Social Change and the Changing Economy essay
Social changes are close linked to economic changes as social and economic change relates to the processes which happen in the social, political and economic life of people. Thus, it goes without saying that social and economic changes are interdependent.
The paper examines the nature, theories and major factors of social and economic change. Special emphasis is put on the processes that forerun social and economic changes.
Social change is a complex process that can be driven by various factors and process in the society. In contrast, considering the economic change most scholars tend to rely on the factors that relate to economic environment. Less attention is paid to social factors of economic change. However, the examples of various countries which survived significant social and economic changes show that they are interrelated. It should be noted that social change is possible to be stimulated by economical change as well as the changing economy may easily provoke significant social changes.
Sociology and Social Change
Sociology as a science began as an attempt to understand and to explain how the human society was changing (Blundell et al., 2003). Social change is still one of the major concerns of sociology. Abu-Lughod as cited in (Shepard, 2009) explains that social change embraces social alterations which lead to long-term and significant consequences. Tischler (2010) defines social change as a phenomenon consisting of ‘any modification in the social organization of a society in any of its social institutions or social roles’ (417). The author sees a social change as a result of collective behavior.
Wenstein (2010) identifies the following components of social change: ‘the demographic component’ which involves population processes and transitions; ‘the cultural component’ which embraces religion, values and language and ‘the social component’ which presupposes shifts in the relations within the society. The demographic component of social change includes variations in the size, composition and geographical distribution of population. This component is the basic one. Cultural component clarifies what role religion, values and language play in the process of social change. Social component is made up of interactions, relatively short episodes of collective behavior.
Noble (2000) states that social change is endogenous as ‘it is generated within the social system itself by the cultural and asocial processes at work within it’ but it can be mainly exogenous as it can be the outcome of the external factors which intrude to destabilize the existing situation (5). Endogenous change is stimulated by the desire to reallocate the distribution of social advantage. Noble (2000) emphasizes that in general sense change should be seen as a reaction to events elsewhere.
Sociologist name several factors of social change. They include physical environment, population changes, isolation and contact, social structure, attitudes and values, and technological factor (Sociology Guide, 2011). Changes of physical environment may involve climate changes, changes in flora and fauna. These changes lead to significant changes in culture as well. Changes in physical environment may be caused by people themselves, while they are able to change their physical environment by migration. Such changes used to be the reasons of great civilizations destruction. Population changes should not be regarded as social changes themselves. However, they become the driving force of social changes. It should be noted that societies which were located at crossroads have always experienced many changes. As most new trends develop through diffusion, societies which were in close contacts with others were more inclined to novelties. But isolated areas are more stable. They tend to retain their routine way of life. The structure of the society influences the rate of change. Societies which impose more respect and power to old people are more conservative and resistant to changes. Societies which emphasize values, religion and culture are less likely to experience frequent changes while societies where cultural components are less integrated and more independed from each other are more open for changes. Societies differ in the general attitudes to social change. Civilized and developed societies are more likely to accept changes positively. People who are more focused on their past, traditions and rituals are less inclined to take changes positively. Societies which experience rapid changes are aware of the process. Such attitude stimulates changes. Culture affects the direction and character of technological changes. They may stimulate or resist technological advances. Technological factors may be considered as the conditions people create themselves. They are intended to improve their life. Science and technology are usually considered together. Adopting the products of technology people bring social changes. These changes usually modify customs and social institutions.
Tischler (2010) states that sociology theorists rely on three basic models of social change to explain the phenomenon. They are evolutionary, conflict and functionalist theories. Evolutionary theory is based on Charles Darwin’s work in biological evolution (The Zgourides,2000).
The evolutionary theory presupposes that society moves in special directions. Early ideologist of this theory believed that the society progresses to higher and higher levels. They saw societies moving from simple to complex social structures. The Zgourides (2000) state that Comte, Durkheim and Spencer proposed unilinear evolutionary theories which presuppose that al the societies pass the same way in the development and reach the same destiny in the end. According to Gerhard Lenski, Jr., social change is rather multilinear than unilinear process. Multilinear theory of social change presupposes that change may occur in different ways and the consequences may vary as well. It means that human societies have evolved in different ways.
Functionalist theory focuses of the factors that maintain the society instead of those changing it. The leading ideologist of functionalist theory Parsons put forward the idea about stable and balanced society in its natural state (The Zgourides, 2000). He considered all the social problems, strikes and other phenomena as temporary states in the stable social order. His equilibrium theory presupposed that changes in one area of society required some adjustment in the other areas. In case the adjustments do not occur equilibrium disappears and the existing social order is under threat. Parson’s theory relies on evolutionary idea of continuing process, but the main concept of this theory is stability and balance.
The ideologist of conflict theory believed that change played a significant role in fighting with social inequalities and injustices. Karl Marx is considered to be the founder of the theory. However, he did not support the idea that changes in the society lead to higher level of its development (The Zgourides, 2000). He relied on the fact the in any society the rich always exploited the poor. Marx’s view on social change presupposed that people must not be passive is response to exploitation and other social problems. Social change is presented as a tool for those people who wanted to regain their freedom and to establish control over social problems. Conflict is seen as a driving force of social change. However, the critics of the theory emphasize that the ideologist of functionalist theory did not often paid attention to the fact that social changes did not always lead to positive outcomes.
The Changing Economy
Economic change may be considered in two contexts: economic and social one. Thus, history shows that social context id the primary one. The examples of USSR and China show the connection between the economic and social changes in the society.
