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and peacefully process likely conflicts of interest and values under any conditions. These institutions are political institutions and they must be self-sustaining. The solution that is attained using these political institutions should be preferred to the solution that would be achieved through the use of force by each of the parties involved. Acemoglu et al. argued that economic institutions determine long run causes of economic growth. Adam Smith once put forward the same argument. Acemoglu et al. concluded that the traditional neoclassical economic growth models of Solow, Swan, Cass and Koopmans explained the differences in the per capita incomes across countries in terms of differences in capital accumulation. In these models, cross-country differences in factor accumulation are either explained by differences in savings rates, preferences or other exogenous parameters like the total factor productivity or technological progress. These models accept that institutions do exist. The models are based on representative agents who are assumed to be well behaved and have property rights and agents exchange goods and services in the markets. However, the models do not acknowledge that differences in income and growth rates are not explained by differences in institutions or variations in institutions. Acemoglu et al. acknowledged the emergence of the first wave of more recent growth theories of Romer and Lucas, which are different from the frameworks of the neoclassical growth theories. These are different in the sense that the new theories emphasise that externalities from physical and human capital accumulation have the tendency to sustain unlimited, steady state growth or long-term per capita growth rates. Acemoglu et al. further argued that this approach remains within the neoclassical tradition by using preferences and endowments to explain long-run growth. 201 CU IDOL SELF LEARNING MATERIAL (SLM)

Figure 7.1: Economic Institutions The second wave of the more recent growth models, particularly those of Romer, Grossman and Helpmann, Aghion and Howitt and Barro, endogenized economic growth and technological progress. However, their explanation of differences in per capita income across countries is in tandem with those of the neoclassical school and the first wave of endogenous growth models. Romer argued that one country may grow faster than another country by investing more resources in research and innovation. Barro argued that a country may prosper by making sure that public goods grow at the same rate as the growth rate in private investment per labour head. Romer did not explain what determines the preferences and the prospect of the technology for creating ideas. Barro did not explain what causes government to expand the provision of services in line with the growth rate of capital per labour head. The neoclassical and the endogenous models have become the traditional tools for economic growth explanation. This traditional approach provides insight into economic growth mechanisms. However, Acemoglu et al. argued that the approach has failed to explain the fundamental cause of economic growth. This is the reason North and Thomas posited that innovation, technology, human capital development, physical capital, economies of scale and government provision of services are growth in itself and they cannot explain growth. 202 CU IDOL SELF LEARNING MATERIAL (SLM)

The arguments in favour of institutions in promoting economic growth are many. Economic institutions matter for economic growth because they influence the incentives for the key performers in the economy. To be more specific, economic institutions influence investments in physical and human capital, technology and the organisation of production. It is further suggested that geographical and cultural factors also matter in terms of economic growth, but that institutions are more fundamental in explaining long-run economic growth. Institutions are not only significant in explaining aggregate economic growth, but they are also important in explaining an array of economic outcomes, such as the distribution of resources (wealth, physical capital and incomes). This means that economic institutions also influence how economic wealth is distributed among members of the society, be it output, income, physical capital or human capital. Based on this, it can be contended that economic institutions determine the economic performance and distribution of resources in a society. A review of the empirical literature is presented in this section. Lehne, Mo and Plekhanov researched the determinants of the quality of economic institutions in cross-country settings. The study was based on the observation that the relationship between a good political system and economic growth is not linear but a ‘U’-shaped curve. The study listed democratic institutions, geography, history, ethnic factionalism and natural resource endowments as the determinants of the rule of the game. Using the appropriate measures of some factors affecting economic institutions, the study found that democracy improved economic institutions and that history had a significant impact on economic institutions. Other findings were that geographical factors such as economic openness and resource abundance had a substantial impact on economic growth. The study further found that resource abundance tends to encourage bad economic institutions. Okoh and Ebi examined the impact of infrastructural development and the quality of economic institutions on economic growth in Nigeria. In estimating the impact of corruption and infrastructural development on economic growth, several specifications were used to test the robustness of the results. The results generally showed that infrastructural development and contract enforcement had a positive and significant effect on economic growth. Corruption exacted a negative effect on economic growth. Valeriani and Peluso investigated the institutional framework under which economic growth takes place and how economic institutions explain growth and differences of growth across countries. The regression model used by the study stated that economic growth is determined by education (EDU), infrastructure (INFRA), dummy variables (representing economic institutions) and regions (REG). The results of the study showed that the quality of economic institutions impact positively on growth. The study also showed that investment stimulated economic growth. Tamilian and Tamilian explained the uniqueness of economic institutional effects on economic growth in post-communist countries. Their study showed that the collapse of communism in the communist countries led to radical changes in political, social and economic systems of the former communist countries. The introduction of capitalist economic institutions was dysfunctional. The relationship between the quality of economic institutions and economic growth in the former communist countries appeared to 203 CU IDOL SELF LEARNING MATERIAL (SLM)

differ from the patterns in advanced and developing countries. The study revealed that the revolutionary process rather than evolutionary process accounted for the poor functioning of the former communist economic systems. The study found that economic institutions that are evolutionary, affected economic growth in relation to their quality ratings. Good economic institutions promoted growth. In revolutionary methods, the effect of the quality of economic institutions on growth does not reflect their index in the short run, but in the long run they do. Davis and Hopkins investigated the interaction between economic institutions, inequality and economic growth. The study was designed to establish whether economic institutions significantly stimulated economic growth. The study was also designed to test the hypothesis that inequality does not stimulate economic growth positively. The statistical analytical method employed five yearly sets of data for eight periods starting from 1961/1965 to 1996/2000. It employed a regression model which stated that the per capita income is a function of years of schooling plus the Gini coefficient representing inequality, plus a variable for economic institutions which is property rights. The results of the study showed that economic institutions promoted growth but that income inequality depressed growth. The study further demonstrated that investment also promoted economic growth. Zouhair studied the effects of institutional factors on investment and growth in the Middle East and North America (MENA). The study covered 11 countries for a 9-year period from 2000 to 2009 and made use of dynamic panel data. The theoretical perspective of the study emphasised the fact that the empirical literature examining the impact of institutions on economic growth is increasing since the seminal work of North. Good economic institutions encourage economic agents to invest. Conversely, poor institutional quality creates uncertainty, unpredictable environments, instability and corruption and thereby increasing the cost of transacting. In such an environment, private investments are discouraged and thus retard growth. The estimation of the model applied in the study used the generalised method of moments (GMM) of Arellano and Bond. The key findings of their study showed that political institutions and investment stimulated growth. The study also showed that interaction between political institutions and investment promoted growth, while political instability depressed growth. Docquier identified the impact of institutions on economic growth. The study stated that the past century had come and gone but only a few poor countries had caught up with the rich countries. The study was designed to explain convergence across countries. Data used for the study spanned the period from 1870 to 2010. It found no evidence of convergence of economic institutions among the countries studied and did not find any evidence of convergence in growth. Ferrini examined the interaction of economic institutions to stimulate economic growth. This is achieved through considering four aspects of economic institutions. The first aspect is the reduction in the cost of economic transacting (exchange). Economic institutions enhance development by encouraging people to enter into contracts. Contract enforcement uses common commercial law codes and the sharing of information. This reduces transaction cost, risk and uncertainty. Secondly, economic institutions determine the degree of appropriation of returns to investment. Property rights, fundamental human rights, 204 CU IDOL SELF LEARNING MATERIAL (SLM)

and the rule of law encourage investment, employment, output and incomes. Thirdly, economic institutions determine the expropriation of state resources by the ruling elite. Unequal opportunity provided by economic institutions discourages investment and economic exchanges. Fourthly, economic institutions determine the degree to which the investment environment is conducive to cooperative behaviour and this increases social capital. Inclusive and participative economic institutions increase the free flow of information and the extent to which resources can be pooled and invested in collective properties, reduce risks and ensure sustained wealth creation. Pereira and Teles employed an econometric model based on the GMM and used the autoregressive distributed lagged model for 109 countries for a 9-year period, from 1975 to 2004. The key dependent variable was the GDP per capita; political institutions were taken as explanatory variables. The political institutions used were the electoral rules, form of government and political regime. When economic variables were controlled or moderated, the study demonstrated that political institutions matter for recipient democracies, and not for consolidated democracies. Consolidated democracies have already internalised the effects of the political system on their economic growth. In recipient democracies, there is a need to internalise good political institutions that will promote economic growth to ensure the continued growth of the economy. 7.3 FEATURES AND FUNCTIONS After the behavioural revolution, political scientists have replaced ‘state’ by ‘political system,’ considering the former as formal, inadequate and unsatisfactory. Still it is not clear which is the central element of political system. Classical political thinkers had found knowledge, reason, natural land religion or conventional law as the basic element of state. Most of the modern political scientists find ‘legitimate physical compulsion’ as the key variable of political system. For Easton, it is ‘authoritative allocation of values for society”. Lasswell and Kaplan regard ‘severe deprivations’ as the basic material of political system. Dahl relates it to power, government and authority. Catlin discovers ‘control over wills’ as the basis. Almond defines the political system, more or less, as ‘the legitimate, order- maintaining or transforming system in the society’. All the scholars have called its various organs and processes in varying terms. Easton has put them in the two broad categories of ‘inputs’ and ‘outputs. A ‘political system’ cannot be physically separated from its non-political aspects, and is, therefore, usually understood and studied in an analytical or conceptual manner. Society as a whole makes up the general social system, which contains many subsystems. Political system is one of these subsystems. When the political system is to be studied as a whole along with its intra-subsystems, then, it is treated as a ‘system’. Besides that, ‘system’ can be considered as a part of environment. Thus, the concept of ‘system’ both in interlocking micro and macro forms, saves us from the error of considering ‘systems’ as 205 CU IDOL SELF LEARNING MATERIAL (SLM)

