SOC-1051 : Sociology Exam 3 Notes[1] 1
Sociology Exam 3 Notes
The Barter System
▪ The oldest form of economy we know of. It is based on exchange
of goods (you have cotton and we have salt so lets exchange). For
simpler societies the barter system tended to be pretty sufficient but
it has some major drawbacks also. It is limited also by how much a
person can carry around. The system is limited by what can be
accumulated and what can be stored (some goods can not be
stored so you have to trade them off in a hurry).
Money Economies
▪ When societies got more complex we saw money economies
where we developed some system where things can be
exchanged for a wide variety of things. As long as there was some
systematic way of every one agreeing on the system (I agree and
you except that a dollar is a dollar). You could use the money to
buy whatever you wanted.
Command Economies
▪ These are economies which the government tries to regulate most
aspects of the economy
▪ Feudalism
o An agrarian system based on large scale agriculture. It was
based on how much land nobility had and how much land
they could accumulate. These wealthy land owners pretty
much owned all the needs for production. The majority of
people were surfs (peasants bound to the land by law to
work the land for the landlord). They would usually have the
right to keep some of what they raised. Some of what they
produce has to go to the landlord and they can’t leave. This
developed and became common in Europe. It still exists in
various forms in parts of the world today. In the early ages the
system was based on barter more than money (people
couldn’t get their hands on money easily). With an increase in
trade money became more available. And the surfs could
pay the landlords instead of working. This rise in money leads
to the decline in feudal system.
▪ Mercantilism
o Under this system individuals (or privately owned businesses)
took care of the production of goods, but the distribution of
goods was regulated by the government. We see in Europe
not only the rise of states but the rise of monarchies. They
would make their money to import and export taxes. Any flow
of goods in to or out of the country they had to pay taxes.
European powers began to develop oversea colonies. Any
goods produced in a colony had to be sent back to the
other colony which caused them to have to pay a tax.
Monarchs were very much important because it was up to
parliament to pass laws about internal taxes (and they would
get the revenue).
▪ Adam Smith disagreed with this and in his book called
the wealth of nations- he said this wasn’t a way for your
county to get rich.
▪ John Hancock smuggled rum. All the rum had to go to
the mother country first to collect tariffs (import and
export). This put a glitch in his business and wasn’t
happy with the king.
▪ These laws brought about and regulated the flow of
goods and led to the American Revolution. For the
most part American colonies did not pay a lot of
attention to these laws because they were so far away.
In the French and Indian war England decided that
because they had to defend the French, American
colonies needed to be paying more for their orders.
American colonies said they had already paid for it
with money and through their own blood. John
Hancock and many others were angry. Started saying
taxation without representation. They finally decided
they didn’t want to pay any taxes to England. They did
away with them all except for the one with tea. This
lead to the Boston tea Party (Americans threw British
tea overboard). This put an end to the mercantile
system and it pretty much faded away after that.
▪ Socialism/ “Communism”
o Under socialism the government owns the major means (big
businesses, banks, farms) of production and distribution of
goods (monopolies). They regulate wages in prices also.
o Negative- No incentive for production of goods because
there is no competition or innovation because there is no
need to develop better goods because you have enough
profit producing mediocre things.
o Karl Marx
▪ Socialism societies are based on many of the ideas of
Karl Marx. He lived at a time when Western Europe was
becoming industrialized. This caused massive changes
in society (the rise of big farms, closing lands, and the
rise of factories in their cities). These were causing a lot
of poverty. People were working like 16 hours a day for
a few pennies. For Marx a person’s position in society is
based on their relation to the means to production.
• Bourgeoisie- big business owners were known as
this. These are people that make their living off of
other people’s labor.
• Proletariat- people who have to make their living
by selling their labor to capitalist. They have to
sell their product at a higher cost to make a
profit. This is by its very nature an exploit of the
system.
o Capitalism- It is the best way we’ve found yet for producing
goods because as long as there is a demand there, there is
an incentive to produce the goods
o According to Karl, Capitalism is based on competition
because there is always competition to sell your product at a
lower cost. The easy way to reduce your cost is to reduce
your labor. The more and more capitalism goes on the more
workers are going to be exploited. There will come a time
when these labors realize they can’t get ahead because of
this system. Once they realize this fact the proletariat is going
to come together and rise up against the bourgeoisie and
take over the production for themselves and distribute the
money themselves. This was Karl Marx’s society known as
Communism. Marx said this will not be an easy process. There
will be a lot of people in society that will not want to change
the way things are done. He said there needs to be a phase
in-between capitalism and communism where the
government controls the means of production (socialism).
When we look at countries today and say they are
communism they really are not, they are socialism. We also
have a tendency to confuse these economic systems with
political systems.
Free Market Capitalism
▪ Any individual is allowed to engage in any type of economic
activity as long as it’s legal. Adam Smith said private greed will result
in the greatest public good. People are greedy by their own nature.
As long as people can find a way to make money they will do it.
The economy will be regulated by the “invisible hand”. If there is a
big demand for goods they will pay more for it and more will be
produced. If some good goes down fewer people want to buy it
then they will produce it less. Supply and demand is based on the
assumption of many producers and consumers.
Document Summary
The barter system: the oldest form of economy we know of. It is based on exchange of goods (you have cotton and we have salt so lets exchange). For simpler societies the barter system tended to be pretty sufficient but it has some major drawbacks also. It is limited also by how much a person can carry around. The system is limited by what can be accumulated and what can be stored (some goods can not be stored so you have to trade them off in a hurry). Money economies: when societies got more complex we saw money economies where we developed some system where things can be exchanged for a wide variety of things. As long as there was some systematic way of every one agreeing on the system (i agree and you except that a dollar is a dollar). You could use the money to buy whatever you wanted.
