MAN 4701 Business and Society Exam 1 Study Guide PowerPoint Slides 1 Economic Organization and Societal Development All societies from the simplest to the most complex must answer the Fundamental Economic Question How do we allocate our labor and resources to provide for our current needs and our long term prosperity OR Who does what and who gets what so we can Survive and Thrive The way Societies answer this Question is related to other aspects of the society such as o Authority power and status within the society o Roles and responsibilities o Laws norms and customs o Shared values among members o Technology used to create material value o Interactions with other societies Historically there have been only three ways that societies have used to answer the Fundamental Economic Question o Tradition Roles and tasks are determined by what has always been done Most common in societies that are relatively isolated from other societies Generally economically self sufficient Limited contact with outsiders Pressure to adapt to changing conditions is low o Command Some person or group is accepted as having the legitimate right to determine who performs some tasks how they are done and how the value produced is distributed Usually arise from Need to defend themselves or a desire for conquest Need for order within the society Need to adapt to social change or disruption Ability of strong members to force their dominance on others o Free Market Each person is free within the limits defined by law and custom to employ their labor and resources as they choose and assumes the responsibility for their choices Did not become common as a primary basis for economic organization Adam Smith until the 1700s o Often referred to as the first modern economist o Trained as a Clergyman employed as a Professor of Moral Philosophy o Principal concern improving the human condition o Introduced the term Invisible Hand of the Marketplace Advantages of a Free Market Economy o Rewards people for producing things desired by other people o Encourages the distribution of labor and resources to produce the mix of goods that produces the most value o Promotes efficiency o Promotes long term economic growth o Promotes individual freedom responsibility and rights Limitations of the Free Market o Not well suited to the production of Social Goods Things that provide economic benefit to all but cannot efficiently be produced or sold in individual units o Not well suited to advance social goals other than economic growth o The market by itself is not well suited to distinguish between competitive advantage acquired legitimately and those acquired illegitimately o Those who acquire market power may use that power to close the market to other competitors thereby depriving society of the benefits of competition PowerPoint Slides 2 Social Institutions and Social Needs Why do people live socially o Security protection against hostile enemies o Order ability to interact in a predictable cooperative way o Affiliation companionship mating sense of identity o Economics acquire the things needed for survival and comfort others achievement oppressive Social Cohesion refers to the strength of the forces that create a sense of attraction and commitment to a social group o Members of highly cohesive social groups tend to Accept and Legitimize the norms and rules of the group Encourage conforming behavior and sanction disruptive behavior by Willingly act for benefit of other members and work to alleviate problems Costs Associated with Societal Affiliation o Economic Costs Taxes user fees assessments o Conformity Pressure to conform to behavioral norms or beliefs o Limited Opportunities Economic legal or social restrictions on personal o Restrictions on Freedom Laws and norms that are perceived as intrusive or Social Alienation When a person perceives that the Costs of membership in a group exceed the Benefits of membership the attractiveness to the group often declines resulting in emotional separation from the group Social Disaggregation occurs when Alienation becomes so common that members no longer value membership This can result in the breakdown of society o Psychological realignment identification with a similar sub group rather than with the larger community norms o Delegitimization of authority unwillingness to voluntarily accept social and legal o Physical withdrawal move outside the reach of social control expectations o To counteract this Tendency to Disaggregate Societies must reinforce in the minds of their members why membership in and commitment to the Society is good for them Social Institutions Groups organizations and ordered systems of relationships and behaviors that are o Relatively Permanent o Serve a Social Purpose beyond the benefit of their members o Have some degree of Social Approval from other members o Develop in societies in part to provide or remind members of society of the benefits of membership Social Institutions may be planned or emergent o Planned intentionally designed to serve a social purpose o Emergent develop over time from spontaneous and uncoordinated efforts to solve problems or improve society o Often have characteristics of both Functional Types of Institutions functions to prevent disaggregation o Governmental Institutions o All large complex societies need Social Institutions to perform three basic Example The Legislature The Executive The Judicial Essential Functions Protect members from external threats Maintain order within society Administer justice when laws are violated or members believe their rights have been violated o Cultural Institutions Examples Churches Schools Museums Art Galleries Essential Functions Preserve transmit and reinforce the essential Common Values of the Society Reinforce a sense of Common Identity Encourage Standards of Behavior that are consistent with maintaining a good society Example Bank Stock Market Corporations Essential Function Create wealth for society by producing the goods and services people want effectively and efficiently o Economic Institutions PowerPoint Slides 3 Industrialization and American Business Agricultural Economies o Based on producing wealth by the systematic cultivation of crops o Displaced nomadic hearing as the dominant source of economic value around 10000 B C and remained dominant until around 1700 A D o Most important factors of production were land and labor Ways Agriculture Changed Societies 1 Development of permanent