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Topic 4: Economy & Class Inequalities

Questions for Thought:

Q: Why does a doctor have a higher income than a nurse?
Q: Why does a pop star earn more than a bus driver?
Q: Why do people like Li Ka Shing have so much more wealth and power than a university professor
or a worker?
Q: Why are there an increasing number of street-sleepers in HK?
Q: In many societies, why is there a much higher percentage of certain categories of people (e.g. men,
whites) than other categories (e.g. wo men, non-whites) employed in professional & managerial
positions?

1. GENERAL CONCEPTS

1.1 Social Inequality

l socially created inequalities in terms of differential access to societal resources

l societal resources: resources which enable people to obtain the socially desirable goods
such as good housing & good education.

l 3 major kinds of resources: wealth, status, and power

l Q: Are social inequalities a result of natural inequalities (e.g. natural differences in

talents, good qualities)?

1.2 Social Stratification

In all existing societies, societal resources are unevenly distributed among different people.
The question, then, is who get more and who get less. From a sociological point of view,
the question is not simply about whether Mr. A or Ms. B gets more than the others. Rather,
we are concerned if certain categories or groups of people (capitalists, governing elites,
men, white people etc.) consistently have greater societal resources than the other
categories or groups. This is a question about social stratification.

Social Stratification: a particular form of social inequality, which refers to the presence of
social groups which are ranked one above the other, usually in terms of the amount of
power, prestige and wealth their members possess.

Life Chances: One’s position in a stratification system may enhance or reduce one’s life
chances, i.e. the chances of people obtaining those things defined as desirable and avoiding
those things defined as undesirable in their society

For sociologists, one of the tasks is to explain how our society is stratified, why it is
stratified in the way it is, and what explain its persistent structure.

1.3 Social Mobility

l movement from one stratum to another—significantly higher in industrial than in

pre-industrial societies

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l ascribed status (e.g. class of origin, sex, race and kinship relationships) vs. achieved
status (merit)
l open vs. closed system (rate of mobility)

Example: Caste System in India:

² 4 castes ranked in order and a fifth group of the outcaste (untouchables)
² a hierarchy of prestige based on notions of ritual purity (e.g. Brahmins/ priests ranked top)
² also a hierarchy of power and wealth
² little cross-caste mixing (e.g. rituals; marriage)

l Why study social mobility?

-(a) to measure the extent of equal opportunity in society
-(b) to see if classes become social entities with a stable membership as well as a stable
interest that leads to distinctive class cultures

l Types of Social Mobility

-(a) Intragenerational mobility
-(b) Intergenerational mobility
² usually short-range mobility—movement to a class close to that of one’s father

l Why social mobility or why little mobility - individual or structural factors?

1.4 Class Reproduction & Class Subcultures

Social classes may reproduce themselves in maintaining their distinctive position in the
social structure within and across generations.

(a) Upper Class

l through direct transfer of private property from one generation to the next
l conversion of economic assets into social and cultural assets - education, personal tie
(old boys’ network or old girls’ network);
l inter-family ties - business & marriage

(b) Traditional Working-Class Subculture (e.g. among miners)

l Fatalism à an emphasis on immediate gratification rather than long-term planning
l An emphasis on mutual aid and group solidarity (e.g. sense of fraternity in men's clubs,
trade unions), which discourages individual achievement

(c) Middle Class Subculture

want to achieve the
l A purposive approach to life—an emphasis on future time gratification, deferred
goal_ prepare
gratification, and discipline workinghard
consistently
l An emphasis on individual rather than a collective strategy—individual achievement
and individual effort.
divided into thyunit intensified production
Questions for Further Thought:
(1) Is social stratification functional and desirable for the maintenance of social order, or
does it generate too much social inequality & social conflict?

(2) Do people within the same stratum (e.g. lower class, middle class) necessarily form a
strong sense of group identity (e.g. class consciousness) among themselves and thereby lay
the potential basis for common action such as social protests?

