SOC 138 Midterm

21. What is a CDO? P96

- CDO = Collateral Debt Obligations - Home mortgages and other forms of debt (credit card loans, auto loans, commercial loans) were bundled and sold off to investors from other banks, insurance companies, pension funds, etc. Banks and mortgage companies eventually came to an agreement where banks would buy any mortgage sold to homeowners - mortgage companies no longer had any incentive to conduct background checks on debtors because they knew they would not carry any of the risks. - Banks and mortgage companies made millions of dollars in fees from selling mortgages to selling CDOs

18. Imperialism/colonialism abroad was not just about more profits. What major problem did it solve? Note Cecil Rhodes quote. P83-84

- Cecil Rhodes, one of the great figures of England's colonization of Africa, recognized also the importance of overseas expansion for maintaining peace at home. In 1895, Rhodes, responding to pleas of the unemployed for "bread," said, - My cherished idea is a solution for the social problem, i.e., in order to save the 40,000,000 inhabitants of the United Kingdom from a bloody civil war, we colonial statesmen must acquire new lands for settling the surplus population, to provide new markets for the goods produced in the factories and mines. The Empire, as I have always said, is a bread and butter question. If you want to avoid civil war, you must become imperialists. (Leroy-Beaulieu 1891:839)

29. What did Edward Bernays believe about who (and how many) should manage "the masses" under democracy and consumer capitalism? P117

- Edward Bernays believed in a clear hierarchical view of society, and thought that an "intelligent few" should manage the masses under democracy and consumer capitalism. - The masses were known as "the mob," and the elite believed that they needed to be controlled

13. "Free labor" refers to what? P58

- Free labor, historically, has been created by removing people from the land or destroying the small-scale industry that allowed them to support themselves. - Although the term might suggest the same meaning, the word "free" had nothing to do with bondage or working for no wage, but rather indicated concepts of freedom, independence, and self-reliance. - The concept emphasized an egalitarian vision of individual human potential, the idea that anyone could climb the ladder of success with hard work and dedication.

15. Name three historical barriers to commerce as a central organizing principle (there are more than 3). P67

- Geography was obviously a major barrier - Economically, there were various restrictions - Political rulers were not yet committed to encouraging trade - Religious authorities discouraged trade by extracting high taxes or forbidding loans at interest

36. What was Malthus' dark prediction about the future of "progress"? P78

- In his treatise, "An Essay on the Principle of Population as It Affects the Future Improvement of Society," Malthus predicted that the earth would no longer be able to sustain the growing population; eventually, our need to reproduce will strip the earth of all its resources. - Malthus was convinced that the human population would never attain everlasting peace and plenty.

27. What is the definition and functional role of "invented tradition"?

- Invented tradition: a set of practices, normally governed by overtly or tacitly accepted rules and of a ritual or symbolic nature, which seek to inculcate certain values and norms of behavior by repetition, which automatically implies continuity with the past. In fact, were it possible, they normally attempt to establish continuity with a suitable historic past. - many "traditions" which "appear or claim to be old are often quite recent in origin and sometimes invented." Nation-states are constructed through intervention and social engineering - Invented tradition exists because states wanted individuals to feel a sense of solidarity with others. They had to be convinced that they shared certain features, such as language, religion, ethnic group memberships, or a common historical heritage.

11. Name the four characteristics of laborers in modern capitalism. P41

- Labor Mobility - Segmentation - Discipline - Resistance

1. What are the Four Factors in the creation of a consumer economy?

- Marketing and advertising - Transformation of institutions - Reconfiguration of time, space, and class - Transformation of spiritual and intellectual values

30. Chalmers Johnson believed that the "sorrows of empire" including what five outcomes? P124

- More violent attacks against US citizens and to an increase in reliance by smaller states on weapons of mass destruction - A loss of democracy and constitutional rights to an increasingly imperial presidency - A "shredded principle of truthfulness" as propaganda and spin are used to glorify war, power, and the military itself - Economic decline and neglect of education, health, and individual well being (as more resources are spent to maintain the military empire) - The militarization of society in general

28. Carole Nagengast suggests that internal "othering" occurs through state-sponsored violence in order to construct "punishable categories of people." What are the two types of people constructed within this ambiguous underclass? P111

- Others are an ambiguous underclass consisting of (1) subhuman brutes and (2) superhuman individuals capable of undermining the accepted order of society - By creating others, the states maintain boundaries and legitimate or delegitimate specific groups - States symbolically mark the Others through arrests and torture, using terms like terrorists, communists, criminals, or separatists.

14. How is the analogy of a "black box" used? p58

- So the engineers assume that the black box produces something for the purposes of design and planning but the engineers don't concern themselves with the internal functioning of the box. They simply assume that if they put something into it, they will get something out of it. - The analogy of the black box is used here when they examine how the black box performs its conversion by looking at the growth of overseas assembly plants and the creation, segmentation, and disciplining of the labor force necessary for the box to function at its greatest efficiency.