North (2010) claims that economic change is the result of changes “in quantity and quality of human beings, in the stock of human knowledge particularly as applied to human command over nature; and in the institutional framework, that defines the deliberate incentive structure of a society (1). The theory of economic change integrates knowledge of demographic shifts and institutional changes. North (2010) emphasizes the incremental character of economic change. The concept of economic change is based on the progressive direction of change. Thus, economic change is driven by the factors that lead to the growth of competitiveness. Hämäläinen (2003) mentions the accumulation of productive resources as one of the driving forces of economic progress. Modern scholars tend to classify productive resources into physical resources, human resources, capital resources, infrastructure and knowledge resources (Hämäläinen, 2003). However, Porter criticizes this approach and suggests his own division of productive resources into ‘basic’ and ‘advanced’. Dunning as cited in Hämäläinen (2003) categorizes productive resources as ‘natural’ and ‘created’. Thus, basic (natural) ones involve unskilled labor, geography and climate. Advanced (created) ones include tangible and intangible resources made up of basic resources. The examples may include infrastructure, skilled workers and technological know how. The second part of Porter’s distinction is between the ‘generalized’ and ‘specialized’ factors. The examples of specialized factors may be well trained graduates which may be employed in a wide range of industries while specialized factors may include narrowly skilled personnel which is possible to be employed in limited fields. Porter and Dunning speak of the necessity of giving the priority to specialized resources (Hämäläinen, 2003). Three reasons can be give to support the idea of inferiority of natural and generalized resources: the decreases efficiency of global factor markets during the last decades, open access of multinational corporation to non-tradable natural and generalized resources and these resources ‘involve modest private and social investment’ which can be used by numerous developing countries in building their industries (102). Created and specialized resources involve ‘externalities’ and ‘public good characteristics’ which may negatively affect the efficiency of the market mechanism. Another factor of economic change and progress is technological innovation and diffusion. Technology affects both price and non-price competitiveness of companies of the economic sector. Criticizing the idea of accumulation of productive resources in the process of economic change, Schumpeter as cited in (Hämäläinen, 2003) suggested the concept of technological innovation importance in the process of economic progress. Technological impact of economic growth and competitiveness is determined by the processes of innovation and diffusion. Economic change which applies to a particular economy may be influenced by indigenous technological resources and capacities opposed to those of other nations’. However, small nations are more dependent on the process of diffusion of knowledge and technological innovation than larger nations. Most of technical innovations come from profit-oriented enterprises. Hämäläinen (2003) identifies several factors that define the success of innovation: “market potential, technological opportunities, appropriability regime, organizational capabilities and inducement mechanisms” (105). Technological innovations are specific for each sector and depend on the maturity of the industry. Appropriability regime involves the environmental factors that rule the innovator’s ability to gain a certain amount of profit. According to Hämäläinen (2003), factors that influence the appropriability regime include “the properties of technological knowledge, market structure, legal environment and access to necessary complementary assets” (106). Since firms are the initiators of technological innovations, their resources and capabilities become the significant factors of the innovation. Technological change is an accumulative process which occurs in case of new technologies is constrained of firms’ old one. The inducement mechanisms suggested by Hämäläinen (2003) include “technological bottlenecks; scarcities of critical inputs, or conversely; abundance of particular inputs; major shocks in prices or supplies; composition, change and growth of demand; industrial conflicts; close user-producer interaction and tight regulatory standards” (107).
Technological diffusion is defined as the process of adoption of technological innovation by new users while it may be more intensive use of the innovation by the innovator himself (Hämäläinen, 2003). The share of technological achievement varies from country to country. More intensive process of diffusion leads to positive economic changes.
Large markets welcome technological innovation and diffusion of new technologies. The competitive pressure of market shapes the prices and pushes the manufactures to more technological innovations. There are differences in the firms’ capacity in adopting new technologies as well. Some technological innovations are more observable and easy to implement than others. Thus, the choice of the technological innovation based on the nature of technological knowledge may initiate or deny economic change. The nature of labor markets defines the effectiveness of the diffusion process and thus, affects the changing economy in a positive or negative way.
Organizational efficiency and arrangements of the economic system in general is of the factors that define the process of economic change. Hämäläinen (2003) identifies three components of organizational efficiency; “allocative efficiency, technical or X-efficiency, coordination efficiency and dynamic efficiency” (113). Allocative efficiency presupposes efficiency which determined the distribution of the resources within the system. Technical or E-effiency means coordinating the effectiveness of the use of the resources. Coordination efficiency presupposes optimization of the system of value-added by the coordination of the interfaces and interdependences between the organizations. Dynamic efficiency is the efficiency of improvement of the allocative, technical and coordination efficiencies of the system over time.
Product market characteristics may contribute into economic change. Thus, this factor should be taken into consideration as well. Another factor that should be counted as defining in the process of economic change is international business activities. International contacts usually stimulate the economy to adopt some economic practices of their partner. The result of the adoption may be economic changes on a more global basis.
Conclusion
Having analyzed the essence of both social change and the economic change, it is necessary to sum up that social and economic changes are interdependent and display systematic characteristics. It should be noted that they have a number of common characteristics. Both social and economic changes may be stimulated by technological innovation and diffusion. Demographic factors are important both for economic and social changes but in different dimensions. Social and economic changes have a similar scheme of occurrence. They are both possible to be the forerunners of each other.