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2. CAPITALISM AND CLASS INEQUALITIES

Capitalism:
-founded on the investment of capital in the process of production in the expectation that it
would yield a return in the form of a profit (profit vs. subsistence) in order to accumulate more
capital1

Basic Characteristics of a Capitalist Economy

(a) Investment of capital (money used to finance production for gain) in the production of
goods
(b) Monetary value—given to goods, and also to the labor power, raw materials and
machinery used to produce the goods
(c) Capital is accumulated by selling those goods at a price higher than their cost of
production
Price cost of production
Reduction
of
Industrialization (Industrial Capitalism) TEStructuralLogic
Capitalism is being intensified through technological inventions under industrial
j2mway es
provetech
development:
l Clock time as a new basis of social organization
l Fordism—a system of mass production inspired by the Ford Car Company’s
assembly-line process which produced cars for a mass market

[We will go over 2 different approaches to capitalism: economic liberalism & Marxism. The former is dominant
in economics; the latter has influenced much sociological thinking.]

capitalism Industrialization
2.1 Economic Liberalism - Laissez-faire (an economic perspective)

Adam Smith’s The Wealth of Nations (1776)

-Its centerpiece is the analysis of the ‘invisible hand’, the mechanism by which “the economic
activities of profit-seeking individuals result in the greatest economic good for society as a
whole” (Brown).

l
1to choose
Freedom of individuals
l Market co-ordination - supply & demand mechanism
l Division of labor - comparative advantage

wǔtodowhat
2.2 The Marxist Approach

Capitalism: a mode of (commodity) production centered upon the relation between the
private ownership of capital and propertyless wage labor

l Social Relations of Production

- OWNERSHIP of the means of production ( ® control over the production process)
- two major classes: capitalists (bourgeoisie) vs. worker (proletariat)

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There are two forms of property: (a) productive property —capital, which yields income through profits on its
productive use, resulting in more wealth; (b) consumption property—property for personal consumption (e.g.
clothes, car, and family homes that are owner-occupied).

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l Labor
Workers have to sell their labor power (勞力) to the capitalists in order to earn a wage.
They sell their labor in terms of time: they promise to let an employer use their labor
power for a period of time in return for a fixed amount of money—wage workers. Yet
they have no control over the actual laboring process i.e. not knowing in advance what
specific tasks they are required to do.

ofsomeservice
l Economic Exploitation
-Surplus value—unpaid hours of laboring
Subcontracting
等
-The general law of capitalist accumulation: “The constant tendency of capital is to force
the cost of labor back towards ... zero.” (Marx, 1867/1967“600)
classdepend not onwealth
[Q: Are the people working at McDonalds being exploited?]
but properlythey owned
l Alienation
a situation in which the creations of humanity appear to humans as alien objects—as
independent from their creators and invested with the power to control them.

Under Capitalism
-lack of property ownership, hence lack of control over the production process
-alienation from: (i) product, (ii) production process, (iii) themselves, & (iv) their
fellows

Under Industrialization
the mechanization of production and a further specialization of the division of labor

l Social Structure

Superstructure 上層建築 (non-economic institutions e.g. education, family, politics, ideology)

Substructure 下層建築 (economic institution: production)

Production: the basis of human society

Substructure/ Infrastructure: the mode of production 生產模式

l the forces of production (the technical component)
l the social relations of production (the social component): classes

Forces of production (technical)

-raw materials, machinery, technical knowledge etc. (Those parts of the forces of
production which can be legally owned is called “means of production” e.g. raw materials
& machinery.)

Relations of production (social)

-the social relationships which people enter in the production process (CLASS
relationships)
-two major classes: (a) those who own the means of production
(b) those who do not own the means of production

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Stages of Historical Development (Different Modes of Production)

(i) primitive
(ii) ancient ( master vs. slave)
(iii) feudal ( lord vs. serf)
(iv) capitalist ( capitalist vs. wage worker)
(v) communist

Economic Power ® Political Power (to be discussed in later lectures on power)

Insofar as societal resources are mainly in the hands of the capitalists, they have a lot of
influence and power over the government/state. production

are t from 1lass inner ship.t

mean of
l Social Change
astiiīǎymarx
web other situ
fPower
dimension
Class Class Class Class Change:
Position ® Polarization ® Consciousness ® Struggle ® Communism
­
(economic crisis)

“The history of all societies up to the present is the history of the class struggle.”

l Contradictions within Capitalism (Crisis)

Competition among capitalists à increasing concentration of capital (further reduction of

cost of production)

2 Effects:
(a) smaller capitalists being unable to compete successfully; joining the working class
(b) reduction of wage or an increasing rate of unemployment among the workers

Spiraling effect: wage reduction or unemployment causes a decrease in consumption among

the working class, which pushes the capitalists to cut costs still further so as to retain profit
levels.

