Inequality - Stratification Sociology - Lecture Slides, Slides of Sociology

Download Inequality - Stratification Sociology - Lecture Slides and more Slides Sociology in PDF only on Docsity! INEQUALITY & DEVELOPMENT IN THE WORLD SYSTEM I docsity.com The World-System Approach • World-system theory: a perspective on the origins and development of capitalism as a global economic system (Wallerstein, 1974) docsity.com The World-System Approach “The singular feature of this world economy was the discontinuity between economic and political institutions. This discontinuity made possible and was made possible by the creation of capitalist forms of production, not only in commerce and industry, but most important of all, in agriculture.” (Wallerstein, 1972, p95) docsity.com Core, Periphery, and Semiperiphery • “The core areas were the location of a complex variety of economic activities” • The peripheral areas “were monocultural, with the cash crops being produced on large estates by coerced labor” • “The semiperipheral areas were in the process of deindustrializing” (Wallerstein, 1972, p96) docsity.com The World-System Approach • In the world economy, the various areas came to be dependent on each other for their specialized roles • Profitability: the world system tried to increase its overall productivity docsity.com Transnational Corporations and Underdevelopment (Bornschier and Chase-Dunn, 1985) Dependent Industrialization and Underdevelopment • The stratification of average income among nations and the internal distribution of income around the national average are mainly determined by nations’ positions in the world system docsity.com National and International Income Inequality • “The average income possibilities and the internal distribution of income that are consequences of a country’s position in the spatioeconomic hierarchy interact with the process of the transnational corporation’s organizational imperialism to produce greater personal and sectoral income inequality and higher levels of social marginality within countries on lower levels of hierarchy.” (Bornschier and Chase-Dunn, 1985, p23) docsity.com National and International Income Inequality • There is a harmony of interests between the ruling classes of core and peripheral countries to be the main social stabilization mechanism of the spatioeconomic hierarchy • “…an alliance between core ruling classes and peripheral ruling classes will tend to produce greater inequalities within peripheral countries because the peripheral elite will be able to use the resource of core support to garner income and other advantages to itself. It will also be more able to successfully resist demands for redistribution.” (Bornschier and Chase-Dunn, 1985, p23) docsity.com National and International Income Inequality • Export of proletariat: “These flows of resources to the core countries contribute to their further development of technological innovations, and expansion of clean and well-paid jobs, whereas routinized and standardized, dirty and simple tasks with low incomes are increasingly transferred to the periphery.” (Bornschier and Chase-Dunn, 1985, p24) docsity.com National and International Income Inequality • Superimposed stratification: in many peripheral countries the subsidiaries of transnational corporations constitute the majority of the largest industrial enterprises • “The extent of the superimposed stratification by transnational corporations is generally greater the less developed a country is.” (Bornschier and Chase-Dunn, 1985, p24) docsity.com National and International Income Inequality • Zero-sum game: The expansion is not necessarily diminished by reaching the limits of market demand. “Rather, competition causes aggressive, innovative, and powerful firms to continue to grow at the expense of other firms and many of the latter are either driven from the market or absorbed.” (Bornschier and Chase-Dunn, 1985, p24) docsity.com Obstacles to Growth in the Periphery • In contrast to what happens in core capitalism, the effects of monopolization are much more destructive in peripheral capitalism • “…the mechanisms by which the advanced country can counteract or stave off such stagnation tendencies, are in the underdeveloped economy, both fewer and less effective” (Merhav, 1969, p6) docsity.com Obstacles to Growth in the Periphery • “The small size of domestic markets in peripheral countries, even in those with large populations, produces a situation in which the stagnation tendencies that show up in core countries only at a late stage of industrialization are present practically from the beginning.” • In addition to the small size of the domestic market, it is also related to the scale of technology and limited possibilities to produce for export markets • “Shares of the world market are already distributed among industrial producers and are relatively closed to late industrializers.” • “...what was possible 150 years ago for a small country like Switzerland is no longer possible in the industrialized world of today” (Bornschier and Chase-Dunn, 1985, p27) docsity.com Transnational Firms and Inequality in the Periphery • The “trickle-down” effects are few: the basic needs of the majority of the population in peripheral countries are not satisfied • Income inequality becomes a necessary condition and a consequence • “…given a particular peripheral country in which average income is low and world market prices for transnational corporate products prevail, the effective demand…is larger and of more interest to transnational corporations the greater the income inequality” (Bornschier and Chase-Dunn, 1985, p28) docsity.com Causes of National Income Inequality • The striving for participation in the bourgeois lifestyle produces privileges relative to the average life situation in peripheral countries • “The integrated population tries to increase its consumption in order to keep up with core standards.” (Bornschier and Chase-Dunn, 1985, p120) • These lead to a larger income gap and more intense marginalization in poorer countries than in richer ones docsity.com Causes of National Income Inequality • “Transnational corporations are less opposed to greater income inequality within core countries.” (Bornschier and Chase-Dunn, 1985, p120) • Their market chances are larger the higher are the incomes of the masses of the people docsity.com Causes of National Income Inequality • Types of activity of transnational corporations in the periphery 1. Transnational firms active in agricultural, mineral and oil extraction 2. Those active in manufacturing for the world-market (“world-commodities”) 3. Transnational firms active in manufacturing for the domestic market docsity.com Causes of National Income Inequality • The rank order of production systems in the modern world regarding productivity and surplus · horticultural production systems · simple agrarian production systems · advanced agrarian production systems · industrial production system: periphery and semiperiphery · industrial production system: core docsity.com Causes of National Income Inequality • “…inequality in the industrial system is still greater than in advanced agrarian systems” (Bornschier and Chase-Dunn, 1985, p127) docsity.com Causes of National Income Inequality • “Productivity in the core is much higher and the organizational forms of production are much more complex, reflecting a more even distribution of power, whereas in the periphery standardized and routinized production prevails within the world division of labor, and this is accompanied by a larger marginalized segment of the population.” (Bornschier and Chase-Dunn, 1985, p127-8) • “…the strength of the state as an institution reflecting group and class alliances structured by the world-economy is greater in the core than in the periphery” (Bornschier and Chase-Dunn, 1985, p128) docsity.com Empirics of World Income Inequality (Firebaugh, 1999) • Different rates of population growth among nations played the predominant role in determining change in the distribution of per capita income across nations • The centuries-old trend of rising inequality leveled off from 1960 to 1989 docsity.com Convergence Theory • National economies will tend to converge because of the principle of diminishing returns to capital and labor (Solow, 1956) • “As rich industrial nations begin to experience diminishing returns, poorer nations (who are farther from the point of diminishing returns) will tend to catch up as they industrialize.” (Firebaugh, 1999) docsity.com Convergence Theory • The new growth theory (endogenous growth theory) (Romer, 1986; Lucas, 1988) challenges the convergence thesis by arguing that the principle of diminishing returns can be overcome by specialized inputs made possible by research • Conditional convergence (Barro, 1991: Barro and Sala-i-Martin, 1992: Mankiw, Romer, and Weil, 1992) • Unconditional convergence docsity.com Cross-national Evidence • Making sense of these findings weighting: studies that do not weight generally find divergence, whereas studies that weight generally find little change in intercountry inequality over recent decades purchasing power parity (PPP) China: weighted studies that exclude China are suspect docsity.com Cross-national Evidence • When each national economy is given the same weight, the data indicate national divergence • Weighted studies find stability • Do we want to give nations or individuals equal weight? docsity.com Weighted versus Unweighted Convergence • Economists: each nation represents one unit (one economy); economic trends in Luxembourg count just as much as economic trends in China, even though China has nearly 3,000 times more people • Sociologists: whether there is intercountry convergence in the case where individuals, not nations, are given equal weight docsity.com The Kuznets Curve • Kuznets theorized about long-term changes in the distribution of income • Examined changes in inequality within countries – Each country treated as an insulated unit – Development trajectory of a given country unrelated to that of other countries Hi, I’m Simon Kuznets, the man behind the curve. docsity.com D o an o & o ce) o Nw ee Gini coefficient of income inequality sy o o T 7 1 7 5 6 7 8 9 10 1 75 cout Logarithm of initial income per capita 1965 3 docsity.com Two Primary