isolated, separate, or independent entities. Besides throwing light on their interconnections, one can examine their discrete nature, and separate empirical existence. According to Almond, the political system in a society, is ‘legitimate, order maintaining’ or transforming system, Wiseman maintains that every political system involves political structures, actors, or roles performed by their agents, patterns of interaction existing between individuals or collectivises, and political processes. In the ‘political system’ of Kaplan also, there are recognisable multivariate interests. Instead of always being opposite, sometimes they are complementary to each other. There are regular structures and channels to reach the decisions and judgements related to particular interests. General rules are prescribed to govern the actors and activities relating to particular decisions and judgements. At the present time research on the issues of political development of the state formations of the former Union of Soviet Socialist Republics (USSR), in particular the vicissitudes of becoming a democratic system in the Caucasus in 1989- 2000, becomes one of the important directions for the humanities and social sciences. This period is considered to be the most complex in terms of choosing the tactics and strategy of the future government, due to circumstances occurring on the entire territory of the USSR, the transformation of one social order to another and the drastically changed existing political order. The republics of the Caucasus were not an exception, which in various forms and manifestations, was presented the ‘parade of sovereignties. The search for self-identity, the reconstruction of the national idea, finding a new state in the 90-s of the twentieth century by the peoples inhabiting the region became one of the dominant factors in the life of the country. Authorities of the autonomous provinces, republics and regions demanded sovereign rights and political freedoms. Taking advantage of the crisis of the central government, ‘the new regional elite’ promised the radical changes to the people, putting into practice its right to control by means of armed conflict, demonstrations, strikes and coups. The democracy, which replaced communism, has led to the formation of new political relations between the emerged state entities. During this period, there was a redistribution of power, the formation of a new class of owners, the emergence of local elites, etc. Talking about the relevance of the study, it should be noted that the present day social thought and science is pending huge resources on undertaking scientific works dedicated to the evidence of antiquity and uniqueness of each of the Caucasian ethnic groups. However, this does not lead to a genuine analysis and coverage of historical processes occurring in the region, does not reflect the characteristics of the interaction of neighbouring nations. Given the fact that the preferences of the researchers on this historical period is given the problems associated with understanding the ethnopolitical conflicts, inter-confessional and inter-ethnic relations, it is extremely important to carry out an objective analysis of the methods of formation of a new political system, in almost all regions of the Caucasus. Due to the fact that some authors have neglected the principles of historicism and objectivism while undertaking their scientific work, since a significant part of such works is written by state order, the objective analysis of the reasons, background, 206 CU IDOL SELF LEARNING MATERIAL (SLM)

progress and results of a conflict is replaced by elevation on the role (or even superiority) of authors’ ethnic group over others. The study of this kind has to carefully assess the arguments and facts cited by the warring parties; the researchers are facing an issue of scientific interpretation of the events of 1989-2000 in the Caucasus. As it was mentioned, the processes that gripped the Soviet Union, Russia and, of course, the Caucasus were very diverse in its manifestations. This is what determines the choice of chronological and geographical scope of the study. Analysis of the main features of the folding state and political development of the state formations in the Caucasus has identified several basic models of these processes occurred, with each of the subjects having its own characteristics. In this regard, the most revealing are the following: Abkhazia, Adygea, Dagestan and Chechnya, where these features emerged quite clearly. The most common characteristic of these regions is their autonomous status, which made it a priority of the political development of the acquisition of sovereignty. During the collapse of the former Soviet state, one of the models of formation of a new political system was an armed confrontation. In most autonomous entities of the Caucasus, it took the form of international, mostly bilateral collision on the basis of the revival of the ideas of self-identity of ethnic groups who sought to concentrate power in their hands. In Abkhazia and Chechnya, the escalation of the conflict has reached the level of a coup d’état – in one case ended with the emergence of a new non-recognized state, and in the other – a protracted civil war within the subject, which led to significant human and material losses. The first of these republics in search of sovereignty was Abkhazia. In March 18, 1989 People’s Forum of Abkhazia ‘Aidgilara’ (Unity) directs the union leadership ‘Lykhni treatment’ demanding the return to the Abkhaz Autonomous Socialist Republic (AbASSR) of a status of the Federal Socialist Republic by appealing to the fact that from 1921 to 1931 it had already been allied to the USSR. This ‘treatment’ was signed by 40 thousand people. Such a change in the status of the Abkhazian autonomy did not suit Georgia at all. Given the in the context of unfolding parade of sovereignties, the country’s government did not respond to the appeal of the Abkhaz, wanting to keep the Georgian SSR in its structure. Realizing that the Georgian authorities do not intend to peacefully release Abkhazia from its members, the government of AbASSR at the next meeting of the Supreme Council (SC) of the Republic on August 25, 1990 unilaterally announced the return of the status of SSR, adopting a decree “On the legal guarantees of statehood of Abkhazia” and the declaration “On the State Sovereignty of the Abkhaz Soviet Socialist Republic”. This political act was the basis for the emergence in 1990-1994 of the precedent in the way of formation of a new political order in the autonomous regions studied. In response to this, the very next day the Presidium of the Georgian Supreme Council announced the declaration and resolutions adopted in Abkhazia as not valid. However, this was no longer perceived by the people of Abkhazia, and the abolition of the Constitution of Georgia in 1978 and return to the Basic Law of 1921, according to which Abkhazia was not included in its composition, legitimized the Abkhaz decree. The next step of the AbASSR government was the resolution “On termination of the 207 CU IDOL SELF LEARNING MATERIAL (SLM)

Constitution of the Abkhaz ASSR of 1978” adopted on July 23, 1991, in which the republic was returning to the Constitution of 1925 that declares: “Abkhazia – the sovereign state that holds state power independently...”. This enabled the government of the autonomy to assign a country name – “Republic of Abkhazia”, and take the coat of arms and a flag. As a result, the formation of a new state in Abkhazia has led to a major armed conflict, called – the Patriotic War of 1992-1993 with Georgia that wanted to preserve Abkhazia in its structure and leading to the formation of an independent state – Abkhazia, which raised its status from autonomy to the level of an independent country. Changes in Chechnya, as in other regions of the Caucasus began on 27 November 1990, when an extraordinary Session IV Supreme Council of the Chechen-Ingush Autonomous Soviet Socialist Republic adopted a declaration “On the State Sovereignty of the Chechen- Ingush Republic”. Its feature was the absence of references to the legislation of the USSR and the Russian Soviet Federative Socialist Republic (RSFSR), as well as introduction of a clause to art. 17 that the Chechen-Ingush Republic (CIR) will not sign an agreement with the Russian Federation (RF) until the territorial claims of the Ingush are not yet satisfied. So, the basis of the document on the independence of the republic initially pawned an unacceptable item for the federal government. But “any protests either from the Russian or on the part of the allied authorities in Moscow did not happen”. The escalading governance crisis in the republic fell deeply in 1991 in an open confrontation between the army of CIR and the opposition-minded Executive Committee (EC) of the Congress of the Chechen people, led by D.M. Dudayev. The opposition has openly demanded for “the dissolution of the military force of CIR as having fulfilled its policy objectives and not conforming to the status of the Parliament of the new sovereign state” that revealed the desire to change the government in the autonomy. Trying to remain at the helm, the head of the Supreme Council of CIR on March 11, 1991 has taken the decision not to participate in the All-Russian referendum. Retaining the pro-Russian orientation, the local authorities of Ingush area decide to hold this referendum, which marking the desire to withdraw from the Chechen-Ingush Republic. Subsequently, the situation only worsened. Using the protest activity of the population, a group of General Dudayev at the II session of the Congress of the Chechen people, which took place on June 8-9, 1991 in Grozny, established a Joint Congress of the Chechen People (JCCR), which announced the overthrow of the existing government and the proclamation of the sovereign Chechen Republic “Nohchi-Cho” as not being a part of neither Russian or USSR. But not all members of the JCCR were willing to follow this path. Liberal part of IR, published a “Statement of 16” managed to briefly stop the opposition and reduce the activity of the inhabitants of CIR. However, the events of August 1991 in Moscow gave a new impetus for rallies. Having gathered a rally at the square in Grozny on August 19, the Chechen opposition leaders condemned the coup and supported the President of the Russian Federation Boris Yeltsin. This not only gave them a kind of carte blanche, but also dragged on the sympathy of the population. And in September 1991, JCCR openly announced the dissolution of the Supreme Council of CIR. On September 15, during the visit of the 208 CU IDOL SELF LEARNING MATERIAL (SLM)

