Discussion 6

Economic

Sociology

Fabio Rojas, Indiana University

Economic Sociology (Fall 2021)

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Economic Sociology

F A B I O R O J A S , I N D I A N A U N I V E R S I T Y

THE SOCIOLOGICAL APPROACH TO THE ECONOMY

WORK AND PAY IN THE MODERN ECONOMY

Human capital and income gaps

Discrimination and income gaps

Social closure

Native Americans and Latinx people in the American economy

CORPORATIONS, MONEY, AND OTHER ECONOMIC

INSTITUTIONS

Corporations as institutions

Bureaucracies

Money

THE 1%, THE 50%, AND THE 99%

MARKETS: THE BIG PICTURE

REVIEW AND CONCLUSION

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THE SOCIOLOGICAL APPROACH TO THE ECONOMY

 How do sociologists look at economies?

 What is workplace discrimination? What does it mean for a job to be segregated by

gender or race?

 How is the economy “inside” society?

In 2009, Heidi Wilson, a bank services manager for Citigroup, sued her employer for

gender discrimination. When she was promoted to be the manager of her service center, she

was paid about $75,000. The man who held the position before her was paid $129,000. She

later asked her company for a raise and didn’t get it. She then asked the company to

conduct a study of pay levels inside the company. Soon after, she was fired. Wilson turned to

the courts. After suing Citicorp, she received a settlement of $340,000.1

Wilson’s case raises an important question about work: Why do some people get paid

more than others? A casual glance at income statistics shows consistent differences in pay

between social groups. According to numerous studies, spanning decades, women make less

money than men – depending on the study, about 15% less. This is the gender wage (or pay)

gap.2

Many factors explain why women make less money than men. Sometimes, employers

simply like certain workers more than others and reward them more highly. This is discrimination

in pay, and it happened in Wilson’s case. Men and women are also over- or under-

represented in different occupations. For example, women are overrepresented in nursing but

underrepresented among doctors. These are important differences because some jobs earn

more income and are seen as more prestigious or valuable than others. If women are less likely

to be in high-income jobs, like medicine, they will, on average, make less money than men.

Thus, the gendered segregation of work—the concentration of men and women in different

jobs—is a factor that partially explains the pay gap.3

The question of why men and women are paid differently is a great way to start thinking

about the economy sociologically. People are not interchangeable cogs in an economic

system. We bring our backgrounds and personal identities to work. When a boss is about to

hire someone, they are not only looking for skills; they’re also thinking about this person as a

potential friend, colleague, or ally at work. Some employers may not care about the gender

or race of job applicants, while others may care a great deal. An employer may ask, “Does

this person have the skills needed for the job?” But they also have emotions and gut reactions

related to social categories. The owners of a Silicon Valley company may feel that women

shouldn’t lead high-tech companies. Or maybe men avoid a job because it isn’t “manly

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enough.” Even though nursing is a field open to everyone, many men feel that they wouldn’t

fit into a job held mainly by women. When a job is perceived to be appropriate for either men

or women, but not both, the job is

gender typed.4 This is an example

of how gender “frames”

interactions. When people work

together, they often use gender to

guide their actions—thinking that

only women, for example, are

supposed to do certain jobs, like

nursing or teaching kindergarten.

Sociologists such as Cecilia

Ridgeway argue that this type of

framing happens in almost all

human interactions and

contributes to inequality at work

and in other settings.5

Understanding how “social things” are wrapped up in what we buy, who we hire,

and how we run businesses is the core goal of economic sociology.6 In the rest of this chapter,

we’ll think about issues that motivate economic sociology. First, we’ll discuss workplace

inequality and why some people get paid more or are promoted more often than others. Do

some people get paid less because they are less productive or because employers and

clients dislike them? Second, we’ll discuss economic institutions,7 the rules and systems we use

to organize our economic lives. I’ll talk about two economic institutions: money and the

corporation.

Third, we’ll discuss two big-picture approaches to the economy. What does it all mean?

Is our system of private profit a good one? Sociologists call this kind of analysis political

economy.8 We’ll start with the more positive view of the classical economists, who saw the

economy as a vast and sprawling social order that coordinates buyers and sellers. I will also

talk about the critical approach, which stems from writers such as Karl Marx; from this view,

markets are inherently unfair and exploitative, generating inequality, corruption, and social

instability. This leads to the final section, about high and low points in the American economy.

What do sociologists and other researchers know about poverty and what do we know about

the very wealthy and those who are poor?

How do people factor gender into the decision to hire someone for a

job? (Source)

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REVIEW SHEET: THE SOCIOLOGICAL APPROACH TO THE

ECONOMY

CLICK THE LINK FOR:

LEARNING OBJECTIVES KEY QUESTIONS

AUDIO KEY POINTS

PRACTICE QUIZ KEY PEOPLE

VOCABULARY CROSSWORD PUZZLES KEY TERMS

WORK AND PAY IN THE MODERN ECONOMY

 How are barter economies and cash economies different?

 Why do we have a division of labor?

 What does human capital theory try to explain?

 What is the difference between statistical discrimination and taste-based

discrimination?

 What are some occupational groups that maintain high pay because they have been

able to exclude others from their type of work?

Take a moment and think about how you get your food. It’s almost certain that you

don’t live on a farm and grow all of it. You probably don’t till the soil, plant wheat, and then

harvest it. You likely don’t grind it and take a few hours to bake bread. Instead, like most

people, you go to the grocery store and use money to buy bread. And the people at the

grocery store then use the money to buy things they need.

This chain of cash and work defines the modern economy. Very few people make

everything they need. Instead, we work at jobs and try to get people to pay us for what we

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do. We use our income to buy a wide assortment of goods and services: food, smartphones,

Netflix subscriptions, and trips to the dentist. Adam Smith, an 18th-century economist, called

this the division of labor.9 As societies develop and grow, people can no longer do every type

of labor. They divide the labor up, specialize, and become more efficient. The division of labor

is the basis of the economy that we experience every day.

Sociologists have long had a special interest in the division of labor. When economists

first thought about the division of labor, they were mainly interested in efficiency: Was it better

for people to specialize in a specific job? Did specialization lead to wealth? Sociologists had

different questions: Who gets the best jobs in the division of labor? Do people get equally

rewarded if they do the same job? These differences in income and jobs are called economic

inequality.10

Inequality is a central concern of sociology. Societies tend to be unequal; there is no

society where everyone makes exactly the same amount of money or has exactly the same

amount of status. Even in non-industrialized societies, like tribes living in remote parts of the

Amazon or central Africa, some people are more popular than others and occupy the best

land. Inequality certainly characterizes the United States. Some people live below the poverty

line (the U.S. Census measure of the income needed to buy a minimally-sufficient amount of

food and shelter) while others have incredible amounts of wealth.11

Human capital and income gaps

How do we explain how much money people make? Human capital theory suggests

that skills lead to income. If you have a skill that is highly desired, you will make more money

than people with less-desired skills.12 This might explain why doctors make more money than

poets: While poetry has its own value, few people desire poetry so badly that they will pay lots

of money for poems. But most of us are willing to pay large sums for medical services that

relieve our pain or extend our lives.