Class Consciousness: a full awareness of the true situation of class exploitation

2.2.1 Strengths of Marxism

(a) analyzing structural contradictions in capitalism—class exploitation, & economic

crises

(b) envisaging concentration of capital in society

(c) envisaging globalization of capital & production

-e.g. transnational corporations (e.g. Sony, McDonald, Coca Cola), emergence of a
transnational capitalist class, relocation of factories

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2.2.2 Criticisms

(a) overlooking non-class based inequalities & conflicts (e.g. gender, ethnicity, political
power)

(b) overlooking intra-class inequalities & conflicts (different positions/ groups within
the same class)

(c) under-conceptualization of the middle class

(The existence of the middle class does not fit well into a Marxist framework, given
its political agenda about revolution. Even in a neo-Marxist framework, the power
position of the middle class still remains unclear and ambiguous.)

l in terms of ownership of means of production—not belonging to the capitalist

l in terms of work autonomy—quite different from the working class

(d) prediction not actualized - why not?

-Marx: false consciousness 假意識—unawareness of one’s real interests
-Weber: class fragmentation 階級分化 (next section)

2.3 The Weberian Approach to Social Stratification

Max Weber (1864-1920) proposed that social stratification result from a struggle for
scarce resources in society, including not only economic resources (class), but also social
honor (status) and political power (party). The interaction among class, status and party
gives rise to a complex basis for the formation of social groups, which is quite different
from Marx’s views.

3-dimensional view of social stratification

l class—economic reward
l status—social honor, prestige (e.g. gender, ethnicity)
l party—political power (political groups seeking political influence & power)

(i) Class
Weber also saw ownership of wealth as an important criterion; but he placed more
emphasis than Marx on divisions within the propertyless class.

-Class: a function of one’s market power/ market capacity, which depends on one’s
(a) possession of material resources, or
(b) possession of skill & knowledge (occupational labor market)

The propertied class Capitalists

Petit capitalists
The propertyless class Professionals
Managers
White-collar workers
Skilled manual workers
Unskilled manual workers

-class position/situation = market situation (e.g. income)

-class position affects life chances (e.g. access to higher education and quality housing)
-class relations: competition for economic resources

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Social Changes: Weak Social Bases for Revolution by Workers

Unlike Marx, Weber did not anticipate the polarization of classes or the inevitability of the
proletarian revolution.

(a) Growth of the Middle Classes (social mobility)

-changing work structure—increasing numbers of administrators & clerical staff

(b) Intra-class fragmentation

-intense competition ® hierarchy (skill, qualifications/ credentials, status)

[Observation: The post-industrial labor market requires more knowledge-based,

specialist skills which can be adapted to a fast-changing economy (® well-paid and
secure jobs for the middle and upper-middles classes.)

(c) Growing affluence of the working class

e.g. skilled technicians

(d) Separation of ownership & control

(i.e. creation of a category of manager that is separate from the owner)
• a group of managers mediating between capitalists & workers
--- the managers oversee running the day-to-day operation of the production,
liaising with their bosses, and managing the relationship with the workers etc.

(ii) Status
In certain situations, status rather than class provides the basis for the formation of social
groups whose members perceive common interests and a group identity.

l Status situation—the distribution of social honor, prestige or esteem (e.g. gender;

ethnicity; profession; the newly rich vs. the established rich; locality of birth e.g.
"local-born" vs. "new migrant")

l Status group: Members of status groups are quite aware of their common status
situation; they may share a similar lifestyle, identify with and feel they belong to
their status group.

l Social closure/ exclusion: status groups may place restrictions on the ways in which
outsiders may interact with them (e.g. castes in India)

Ø Status groups may create divisions within classes

Ø Status groups may cut across class divisions (e.g. ethnicity, homosexual groups)

ð The presence of different status groups within a single class and of status groups
which cut across class divisions can weaken class solidarity and reduce the
potential for class consciousness.

(iii) Party
-groups seeking political power & influence (e.g. interest groups, political parties)
-A party may be: class-based, status-based, both, or neither.
TheInterplay oflass status party'h theformation
ofsocialgroups is complex
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3. THE MIDDLE CLASS

l Expansion of the middle class in the 20th century. Why?

l How to define the position of the middle class today?