Chairman of Supreme Soviet of RSFSR H. Khasbulatov this act was officially recognized, and the government responsibilities were temporarily given to the Supreme Council of Chechnya, headed by H. Ahmadov. The first thing H. Ahmadov and his supporters did on October 1, 1991 was announcement of the separation of CIR into two sovereign republics. Soon, however, some members of the Supreme Council decided to abandon this decision. Realizing that the situation could spiral out of control, D. Dudayev hold a military seizure of power in the country and on October 27, 1991 he declares the presidential and parliamentary elections in Chechnya. After virtually uncontested presidential elections in the Chechen Republic and the Parliament of the Republic, on November 1, 1991 D. Dudayev issued a decree “On the declaration of the sovereignty of the Chechen Republic”. In response to these actions, the federal centre on November 2 recognizes the “carried out in the Chechen-Ingush republic presidential elections and Supreme Council of the Republic as illegal and the undertaken acts as not enforceable”, and after 5 days, issued a decree of the President of the Russian Federation ʋ 178 “On a state of emergency in the Chechen-Ingush Republic”. On this basis, D.M. Dudayev was able to announce the intervention in the internal affairs of Chechnya and accused Russia in the beginning of the armed conflict. Also, to hold an official inauguration of the President of the Czech Republic on November 9, 1991, making himself the absolute head of the newly formed republic. Over the next few months, he urgently formed the main institutions of the new government: Parliament, the Council of the Constitutional Court and a new Constitution of the Czech Republic. These events have led to the formation of two sovereign republics of Ingushetia and Chechnya in 1993-1995 at the site of former Chechen-Ingush ASSR, as well as the beginning of future violent events, which stopped the Chechen peaceful development of democracy for nearly 10 years. 7.3.1 Capitalist or free enterprise economy Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and resource owner is engaged in economic activity with a large measure of economic freedom. Individual economic actions conform to the existing legal and institutional framework of the society which is governed by the institution of private property, profit motive, freedom of enterprise, and consumers’ sovereignty. All factors of production are privately owned and managed by individuals. The raw materials, the machines, the firms, and the factories are owned and managed by individuals who are at liberty to dispose of them within the prevalent laws of the country. Individuals have the freedom to choose any occupation, and to buy and sell any number of goods and services. Capitalism thrives on the institution of private property. It means that the owner of a firm or factory or mine may use it in any manner he likes. He may hire it to anybody, sell it, or lease it at will in accordance with the prevalent laws of the country. The state’s role is confined to the protection of the institution of private property through laws.” The institution of private property induces its owner to work hard, to organise his business efficiently and to produce more, thereby benefiting not only himself but also the community at large. All this is actuated 209 CU IDOL SELF LEARNING MATERIAL (SLM)

by the profit motive. The main motive behind the working of the capitalist system is the profit motive. The decisions of businessmen, farmers, producers, including that of wage- earners are based on the profit motive. The profit motive is synonymous with the desire for personal gain. It is this attitude of acquisitiveness which lies behind individual initiative and enterprise in a capitalist economy under capitalism, the price mechanism operates automatically without any direction and control by the central authorities. It is the profit motive which determines production. Profit being the difference between outlay and receipt, the size of profit depends upon prices. The larger the difference between prices and costs, the higher is the profit. Again, the higher the prices, the greater are the efforts of the producers to produce the varied quantities and types of products. It is the consumers’ choices which determine what to produce, how much to produce, and how to produce. Thus capitalism is a system of mutual exchanges where the price-profit mechanism plays a crucial role. During the 19th century, the role of the state was confined to the maintenance of law and order, protection from external aggression, and provision for educational and public health facilities. This policy of laissez-faire—of non- intervention in economic affairs by the state—has been abandoned in capitalist economies of the West after the Second World War. Now the state has important tasks to fulfil. They are monetary and fiscal measures to maintain aggregate demand; anti-monopoly measures and nationalised monopoly corporations; and measures for the satisfaction of communal wants such as public health, public parks, roads, bridges, museums, zoos, education, flood control, etc. Under capitalism, ‘the consumer is the king.’ It means freedom of choice by consumers. The consumers are free to buy any number of goods they want. Producers try to produce variety of goods to meet the tastes and preferences of consumers. This also implies freedom of production whereby producers are at liberty to produce a vast variety of commodities in order to satisfy the consumer who acts like a ‘king’ in making a choice out of them with his given money income. These twin freedoms of consumption and production are essential for the smooth functioning of the capitalist system. Freedom of enterprise means that there is free choice of occupation for an entrepreneur, a capitalist, and a labourer. But this freedom is subject to their ability and training, legal restrictions, and existing market conditions. Subject to these limitations, an entrepreneur is free to set up any industry, a capitalist can invest his capital in any industry or trade he likes, and a person is free to choose any occupation he prefers. It is on account of the presence of this important feature of freedom of enterprise that a capitalist economy is also called a free enterprise economy. Competition is one of the most important features of a capitalist economy. It implies the existence of large number of buyers and sellers in the market who are motivated by self-interest but cannot influence market decisions by their individual actions. It is competition among buyers and sellers that determines the production, consumption and distribution of goods and services. There being sufficient price flexibility under capitalism, 210 CU IDOL SELF LEARNING MATERIAL (SLM)

prices adjust themselves to changes in demand, in production techniques, and in the supply of factors of production. Changes in prices, in turn, bring adjustments in production, factor demand and individual incomes. Arthur Young wrote’ “The magic of property turns sand into gold.” This observation of Young holds good in a free enterprise economy where every farmer, trader or industrialist can hold property and use it in any way he likes. He brings improvement in production and increases productivity because the property belongs to him. This leads to increase in income, saving, and investment, and to progress. The presence of competition under capitalism leads to increase in efficiency, encourages producers to innovate and thereby brings progress and prosperity in the country. As pointed out by Seligman.” If competition in biology leads only indirectly to progress, competition in economics is the very secret of progress.” The automatic working of the price mechanism under capitalism brings efficiency in the production and distribution of goods and services without any central plan, and promotes the maximum welfare of the community. The purpose of every economy is to satisfy human wants by using limited or scarce resources available and known to a society. These wants can be satisfied by production and consumption of goods and services. For production, the factors of production are engaged in some economic activities. These economic activities bring income to the economic agents that can either be consumed or saved and invested. On account of these gainful economic activities and accumulated earnings, some countries grow fast while others cannot attain such high growth rate. As a result some economies attain the status of developed economies while others remain underdeveloped or developing economies. They are also known as rich and poor economies. We can look at economies on the basis of ownership of resources. The resources available may be in private ownership or the collective ownership. Thus there are different ways to look at the economy and its level of development. In this lesson we will explain all these terms in simple way so that you may understand and differentiate the meaning and nature of an economy and understand its various types. An economy is a man- made organization for the satisfaction of human wants. According to A.J. Brown, “An economy is a system by which people get living”. The way man attempts to get a living differs in major respects from time to time and from place to place. In primitive times ‘get a living’ was simple but with growth of civilization it has become much more complex. Here it is important to note that the way person earns his/her living must be legal and fair. Unfair and illegal means such as robbery, smuggling may earn income for oneself but should not be taken into consideration as gainful economic activity or a system of ‘get a living’. It will therefore be appropriate to call that economy is a framework where all economic activities are carried out. 211 CU IDOL SELF LEARNING MATERIAL (SLM)

7.3.2 Socialist or centrally planned economy Advocates of centrally planned economies believe central authorities can better meet social and national objectives by more efficiently addressing egalitarianism, environmentalism, anti-corruption, anti-consumerism and other issues. These proponents think the state can set prices for goods, determine how many items are produced, and make labour and resource decisions, without necessarily waiting for private sector investment capital. Central economic planning naysayers believe central entities lack the necessary bandwidth to collect and analyse the financial data required to make major economic determinations. Furthermore, they argue that central economic planning is consistent with socialist and communist systems, which traditionally lead to inefficiencies and lost aggregate utility. Central economic planning naysayers believe central entities lack the necessary bandwidth to collect and analyse the financial data required to make major economic determinations. Furthermore, they argue that central economic planning is consistent with socialist and communist systems, which traditionally lead to inefficiencies and lost aggregate utility. Free market economies run on the assumption that people seek to maximize personal financial utility and that businesses strive to generate the maximum possible profits. In other words: all economic participants act in their own best interests, given the consumption, investment, and production options they face before them. The inherent impulse to succeed consequently assures that price and quantity equilibrium are met and that utility is maximized. The centrally planned economic model has its fair share of criticism. For example, some believe governments are too ill-equipped to efficiently respond to surpluses or shortages. Others believe that government corruption far exceeds corruption in free market or mixed economies. Finally, there is a strong sense centrally planned economies are linked to political repression, because consumers ruled with an iron fist aren't truly free to make their own choices. A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning. The level of centralization or decentralization in decision-making and participation depends on the specific type of planning mechanism employed. Socialist states based on the Soviet model have used central planning, although a minority such as the former Socialist Federal Republic of Yugoslavia have adopted some degree of market socialism. Market abolitionist socialism replaces factor markets with direct calculation as the means to coordinate the activities of the various socially-owned economic enterprises that make up the economy. More recent approaches to socialist planning and allocation have come from some economists and computer scientists proposing planning mechanisms based on advances in computer science and information technology. Planned economies contrast with unplanned economies, specifically market economies, where autonomous firms operating in markets make decisions about production, distribution, pricing and investment. Market economies that use indicative planning are variously referred to as planned market economies, mixed economies and mixed market economies. A command 212 CU IDOL SELF LEARNING MATERIAL (SLM)