20. What are five principles of "corporate libertarianism" asserted by David Korten? p88

- Sustained economic growth, as measured by gross national product (GNP) is the path to human progress - Free markets, unrestrained by government, generally result in the most efficient and socially optimal allocation of resources - Economic globalization achieved by removing barriers to the free flow of goods and money anywhere in the world, spur competition, increases economic efficiency, creates jobs, lowers consumer prices, increases consumer choice, increases economic growth, and is generally beneficial to almost everyone - Privatization, which moves functions and assets from governments to the private sector, improved efficiency - The primary responsibility of government is to provide the infrastructure necessary to advance commerce and enforce the rule of law with respect to property rights and contracts

25. Is the "nation-state" an old or recent development? P102

- The nation-state is a relatively recent development, having been created only 200 to 300 years ago (this is not much compared to states, which were created around 7,000 to 8,000 years ago). - A state is a political entity with identifiable components, but a nation is a far more abstract concept than a state. A nation is an imagined political community.

32. Is the nation-state a neutral umpire when it comes to economic activities and systems, or does it help create the very kind of people necessary to make it profitable and sustainable? p125

- The nation-state is not a neutral umpire when it comes to economic activities and systems, it actively participates in creating people (laborers and consumers) required to maintain and protect the interests of the capitalists. - "It created and maintained an unprecedented division of labor and imposed a shared culture that enabled workers to communicate with precision whole thirsting for the commodities that labor produced and which served as the basis of the elite's wealth."

33. Describe the kinds of people who the author calls "worldly philosophers." Did they all have similar characteristics and "talents"? P13-17

- The only thing these worldly philosophers had in common was a common curiosity. Their fascination with the world, its complexity and its disorder drove them to study this subject extensively. They are called worldly philosophers because "they sought to embrace in a scheme of philosophy the most worldly of all man's activities - his drive for wealth." They were obsessed with the behavior of "fellow men" starting from the discovery of wealth to the attainment of wealth. - Aside from this curiosity, these philosophers had nothing else in common. They came from every nationality, every walk of life, every turn of temperament, different levels of fortune, all levels of education, and they all had their own viewpoints towards the world, and they wrote about them in a variety of books.

31. When did the state and nation-state appear? P125

- The state emerged about 7,000 to 8,000 years ago; they were created to politically integrate largely heterogeneous peoples and cultures - Nation states came afterwards (200 to 300 years ago) to fill the need of economic integration

12. What are primary vs. secondary industries? P52

- There are primary industries whose markets are well defined, whose profits are relatively certain, whose capital investment is high, and who are able to pay good wages and ensure decent working conditions. E.g., automobile manufacturing, communications and energy industries. - Then there are secondary industries that include the fast-food industry; agriculture; electronics; and, most notably, the clothing garment and/ or textile industry. Within secondary industries there is intense competition, uncertain or changing demand, a lower profit margin and a greater dependence on skilled labor. Least desirable for workers because to stay competitive, have to pay lowest wages and maximize worker output.

26. What are the three tasks of the modern state asserted by Braudel <- historian who covered long durations of time? P102-3

- To secure obedience and gain a monopoly on force with legitimate violence - To exert control over economic life to ensure the orderly circulation of goods and to take for itself a share of the national income to pay for its own expenditure, luxury, administration, or wars - To participate in spiritual or religious life and derive additional strength by using religious values or establishing a state religion

34. Describe the new social "problem" of growing commerce beyond accumulation of gold, and why "the time for economists had arrived." p40-41

- With growing commerce, a new philosophical question sprung up - "how to create more and more wealth by assisting the rising merchant class in the furtherance of its tasks," and this philosophical question bought a new social problem of how they could keep the poor poor. - "To make society happy, it is requisite that great numbers should be ignorant as well as poor." - It was time for economists to arrive because no one could figure out a model of order over the chaos of daily life - people were unable to agree on how the nation could conduct trade or whether poor people were chosen by God to be poor. This was when Adam Smith (Inquiry into the Nature and Causes of the Wealth of Nations) came into the picture - he painted the world in a whole new way and gave the people a clearly visible goal.

35. Adam Smith favored a system dominated by needs of consumers with little government intervention. Describe exceptions to this and why. P68

Although Adam Smith favored a system dominated by needs of consumers with littler intervention, he was not completely opposed to the government. (Smith is only against the meddling of the government with the market mechanism.) In fact, Smith specifically points out three areas in which government should intervene. - The government should protect society against "violence and invasion" from other societies ex. Police, TSA - The government should provide an "exact administration of justice" for all its citizens ex. The Justice System - The government should erect public institutions and public works "which may be in the highest degree advantageous to a great society" ex. Roads and education

6. How are Chinese and American consumers alike? p34

As in the United States, Chinese consumers are being leveraged through mortgages, auto loans, credit cards and consumer finance.

