HCJ 1, Semester 2, Rough Notes.

Wall Street crash and Great Depression in 1929.

New Industrial State published in 1967.

Techno structure –a small group of technicians, managers, executives (etc) with considerable influence and control in economy.

Galbraith believed these people had the power over organisations and not the share holders/market as they are the ones who make the decisions.

Galbraith defines an organisation as a ‘system of consciously co-ordinated activates or forces of 20 or more persons’ –He believed that an individual in an organisation puts aside their own goals to pursue the organisation (Utilitarian movement).

The executives of an organisation are the inner circle, with role status lessening as they spread from the core.

He believed that the closer an employee gets to the core, the more they believe in the goals of the organisation they are in.

Employee’s become motivated to become closer to the core by:

Compulsion: ‘Behind the person with a spade is a person with a club’. The employee will work towards a goal through force, fear or punishment. They will never accept the organisations goals as their own as they are being made to work towards them. For examples slaves and community services sentences.

Pecuniary Motivation: The employee works towards the common goal as they are getting rewarded for it, for example through wages, promotions etc.

Identification: When an employee finds the goals of their organisation far superior to their own, e.g., charity work, nation service.

Adaption: Working for an organisation as an effective way of altering their own goals through the organisations, e.g., working for a support group or mentoring young adults in high crime rate areas.

Galbraith states the richer the country the better the unemployment compensation. He believed if unemployment became a problem the state should lessen the compensation. For example a lot of stories were in the media about families which were better off on benefits than going out working.

Adam Smith is a mechanistic thinker. This means they avoid pain and seek pleasure, which is logical. He believed the individual utility goes up or down depending on the circumstance, long and short term.

Utility in Economics: £100 dress vs. £10 top. The dress provides 10 X the utility of the top. –Utility without morality; sheer facts, society’s price system.

Utility within human existence- everyone is free to maximise their utility.

Kantian System is much more concerned on morals -categorical imperatives such a lying and stealing.

The labour theory value: Ricardo

Labour can be sold, increased and decreased.

The natural price of labour depends on the price of living costs.

If the economy is good labourers can afford to have big families, but if the population increases it means future wages will decrease.

Iron Law of Wages by Malthus

States the population grows geometrically.

If every couple has 2 children, and the parents then die and the chain continues the population will remain the same. However if a couple has 4 children, they will produce more and more, meaning the state cannot support them (financially, with land sharing and resources).

Danger of overpopulation and under consumption. E.g., Wage for producing a widget £5, widgets sell for £10, widget maker cannot afford them. So the government will lend the maker £5 to buy the widget. Example of this in the modern say would be mortgages.

Credit Creation Ratio enables the bank to print more money than gold it has in its stores, on the assumption that not every person will go to the bank and empty their account at the same time.

Keynes: Economics revolution: after World War II and the great depression. States that you have to have a lot of forward planning, saving and anticipating the states needs/wants. However this won’t work if the states people start buying unnecessary luxuries.

‘We are driven by money even though it is a substance of complete abstraction’.