Forces Leading to Increased Intracountry Inequality 1) “Concentration of savings in the upper-income brackets” (p. 7) – Kuznets found that most savings in the United States were possessed by individuals in the upper income brackets – Saving has a cumulative effect; over time, the upper income groups would come to control increasing shares of assets 2) Shift in income distribution from agricultural to nonagricultural sectors Differences in structure of income distribution (p. 7): – “(a) the average per capita income of the rural population is usually lower than that of the urban” – “(b) inequality in the percentage shares within the distribution for the rural population is somewhat narrower than in that for the urban population” docsity.com Kuznets’ Konclusions • Assuming that inequality in sector B is greater than sector A, lower- income groups should have commanded an ever-decreasing share of income – However, overall income inequality in developed countries narrowed • The narrowing of inequality can be attributed to an increase in shares of income within low-income groups – Specifically, the lessening of inequality is attributable to sector B – Sector A may also have experienced decreased inequality, but the effect would be minimal when compared to sector B, which commanded a far larger share of the income distribution • “Hence, we may conclude that the major offset to the widening of income inequality associated with the shift from agriculture…must have been a rise in the income share of the lower groups within the nonagricultural sector of the population” (p. 17) docsity.com Longitudinal, Within-Country Explanations for the Curve Kuznets explains differences in inequality at various stages in industrial development through the relative position of low-income groups • “the dislocating effects of the agricultural and industrial revolutions, combined with the “swarming” of population incident upon a rapid decline in death rates and the maintenance or even rise of birth rates, would be unfavorable to the relative economic position of lower- income groups” (p. 18) • Thus, inequality steadily rises during the early stages of industrialization; the trend stabilizes and then reverses in later stages docsity.com Nielsen: Elaboration of Kuznets Main argument: “The inverted- U shaped relationship between income inequality and development (Kuznets curve) is largely accounted for by transitional development processes related to the dualism (both economic and generalized) of traditional and modern sectors of developing societies. Whereas Kuznets identified the central role of sector dualism in the evolution of income inequality, [Nielsen] identif[ies] generalized sociocultural dualism as a second critical factor docsity.com Sociological and Economic Explanations of Changes in Inequality Sociological: “focuses on long-term structural and institutional changes brought about by industrial development, such as the spread of education, the rise of democratic systems of government, or the specialized position of a country within the world system” (p. 655) Economic: focuses on dualism • “Dualistic explanations emphasize the inequality implications of aspects of development that are inherently transitional. Inequality is viewed as being generated by social heterogeneity related to a specific stage of the development process, rather than as an equilibrium” (p. 655) • Sector dualism: population shifts from agricultural to nonagricultural sectors affect levels of inequality docsity.com Partial and Selective Diffusion (Lenski) • Aspects of industrial development diffuse at an uneven rate throughout the population – The differential spread of variables such as education, urbanization, and democracy lead to a form of dualism that Nielsen terms generalized sociocultural dualism (to distinguish the concept from sector dualism) – “different subsets of items from the set are adopted by different people in the traditional society at different times” (p. 662) docsity.com Measures of Partial and Selective Diffusion Nielsen uses the natural rate of population increase (birth rate minus death rate) as a proxy for partial and selective diffusion • This substitution is appropriate because the rate of population increase is directly affected by technology that reduces mortality • Reproduction is also reduced, but only after a slight lag, thereby creating a temporary upswing in natural rate of population increase The rise in rate of population increase contributes to greater inequality by: – Elevating the number of young, unskilled laborers – Lowering the wages of all unskilled laborers This parallels the “swarming” of the population predicted by Kuznets: the inequality gap widens during periods of rapid growth because the relative standing of low-income groups (such as those listed above) is diminished docsity.com Kuznets and Lenski Resolved “The transitory increase in inequality due to the industrialization process itself (and its inherent dualism) is…superimposed on the long-term decline in inequality that industrial technology brings forth” (p. 673) • As a society begins the shift from an agrarian to industrial mode