economy follows an administrative-command system and uses Soviet-type economic planning which was characteristic of the former Soviet Union and Eastern Bloc before most of these countries converted to market economies. This highlights the central role of hierarchical administration and public ownership of production in guiding the allocation of resources in these economic systems In the Hellenistic and post-Hellenistic world, \"compulsory state planning was the most characteristic trade condition for the Egyptian countryside, for Hellenistic India, and to a lesser degree the more barbaric regions of the Seleucid, the Pergamenian, the southern Arabian, and the Parthian empires”. Scholars have argued that the Incan economy was a flexible type of command economy, centered around the movement and utilization of labour instead of goods. One view of mercantilism sees it as a planned economy. The Soviet-style planned economy evolved from continuing existing World War I war economy as well as other policies, known as war communism, to the requirements of the Russian Civil War. These policies started to be formally consolidated into an official organ of government in 1921, when the Soviet government founded Gopalan. However, the period of the New Economic Policy intervened before regular five-year plans started in 1928. Dirigisme, or government direction of the economy through non-coercive means, was practiced in France and in Great Britain after World War II. The Swedish government planned public-housing models in a similar fashion as urban planning in a project called Million Programme, implemented from 1965 to 1974. Some decentralised participation in economic planning has been implemented across Revolutionary Spain, most notably in Catalonia, during the Spanish Revolution of 1936 This goes against the Marxist understanding of conscious planning. Decentralized planning has been proposed as a basis for socialism and has been variously advocated by anarchists, council communists, libertarian Marxists and other democratic and libertarian socialists who advocate a non-market form of socialism, in total rejection of the type of planning adopted in the economy of the Soviet Union. Most of a command economy is organized in a top-down administrative model by a central authority, where decisions regarding investment and production output requirements are decided upon at the top in the chain of command, with little input from lower levels. Advocates of economic planning have sometimes been staunch critics of these command economies. Leon Trotsky believed that those at the top of the chain of command, regardless of their intellectual capacity, operated without the input and participation of the millions of people who participate in the economy and who understand/respond to local conditions and changes in the economy. Therefore, they would be unable to effectively coordinate all economic activity. Historians have associated planned economies with Marxist-Leninist states and the Soviet economic model. Since the 1980s, it was recognized that the Soviet economic model did not actually constitute a planned economy in that a comprehensive and binding plan did not guide production and investment. The further distinction of an administrative-command system emerged as a new designation in some academic circles for the economic system that existed in the former Soviet Union and Eastern Bloc, highlighting the role of centralized hierarchical decision-making in the 213 CU IDOL SELF LEARNING MATERIAL (SLM)

absence of popular control over the economy. Indicative planning is a form of economic planning in market economies that directs the economy through incentive-based methods. Economic planning can be practiced in a decentralized manner through different government authorities. In some predominantly market-oriented and Western mixed economies, the state utilizes economic planning in strategic industries such as the aerospace industry. Mixed economies usually employ macroeconomic planning while micro-economic affairs are left to the market and price system. A decentralized-planned economy, occasionally called horizontally-planned economy due to its horizontalize, is a type of planned economy in which the investment and allocation of consumer and capital goods is explicated accordingly to an economy-wide plan built and operatively coordinated through a distributed network of disparate economic agents or even production units itself. Decentralized planning is usually held in contrast to centralized planning, in particular the Soviet-type economic planning of the Soviet Union's command economy, where economic information is aggregated and used to formulate a plan for production, investment and resource allocation by a single central authority. Decentralized planning can take shape both in the context of a mixed economy as well as in a post-capitalist economic system. This form of economic planning implies some process of democratic and participatory decision-making within the economy and within firms itself in the form of industrial democracy. Computer-based forms of democratic economic planning and coordination between economic enterprises have also been proposed by various computer scientists and radical economists. Proponents present decentralized and participatory economic planning as an alternative to market socialism for a post-capitalist society. Decentralized planning has been a feature of anarchist and other socialist economics. Variations of decentralized planning such as economic democracy, industrial democracy and participatory economics have been promoted by various political groups, most notably anarchists, democratic socialists, guild socialists, libertarian Marxists, libertarian socialists, revolutionary syndicalists and Trotskyists. During the Spanish Revolution, some areas where anarchist and libertarian socialist influence through the CNT and UGT was extensive, particularly rural regions, were run on the basis of decentralized planning resembling the principles laid out by anarcho-syndicalism Diego Abad de Santillan in the book After the Revolution. 7.3.3 Mixed economy A mixed economy is variously defined as an economic system blending elements of a market economy with elements of a planned economy, free markets with state interventionism, or private enterprise with public enterprise. While there is no single definition of a mixed economy, one definition is about a mixture of markets with state interventionism, referring specifically to a capitalist market economy with strong regulatory oversight and extensive interventions into markets. Another is that of an active collaboration of capitalist and socialist visions. Yet another definition is apolitical in nature, strictly referring to an economy 214 CU IDOL SELF LEARNING MATERIAL (SLM)

containing a mixture of private enterprise with public enterprise. Alternatively, a mixed economy can refer to a reformist transitionary phase to a socialist economy that allows a substantial role for private enterprise and contracting within a dominant economic framework of public ownership. This can extend to a Soviet-type planned economy that has been reformed to incorporate a greater role for markets in the allocation of factors of production. Western mixed economies are described as being capitalist economies characterized by the predominance of private ownership of the means of production, with profit-seeking enterprise and the accumulation of capital as its fundamental driving force. The difference from a lassiez-faire capitalist system is that markets are subject to varying degrees of regulatory control and governments wield indirect macroeconomic influence through fiscal and monetary policies with a view to counteracting capitalism's history of boom/bust cycles, unemployment and income disparities. In this framework, varying degrees of public utilities and essential services are provided by government, with state activity often limited to providing public goods and universal civic requirements, including education, healthcare, physical infrastructure and management of public lands. Western mixed economies are described as being capitalist economies characterized by the predominance of private ownership of the means of production, with profit-seeking enterprise and the accumulation of capital as its fundamental driving force. The difference from a lassiez-faire capitalist system is that markets are subject to varying degrees of regulatory control and governments wield indirect macroeconomic influence through fiscal and monetary policies with a view to counteracting capitalism's history of boom/bust cycles, unemployment and income disparities. In this framework, varying degrees of public utilities and essential services are provided by government, with state activity often limited to providing public goods and universal civic requirements, including education, healthcare, physical infrastructure and management of public lands. This contrasts with laissez-faire capitalism, where state activity is limited to maintaining order and security, providing public goods and services, and providing the legal framework for the protection of property rights and enforcement of contracts. In reference to Western European economic models as championed by conservatives (Christian democrats), liberals, and socialists as part of the post-war consensus, a mixed economy is a form of capitalism where most industries are privately owned, with only a small number of public utilities and essential services under public ownership, usually 15-20%.In the post-war era, Western European social democracy became associated with this economic model. As an economic ideal, mixed economies are supported by people of various political persuasions, typically centre-left and centre-right such as Christian democrats or social democrats. The contemporary capitalist welfare state has been described as a type of mixed economy in the sense of state interventionism, as opposed to a mixture of planning and markets, since economic planning was never a feature or key component of the welfare state The term mixed economy arose in the context of political debate in the United Kingdom in the post-war period, although the set of policies later associated with the term had been advocated from at least the 1930s. The oldest 215 CU IDOL SELF LEARNING MATERIAL (SLM)

documented mixed economies in the historical record are found as early as the 4th millennium BC in the Ancient Mesopotamian civilization in city-states such as Uruk and Ebla The economies of the Ancient Greek city-states can also best be characterized as mixed economies. It is also possible that the Phoenician city-states depended on mixed economies to manage trade. Before being conquered by the Roman Republic, the Etruscan civilization engaged in a,\" strong mixed economy”. In general the cities of the ancient Mediterranean, in regions such as North Africa, Iberia, Southern France, etc all practiced some form of a mixed economy. According to the historians Michael Rostov Zeff and Pierre Leveque the economies of Ancient Egypt, pre-Columbian Mesoamerican, Ancient Peru, Ancient China, and the Roman Empire after Diocletian all had the basic characteristics of mixed economies. After the collapse of the western half of the Roman Empire, the eastern half or Byzantine Empire continued to have a mixed economy until its destruction by the Ottomans. Medieval Islamic societies drew their primary material basis from the classical Mediterranean mixed economies that preceded them, and therefore the economies of Islamic empires such as the Abbasid Caliphate dealt with their emerging, prominent capitalistic sectors or market economies through regulation via state, social, or religious institutions. Due to having low, diffuse populations and disconnected trade, the economies of Europe could not supported centralized states or mixed economies and instead a primarily agrarian feudalism predominated for the centuries following the collapse of Rome. However with the recovery of populations and the rise of medieval communes from the 11th century onward, economic and political power once again became centralized. According to Murray Bookchin by the 15th century mixed economies, which had grown out of the medieval communes, were beginning to emerge in Europe as feudalism declined. In 17th century France, Jean-Baptiste Colbert acting as finance minister for Louis XIV attempted to institute a mixed economy on a national scale. The American system initially proposed by the first United States Secretary of the Treasury Alexander Hamilton and supported by later US leaders such as Henry Clay, John C Calhoun, and Daniel Webster exhibited the traits of a mixed economy combining protectionism, laissez-faire, and infrastructure spending. By 1914 and the start of World War I Germany had developed a mixed economy with government co-ownership of infrastructure and industry along with a comprehensive social welfare system. After the 1929 stock crash and subsequent Great Depression through much of the global economy into a severe economic decline, British economists such as John Maynard Keynes began to advocate for economic theories which argued for more government intervention in the economy. Harold Macmillan, a conservative politician in the British Tory Party also began to advocate for a mixed economy in his books Reconstruction and The Middle Way. Supporters of the mixed economy, included R. H. Tawney, Anthony Croslandand Andrew Shonfield who were mostly associated with the Labour Party. During the post-war period and coinciding Golden Age of Capitalism, there was general worldwide rejection of laissez-faire economics as capitalist countries embraced mixed-economies founded on economic planning, intervention, and welfare. Mixed economies understood as a mixture of socially owned and private enterprise 216 CU IDOL SELF LEARNING MATERIAL (SLM)