Human capital (your skills and knowledge that allow you to be productive at work and

produce economic value) is an important tool for thinking about income inequality. For

example, ethnic groups vary in their average yearly incomes. African Americans and Latinos

make less money than the average White person in the U.S. According to the 2017 Current

Population Survey, the median income for an African American family was $41,000; for Latinos,

it was $50,000. In contrast, the median White household earned about $68,000.13 This is a very

large difference and it matters a great deal. How do we explain this gap in income between

ethnic groups?

Human capital theory points to education. People with college educations generally

make much more money than those without college degrees. College graduates make

almost double what people with only high school degrees earn. The extra money that college

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graduates make is called the college premium. This has indicated to sociologists that

education might be one explanation for differences in income.14

The data on

education, race, and

ethnicity is consistent with

this view. About 36% of

Whites have a college

degree, while only 23% of

Blacks do.15 This is an

important gap because

many of the best jobs

require advanced

educations; some, such as

medicine and the law,

require multiple college and

graduate degrees. Other

jobs that require a college

degree may not pay as

much, but they offer high levels of job security. Teaching is one example; public school

teachers don’t make as much as doctors but they often have tenure, which means their

contract is automatically renewed as long as they do a satisfactory job. Not surprisingly, most

states require that teachers have college degrees.

Not only are there differences in how much people are willing to pay for skills (e.g.,

people want doctors more than poets), but some groups have systematically different access

to skills, which impacts their long-term earnings. Let’s think about the case of doctors. To

become a medical doctor, you need to accomplish the following: First, you need to complete

high school and enroll in college. Second, you have to complete a four-year college degree

with a high GPA. Then you must get a high score on a standardized test (the MCAT) and earn

admission to a medical school. Finally, you have to find the money to pay for medical school.

At current rates, you need about $200,000 for a private school or $100,000 for a public one.

Most medical students take out huge loans. As you can see, becoming a doctor is a difficult

and expensive process. If some racial or ethnic groups start with low incomes or have little

access to good high schools, it will be harder for them to begin the process of becoming a

doctor. We would expect those groups to have lower levels of educational achievement,

which would later lead to lower incomes.

According to human capital theory, manual work, like house painting, doesn’t

pay as much as some other jobs because the skill is very common. (Source)

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Doctors earn a lot of money because their skills are rare, as suggested by human capital theory.

But there are also laws that restrict the total number of medical school graduates. (Source)

Discrimination and income gaps

Human capital theory isn’t the only explanation for why some groups make less money

than others. A second theory is that employers and customers discriminate. Remember the

case of Heidi Wilson, who sued Citicorp. She argued that women were not paid the same

money for the same work. This is an example of the discrimination theory of income

differences. Women and men are capable of performing the same management tasks at

Citicorp, but perhaps the bank’s leaders simply like men more than women and so they pay

men more. When an employer or customer pays more to some groups than others for

providing the same service or good, they’re engaging in taste-based discrimination. In other

words, if a boss pays a White worker more than a Black worker when they’re equally

productive, it reflects the boss’s subjective “taste,” or preference, for White employees.

In an interesting experiment, Devah Pager and her colleagues had matched pairs of

men give (fake) resumes to employers to see how much employers cared if applicants have a

criminal record. This was another audit study, which you’ve read about in previous chapters.

Some of the men participating in the study were White and some were Black. The resumes

they presented to potential employers were matched in terms of work experience and skills for

the jobs; however, some mentioned a minor criminal record (a conviction for a non-violent

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drug offense) while others didn’t. And not surprisingly, they found differences: employers were

less likely to call those with a criminal record and invite them for a job interview. But there was

an even larger gap based on race; in fact, a higher percentage of Whites with a criminal

record (17%) got a call for a follow-up interview than Black applicants without a criminal

record (14%)!16 This experiment shows that taste-based discrimination is real and that it

emerges even at the point of screening job applicants. If such biases in hiring and pay occur

at many stages of hiring and evaluating employees, it’s not difficult to imagine how race- and

gender-based differences in income would emerge.

However, a difference in income doesn’t always mean that employers or customers

dislike a group of people. It may indicate a genuine difference in skills or job-related abilities

that exists, on average, between groups. Statistical discrimination occurs when an employer

pays people from a certain group less because members of that group in general do not

perform as well as others; this is a form of discrimination because bosses are distinguishing

between workers based on group membership rather than their individual skills.17 Consider an

example from When Work Disappears, by William Julius Wilson.18 Wilson asked a common

question: Why is it hard for people from poor neighborhoods to find jobs? He answered this

question with an in-depth study of a poor Chicago neighborhood. He and his team of

researchers visited homes, interviewed people, and talked to employers around the city.

The story is complicated. Wilson found some evidence for human capital theory. High

schools in poor neighborhoods don’t prepare their students well for jobs. The schools are often

in such a poor state that students leave without a solid grasp of written English, which is

crucially important in an economy that depends on computers and handling information. In a

discussion with employers, Wilson asked why they didn’t bother to call people about a job

even if they had a high school degree, which indicates they might be prepared for an office

job. A number of employers suggested that people from these low-income areas probably

didn’t have the right personal skills—such as talking to customers or following directions at

work. Poor people from these areas of Chicago weren’t getting jobs because employers

thought it took too much effort to figure out who could work well in an office. They assumed

that the average person from poor neighborhoods wouldn’t fit. This is an example of statistical

discrimination; employers made decisions based on broad judgments about the abilities of

groups, rather than by evaluating individual job candidates.

Social closure

A third explanation of income differences is social closure. Often, one group will

actively try to exclude another in an attempt to defend its occupational “turf.” Consider

doctors. It’s certainly the case that doctors do well because their services are needed. But

part of their income derives from the fact that there are very few medical schools, and states

require doctors to obtain a degree from one. In fact, it’s illegal for non-doctors to perform

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many medical procedures, even those that require little medical knowledge.19 This makes

doctors relatively scarce.

To appreciate this point, take an example from my own life. Recently, my daughter and

I were at a mall and, like many young children, she started chewing on a small object she

found. She quickly wedged a small metal cap into her teeth. I couldn’t pull it out with my

fingers, nor could my wife. I eventually gave up; I needed someone who had a little skill in

taking care of teeth. I brought my daughter to an ER and told the nurse that my daughter had

a metal cap wedged in her mouth. A pediatrician took out a small tool and popped out the

cap in less than a second! The doctor was kind. She was used to children cramming all kinds of

odd things in their mouths, and she made me feel better.

