316 M1R - Midterm 1 Review

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786 8.30.11 What determines “class”? Income Education Neighborhood Social Network Purchase Power Money Wealth All of these are INIDICATORS of class, but not class determinants Class-Power—Broad Society Exercise of power wealth, income, etc Transform money into a form of power What differentiates between being rich and being a capitalist? Where is power control? Capitalist dictator working conditions, exercising power over the worker, power over production The essence of class: Power is a RELATIONSHIP—if you can’t exercise power over someone who has less power than you (or no power at all), then your power is also useless each is powerful in society Race, and gender are also power relationships; they are all grounded in economic questions that are subject to change 9.1.11 The lack of “class” in economics -differences that arise from this -how will it cause certain effects if it is brought back? Perspective 1: marginal producitivity: wages = how much workers able to produce (marginal product) }question of power: claim, exercise, organization Perspective 2: workers should be paid just enough money to scrape by & produce offspring that will work in their place “Subsistence wage” }what constitutes “enough” to get by? Concept of being able to “reproduce yourself”
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786 Capitalists are differentiated from workers by the type of input what factor of production do they demand? For 100 years (thanks to Smith) “subsistence wages” ideology exists. Marginal productivity came around about 100 years later along with the Marxist theory Workers produce everything, but capitalists own everything 1 group produces/creates wealth 1 group that claims wealth, but returns a little through different mechanisms What is the origin of wealth? Marx, 75 years later Marx: understood & believed that the working class had potential; Smith did not He saw the power struggle that drives history Battle of class in production }All value and all wealth exists because of labor –Smith How do we allocate wealth efficiently? Instead of: “Where does wealth come from?” 19 th Century—2 factors that lead to change 1) Feudalism defeated 2) Economic theorist: Marx (socialist—1805s-1870s) Conflict drives industry & this is why the working class will bring revolution and shoot down capitalism Jevins and others brought a counter-weight to classic economies that Marx was producing; marginal productivity Instead of being pushed up, it’s a race to the bottom What society expects working people to have; wages go down, standard of living goes down, and production goes up Essentially, more is being created, but workers are getting less This leads to the widening of the gap between capitalists and workers because workers become even less powerful International Trade “Gains from trade”—more wealth with the same resources
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This note was uploaded on 10/16/2011 for the course ECO 316 taught by Professor Zweig during the Fall '11 term at SUNY Stony Brook.

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316 M1R - Midterm 1 Review

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