have been predicted and advocated by various socialists as a necessary transitional form between capitalism and socialism. Additionally, a number of proposals for socialist systems call for a mixture of different forms of enterprise ownership including a role for private enterprise. For example, Alexander Nove's conception of feasible socialism outlines an economic system based on a combination of state-enterprises for large industries, worker and consumer cooperatives, private enterprises for small-scale operations and individually owned enterprises. The social democratic theorist Eduard Bernstein advocated a form of mixed economy, believing that a mixed system of public, cooperative and private enterprise would be necessary for a long period of time before capitalism would evolve of its own accord into socialism. The People's Republic of China adopted a socialist market economy which represents an early stage of socialist development according to the Communist Party of China. The communist party takes the Marxist-Leninist position that an economic system containing diverse forms of ownership-but with the public sector playing a decisive role-is a necessary characteristic of an economy in the preliminary stage of developing socialism. The Socialist Republic of Vietnam describes its economy as a socialist-oriented market economy that consists of a mixture of public, private and cooperative enterprise-a mixed economy that is oriented toward the long-term development of a socialist economy. Mixed economy, in economics, a market system of resource allocation, commerce, and trade in which free markets coexist with government intervention. A mixed economy may emerge when a government intervenes to disrupt free markets by introducing state-owned enterprises, regulations, subsidies, tariffs, and tax policies. Alternatively, a mixed economy can emerge when a socialist government makes exceptions to the rule of state ownership to capture economic benefits from private ownership and free market incentives. A combination of free market principles of private contracting and socialist principles of state ownership or planning is common to all mixed economies. In addition to taking a variety of forms, mixed economies have come about from a variety of motives and historical causes. The British Corn Laws of the early 1800s, for example, were government interventions in the free market to protect native agricultural interests by limiting imports. The laws encouraged foreign protectionist responses and resulted in higher food and labour costs at home, which in turn led to an invigorated laissez-faire and free trade movement. However, at roughly the same time, abuses of factory workers led to government intervention to reform labour conditions for women and children. In developed Western economies between the late 1800s and early 1900s, most political economists and governments believed that social prosperity progressed best in economic systems composed of free markets, in which social and monetary order was protected by the actions of governmental and banking institutions. This belief was profoundly shaken, however, by the system's twin catastrophic failures that came to be known as the Great Depression failing first to prevent the global economic collapse and then failing to recover communities from the horrendous human tragedies of unemployment and poverty wrought by the collapse. Between 1933 and 1939 the New Deal, a series of interventionist legislation and government programs in the United States, was championed by Pres. Franklin 217 CU IDOL SELF LEARNING MATERIAL (SLM)

D. Roosevelt to head off social unrest caused by widespread unemployment during the Great Depression. In the mid-20th century many people agreed that the Great Depression arose from fundamental flaws in the free market theory of equilibrating supply and demand and that this meant that the free market alone would be incapable of recovering from another global economic downturn. 7.4 PROPERTY What is property? You might think you know what property is but surprisingly it is a difficult thing to describe adequately. Jot down quickly what property you have. Things like Tennis rackets, Clothes, Money, Computer, Books. All of these things are what most people think is their ’property’ and what people ’own.’ For lawyers these are inexact descriptions of what in law is the relationship that exists between a person and things or land. The layperson’s view of what is property is acceptable and understandable in most contexts as there is usually no need to be more precise. But if the purpose is to analyse the nature of the property relationship in a legal context these categories may be inadequate. This is especially tree alien one attempts to apply legal definitions in a commercial context. We will be looking at ’property ‘in two contexts: as a noun i.e. \"my property includes the following\" and when describing the legal relationship existing between a person and a thing or land i.e. \"I have property in that land.\" Definitions of Property As a starting point we should start with some definitions of property. What is defined as property may depend upon the context. One case defined \"property\" in these terms: \"The term property is sufficiently comprehensive to include every species of estate, real and personal, and everything witch one person can own and transfer to another. It extends to every species of right and interest capable of being enjoyed as such upon which it is practicable to place a money value.\" Under the Income Tax Assessment Act property includes \"services\" s136 AA while under 51xxxi of the Commonwealth Constitution \"money\" was deemed not to be property. Mutual Pools and Staff Pty Ltd v Commonwealth 179 CLR 155 at 195-6. Under most definitions money is deemed property. Property as a legal relationship We will now discuss the concept of property when the term is used to describe the legal relationship between a person and an object or land i.e. \"I have property in that car or that parcel of land.\" Some define \"property\" in this context very broadly as \"a legal relationship\" where there are three persons in that relationship. the state, a person the state has concluded is the holder of a specified form of property. any other person whom the state has concluded does not hold the specified form of property. The state will suppress the civil liberties of the third person to the extent they fall within the scope of the property held. This is basic to the concept of property that is the notion that the person who holds the property being entitled to exclude another from access to the property which is sanctioned by the state. This definition of property indicates - First, that when you say you have property this is an interest separate from the thing itself. For example: lift say I include in my property \"a car\" in a technical legal sense what I have or hold is property in the car. In a technical sense I own the property in the car and not the car as a 218 CU IDOL SELF LEARNING MATERIAL (SLM)

physical object. The concept of property is also abstract. Rather than referring directly to a material object such as ~ parcel of lan~ or the tractor that cultivates it, the concept of property to often said to refer to a bundle of rights that may be exercised with respect to that object. Ownership is usually conceived of as being the highest form of \"property\" or relationship with the thing or land being considered. There are other types of \"property\" that one can hold such as possession, a security interest, a leasehold interest over land or a life estate over land which are different types of property in a thing or land. Often ownership and possession is merged in one person i.e. when I say \"This is my pen\" I have ownership and possession. If 1 give my pen to a friend to use then I will still own the pen but try friend will have possession being a form of property in the pen. This approach allows a number of people to have \"property\" in an object at the same time. For example A owns a book because they purchased it from a bookshop it can be said the property they have in that book is \"ownership?’ If A then lends the book to Y that person has ’property’ in that book as they have possession of the book. If Z steals the book from Y that person has a type of tenuous property in the book based upon his possession though the rights of Z will be subject to the entitlements of A and Y who have prior interests with A having the primary interest as owner. Thus you may have a number of parties all with ’property’ in the book though each having different types of rights. The book is not property itself rather it is the object of property A major division occurs in relation to property between private and public property. Often when we speak of property we talk about private property, that is, property owned by private individuals or corporations. This form of property predominates in our private enterprise economic system. Your ownership or property in a bike or money will be based upon the concept of private property. Public property is property owned by one of the three tiers of government i.e. Federal, State or Local Government. Examples of public property are public parks, national parks or military equipment. In western countries property is predominantly held as private property or by the state as public property. In other more traditional cultures communal property is the norm. In the Australian context the concept of communal ownership was discussed in the High Court case ofMabo v State of Queensland. In that case the High Court acknowledged that the common law of Australia recognized a form) of native title which provided for entitlements based upon laws and customs of tribal peoples. These entitlements were/communal in nature that is they attached to the group rather than to the individual. This is an acceptance of communal rights though it is still a form of ownership. As the terms of this decision and subsequent legislation like the Native Title Act and its state equivalents take effect large parts of Australia will be held by groups of Aborigines under native title based upon communal ownership concepts. There are some assets for which there are no owners such as the air we breathe. This theory suggests that a person is entitled to the full produce of their labour. The basis behind this theory is that a society should encourage labour and property should be distributed according to one’s productivity. This theory is based on the approach that 219 CU IDOL SELF LEARNING MATERIAL (SLM)

originally all ~property was owned in common but people had the right to appropriate this property by co-mingling their labour with it. This theory arose out of the English revolution that was based upon an attack upon the institutions of the monarchy and hereditary ownership of land. This was a time when the middle class emerged after ancient and medieval times when much of the work was performed by slaves and serfs. To the middle class this theory fitted the times as they began to accumulate assets by their own labour and effort not in accordance with hereditary succession. This theory was also one justification for ignoring the interests of aboriginal inhabitants. On occasion the European perspective in centuries past was that native inhabitants did not have an entitlement to land rights as they did not make the land by cultivation or development. This theory has the difficulty of dealing with how one separates the efforts of various labour contributions to a product, such as how can you distinguish the bricklayer, truck driver and brick kiln operator in providing the labour for a house. This concern is especially relevant when it involves services not directly involved in the process for example the police force in preserving peace. We also need to consider that most societies choose to provide support to those who do not produce anything to avoid unnecessary poverty and deprivation to those who are unable to provide adequate labour. 7.5 DIVISION OF LABOUR The first question that arises for an author who wants to discuss the division of labour is what is the purpose of writing an article with such a topic in the informational age, when Rifkin has already written about the end of work? Why should anyone bother with writing about theories of the division of labour and, particularly, why start from classical sociological concepts? Is there any useful insight for contemporary social sciences that we can find in these first theories? What would be the contribution of such a theoretical article? Exactly because it appears at first glance that this work seems useless and unnecessary, one must first explain why, even today, it is important to use concepts from our sociological heritage when talking about the division of labour. The inspiration for this article has come from research on the post-industrial transformation of the structure of occupations in Croatian society during the period of transition from communism to neo–liberal capitalism, as Croatia prepares to enter into the European Union. Even though every worldwide-known textbook of sociology, contains a special chapter on work and labour, none of them presents, analyses and compares terms relating to this subject from the original sources of classical sociological theories. Therefore the main goal of this article is to promote classical theoretical terms and concepts and to point to their relevance in modern conceptualizations of the division of labour. This article will present basic approaches and theories about the division of labour from Adam Smith, Karl Marx, Emile Durkheim, Herbert Spencer and Max Weber and will highlight their main conclusions. The article will conclude with a comparative scheme of the causes and effects of division of labour based on these classical theories and approaches. This scheme could be a model for the theoretical synthesis of classical sociological approaches to the division of labour. The purpose of such a theoretical synthesis is to promote classical 220 CU IDOL SELF LEARNING MATERIAL (SLM)