10. What is the concept coined by Karl Marx to describe how commodities, both goods and services, may take on a life of their own. It's a kind of hypnosis resulting in magical thinking about the origins and social processes of the commodity. In this way, we may overlook or actively be distracted from labor exploitation and externalities from the production and consumption of the "good." (p. 40) 3:14

Commodity fetishism is the perception of the social relationships involved in production not as relationships among people, but as economic relationships among the money and commodities exchanged in market trade.

37. Describe the role of consumer culture in the Enron scandal.

Consumer culture was all about money.

17. What is Eric Wolf's definition of "capitalism"? P79

Eric Wolf offered one of the more concise views. For capitalism to exist, he said, wealth or money must be able to purchase labor power. But as long as people have access to means of production, there is no reason for them to sell their labor. They can still sell the product of their labor.

23. How many people live in poverty in year 2000? P97

In 2000, more than 1.2 billion people lived in absolute poverty, earning the equivalent of less than one dollar a day

4. What does "kinderculture" refer to? P28

Kinderculture → the promotion of an ethos of pleasure for the purpose of enticing adults as well as children to consume

22. Once a segment of the economy starts "making money with money" what follows next? p97

Once a segment of the economy starts depending on making money with money, perpetual growth must ensue. Once money is lent or invested, the money must work to produce more money to account for both the original amount lent or invested, plus interest, dividend, or profit. If no additional money can be acquired, loans will go unpaid, dividend and profits will go unrealized.

38. Describe Enron management culture and strategies, and how this contributed to scandal.

Referring to rank and yank Turnover rate was very high Very cutthroat Darwinian atmosphere Bell curve in employees and their performance <- those at the bottom of the bell curve were let go

7. What are two things the U.S. government urged its citizens to do after 9/11? P35

Shop - give people the confidence to go back out and buy things for Thanksgiving and Christmas Work - to the consumer, need to show that the government and businesses look to supply for continued expansion of the economy

3. What is the "nag factor"? P25

The "nag factor" is the tendency of children, who are bombarded with marketers' messages, to unrelentingly request advertised items. Children's nagging inspires a third of the family's trips to fast food restaurants, video stores and children's clothing store Advertisers explicitly worked on a child's desire to be accepted and on their fear of being "losers"

19. Which Amendment to the U.S. Constitution played a pivotal role in the expansive powers of the corporation? P88

The 14th Amendment

8. What is the dilemma of the American Dream as expressed by Francesco Sisci? P35

The American victory in the soft war creates the desire of the citizens of the world to become American, with its values, wealth and security umbrella. However, it is impossible for America to grant the American dream to all people who dream it, either in the US or abroad. The danger of creating a desire that cannot be satisfied - whether desire for a certain product or a certain civilization - is the backlash that will follow: waves of protest and dissatisfaction that will translate into a wish to return to one's own history.

16. What is the "tulip bubble" and the main lesson to be learned? p76

The lessons of the VOC/Dutch East India Company (first MNC and first to sell stock) and the "tulip bubble" are that for investors to profit and for borrowers to pay their debts, there must be some form of economic growth, either as an increase in trade, as with the VOC, or as an increase in the value of assets, such as tulip bulbs. If growth occurs, profits are made and debt is repaid. If it doesn't, investors experience losses and borrowers may default on their loans.

5. What is "soft power" and who coined it? P32

The phenomenon by which people around the world want to emulate consumer capitalism represents what Joseph Nye (2003) calls "soft power". - Anything that wins over the hearts and minds of people is soft power - Hard power is the traditional military force

24. Top three richest people in the world own the equivalent of how many of the poorest nations? P97

The top three richest people in the world own more than the gross national product of the 48 poorest nations combined. The gap between the poor and the rich is only increasing

40. Describe how Enron could not have grown so quickly without the use and manipulation of laws, regulations, and politicians.

They couldn't have done this without the help of a political system designed to help them Laws were designed to divide people into profit making departments Divide and conquer Classes and races

2. The transformation of several institutions mostly served to promote what? P17

They wanted to promote consumption and the consumer economy

9. What is "use value" vs. "exchange value"? P37

USE VALUE - in precapitalist societies or non capitalist production, as in capitalist production, people either make or obtain commodities - food, shelter, clothing and the like - to use. EXCHANGE VALUE - in capitalism, people produce or obtain goods not for their use, but for the purpose of exchange. Their object is to get capital or money. The goods have what is called exchange value.

39. Describe how the powers of a U.S. corporation contributed to the scandal.

Understand the power of the corporation Corporation baby machine LOL Created in diff parts of the country Engineered reality