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Lecture 4

Week 4 Lecture

Course Code
Dan Silver

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Commercial Society
1. Structure
a. money
b. markets
2. Distributing wealth
a. wealth
b. inequality
c. social class/conflict
3. Process
a. natural progress
b. European Inhibitors
i. Feudalism
ii. Mercantilism
4. Government + its duties
a. military
b. justice
c. education
- money = great way to facilitate exchange with lots of people
- e.g. give money for cows, and use money for other stuff
- expansion of money – use value vs. exchange value
- use value = value of using it
- exchange value = value one gets for exchanging something
- Mercantilism – kind of theory when obsessed with exchange value
- How to allocate resources? Who to exchange with?
- e.g. make lots of Christmas trees and allocating them to people who want them
- competition + self-interest = equilibrium distribution
- market – way of distributing things to people who want/need them
- models that tell prices:
- law of demand – inverse relationship between price and amount desired
- law of supply – direct relationship between price and amount offered for sale
- law of comparative advantage – individuals and firms in regions can gain by specializing in
production of goods that they can produce cheaply and exchanging for other desired goods that
they can produce expensively
- do the thing that you are best at
Distributing Wealth:
- three ways of distributing wealth: rent (landlords), wages (workers), and profit (business
- property creates rent and capital; produce and sell things to create profit
- business people want to pay workers as little as possible (i.e. minimum) to keep families alive
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