theoretical terms and concepts and to point to their relevance in modern theoretical conceptualizations of the division of labour. This could also be used as a fundamental starting point for the operationalization of the research on changes in the social division of labour, evident in transformations in the structure of economic activities, the structure of education and structure of occupations. Adam Smith is the first author who used a concept of the division of labour. He pointed out that this phrase was not used earlier, except in Mandeville’s The Fable of the Bees Moreover, the first book of his masterpiece An Inquiry into the Nature and Causes of the Wealth of Nations begins with the following three chapters: “Of the Division of Labour,” “Of the Principle Which Gives Occasion to the Division of Labour,” “That the Division of Labour is limited by the Extent of the Market.” His analysis of the division of labour begins with a description of the process of manufacturing pins. This is divided into a number of specific crafts. Smith gives the following illustration: One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving, the head; to make the head requires two or three distinct operations; to put it on is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. In consequence of a proper division and combination of their different operations, ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty. Smith uses this description not only to show to that the division of labour in manufacturing causes, in each specific craft, a significant increase of productivity, and to emphasize that differentiation of various occupations and jobs on the national level results in the development and the wealth of some countries. This principle became one of the most important features of the wealth of nations that enjoy the highest degree of industry and improvement. Smith concludes that the large increase in the amount of work that can be done by distributing the same number of people, using the division of labour, can be attributed to three different circumstances The first is the increase in the skills of each worker. The second is saving time - before the division of labour lots of time was lost transiting from one type of work to another. The third is the invention of a large number of machines which facilitate and reduce the work and enable one man to do the work of many people. Every individual, says Smith, becomes a better expert in his particular job and, therefore, more work could be done, and the amount of knowledge is highly increased: He further argues that a man without this natural human tendency would have to supply all of life’s necessities and comforts for himself. Moreover, everybody would have to do same job and there could not be many different jobs, There would be no possibility for developing 221 CU IDOL SELF LEARNING MATERIAL (SLM)

talent within a particular job. Therefore, he concludes, all this division of labour is caused by a power of exchange as a feature of human nature. The third chapter argues that the division of labour is limited by the scope of the market. In the lone houses and small villages in the Scottish mountains each man must be a butcher, baker and brewer for his own family. “A country carpenter deals in every sort of work that is made of wood: a country smith in every sort of work that is made of iron,”. Therefore certain types of industries can be performed only in the big city. But after the division of labour was applied, there remains a small portion of needs that a man has to achieve with his own production. Smith concludes: He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society. These are the basic and most important of Smith’s thesis on the division of labour on which he builds his entire economic theory. It is important to emphasize that for him the division of labour is actually an indicator of prosperity of certain countries and is the main cause of the economic system that leads to general welfare. We may say that Smith is the first to point out the developmental dimension of the division of labour. This is one of Marx’s main theses on the division of labour and can be found even in his early paper “A letter to Annenkov,” which shows us how important this subject was for Marx. Besides the division of labour in manufacturing or in individual work in a workshop, Marx analyses the social division of labour, which has a fundamental importance for society. It makes a general basis for production of each commodity and mainly depends on the development of forces of production1 . He considers that any new force of production leads to the further development of the division of labour. In the first historical division of labour within society there was a separation of industrial and trade work from agricultural work and, therefore, a separation between towns and villages with their different and opposite interests. Further development leads to the separation of industrial from trade or commercial work. This division of labour also developed within these branches of economy different social groups whose social position is determined by the ownership of materials, tools and works products. By the type of position and ownership Marx distinguishes tribal, ancient, communal, state and feudal or class ownership. These theses are also the basis of his sociological thought, although he never considered himself a sociologist. Marx wanted to explore the basic principles which lead to the division of labour even in the original and first communities. In the first primitive societies, clans and tribes, the first native division of labour derived from the difference of gender and age, that is, from physiological principles. Later, along with the differentiation of the instruments or tools for specific works, also developed the differentiation of craft which produces these tools, as well as specially trained people who know how to use them. That was the first technical division of labour that leads to the separation and differentiation of branches of production, so Marx points out: 222 CU IDOL SELF LEARNING MATERIAL (SLM)

Considering this thesis, Marx claims that division of labour is the main factor that causes the development of production sectors on national and international levels. Modification and technical functions of tools are developed based on changes in materials and raw materials, so modern industry of his time, as well as today, continually uses and includes these technical innovations in the process of production. Marx concludes that this technical basis of division of labour is revolutionary, whereas in all earlier processes it was conservative. By means of machinery, chemical processes and other methods, it is continually causing changes not only in the technical basis of production, but also in the functions of the labourer, and in the social combinations of the labour-process. At the same time, it thereby also revolutionises the division of labour within the society, and incessantly launches masses of capital and of workpeople from one branch of production to another. Therefore, we can conclude that for Marx the development of technology and technical innovation in industrial societies, substituted for physiology as the main principle of the division of labour from earlier ages. Marx, of course, does not finish his study on the division of labour by just giving an exploration of its principles and typology. He also wants to analyse the influence of division of labour as a national-economic expression of the sociability of labour within the concept of alienation2. That specific approach was displayed even in his early writings known as Economic and Philosophical Manuscripts, where he claims that the “division of labour is nothing more than the estranged alienated positing of human activity as a real species activity or as activity of man as species being,”. Marx criticizes and rejects Smith’s thesis that the principle which causes the division of labour is a specific human tendency to exchange and trade, and the motive of the exchange is not humanity but egoism. On the contrary, he finds that the division of labour in capitalism was initiated with the general intention of the accumulation of capital. It has led to the degeneration of human beings, and certainly does not originate from human propensity to exchange. The central limitation of this part of Marx’s theory is that it was fixed mainly on the division of labour within the production of material products in manufactories and factories of the 19th century. With this reductive approach, Marx omits in his analysis the rest of social structures, which, in that period included the dominant peasantry, the remnants of feudal classes, the growing trade and commercial sector and already existing service sector and service occupations. Without going into further presentation of Marx’s discussion of the division of labour, for this paper it is important to highlight these theses: on the one side of the division of labour is the importance of the role of technical development, which leads to further differentiation and specialisation, and on the other side it is the disappearance of the old and the emergence of new occupations and professions. According to this perspective, the fundamental questions that Durkheim wants to consider and research in his famous masterpiece The Division of Labour in Society, are the nature of the division of labour with the law of nature and the moral rule of human behaviour, and, if both are true, why are they true, and how could they be measured. He noticed that public opinion tended to treat the division of labour as the obligatory rule and impose it as some 223 CU IDOL SELF LEARNING MATERIAL (SLM)

kind of important social mission. This is especially evident in imperatives for education, which became increasingly specialized, and was reflected in a popular phrase of the time: “train up to fill specific useful function.” He especially criticized writers who made only a subjective perception of the division of labour. He wanted to find out what features of the division of labour are objective and could be treated as objective facts to be observed and compared. Therefore Durkheim points out that results of these observations are often different from subjective perceptions and experiences. He argued that the division of labour first must be considered in an entirely speculative way by researching its utility and its main content, causes and functions. 7.6 SUMMARY  From this point, Durkheim sets out three main goals of his research: 1. to explore the social function of the division of labour, 2. to determine the causes and conditions upon which it depends; 3. to classify the major abnormal forms in which it appears3. Before answering the question about its function, Durkheim observes the historical development of the division of labour and remarks that the increase in the division of labour is therefore due to the fact that social segments lose their individuality and that the partitions dividing them become more permeable. In short, there occurs between them a coalescence that renders the social substance free to enter into new combinations.  Before the development of the division of labour, social segments were connected by sets of beliefs and feelings that were common to the average members of the same society. This makes one determined system with its own life that Durkheim calls collective or common conscience. Therefore, the collective consciousness is the element that makes members of a particular society unified and interconnected. That type of interdependence, based on similarity, Durkheim calls mechanical solidarity. With the disappearance of society based on mechanical solidarity, specialisation came on the scene.  This, according to Durkheim, partially relieves the individual consciousness and the individual becomes a major factor in his behaviour, no more just a reflection of collectively. Division of labour itself contributed a lot to this liberation of individual consciousness, and, through professional specialisation individual nature becomes more complex, with less influence from the collectively and heredity as well. That is why for him to be an individual means to be independent source of action. 4 For the type of society in which the collective consciousness is no longer a major factor of solidarity (as interdependence and interconnection) and where the fundamental principle is not similarity but diversity, there is a need for a new and different factor of solidarity. 224 CU IDOL SELF LEARNING MATERIAL (SLM)