What didn’t make me feel better was the doctor’s bill. For a procedure that took a few

seconds, I was charged over $600! What could account for such a high invoice? Human

capital theory suggests that the pediatrician had a valuable, and rare, skill that I really

needed. But the human capital answer is incomplete. Yes, the doctor had a valuable skill, but

couldn’t other people offer the skill of pulling metal caps out of children’s mouths at a lower

price? Many dentists could do it, many nurses could as well; many other health care

professionals, such as paramedics, could also complete such a simple procedure. But while

they probably could do it, they’re prohibited by law from doing so. In general, the only people

who can offer medical services, however minor, are doctors. Anyone who advertises medical

services without a medical degree will end up in jail. Thus, we shouldn’t be surprised when

even very basic medical services are expensive.

Doctors are only one example of social closure. For example, in the 1800s, many

southern states passed Black Codes, laws that banned newly freed slaves from entering

desirable trades.20 The goal was clear: state governments wanted the most desirable trades to

be reserved for White men. Today, we see a similar dynamic regarding migration: many

people want to exclude low-education workers from other countries in order to boost the

incomes of native-born workers.

Native Americans and Latinx people in the American economy

This chapter has focused on a number of processes that affect income and jobs such

as job skills, employer discrimination, and participation in labor markets. Here, we turn to a

discussion of how two different groups, Native Americans and Latinx people, fit into the

American economy. In some ways, they share much in common. The average income and

college graduation rate within each group are significantly below the national average. At

the same time, each has a unique history, and different institutions and characteristics

emerged that shape the way Native Americans and Latinx people earn income.

The story of Native Americans is essentially a story of conquest, forced removal, and

expropriation since the founding of the United States. Even though numerous treaties were

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signed to protect Native sovereignty and property rights, the treaties were routinely violated. In

many cases, Native Americans were forced to live on lands set aside for them called

reservations. By the 1900s, the situation had stabilized and the modern reservation system had

emerged. The 1934 Indian Reorganization Act passed by Congress established the basic legal

framework for reservations and allowed tribal leaders to exercise a significant level of control

over the economy of Native American communities.

Native American control over the economic institutions of reservations had far-reaching

implications that are still felt in the 21st Century. Specifically, Native American leaders had the

power to approve businesses that were limited, or even prohibited, outside of reservations. The

most notable example is gambling. Currently, about 200 Native American tribal groups

operate casinos, some in states where this type of gambling is otherwise illegal. In other cases,

reservations establish regulations that allow selected businesses to thrive, such as tourism and

specialized manufacturing. Thus, a key issue in understanding economic outcomes among

Native Americans is whether they find jobs in one of the industries that have emerged on

reservations or whether they seek employment in the rest of the American economy.

Like Native Americans, Latinx people are remarkably diverse and there is no single

“Latinx” experience that would explain all economic or employment outcomes. Still, a few key

factors often affect their outcomes. First, many people who identify as Latinx are immigrants or

have immigrant parents, and the context of their arrival in the U.S. is important. For example, a

large portion of migrants from Mexico find work in agriculture, which is generally low-paid. In

contrast, Cubans who migrated to Florida after the Cuban Communist Revolution of 1959

were often professionals such as teachers, doctors, and accountants. Not surprisingly, the

economic outcomes and options of Mexican agricultural laborers and Cuban professionals will

be vastly different.

Second, language strongly influences the ability of immigrants to earn income. The

ability to speak English greatly improves how much people earn. This draws attention to a very

important feature of work: getting a job is not merely about performing a specific task, it’s

about communicating with customers and employers and knowing how to fit in. Third,

migration status is also highly associated with income. American employment law makes it

difficult for people without proper documentation to find legal work, which means that their

wages are lower than might be expected otherwise. This is one reason why critics of the U.S.

immigration system often ask that the law be reformed to make it easier for people to legally

migrate here so their wages won’t be suppressed.

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REVIEW SHEET: WORK AND PAY IN THE MODERN ECONOMY

CLICK THE LINK FOR:

LEARNING OBJECTIVES KEY QUESTIONS

AUDIO KEY POINTS

PRACTICE QUIZ KEY PEOPLE

VOCABULARY CROSSWORD PUZZLES KEY TERMS

CORPORATIONS, MONEY, AND OTHER ECONOMIC

INSTITUTIONS

 What are the defining features of corporations? What types of laws govern corporations

in the U.S.?

 What is an economic institution? Are corporations formal or informal institutions?

 How do people use money to convey meaning? How might money change the way

people think about relationships?

Pacific Railway. Sears. General Motors. These titans of industry left their mark on

American history. At their peak, each of these corporations employed thousands of people

and built massive structures. The railroad companies laid thousands and thousands of miles of

railroad track, many of which are still used 150 years later. Drive through America and you still

see hundreds of Sears department stores. Even in decline, Sears managed to sell nearly $17

billion worth of goods and services in 2017.21 While people are shifting their purchases to online

retailers, the department store giant still brings in vast amounts of income. And General Motors

is doing quite well. It has weathered world wars and many economic recessions since its

founding in 1908. In 2017, General Motors employed 180,000 people and sold nearly 10 million

cars around the world.22

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Corporations—groups of people organized together by the owners to generate profit—

are a method of organizing the labor of millions of people. Corporations are so big that their

actions cause ripples across the economy. If General Motors went bankrupt, thousands of

auto-workers would be out of jobs. GM’s bankruptcy would also cause hardships for the

suppliers, dealers, and mechanics whose jobs depend on the sale and maintenance of

millions of cars. Not surprisingly, when the American auto industry has faced economic

problems, the U.S. government has often stepped in to help. In a very real way, the

corporation is a way of life in America.

Corporations as institutions

Corporations are an example of an economic institution, a set of formal and informal

practices meant to organize an activity. Corporations are formal institutions in the sense that

laws and other written policies govern what corporations may or may not do. For example, a

corporation must have a board of directors that appoints and monitors the company’s

leadership. If a corporation wants to raise money by selling stock, it must publicly report its

finances and tell stock owners what it has done each quarter.

Corporations are also

informal institutions governed

by social norms, unwritten rules

about what people expect.

Many people expect

corporations to “give back”

and help communities through

charitable work. This is one

reason you see corporate

sponsors behind a wide range

of activities. Corporations give

to the Girl Scouts, colleges and

universities, and hospitals. They

give money for Little League

baseball teams and cancer research. Why? Some business leaders truly support those causes.

Business leaders, like everyone else, would like to see medical researchers find a cure for

cancer. Sometimes the reasons are self-interested; how many of us wouldn’t feel pride and

high self-esteem if a university built a fancy library and named it after us? There are also social

expectations. A corporation that fails to give to charities might be viewed as heartless or

uncaring; just like other people, executives want to be seen as “normal” people who care

about their communities.

