIR–SHARE Read Source A from Utopia for Realists by Rutger Bregman. Today, there are many people, organizations DISCUSS and governments working to improve the lives of To what extent are today’s differences in income people who experience daily hardship. Do you think we inequality still a legacy of the systems of slavery will ever be able to eradicate poverty? What barriers and feudalism? currently prevent people from escaping poverty? Write some of your thoughts down, share them with a They argued that because production’s purpose is not for partner and discuss with the rest of the class. consumption straight away, but for trade and exchange, the worker has no choice but to enter into a relationship SOURCE A with the owner of the means of production. In other ‘Let’s start with a little history lesson: words, workers are no longer producing their own food, equipment, etc. needed for daily survival, but they must In the past, everything was worse. instead work to earn a wage to buy those items. For roughly 99% of the world’s history, 99% of humanity was Marx viewed this relationship between the worker and his poor, hungry, dirty, afraid, stupid, sick and ugly. As recently as production in an extremely negative way: the seventeenth century, the French philosopher Blaise Pascal (1623–62) described life as one giant vale of tears. “Humanity ‘First, the fact that labour is external to the worker, is great,” he wrote, “because it knows itself to be wretched.” i.e. it does not belong to his essential being; that in In Britain, fellow philosopher Thomas Hobbes (1588–1679) his work, therefore, he does not affirm himself but concurred that human life was basically “solitary, poor, nasty, denies himself, does not feel content but unhappy, brutish and short.” does not develop freely his physical and mental energy but mortifies his body and ruins his mind. But in the last 200 years, all of that has changed. In just a fraction The worker only feels outside himself. He is at home of the time that our species has clocked on this planet, billions of us when he is not working, and when he is working he are suddenly rich, well nourished, clean, safe, smart, healthy and is not at home. His labour is therefore not voluntary, occasionally even beautiful. Where 84% of the world’s population but coerced: it is forced labour.’ – Marx, The still lived in extreme poverty in 1820, by 1981 that percentage has Economic and Philosophic Manuscripts dropped to 44% and now, just a few decades later, it is under 10%. Given that labourers are the sole owners of their own If this trend holds, the extreme poverty that has been an abiding labour power, and that capitalists have no means of turning feature of life will soon be eradicated for good.’ resources into things with value without labourers, Marx The opening paragraphs of Utopia for Realists: And how can we get and others thought that power should be in the hands of there (2017), by Rutger Bregman the workers. As capitalists competed increasingly strongly with each other for profits, which would eventually cause them to lower workers’ wages, it was predicted that EQUALITY VERSUS EQUITY workers would rise up against the capitalists and overthrow The terms ‘equality’ and ‘equity’ may sound similar, but the capitalist system. Where private property rights they do not have the same meaning. Equality would be protected capitalists’ ability to generate profit from what achieved if everyone earned the same in society. We also they owned, under communism there would be no private talk about gender equality, which means no discrimination property, so that any surplus value generated by economic in pay or treatment based on gender. Equity, on the other activity would be shared and owned by all citizens. hand, means fairness. 8 Individuals & Societies for the IB MYP 4&5: by Concept 10425798_01_I&S_for_the_IB_MYP_4&5_Ch01.indd 8 20/01/2020 13:10