² As compared to the working class, they enjoy greater advantages regarding job
security, working hours, holidays, fringe benefits and promotion prospects.
² Defining the middle class solely in terms of non-manual occupations is
inadequate because there is an extreme diversity in the middle class ranging
from clerks to managers and accountants.

l Distinction between the upper middle class (e.g. professionals, administrators and
managers) and the lower middle class (e.g. clerks, secretaries and shop assistants).

3.1 Upper-Middle Class (Focus: Professionals)

l Why the growth of professional occupations?

l A profession is a service occupation with legitimate control over the market for its
services & over a body of specialized knowledge or expertise (state-legitimated
license & exclusive membership).

3.1.1 Functionalist Perspective

Attributes of the professions that explain their high reward:

² (a) a body of systematic & generalized knowledge
particulargroup
² (b) communal interest (vs. self-interests; vs. sectional interests)
² (c) a code of professional ethics learned as part of the required training
² (d) high rewards as symbols of achievement
maximize an
Ø Weberian Critique: professionalism as a market strategy (for self-interests)
cempat.in'nnngiign
Ø Marxist Critique: professionals as servants of the powerful (for sectional interests)
I o
class market en situation 1notfixedbutpeoplecompete forresources dynamic
pow
3.1.2 Weberian Perspective: Professionalism as a Market Strategy
(focus: the market situation of a particular occupational group)

l Class: market relations (“Market” is a concept of relative positions.)

l Market strategy—Different classes use different strategies to maximize their economic
resources so as to improve their market situation.

l Professionalization: a market strategy whereby an occupational group restricts access to

resources and opportunities to a limited group of qualified professionals [closure].
exclusion
Strategies:
(a) controlling supply (e.g. student quota)
(b) creating demand (e.g. medicalization)
(c) monopolizing knowledge
(d) seeking legal monopoly of service
(e) claiming professional autonomy i.e. the right to discipline their own members (In
doing so, professional associations prevent public scrutiny of their internal affair.)

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3.1.3 Marxist Critique social ills Medicalsolution

Professions as servants of the powerful

-e.g. accountants and lawyers are employed in the service of the capital

Mystification神秘 化
e.g. Illich: “The medical establishment has become a major threat to health” by helping
to mystify the real cause of illness in the social environment—e.g. industrial capitalism

3.2 Lower Middle Class

Proletarianization of the Middle Class?

A growing number of people are occupying an intermediate position between the middle and
the working-class occupational groups due to the growth of a tertiary sector where people
work in office, administrative, retail and service sector jobs (e.g. banks):

² features of middle-class status (white-collar, office or technical work associated with

educational qualifications)
² material reward closer to typical working-class positions (e.g. wages, pension rights, and
job security)
² work nature: very tedious and routine

[Deskilling of clerical work]

One viewpoint argues that these groups still enjoy higher job security and higher staff status
and are functionally associated with the established middle class.

A second viewpoint suggests that many women workers in routine non-manual jobs (e.g. in
offices, hotels and catering) are very similar to women in manual work. They occupy a
“fundamentally proletarian market position”.

A third viewpoint suggests that they form an intermediate group between the middle and the
working classes.

4. THE RESTRUCTURING OF THE ECONOMY

4.1 A Shift from Fordism to Post-Fordism in Post-industrial Economy

• Fordist approach: a mass production approach, which dominated industrial production

from the 1950s onward

• Post-Fordist approach: targeting products to more specialized markets and producing

such products “just-in-time” (smaller, more specialized production economy)

-New skills in the post-industrial labor market: knowledge-based, specialist skills,

flexible skills that can be adapted to new needs & opportunities (“knowledge society”)

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• Globalization à re-location of the production line to less developed countries, where

Fordist production is replicated (e.g. mass production of i-phones in mainland China)

4.2 Polarization of the labor market

l Impact of post-Fordist development on the labor market: segmentation into three parts:

Ø (a) a core of securely employed workers (e.g. knowledge-based work)

Ø (b) a periphery of casualized workers (self-employed, part-time staff)
Ø (c) a growing number of structurally unemployed

The shift results in a reduction in the number of full-time staff with secure employment
and an increase in casual, insecure and temporary employment.

l Knowledge-based occupations for professionals and highly educated middle-class

people are richly rewarded but they have to work for long hours under increasing
competitive pressure.

l For those without knowledge-based skills, work can be insecure, low-paid and at risk of
being replaced by new technology (automation brought about jobless growth). This
results in increasing casualization and disorganization of the working class.