 Durkheim particularly emphasizes, that there is a completely different structure of these societies where this new organic solidarity exists. It consists of a system of different organs each of which has a special role and is made up of heterogeneous types that are coordinated and subordinated to one another, around the same central organ that directs action. Durkheim concludes that social life stems from two sources: similarity of consciousness and the division of labour. Similarity of consciousness creates legal rules under the threat of sanctions, imposed on all by beliefs and customs, while the division of labour creates legal rules that determine the nature and relations of divided functions. The first function of the division of labour for Durkheim is the one that was earlier filled by collective consciousness- -to make civilisation possible--and that holds together social groups of higher types.  Durkheim points out another important function of the division of labour, and that is the education of social groups who would not even exist without it. Therefore Durkheim is the author of the first theoretical conceptualisation of the term profession as a social group that requires particular education and exact occupation, but he also considers them as important fact of the future moral order. In societies with organic solidarity, then, individuals are no longer stratified according to their heritage, because their position, role and status are now based on professional achievements. These insights of Durkheim’s are very important elements for understanding the process of modernization in western societies, which is still on the scene in the countries in transition, as well as in other, non-western parts of the world. Analysing the factors that lead to the division of labour, Durkheim emphasizes two main causes: density and social volume. Defining the concept of (social) density as moral condensation of mankind he claims:  In his concluding remarks Durkheim summarizes the presented concepts and opposes them to the ideas of society held by Smith and Spencer. He built one of the foundations of the subject of sociology as a science, as opposed to the then prevailing historicism, biological determinism, psychological and economic determinism. When considering some of the final definition of society he claims:  Durkheim understands as the main source of solidarity morality, which makes a person to be relied on by another person and to act guided by something else besides egoism. That’s why he openly disagrees with Smith’s thesis, in particular, that the division of labour does not produce solidarity just because it makes each individual an exchanger, but because it creates among people the whole system of rights and obligations that bound them to one another permanently. He concludes that societies can be formed only with the development of a division of labour, which means with greater specialisation of function.  The division of labour, therefore, does not oppose individuals or persons, but just social functions. Social aspects of individuals in that kind of society couldn’t be 225 CU IDOL SELF LEARNING MATERIAL (SLM)

reduced to psychological aspects: personality, behaviour, subjective perception, and so on. On the historical stage has come modern society with completely new terms and concepts such as social role, social status, social fact and many others, which are today known as major principles of sociology. From Durkheim’s theses presented above, it can be concluded that the division of labour is the key factor of moral integration of modern industrial societies that makes their members interdependent.  Unlike Durkheim and his sociological, ethical and legal concerns, Herbert Spencer approaches the division of labour through the theory of social evolution and the differentiation of functions, but he also considers it as the main factor of social integration in the society defined as a supra organic aggregate. He divided this concept of the division of labour into four different categories: social differentiation, specialisation, integration and function5. In an early book, The Study of Sociology, Spencer emphasises how the division of labour is a “cardinal truth in sociology neither been specially created, nor enacted by a king, but had grown up without forethought of any one”. In the first chapter of his other book, The Principles of Sociology, he observes the division of labour in ants and bees. Spencer notes that the development of the division of labour is evidence of organic evolution in biology, because the simplest living creature is all stomach, all respiratory system, all limbs. Spencer applies this argument to society, but here he uses the term super – organic evolution, pointing out, “While rudimentary, it is all warriors, all hunters, all hut builders, all tool makers: every part fulfils for itself all needs. 7.7 KEYWORDS  Industrializing Nations- Countries that are in the process of becoming industrialized; includes most of the countries of the former Soviet Union.  Inner Controls- According to control theory, the thought processes such as morality or a conscience that reside within people and that can prevent them from committing acts of deviance.  Innovators - According to Robert Merton’s theory of goals and means, those who accept cultural goals but reject the institutional means of achieving them.  Institutionalized - Legitimate, socially approved ways that societies offer their members to achieve culturally approved goals.  LabellingTheory- A theory of deviance put forth by Howard Becker that claims that deviance is that which is so labelled. 7.8 LEARNING ACTIVITY 1. Create a session on centrally planned economy. 226 CU IDOL SELF LEARNING MATERIAL (SLM)

___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on free enterprise economy. ___________________________________________________________________________ ___________________________________________________________________________ 7.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Describe about Capitalist? 2. Define the term Socialist? 3. What is Mixed economy? 4. Write down the main advantage of Division of Labour? 5. What is the meaning of Property? Long Questions 1. Explain the Overview of Economic Institutions. 2. Discuss about centrally planned economy. 3. Illustrate the about free enterprise economy. 4. Describe the Features of Economic Institutions. 5. Examine the Functions of Economic Institutions. B. Multiple Choice Questions 1. Who is put forward the concept primary group in social science? a. G H Mead b. C H Cooley c. C W. Right d. M N Roy 2. Who authored the book ‘Social Organization: A Study of the Larger Mind’? a. C. H Cooley b. E. B. Tylor c. F. Tonnies d. F D Saussure 227 CU IDOL SELF LEARNING MATERIAL (SLM)

3. When did the book ‘Social Organization: A Study of the Larger Mind’ was published? a. 1908 b. 1909 c. 1905 d. 1910 4. Which is the basic characteristic of primary group? a. Impersonal relationship b. Indirect relationship c. Intimate face to face association d. Temporary association 5. Which is the best example of primary group? a. Family b. Association c. Caste d. College Answers 1-b, 2-a, 3-b, 4-c, 5-a 7.10 REFERENCES References book  Kadushin, C., Lindholm, M., Ryan, D., Brodsky, A., & Saxe, L. (2005). Why It Is So Difficult to Form Effective Community Coalitions. City & Community, 4(3), 255- 275.  Lamothe, R. (2008). John Macmurray's philosophy of community and psychoanalysis. Contemporary Psychoanalysis, 44(4), 581-603.  Lehavot, K., Balsam, K. F., & Ibrahim-Wells, G. D. (2009). Redefining the American quilt: definitions and experiences of community among ethnically diverse lesbian and bisexual women. Journal of Community Psychology. Textbook references 228 CU IDOL SELF LEARNING MATERIAL (SLM)

 Lewis, T. A. (2005). ACTIONS AS THE TIES THAT BIND Love, Praxis, and Community in the Thought of Gustavo Gutierrez. Journal of Religious Ethics.  Lowrey, W., Brozana, A., Mackay, J. B. (2008). Toward a Measure of Community Journalism. Mass Communication and Society.  Lysaght, R., Cobigo, V., Hamilton, K. (2012). Inclusion as a focus of employment related research in intellectual disability from 2000 to 2010: A Scoping Review. Disability and Rehabilitation. Website  https://www.britannica.com/topic/mixed-economy  https://www.researchgate.net/publication/27826677_Concepts_of_property/link/595c 80aea6fdcc36b4dc5a27/download  https://www.researchgate.net/publication/321829592_Economic_institutions_and_eco nomic_growth_Empirical_evidence_from_the_Economic_Community_of_West_Afri can_States 229 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 8 – CULTURAL INSTITUTIONS STRUCTURE 8.0 Learning Objectives 8.1 Introduction 8.2 Religion 8.2.1 Sociology of Religion 8.3 Meaning 8.4 Types 8.4.1 Classical Theories of Religion in Society 8.4.2 Contemporary Theories of Religion in Society 8.5 Functions 8.6 Summary 8.7 Keywords 8.8 Learning Activity 8.9 Unit End Questions 8.10 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to:  Describe the concept of Sociology of Religion.  Explain the Classical Theories of Religion in Society.  Illustrate the Contemporary Theories of Religion in Society. 8.1 INTRODUCTION Recent research demonstrates that cultural variables determine many economic choices— they even affect the speed of development and the wealth of nations.1 Researchers are now striving to better understand the mechanisms. In this paper, we investigate what we know about one specific mechanism: the relationship between culture and institutions. Both terms are often vague in the literature; we devote space to defining them properly, and we also sum up how various authors have defined them differently. Culture and institutions are endogenous variables determined, possibly, by geography, technology, epidemics, wars, and 230 CU IDOL SELF LEARNING MATERIAL (SLM)

other historical shocks. Can any causal link between the two be established? How do culture and institutions interact? One notable study—by Putnam, on social capital in Italy— illustrates how complex these issues are. Putnam and his colleagues took advantage of a natural experiment involving an institutional reform: in the early 1970s, Italy’s central government established fifteen new regional governments.2 Ideally, they would function identically throughout the country, but in practice they didn’t. The discrepancy was most pronounced between the centre-north and the south. Putnam and his colleagues hypothesized that the variance was due to regional differences in levels of cooperation, participation, and social interaction, and trust— four key “social capital” traits. They argued that these regional differences—dating back at least as far back as the twelfth century—are a function of whether the given region had experienced the institution of free cities. Free cities developed a form of early participatory democracy, generating a feeling of belonging to a polity, whose functioning could guarantee both protection from aggression and the provision of public goods. As a result, citizens of free cities developed a deep sense of civic and cooperative behaviour, a cultural trait they transmitted from generation to generation. Guiso, Sapienza, and Zingales formally tested this hypothesis, finding considerable support for it. A contemporary Italian city’s social capital, a “cultural” variable determining the success or failure of its institutions, correlates with its historical experience as a free city in the middle Ages. Thus, an institutional variable, the free-city arrangement, influenced a long-lasting cultural change that still affects Italy’s local governments. If cultural values were not so persistent, being a free city in the twelfth century would have nothing do with today’s institutions. At the same time, this long-lasting cultural trait was sparked by early forms of local self-determination, an institutional feature. The experience of a free city in the middle Ages is clearly not an exogenous variable. For example, even within central and northern cities, there is variation regarding which cities could more easily become free, due to geographic features that made them more or less capable of defending themselves against the emperor. Like geography, many other factors could have determined the relative efficiency of local governments in Italy. Yet the complex interaction between culture and institutions is interesting, regardless of the “ultimate” causes. Those who study culture are well aware of the importance of institutions and, as we document below, they try as well as they can to isolate the effect of culture from institutions—probably because the importance of institutions is fairly well established.3 Since cultural economics is in its infancy, those who write about institutions don’t seem to worry much about whether institutions are well identified and isolated from cultural influences, which may be problematic. Some may argue that culture is a vague variable and difficult to measure. One of our ancillary goals here is to try to clarify these definitional issues. The rest of our paper is structured as follows. In section 2, we define what culture means in the economic literature, and how it is measured. Many contributions to the literature since the last two surveys discuss the relevance of culture on economic outcomes. Thus, we provide a map of the main cultural traits used in economics and their correlations. We also provide definitions and measurements of formal institutions. In section 231 CU IDOL SELF LEARNING MATERIAL (SLM)