of production, economic inequality increases • Income inequality grows “as a modern economic sector with vastly greater productivity emerges, as a small educated elite is paid a premium for its skills, as some regions take off economically and others are left behind, and as the contrasts between the cities and the countryside increase” (p. 673) Thus, inequality does not peak in the agrarian stage and gradually decrease and industrialization emerges; rather, sector and generalized sociocultural dualism interact with the transition to temporarily inflate inequality in the beginning phases of industrialization After the transition (from agricultural to nonagricultural predominance) is well underway, levels of inequality begin to decline docsity.com World-Systems Theory and the Kuznets Curve Reconciled (Alderson and Nielsen) docsity.com Internal-developmental Model of Inequality The “baseline model of the relationship of income inequality with development that incorporates three major processes: labor force shifts and sector dualism; the demographic transition; and the spread of education” (p. 5) (1) Labor force shifts and sector dualism – Labor force shifts: Movement from agricultural to nonagricultural sectors causes inequality over time to plot as an inverted-U shape – Sector dualism: the level of inequality brought about by labor force shifts – Measured by level of sector dualism (positive effect) and percentage of the labor force in agriculture (negative effect) docsity.com Foreign Penetration School Based on world-systems theory • As posited by Bornschier and Chase-Dunn (1985), income inequality within a developing nation rises with increasing levels of as transnational corporate penetration (positive effect) • “dependence on foreign capital increases income inequality by distorting the occupational structure of Third World countries, ‘bloating’ the tertiary sector and producing both a highly paid elite and large groups of marginalized workers” (p. 7) docsity.com Test of Bornschier and Chase- Dunn (1985) • The baseline model (labor force shifts and sector dualism, the demographic transition, and the spread of education) is significant in the predicted directions – Sector dualism (between-sector inequality) positively effects inequality – Labor force in agriculture (within-sector inequality) negatively affects inequality – Natural rate of population increase raises levels inequality – Secondary school enrollment reduces inequality • Foreign capital penetration positively affects inequality – However, “the overall positive effect of foreign capital penetration on inequality is cancelled out for core countries” (p. 15) – These findings support those of Bornschier and Chase-Dunn docsity.com Interpretation of Findings Using Investment-development Model As accumulation (stock) of foreign investment increases from low to intermediate levels, dependence of foreign investment simultaneously increases Moving from intermediate to high levels of foreign investment stock, levels of dependence on foreign investment decline docsity.com Characteristics of the Industrialization Process (Kerr et al.) (1) The industrial work force • The development of industrialization creates the need for a highly skilled work force • Requisite skills are constantly changing (2) Mobility and the open society • Emphasis on continual training • Extended families decrease in prevalence: Nuclear families more conducive to mobility (3) Education • The educational system functions to impart skills necessary to industrialization • Education serves as a means of social mobility (4) Structure of the labor force • Highly differentiated; classified by occupation • Hierarchy and specialization  heterogeneity (as opposed to the homogeneity of traditional societies) docsity.com Pluralistic Individualism “This term is used to refer to an industrial society which is governed neither by one all powerful elite…nor by the impersonal interaction of innumerable small groups with relatively equal and fractionalized power (the atomistic model)” (p. 799) Some characteristics of pluralistic individualism • Increased state responsibility: mediator of conflict between various combinations of management, labor, and consumers; regulator of organizations and their memberships • Productive enterprises will play a key role • Rise in influence and prevalence of occupational or professional associations • Proliferation of rules • Conflict will be less between classes than between bureaucratic groups docsity.com Beyond Industrialism: Esping- Andersen • Declining demand for unskilled workers can be explained by technological change – “Employment lost due to trade competition from [Asia or the Third World] is rather trivial in comparison with the volume of job loss due to ‘structural change’” (p. 831) – Thus, inequality is caused primarily by within country variables • With the decline in manufacturing jobs in developed nations comes an attendant rise in service jobs – Jobs become increasingly polarized: highly skilled jobs requiring high levels of education creates a mass of “lousy jobs” occupied by those unable to obtain educational credentials docsity.com