The skylines of many cities are corporate office buildings. (Source)

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Political activists (people who organize around a political issue) also shape corporate

behavior, which is a great example of how political pressures shape economic processes.

Protestors are a sort of stakeholder in a corporation.23 Stakeholders are the different people

who have a financial or political investment in a corporation. Many stakeholders are inside the

corporation: owners want to make profits and executives want high salaries; workers want

stable jobs and retirement benefits. But stakeholders also include people outside the

corporation, such as those who buy its products.

About thirty years ago, activists in

the anti-sweatshop movement started

targeting corporations because they

thought that corporations were treating

workers in developing countries badly. They

claimed that corporations paid low wages

in apparel factories in places like Mexico

and Vietnam. This led to a vigorous debate

in the 1990s about how clothes are made.

Protesters held rallies outside corporate

offices. In the press, they accused well-

known companies like Nike of employing

child labor and paying people unfairly low

wages. Student protesters asked university

presidents to disinvest from Nike and other firms that used sweatshops (meaning the universities

wouldn’t invest in companies that used sweatshop practices, and wouldn’t hire them to make

clothing branded with the university’s logo or mascot). The result? Many corporations,

including Nike, now promise consumers that they make shoes and clothes in ethical ways: they

pay more than they did before and avoid illegitimate business practices. Social protesters

changed the corporation by imposing new norms.24 Their influence is so notable that scholars

such as Stanford’s Sara Soule have begun to think of activists as stakeholders with a real voice

in the modern corporation.25

The corporation is such an important economic institution that it’s hard to find a

sector of the economy that hasn’t been touched by them. Consider computer software. While

you might think that popular software is written by small, ragtag groups of young software

engineers, most successful computer companies get larger and grow into corporations. The

Social Network, a movie about the early days of Facebook, illustrates this idea. Facebook was

founded by Mark Zuckerberg, who wrote the software and was assisted by his friend, Eduardo

Saverin. Much of the movie is about their attempts to run a small company out of a college

dorm. They had parties, drank beer, and tried to keep a small group of programmers and staff

together as they ran out of money. Once Facebook became very successful, things changed.

Protesters targeted apparel manufacturers to make them

produce shoes in more ethical ways. (Source)

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Zuckerberg had to become a more traditional leader for the company. They moved into a

large office and had to deal with investors, customers, and legions of employees. Today,

Facebook employs over 33,000 people in offices across the globe.26

Bureaucracies

What are the basic features of the corporation and why do we need them? Max

Weber answered this question over a hundred years ago. Noticing that modern life was filled

with large structures such as corporations and governments, Weber described bureaucracy as

an ordered system that provides structure and discipline for employees. Weber identified three

key features of bureaucracies: they have clear lines of authority, are run on written rules, and

are staffed by full-time employees who are experts in their field. Weber contrasted large

corporate entities like businesses with informal groups such as families or ethnic groups, which

are not clearly defined, lack an obvious “top-down” structure, and aren’t guided by a

professional group of managers.27

Weber’s definition of bureaucracy applies to all kinds of “big structures.” Take

government, for example. Most forms of government are organized into large bureaucracies.

In the U.S., the federal government is a vast system of employees organized into a massive

chain of command. The armed forces chain of command starts with the President, goes to the

Joint Chiefs of Staff, then to the individual branches of the military. Within each branch, there is

a chain of command from generals all the way down to privates. Educational organizations

share bureaucratic traits as well. Most colleges have a president and a board of trustees who

set policies. These policies are further developed and implement by a team of managers with

titles like “dean” and “provost.” The daily work of the university—teaching and research—is

done by a workforce of professors, graduate students, and part-time lecturers.

Weber’s description focused on the organization’s primary mission. An organization’s

structure, its chain of command and policies, flows naturally from its goals. However, later

sociologists came to see corporations and other organizations as open systems. That is, the

firm has loose boundaries that allow people and ideas to enter and leave the firm. A business,

a school, or a church doesn’t usually spring exclusively from the leadership’s ideas. Instead,

organizations respond to a larger environment that includes the government, investors,

customers, and rival organizations. People move in and out of a corporation and ideas flow

across the bureaucracy’s boundaries. Thus, corporations, and other bureaucracies, are more

like organic systems than rigid rational systems.28

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This organizational chart illustrates the concept of bureaucracy

as a rationally ordered system: boss at the top, managers in

the middle, and other employees below. (Source)

Facebook is a great example of this open systems view. Mark Zuckerberg didn’t invent

the concept of social media. In the early 2000s, numerous companies were experimenting

with websites that linked people together. There was Friendster and Orkut (owned by Google

and popular in South America). Probably the most popular was MySpace, which focused on

music. I’m not downplaying Zuckerberg’s skill in creating Facebook, but he and his friends

were responding to what was in the environment at the time.

As Facebook grew, it reflected that broader social environment. While Facebook

innovated many important features of social media, such as the scrolling “wall,” it also

mimicked ideas from or even entirely absorbed other companies. For example, at one point

Facebook added the ability to send money, copying companies like PayPal. Facebook’s

leaders also realized the importance of images for social media. Rather than spend the time

and effort to develop an entirely new system for sharing images, Zuckerberg bought

Instagram. Today’s Facebook reflects waves of innovation in the tech industry, the purchase of

firms like Instagram, and the development of its own ideas about social networking.

Money

A second key economic institution is money. Along with bureaucracy, it’s one of the

most distinctive features of the modern economy. Money is so ubiquitous that people measure

the worth of things with it. Companies are valued in terms of how much money would be

generated if the company sold all its assets. An education’s value is often measured in terms

of how much money a graduate will make. Even in love, we sometimes use money. Jewelry

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companies invented the idea that diamond engagement rings are the ultimate symbol of

love, and that the size of the ring indicates the amount of love. A successful jewelry ad

campaign even gave a clear economic value to a man’s love: he should spend three

months’ worth of his salary on an engagement ring.

Most social scientists treat

money as a method of recording

value. A dollar bill is simply a piece

of paper. What is valuable about it

is that other people treat the

piece of paper as a certain

amount of credit in a bigger

economic system. It may have no

value at all outside of that system.

In America, we use dollars issued

by the federal government. If I

went to France, I would need

paper that indicates credit in the

European economy. When a

government declares that specific

paper or coins are the official

money, it is called fiat currency (fiat means “command” in Latin). In other cases, money

represents specific items that are valuable, like gold. When money is literally a commodity,

such as a gold coin, or represents commodities, like old bank notes, it’s called commodity

money.

In theory, we could make money out of anything. We use paper and coins because

they’re convenient. When people lack paper and metal, they use other objects to record

value. People in island nations used sea shells as a form of money. Before the Spanish came,

the Aztecs of central Mexico used cocoa beans as currency. Using beans as money was

helpful because they are easy to carry and count, but they could also be eaten.