4.3 Implications for Social Mobility

l The expansion of jobs in the health service, hotels and catering, and of casual clerical
work has given rise to the growth of a large, part-time, casual job sector occupied by
women (especially married women). More women enter the workforce, but relative to
male workers, such women are still disadvantaged in terms of pay and conditions.

l The decline in traditional blue-collar work has meant that many men have been ejected
from the labor market into long-term unemployment or early retirement (downward
mobility into the ranks of the poor).

l For the secure middle classes, their secure, life-long position in well-paid white-collar
work has eroded.

l Under the rise of entrepreneurialism, there has been a growth in the number of
self-employed consultants among the middle classes. This denotes some upward
mobility, which may come with some degree of employment insecurity.

4.4 Implications for Class Identity & Class Conflicts

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5. WEALTH INEQUALITIES, POVERTY AND SOCIAL EXCLUSION

Wealth Inequalities (statistics and trends)

Measurement:
-% or number of people holding top95
x% of national wealth (or global wealth)
5 -% of people with much less than the average income in society --- e.g. less than half the
average income of an individual/ household (i.e. on very low incomes)

Poverty in Hong Kong

² the first official poverty line appeared in 2013, set at half of the median household income
² more than 1.3 million Hongkongers lived in households that fell below the poverty line
² Poverty Line: (a) HK$3,600 per month for a one-person household; (b) HK$8,500 for a
two-person household; (c) HK$16,000 for a four-person household
² No. of working poor: 584,000 people

Poverty

-absolute poverty—non-fulfilment of basic needs

-relative poverty—relative to the level of affluence in a society—a low income that is far from
enough to support an acceptable standard of living in a society (poverty line)

Measurement: Gini coefficient

-a statistical measure that measure the overall extent of inequality (a single number between
zero and one)

P. Townscend (1979): Poverty as relative deprivation

“Their resources are so seriously below those commanded by the average individual or family that
they are, in effect, excluded from the ordinary living patterns, customs and activities.”

Question: What are necessities for an acceptable standard of living?

Social Exclusion

-an extension of Townsend’s idea of relative deprivation

-the way in which people are marginalized from society in having limited or no access to the
benefits and rights that are considered as normal—e.g. public services, education or the
political process.
-also, inequalities in other key areas of social life, e.g. access to sources of communication
and information.

The patterns of social exclusion draw our attention to the complex, multidimensional aspects
of inequality.

Underclass
-the poorest who suffer growing exclusion from normal society and get locked into a cycle of
socioeconomic and cultural deprivation (living in appalling conditions, without work and
trapped in poverty)

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Who are most likely to suffer from poverty, as well as social exclusion?

Ø not only the unemployed; but also:

Ø people in low-paid, insecure work, who constitute the majority of those in poverty
(mostly women; men in unskilled jobs; young people who don’t get a secure hold on the
labor market; older workers)
Ø the elderly (increased life expectancy)
Ø lone-parent families
Ø the sick and the disabled
Ø ethnic minorities & immigrant workers

Explanations of Poverty and Social Exclusion

(a) Individualistic Theories

-personal inadequacies

(b) The Culture of Dependency

From the New Right (advocating market economy and privatization):

Ø Universal welfare provision under the welfare state has created a culture of dependency,
which results in poverty and hinders the production of wealth.
Ø Inequality is a desirable feature of society, as it rewards unequal effort and ability.
Ø Welfare should be restricted to those in genuine need.

(c) Conflict Theories of Poverty and Social Exclusion

Poverty is the result of society’s failure to allocate resources and provide opportunities fairly.

(i) Lack of bargaining power of the poor

l Polarization of the labor market (see section 4.2)

l A new reserve army of labor (Byrne):

-Capitalism requires a substantial group of the unemployed who are desperate for work
to be willing to work for very low wages. This group often moves from one low-paid job
to another as the labor requirements of employers change in a rapidly changing economy.

(ii) Marxist critique:

Poverty and social exclusion are inherent and inevitable consequences of capitalism,
which must be transformed to eradicate the problems.

Ø Capitalism requires a highly motivated workforce based primarily on unequal rewards

for work—as incentive—in a highly competitive society.
Ø Low wages is a necessary part of the unequal reward system.
Ø Lower wages help to reduce the wage demands of the workforce.

(d) Solutions?

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