18.1 Economic systems  (Page 10/33)

Another factor affects convergence concerning social structure. Early in their development, countries such as Brazil and Cuba had economies based on cash crops (coffee or sugarcane, for instance) grown on large plantations by unskilled workers. The elite ran the plantations and the government, with little interest in training and educating the populace for other endeavors. This retarded economic growth until the power of the wealthy plantation owners was challenged (Sokoloff and Engerman 2000). Improved economies generally lead to wider social improvement. Society benefits from improved educational systems, allowing people more time to devote to learning and leisure.

Theoretical perspectives on the economy

Now that we’ve developed an understanding of the history and basic components of economies, let’s turn to theory. How might social scientists study these topics? What questions do they ask? What theories do they develop to add to the body of sociological knowledge?

Functionalist perspective

Someone taking a functional perspective will most likely view work and the economy as a well-oiled machine, designed for maximum efficiency. The Davis-Moore thesis, for example, suggests that some social stratification is a social necessity. The need for certain highly skilled positions combined with the relative difficulty of the occupation and the length of time it takes to qualify will result in a higher reward for that job, providing a financial motivation to engage in more education and a more difficult profession (Davis and Moore 1945). This theory can be used to explain the prestige and salaries that go to those with doctorates or medical degrees.

Like any theory, this is subject to criticism. For example, the thesis fails to take into account the many people who spend years on their education only to pursue work at a lower-paying position in a nonprofit organization, or who teach high school after pursuing a PhD. It also fails to acknowledge the effect of life changes and social networks on individual opportunities.

The functionalist perspective would assume that the continued health of the economy is vital to the health of the nation, as it ensures the distribution of goods and services. For example, we need food to travel from farms (high-functioning and efficient agricultural systems) via roads (safe and effective trucking and rail routes) to urban centers (high-density areas where workers can gather). However, sometimes a dysfunction––a function with the potential to disrupt social institutions or organization (Merton 1968)––in the economy occurs, usually because some institutions fail to adapt quickly enough to changing social conditions. This lesson has been driven home recently with the bursting of the housing bubble. Due to irresponsible lending practices and an underregulated financial market, we are currently living with the after-effects of a major dysfunction.

Some of this is cyclical. Markets produce goods as they are supposed to, but eventually the market is saturated and the supply of goods exceeds the demands. Typically the market goes through phases of surplus, or excess, inflation, where the money in your pocket today buys less than it did yesterday, and recession    , which occurs when there are two or more consecutive quarters of economic decline. The functionalist would say to let market forces fluctuate in a cycle through these stages. In reality, to control the risk of an economic depression    (a sustained recession across several economic sectors), the U.S. government will often adjust interest rates to encourage more spending. In short, letting the natural cycle fluctuate is not a gamble most governments are willing to take.