Perhaps the most fascinating form of modern money is bitcoin. A few years ago,

people realized that a purely electronic currency could be valuable. With an electronic form

of money, we wouldn’t need to produce paper bills and metal coins. But the real value of

electronic currency was that it could be created independently of any government. A

problem with most forms of money is that governments often try to control its value by issuing

more money. Inflation occurs when forms of money lose value in this way. But if a form of

money wasn’t tied to a government mint, its value could be controlled and stabilized by a

community of users.

British pounds, the currency of the United Kingdom. Like the American

dollar, they’re an example of fiat money, created by a national

government. (Source)

Economic Sociology (Fall 2021)

Page 18

In 2009, an anonymous computer programmer released software that allowed people

to make bitcoins.29 You download and install the software on your computer; it performs a

mathematical operation and gives you credit for it. The program then records on a public

website that your computer performed this task and gives you a bitcoin that you can keep or

give to other people. An essential feature of the system is that it’s harder to “make” bitcoins

over time; there will be a fixed, but large, number of bitcoins. When you trade them, there is a

public record of the bitcoin exchange. The bitcoin system has been highly successful; bitcoins

are now accepted as money by many companies, and in June 2020 one bitcoin was worth

over $9,000.

Even though money is enormously useful, it still has complex and ambiguous

consequences. For example, money often transforms social relationships, as Israeli psychologist

Uri Gneezy demonstrated. His children were in daycare, and parents were supposed to pick

up their children at 4:00 pm. The daycare center relied on parents to stick to the schedule,

and it worked. Most kids were picked up around 4:00 pm, and few parents were late. But

Gneezy and his colleagues wanted to see what would happen if they attached money to the

“don’t be late for pick-up” rule. They asked the school to fine each parent who was late. The

result? More parents started coming late! Money encouraged parents to compare the cost of

being late with the cost of what they were doing at the time. Charging parents a price

encouraged them to make a specific comparison with other activities. In this case, they often

judged that their kids could stay in daycare a bit longer. In the more informal environment

where parents were simply expected to respect the daycare center’s rules, they were more

reluctant to be late. Gneezy’s experiment has an important lesson: when you attach a price

to an activity, you invite comparisons that may lead to unintended consequences. Money

changes social norms.30

Money is also a way of creating and managing social relationships. A fun example

comes from the work of Olav Velthius, a sociologist who took a deep interest in art. He wanted

to know what prices “say” about an artist. In his research on art dealers, he found many

interesting patterns. For example, art dealers don’t like to decrease prices on an artist’s work,

because that says that the artist is no longer artistically relevant. This is less common for normal

commodities like cars or floor tiles; if there are too many cars or floor tiles, businesses will

announce a sale just to get rid of them quickly. In contrast, prices for paintings are a statement

about the worth of a painter and her reputation. Thus, prices for art tend to be “sticky” – they

reach a level and stay there.31

However, dealers will often get permission from artists to reduce prices for special clients

they may want to cultivate. Dorothy and Herbert Vogel were working-class people who loved

art. Dorothy was a librarian and Herbert was a postal worker. Over the course of their lives, the

Vogels became friends with many famous artists and amassed one of the most extensive

collections of modern art in the world. Many artists wanted to become part of the “Vogel

Economic Sociology (Fall 2021)

Page 19

collection.” Artists, and their dealers, often had to massively discount the price of the work so

they could maintain a relationship with this humble, but highly respected, couple. The history

of the Vogels, and how artists and dealers responded to them, shows that money is an

expression of a social relationship.32

REVIEW SHEET: CORPORATIONS, MONEY, AND OTHER

ECONOMIC INSTITUTIONS

CLICK THE LINK FOR:

LEARNING OBJECTIVES KEY QUESTIONS

AUDIO KEY POINTS

PRACTICE QUIZ KEY PEOPLE

VOCABULARY CROSSWORD PUZZLES KEY TERMS

THE 1%, THE 50%, AND THE 99%

 How much income inequality is there in the U.S.? What is the median income?

 How do social scientists determine what counts as poverty?

 How do the lives of the rich and poor in the U.S. differ? What types of jobs are common

among each social class?

In 2011, political activists met in Zuccoti Park in downtown Manhattan to protest

economic inequality. They noted, correctly, that the top 1% of income earners have been

receiving more and more of the total income in this country. Soon, this dogged band of

protesters attracted the attention of the national media and the world. This movement, now

known as Occupy Wall Street, protested inequality and political corruption. They thought Wall

Street had too much influence on government, which allowed corporations to get tax breaks

and favorable regulations and decreased the well-being of average Americans. This

Economic Sociology (Fall 2021)

Page 20

movement made a big impact by telling Americans that the “1%” was gaining an unfair

advantage over the “99%,” language that has since become widely understood as a way of

talking about income inequality.33

If nothing else, Occupy Wall Street drew attention to a very important fact—there are

vast inequalities in how much money people make. Earlier in this chapter, we discussed

income inequality and how education, skills, and status all contribute to some groups making

more than others. But Occupy Wall Street focused heavily on “the 1%” and the

disproportionate amount of income they get each year. Recent research suggests that the

top 1% of American income-earners get about 20% of the entire nation’s income. If we

stopped looking at income (money received in a year) and looked at wealth (the total value

of all assets someone owns), the top 1% is estimated to own about 35% to 43% of the entire

country’s wealth!34

An Occupy Wall Street poster about income inequality. (Source)

Economic Sociology (Fall 2021)

Page 21

What do sociologists and other social scientists know about the top 1%? What about

the bottom 1%? How do we learn about people at these different income levels? Much of our

knowledge comes from surveys and government records where people are asked how much

money they make.

In 2018, the U.S. Census Bureau announced the findings of its most recent Current

Population Survey (CPS), a yearly study of the American population that provides the

government and the public with important data about the country. It found that in 2017, the

median annual household income was about $61,000. That means that 50% of people in the

survey lived in a family that made $61,000 in combined wages and salary or less, while 50%

made more.35

What about the very poor and very wealthy? When social scientists ask about the poor,

they often use the poverty rate—the percentage of people who are classified as falling below

the poverty line. The U.S. Census Bureau defines poverty as earning less income than the

estimated amount a family would need to purchase food, shelter, and other basic needs; this

is the poverty line (or poverty threshold). A poverty threshold is not meant to be an exact

measurement, but a guess about the amount needed to avoid extreme hardship.36 Poverty

disproportionately affects minority groups, and many sociologists have spent considerable

time trying to understand the consequences of poverty for minorities. For example, sociologists

Scott W. Allard and Mario L. Small have argued that when people are poor, they rely on their

social ties and local institutions, like churches, to provide services.37

Poverty is still a serious issue in the U.S. (Source)

Economic Sociology (Fall 2021)

Page 22

There is good news and bad news about poverty in America. The good news is that

poverty is declining, at least according to the Census definition. Since 1959, when the U.S.

