Understanding the Economy and Work: From Labor to Corporate Power
ITEM 12: ECONOMY AND WORK
The Concept of Labor
Labor refers to the mental and physical effort exerted by individuals to produce services that fulfill human needs.
Occupation refers to work performed in exchange for wages.
Division of Labor
In industrialized economies, work is typically divided into three sectors:
- Primary Sector: This sector encompasses activities like agriculture, mining, forestry, and fishing. In the early stages of industrial development, the majority of workers were employed in this sector, extracting raw materials.
- Secondary Sector: As economies progress, the secondary sector attracts a larger proportion of the workforce. Secondary industries focus on transforming raw materials into manufactured goods.
- Tertiary Sector: The tertiary sector comprises service industries, which provide services rather than directly producing goods. Examples include medicine, teaching, and other service-oriented occupations.
Taylorism and Fordism
Frederick Winslow Taylor aimed to enhance industrial efficiency through scientific management principles. However, he did not address the aspect of product sales. Mass production necessitates mass markets and industrial-scale distribution.
Fordism refers to the mass production system pioneered by Henry Ford, characterized by the assembly line. Each worker on the assembly line has a specific task to perform.
Challenges associated with Fordism included absenteeism and employee turnover. To address these issues, incentive pay systems were introduced to encourage worker discipline and improve retention.
Limitations of Fordism
The applicability of Fordism has diminished over time. It is primarily suitable for industries producing standardized goods for large markets, and the production process can be expensive. Additionally, replicating the Fordism model is relatively easy if sufficient capital is available to establish the necessary infrastructure. Companies in countries with high labor costs may struggle to compete with those in regions where wages are lower.
Taylorist management techniques do not require substantial capital investment. However, their limitations stem from the fact that humans are not machines and may resist being treated as such. Dividing work into monotonous tasks leaves little room for worker creativity and collaboration.
Beyond Fordism
Fordism has given way to more flexible production systems that cater to specific needs with smaller quantities of goods, rather than mass-producing standardized products for the general market.
Automation, the use of machines to mechanize and control production processes with minimal human intervention, has played a significant role in this shift. The integration of computerized processes into industry has further facilitated flexible production.
Advancements in industrial robot design are enabling them to perform tasks previously undertaken by humans.
High-Trust and Low-Trust Systems and Group Production
Fordism and Taylorism are considered low-trust systems, where tasks and instructions are dictated by management, and workers are closely supervised with limited autonomy.
High-trust systems, on the other hand, grant individuals greater freedom to regulate their work pace and even the content of their tasks. In Fordism and Taylorism, such positions are typically found at managerial levels.
Group production involves a shift away from mass production towards collaborative working groups. Automating mundane tasks allows workers to develop new skills and engage in more meaningful and interesting work.
Industrial Democracy
Organizations where employees have a say in decision-making tend to exhibit higher morale, reduced conflict, and increased productivity. Empowering employees in decision-making processes enhances job satisfaction and leads to positive outcomes.
Corporations and Corporate Power
The evolution of corporate power can be divided into three stages:
- Family Capitalism: In this stage, large firms were typically managed by individual entrepreneurs or a small group of family members, with ownership passed down through generations.
- Managerial Capitalism: As large firms grew, professional managers gained greater influence, gradually displacing the role of family ownership and establishing the dominance of the corporation itself.
- Institutional Capitalism: This stage is marked by the emergence of a well-established network of business leadership.
Development of Trade Unions
The trade union movement gained momentum and became a mass movement. In the past quarter-century, trade union activity was legalized, leading to a surge in membership, reaching up to 60% of male manual workers in Britain.
Employment and Unemployment
In modern societies, having a job is crucial for maintaining self-esteem, even when working conditions are less than ideal or tasks are monotonous. Employment offers several benefits:
- Income: Wages are the primary means for most people to meet their needs.
- Skill Development: Employment provides opportunities to acquire and utilize knowledge and skills.
- Variety: Work offers exposure to environments beyond the domestic sphere.
- Time Structure: Regular employment typically structures the day around work schedules.
- Social Contact: The workplace often fosters friendships and opportunities for shared activities.
- Personal Identity: Employment is valued for the sense of social identity and stability it provides, particularly for men whose self-esteem is often linked to their economic contribution to the household.
Reasons for Rising Unemployment Rates
Several factors contribute to increasing unemployment rates:
- Increased International Competition: Globalization has intensified competition in various industries.
- Economic Downturns: Starting with the 1973 oil crisis, the global economy has experienced periods of recession and decline in production.
- Technological Advancements: The growing use of microelectronics in industry has reduced the demand for labor.
- Increased Female Labor Force Participation: More women are seeking paid employment, leading to greater competition for a limited number of jobs.
Domestic Work
Unpaid work, especially that performed by women in the domestic sphere, has often been overlooked. However, such work is as essential to the economy as paid labor. The estimated value of domestic work is equivalent to approximately one-third of the total annual production of a modern economy.
Shadow Economy
The shadow economy encompasses transactions conducted outside the realm of regular employment. This can involve exchanging money for services or the direct exchange of goods and services.
Theory of State Overload
According to this theory, governments have assumed responsibility for numerous tasks, including public ownership of industries, utilities, and welfare programs, exceeding their capacity to finance and manage effectively. The rise of the New Right is seen as an attempt to address this situation by reducing the role of the state and promoting private enterprise.
Theory of Legitimation Crisis
Developed by German philosopher Jürgen Habermas, this theory posits that modern governments face challenges in generating the resources required to fulfill their mandated tasks. State intervention in the economy and the provision of welfare resources are deemed necessary for maintaining economic stability.
The Problem of Secularization
Secularization refers to the process by which religion’s influence on various aspects of social life diminishes. This process has several dimensions:
- Decline in Religious Membership: This refers to the decreasing number of individuals belonging to religious organizations and actively participating in religious services and ceremonies.
- Reduced Social Influence of Religion: This dimension concerns the extent to which religious institutions maintain their social influence, wealth, and prestige.
- Shifting Beliefs and Values: This aspect relates to changes in religious beliefs and values within society.