Census Bureau began measuring poverty using this method, the percentage of people who

qualify as poor has decreased. In 1959, about 23% of people were poor by this definition; in

2016, that number had dropped to 13%. This is definitely a vast improvement. The bad news is

that a large number of people remain impoverished. In a nation of over 300 million people,

roughly 41 million live in poverty. 38 The reasons are complex. Some are migrants from poor

countries, like Mexico, who work in low-wage industries like agriculture. Others live in regions

like Appalachia with very limited economic prospects. Yet others may have very limited

earning potential because they are not well educated or work in industries such as food

services that traditionally have low pay.

What about the other end of the spectrum – what do researchers know about the very

wealthiest in our society? Unfortunately, the U.S. Census doesn’t define a category called

“rich,” which would help this discussion. To make things worse, the very wealthy are small in

number, so if you survey a random sample of Americans, you will get very few “Zuckerbergs.”

To address this problem, researchers have examined IRS tax records; they contain data on

almost all Americans, and tax returns usually contain basic information, such as the tax filer’s

occupation, which can tell us about who the 1% might be.

The highest-earning Americans have increased their share of national income. (Source)

Economic Sociology (Fall 2021)

Page 23

Economist Emmanuel Saez and his collaborators at the University of California, Berkeley

examined tax records to understand who was at the top of the U.S. economy. They

discovered huge changes in the top 1%, especially if you look within the top 1%, at the

wealthiest 10% of the 1%—the few thousand highest income earners in the United States. In the

early 1900s, the wealthiest Americans tended to be leaders of industry and rentiers (people

who inherited land and lived off rents).39 By the 2000s, the situation had changed drastically.

The wealthiest Americans were no longer primarily titans of industry, though those individuals

did appear in the data. Instead, the super-rich now work in finance—as bankers, hedge-fund

managers, and so forth. One of the largest changes in the economy is the move from income

gained through labor and industry to income generated by managing money. Social scientists

call the modern economy financialized because so much wealth is generated from banks,

mutual funds, and investment firms, organizations whose main purpose is collecting and

investing vast sums of money.40

Taken together, these studies suggest a complex picture of poverty and wealth.

Overall, Americans have been doing better. During the 1900s, poverty rates declined and

median household income increased. However, starting in 2008, a serious recession resulted in

lower household incomes and increasing inequality. A new group of people—those in finance

and related industries—account for a larger share of the national income. Perhaps Occupy

Wall Street activists were mistaken when they suggested that Americans were spiraling

downward economically, but they were correct that the 1% is getting more of the pie than

before.

REVIEW SHEET: THE 1%, THE 50%, AND THE 99%

CLICK THE LINK FOR:

LEARNING OBJECTIVES KEY QUESTIONS

AUDIO KEY POINTS

PRACTICE QUIZ KEY PEOPLE

VOCABULARY CROSSWORD PUZZLES KEY TERMS

Economic Sociology (Fall 2021)

Page 24

MARKETS: THE BIG PICTURE

 What is a capitalist society?

 What are the major arguments in favor of market-based economic systems? What are

some arguments against market-based systems?

 In what ways is the U.S. a market-based economy? In what ways is it not?

So far, we’ve talked about work, money, and corporations. We also looked at poverty

and wealth. But we can take a step back and ask bigger questions about the economy. The

large-scale analysis of markets is called political economy. As we noted before, the modern

economy is a system based on exchange. It’s ruled by money and decisions are made in

terms of their profitability. Is this a good system?

In general, there are two responses to this question. The first was articulated by the

economist Adam Smith and his followers. The vast decentralized world of the market economy

is very valuable. According to this view, markets are complex systems of interactions that

match buyers and sellers. In a famous passage in The Wealth of Nations, Smith noted that the

baker doesn’t provide bread out of the

goodness of his heart. He makes food for

others because he expects to be paid. Thus,

Smith saw markets as large, decentralized

arenas where people get what they need

through the pursuit of profits.41

Smith viewed markets as beneficial

because they allow people to specialize

and exploit the division of labor. As people

concentrate on activities that are more

profitable, they learn to produce in better

ways, thus creating more material goods.

Other economists, following Smith, argued

that market transactions are valuable

because they provide information about what people want. If housing in San Francisco is

expensive, it’s a sign that people probably need to build more housing in San Francisco. If

housing is cheap in downstate Indiana, we probably don’t need much more of it there.

The picture of markets that Smith presents is one where buyers and sellers discover what

is needed through exchange. But sometimes markets are violently disrupted. Consider Uber, a

company that allows virtually any individual to become a taxi driver. For nearly a hundred

In Smith’s view, markets are places where people make a

profit by bringing valuable goods and services to

consumers. (Source)

Economic Sociology (Fall 2021)

Page 25

years, the taxi business in America was heavily regulated, which reduced the number of

people who drove taxis. New York City, for example, has a well-known medallion system; the

city government issued a fixed number of licenses that could be bought and sold, and it was a

criminal offense to drive a taxi without owning a medallion. Uber disrupted that system using

smartphones. A person who wanted to make money driving people around downloaded an

app for their phone, verified their identity, and used a map to pick up customers. Once

people got used to getting rides from Uber drivers, cities found it difficult to ban them, and the

taxi industry was disrupted.

Joseph Schumpeter, a prominent economist in the mid-20th century, called this sort of

process creative destruction.42 In his view, markets may be effective in delivering goods and

services, but they tend to become rigid. Workers and capitalists get used to doing things a

certain way. But once in a while, somebody comes along and learns how to do things in a

new way that undermines the old order. An entrepreneur takes a risk on a new idea and, if

successful, can topple an industry. Cars displaced the horse and buggy. The smartphone

displaced older cell phones. History is filled with other examples. The world described by Smith

and Schumpeter is a good one. The desire for profit motivates us to produce valuable things

like food and shelter. Entrepreneurs bring us innovation after innovation.

A rival school of political economy is more skeptical of markets. The skeptics note that

markets don’t treat everyone equally and often have negative consequences. Perhaps the

most well-known advocate of this view is Karl Marx. In his view, markets are not about

satisfying consumer needs. Rather, they’re about exploiting workers. The market system, in

Marx’s view, turns people into machines that produce economic benefits for the owners of

capitalist firms.

The exploitation inherent in market economies had drastic consequences, according to

Marx. In the short term, workers may have their immediate necessities met. By working in a

factory, they receive a paycheck and can satisfy their needs. But the long-term

consequences are bad. Marx predicted that sooner or later, wages would fall as company

owners became better at capturing the revenue from their businesses and driving down

worker pay. Marx argued that corruption is also a natural consequence of private business;

business owners gravitate toward the government and try to control it for their own ends.43

In this situation, workers would suffer, leading to political unrest. Marx predicted

organized struggle, not sporadic conflict. He argued that there was a deep contradiction

within market economies.44 It simply wasn’t sustainable for a society to be so reliant on

exploited labor. People would eventually push back and topple the market society and

replace it with a system that would benefit all workers, not just business owners. This social

system, called socialism, would be governed by a state composed of workers and there

would little, or no, private industry. For this reason, Marx is a revolutionary thinker. He believed

that market economies were inherently unstable and led to crisis, which could only be

Economic Sociology (Fall 2021)

Page 26

resolved through political struggle. Many political parties were inspired by his writings and

gained power in nations such as China, Russia, and Venezuela.

In the Marxist view, workers are exploited by business owners. (Source)

Who is closer to the truth – the defenders of markets or the skeptics? The skeptics, in my

view, offer a number of valuable points. In the short term, workers and owners are indeed

locked in a zero-sum game. If one group gets more, the other gets less; raise wages and profits

fall. Many firms do treat their workers as little more than an expense whose cost needs to be

minimized. For example, the apparel industry relies on workers who make very little and work in

poor conditions. Activists argue that apparel companies treat workers poorly in order to save

money and increase their profits. Workers in many countries do create labor parties and try to

reform or revolutionize their nation. In Venezuela, for example, a socialist party came to power

and implemented socialist policies, such as nationalizing industries (having the government run

them).

The skeptics also make a valuable point when they say that poverty is a serious

problem, even in wealthier capitalist societies, where people privately own firms and seek

profits. As we noted in the last section, poverty is still a persistent feature of the American

economy. Though it has declined since the 1950s, about one in eight Americans are still poor.

Wages have also flattened: wages for people in the middle of the income range have stayed

constant over time. They haven’t gone up or down very much, even though the size of the U.S.

economy has increased over time.

The defenders of markets make strong points as well. In terms of material well-being,

Western societies enjoy an incredible amount of wealth. Millions of Americans have access to

Economic Sociology (Fall 2021)

Page 27

automobiles, cell phones, and televisions. These consumer goods are simply amazing, far

superior to anything that kings of previous ages had. While poverty still exists and is a serious

problem, it has declined drastically around the world, starting with Western nations and in

nations such as China and India. In fact, two sociologists estimated that the decline in global

income inequality is due to China and India opening up their economies to more capitalist

investment.45

My view is that market-based economies are imperfect but desirable. Western nations

have notable degrees of inequality and corruption, but standards of living tend to increase

over the long term. As we noted earlier in this chapter, poverty is a serious problem in America,

but it has decreased over several decades. Furthermore, market-based economies tend to be

the places where social and political rights are expanded first, such as women’s voting rights in

America, which suggests that a certain degree of material wealth promotes and sustains

these rights. Finally, nations that completely abandon markets do not do well in terms of

material conditions or political freedoms.

REVIEW SHEET: MARKETS: THE BIG PICTURE

CLICK THE LINK FOR:

LEARNING OBJECTIVES KEY QUESTIONS

AUDIO KEY POINTS

PRACTICE QUIZ KEY PEOPLE

VOCABULARY CROSSWORD PUZZLES KEY TERMS

REVIEW AND CONCLUSION

This chapter has examined the economy from a sociological perspective. We focused

on a few major topics: sources of income inequality, economic institutions, wealth and

poverty, and political economy. When we looked at work and pay, we encountered some

very important explanations of income differences. Human capital theory says that people

have skills that others find valuable. This helps us explain why some groups make, on average,

less than others. They lack job skills or may have limited educational opportunities. Then there

Economic Sociology (Fall 2021)

Page 28

are theories that focus on discrimination—when people choose to pay more to groups they

like. I used the term “economic institution” to describe broad ways of organizing economic

activities. We looked at money and corporations as examples of institutions. In addition to

being useful, these institutions also reflect our values and affect our society. Our discussion of

wealth and poverty, and of capitalism in general, drew a complex picture. American society is

in many ways better off than before, but poverty and inequality remain serious issues.

The sociological study of the economy teaches deep lessons about sociology

itself. No part of society is separate from the rest. We might, for example, think that people just

earn what they deserve. But we’ve seen lots of examples where social status—race and

gender, for example—affect what people get paid. We might also think that money is a

neutral vessel for transferring value among people. But that isn’t true either. How we make

money, how we distribute it, and how we let it affect our perceptions of value reflect our

moral sensibility. That is perhaps the most important lesson of all: sociology is not about “the

social,” it’s about how “the social” affects everything we do.

Economic Sociology (Fall 2021)

Page 29

REFERENCES

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Bay News. http://www.tampabay.com/news/tampa-woman-wins-lawsuit-against-citicorp-for-pay-

discrimination/1225359 Retrieved July 11, 2017. 2 Francine D. Blau and Lawrence M. Kahn. 2016. The Gender Wage Gap: Extend, Trends, and Explanations. NBER

Working paper 21913. http://www.nber.org/papers/w21913 3 For reviews of recent debates over the sources of gender segregation in jobs and possible links to wage gaps, see

Cha, Youngjoo. 2103. “Overwork and the Persistence of Gender Segregation in Occupations.” Gender and Society

27: 158-184; Jessica Pan. 2015. "Gender Segregation in Occupations: The Role of Tipping and Social Interactions."

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Gender-Typing on Tokenism Processes.” Social Psychology Quarterly 57(2): 150–159. 5 Ridgeway, Cecilia. 2014. Framed by Gender: How Inequality Persists in the Modern World. New York: Oxford

University Press. 6 For a much more advanced explanation of economic sociology, you might want to read Granovetter, Mark.

2017. Society and Economy: Framework and Principles. Boston: Harvard University Press. 7 For a general explanation of “institutions” as sociologists think about them, see Rojas, Fabio. 2013. “Institutions.”

Oxford Online Bibliographies http://www.oxfordbibliographies.com/view/document/obo-9780199756384/obo-

9780199756384-0132.xml#obo-9780199756384-0132-bibItem-0001 8 Veseth, Michael and David N. Balaam. N.d. “Political Economy.” Encyclopaedia Brittanica

https://www.britannica.com/topic/political-economy Retrieved July 11, 2017. 9 Smith, Adam. 1776. “Of the Principle Which Gives Occasion to the Division of Labour,” Book I, Chapter 2 in An

Inquiry into the Nature and Causes of the Wealth of Nations. Online edition:

http://www.econlib.org/library/Smith/smWN1.html#B.I 10 For example, the classical sociologist Emile Durkheim was much more interested in the question of how economic

transactions eroded communities. Durkheim, Emile. 1997. The Division of Labor in Society. Translated by W. D. Halls.

New York: Free Press. 11 U.S. Census Bureau. 2016. “How the Census Bureau Measures Poverty.” United States Census Bureau.

https://www.census.gov/topics/income-poverty/poverty/guidance/poverty-measures.html Retrieved July 11, 2017. 12 Becker, Gary S. 1993. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education

(3rd ed.). Chicago: University of Chicago Press. 13 United States Census Bureau. 2017. “HINC-01: Selected Characteristics of Households by Total Money Income.”

Current Population Survey Tables for Household Income. Retrieved from https://www.census.gov/data/tables/time-

series/demo/income-poverty/cps-hinc/hinc-01.2017.html 14 For recent reporting on the college premium, see Rugaber, Christopher. 2017 (January 12). “Pay Gap between

College Grads and Everyone Else at a Record.” USA Today,

https://www.usatoday.com/story/money/2017/01/12/pay-gap-between-college-grads-and-everyone-else-

record/96493348/ Retrieved July 11, 2017. 15 Pew Research. 2016 (June 27). “On Views of Race and Inequality, Blacks and Whites Are Worlds Apart:

Demographic Trends and Economic Well-Being.” Social & Demographic Trends.

http://www.pewsocialtrends.org/2016/06/27/1-demographic-trends-and-economic-well-being/ Retrieved July 11,

2017. 16 Pager, Devah. 2003. “The Mark of a Criminal Record.” American Journal of Sociology 108(5): 937–975. 17 Arrow, K. J. 1973. "The Theory of Discrimination," in O. Ashenfelter and A. Rees (eds.), Discrimination in Labor

Markets. Princeton, NJ: Princeton University Press. 18 Wilson, William Julius. 1996. When Work Disappears: The World of the New Urban Poor. New York: Knopf. 19 Weeden, Kim. 2001. "Why Do Some Occupations Pay More than Others? Social Closure and Earnings Inequality in

the United States." American Journal of Sociology 108: 55–101. 20 Richardson, J. 1969. Florida Black Codes. The Florida Historical Quarterly 47(4): 365-379. Retrieved from

http://www.jstor.org/stable/30140241 21 United States Securities and Exchange Commission. 2018. “Sears Holdings Corporation Annual Report (Form 10-

K).” Washington, D.C. Retreived from https://searsholdings.com/docs/investor/SHC_2017_Form_10-K.pdf 22 General Motors. 2016. “Sales.” https://www.gm.com/investors/sales/us-sales-production.html Retrieved July 11,

2017.

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23 King, Brayden. 2008. “A Political Mediation Model of Corporate Response to Social Movement Activism.”

Administrative Science Quarterly 53(3): 395–421. 24 Bartley, Tim, Sebastian Koos, Hiram Satel, Gustavo Setrini, and Nik Summers. 2015. Looking Behind the Label:

Global Industries and the Conscientious Consumer. Bloomington, IN: Indiana University Press. 25 Soule, Sara. 2009. Contention and Corporate Social Responsibility. Cambridge University Press. 26 Facebook Newsroom. 2018. “Stats.” Retrieved from https://newsroom.fb.com/company-info/ 27 Weber, Max. 2015. "Bureaucracy." P. 114 in Weber's Rationalism and Modern Society, translated and edited by

Tony Waters and Dagmar Waters. New York: Palgrave-Macmillan. 28 Pfeffer, Jeffrey. 1997. New Directions for Organization Theory: Problems and Prospects. New York: Oxford University

Press. 29 You might enjoy this news article about Bitcoin: Popper, Nathaniel. 2017. “What is Bitcoin?” The New York Times.

https://www.nytimes.com/2017/05/15/business/all-about-bitcoin-the-mysterious-digital-

currency.html?rref=collection%2Ftimestopic%2FBitcoin&action=click&contentCollection=timestopics&region=strea

m&module=stream_unit&version=latest&contentPlacement=6&pgtype=collection Retrieved July 11, 2017. 30 List, John and Uri Gneezy. 2013. “What Makes People Do What they Do?” Freakonomics Blog.

http://freakonomics.com/2013/10/23/what-makes-people-do-what-they-do/ 31 Velthius, Olav. 2006. Talking Prices: Symbolic Meanings of Prices on the Market for Contemporary Art. Princeton

University Press. 32 You might enjoy this documentary about Herb and Dorothy Vogel. “Herb and Dorothy.”

http://www.pbs.org/independentlens/herb-and-dorothy/film.html 33 You might enjoy seeing the documentary made by the movement: “99%: The Occupy Wall Street Collaborative

Film.” https://www.youtube.com/watch?v=FzJ4IpqmXwg 34 Jesse Bricker, Alice Henriques, Jacob Krimmel, and John Sabelhaus. 2016. “Measuring Income and Wealth at the

Top Using Administrative and Survey Data.” The Brookings Institution. https://www.brookings.edu/bpea-

articles/measuring-income-and-wealth-at-the-top-using-administrative-and-survey-data/#recent/ Retrieved July 12,

2017. 35 Fontenot, Kayla, Jessica Semega, and Melissa Kollar. 2018. “Income and Poverty in the United States: 2017.”

Washington, D.C.: U.S. Census Bureau. Retrieved from

https://www.census.gov/library/publications/2018/demo/p60-263.html 36 For analysis of the poverty rate, see: Bernadette D. Proctor, Jessica L. Semega, and Melissa A. Kollar. 2015.

“Income and Poverty in the United States: 2015.” Washington, D.C.: U.S. Census Bureau.

https://www.census.gov/library/publications/2016/demo/p60-256.html Retrieved July 11, 2017. 37 Allard, W. Scott and Mario L. Small. 2013. “Reconsidering the Urban Disadvantaged: The Role of Systems,

Institutions, and Organizations.” The Annals of the American Academy of Political and Social Science 647(1): 6–20. 38 U.S. Census Bureau. 2017. “How the U.S. Census Bureau Measures Poverty.” Washington, D.C.: United States

Census Bureau. Retrieved from https://www.census.gov/library/visualizations/2017/demo/poverty_measure-

how.html 39 Saez, Emmanuel. 2016. “Striking It Richer: The Evolution of Top Incomes in the United States.”

https://eml.berkeley.edu/~saez/saez-UStopincomes-2015.pdf 40 Krippner, Greta. 2005. “The Financialization of the American Economy.” Socioeconomic Review 3(2): 173-208. 41 Smith’s famous phrase is the “invisible hand of the market” – things get done, even without a designated leader.

Smith 1776 (above). https://www.adamsmith.org/adam-smith-quotes/ 42 Schumpeter, Joseph. 1942. Capitalism, Socialism, and Democracy. New York: Harper. 43 Marx, Karl. 1967[1867]. Capital: A Critique of Political Economy, vol. 1. New York: International Publishers. 44 Ibid. 45 Ho-fung Hung and Jaime Kucinskas. 2011. “Globalization and Global Inequality: Assessing the Impact of the Rise

of China and India, 1980-2005.” American Journal of Sociology 116(5): 1478-1513.

Cover Photo Source; Creative Commons License