3, we scrutinize the relationship between culture and institutions, first by reviewing existing empirical and theoretical literature that shows how culture can affect formal institutions, and then by reviewing recent studies that show how formal institutions affect culture. Then, we document the interplay between culture and formal institutions and review the literature on how they jointly determine economic development. Defining culture is an arduous task. We start by providing a definition, distinguishing between empirical and theoretical definitions of culture. The reason for the distinction is that the mapping between empirical and theoretical concepts is often not straightforward. On the empirical side, most papers follow the definition adopted by Guiso, Sapienza, and Zingales, where culture is defined as “those customary beliefs and values that ethnic, religious, and social groups transmit fairly unchanged from generation to generation.” Empirical papers, therefore, combine values and beliefs in the same definition. On the theoretical side, values and beliefs are often treated differently. Several authors have developed models in which culture means beliefs about the consequences of one’s actions, but where these beliefs can be manipulated by earlier generations or by experimentation. For example, Guiso, Sapienza, and Zingales show how individual beliefs are initially acquired through cultural transmission and then slowly updated through experience, from one generation to the next. They use an overlapping generation model in which children absorb their trust priors from their parents and then, after gaining real-world experience, transmit their updated beliefs to their own children. In this setting, multiple equilibria are possible. In the no-trust-no-trade equilibrium, beliefs of mistrust are transmitted from parents to children, who eventually shun trade and therefore do not learn about the trustworthiness of the population. Conversely, in the high- trust-high-trade equilibrium, parents transmit trust beliefs to their children, which encourages trade and learning about the true trustworthiness in the population. A temporary shock to trust can move a society permanently from one equilibrium to the other. Greif integrates game theory and sociological concepts to define the relevance of cultural beliefs. In his view, “sociologists and anthropologists consider the organization of society to be a reflection of its culture, an important component of which is cultural beliefs. Cultural beliefs are the ideas and thoughts common to several people that govern interaction—between these people and among them, their gods, and other groups—and differ from knowledge in that they are not empirically discovered or analytically proved. In general, cultural beliefs become identical and commonly maintained, and communicated.” Greif asserts there is a subset of “rational cultural beliefs, which capture people’s expectations with respect to actions that others will take in various contingencies. . . . Past cultural beliefs that sustain Nash equilibria provide focal points in repeated social interactions or when there are multiple equilibria.”4 Still others view culture as a more primitive phenomenon embodied in values and preferences. This definition, also used in psychology emphasizes the role of emotions in motivating human behaviour. The two interpretations are not mutually exclusive. Benabou shows that values and beliefs interact systematically. He incorporates “mental constructs” into a political- economy model and shows that these mental constructs interact with institutions to generate 232 CU IDOL SELF LEARNING MATERIAL (SLM)

different beliefs, which could persist over time. Empirical investigation of the relevance of culture on economic outcomes is fairly new in economics. So far, the goal of most cultural economics papers has been to establish the relevance of culture. Economists have devoted scant attention to disentangling differences between a belief and a value component. The term culture, thus far, has been ambiguous, indicating both values and beliefs.5 For example, views differ on inequality and redistribution. Luttmer and Singhal highlight the “value component” and show a strong cultural persistence in the formation of preferences for redistribution by documenting a correlation between preferences for redistribution among second-generation immigrants and preferences for redistribution in the country of origin.6 Meanwhile, Alesina and Fuchs-Schündeln and Giuliano and Spilimbergo have shown that preferences for redistribution can be affected by political regimes or macroeconomic shocks—emphasizing the beliefs aspect of culture. Similar ambiguity exists in recent studies of the role of women in society. Alesina, Giuliano, and Nunn emphasize the value components of attitudes about women’s participation in the labour force, by showing a strong correlation between the female labour force participation today and female participation in agriculture in preindustrial societies, which was generated by differences in agricultural technologies hundreds of years ago.7 Meanwhile, Fogli and Veldkamp and Fernandez emphasize a beliefs component to explain the increase in female labour-force participation over time. These two papers, which independently investigate how changes in culture generate changes in female labour-force participation over time, present a dynamic model of culture in which people hold heterogeneous beliefs regarding the relative long-run payoff for women who work in the market versus those who work at home. Both papers conclude that female labour-force participation has increased over time as beliefs evolve due to intergenerational Definitions of Formal Institutions North defines institutions as “the humanly devised constraints that structure human interactions. They are made up of formal constraints (rules, laws, constitutions), informal constraints (norms of behaviour, convention, and self-imposed codes of conduct), and their enforcement characteristics. 8.2 RELIGION Religion is a social-cultural system of designated behaviours and practices, morals, beliefs, worldviews, texts, sanctified places, prophecies, ethics, or organizations that relates humanity to supernatural, transcendental, and spiritual elements; however, there is no scholarly consensus over what precisely constitutes a religion. Different religions may or may not contain various elements ranging from the divine, sacred things, faith, a supernatural being or supernatural beingsor \"some sort of ultimacy and transcendence that will provide norms and power for the rest of life”. Religious practices may include rituals, sermons, commemoration or veneration (of deities and/or saints), sacrifices, festivals, feasts, trances, initiations, funerary services, matrimonial services, meditation, prayer, music, art, dance, public service, or other aspects of human culture. Religions have sacred histories and narratives, which may 233 CU IDOL SELF LEARNING MATERIAL (SLM)

be preserved in sacred scriptures, and symbols and holy places, that aim mostly to give a meaning to life. Religions may contain symbolic stories, which are sometimes said by followers to be true, that may also attempt to explain the origin of life, the universe, and other phenomena. Traditionally, faith, in addition to reason, has been considered a source of religious beliefs. Different religions may or may not contain various elements ranging from the divine, sacred things, faith, a supernatural being or supernatural beingsor \"some sort of ultimacy and transcendence that will provide norms and power for the rest of life”. Religious practices may include rituals, sermons, commemoration or veneration (of deities and/or saints), sacrifices, festivals, feasts, trances, initiations, funerary services, matrimonial services, meditation, prayer, music, art, dance, public service, or other aspects of human culture. Religions have sacred histories and narratives, which may be preserved in sacred scriptures, and symbols and holy places that aim mostly to give a meaning to life. Religions may contain symbolic stories, which are sometimes said by followers to be true, that may also attempt to explain the origin of life, the universe, and other phenomena. Traditionally, faith, in addition to reason, has been considered a source of religious beliefs. There are an estimated 10,000 distinct religions worldwide. About 84% of the world's population is affiliated with Christianity, Islam, Hinduism, Buddhism, or some form of folk religion. The religiously unaffiliated demographic includes those who do not identify with any particular religion, atheists, and agnostics. While the religiously unaffiliated have grown globally, many of the religiously unaffiliated still have various religious beliefs. The study of religion comprises a wide variety of academic disciplines, including theology, comparative religion and social scientific studies. In the ancient and medieval world, the etymological Latin root religion was understood as an individual virtue of worship in mundane contexts; never as doctrine, practice, or actual source of knowledge. In general, religion referred to broad social obligations towards anything including family, neighbours, rulers, and even towards God. Religion was most often used by the ancient Romans not in the context of a relation towards gods, but as a range of general emotions such as hesitation, caution, anxiety, fear; feelings of being bound, restricted, inhibited; which arose from heightened attention in any mundane context. The term was also closely related to other terms like scrupulous which meant \"very precisely\" and some Roman authors related the term superstition, which meant too much fear or anxiety or shame, to religion at times. When religion came into English around the 1200s as religion, it took the meaning of \"life bound by monastic vows\" or monastic orders. The compartmentalized concept of religion, where religious things were separated from worldly things, was not used before the 1500s. The concept of religion was first used in the 1500s to distinguish the domain of the church and the domain of civil authorities. In the ancient Greece, the Greek term triskelia was loosely translated into Latin as religion in late antiquity. The term was sparsely used in classical Greece but became more frequently used in the writings of Josephus in the first century CE. It was used in mundane contexts and could mean multiple things from respectful fear to excessive or harmfully distracting practices of others; 234 CU IDOL SELF LEARNING MATERIAL (SLM)

to cultic practices. It was often contrasted with the Greek word deisidaimonia which meant too much fear. 8.2.1 Sociology of Religion Sociology of religion is the study of the beliefs, practices and organizational forms of religion using the tools and methods of the discipline of sociology. This objective investigation may include the use both of quantitative methods (surveys, polls, demographic and census analysis) and of qualitative approaches (such as participant observation, interviewing, and analysis of archival, historical and documentary materials). Modern sociology as an academic discipline began with the analysis of religion in Émile Durkheim's 1897 study of suicide rates among Catholic and Protestant populations, a foundational work of social research which served to distinguish sociology from other disciplines, such as psychology. The works of Karl Marx and Max Weber emphasized the relationship between religion and the economic or social structure of society. Contemporary debates have centered on issues such as secularization, civil religion, and the cohesiveness of religion in the context of globalization and multiculturalism. Contemporary sociology of religion may also encompass the sociology of irreligion. Modern sociology as an academic discipline began with the analysis of religion in Émile Durkheim's 1897 study of suicide rates among Catholic and Protestant populations, a foundational work of social research which served to distinguish sociology from other disciplines, such as psychology. The works of Karl Marx and Max Weber emphasized the relationship between religion and the economic or social structure of society. Contemporary debates have centered on issues such as secularization, civil religion, and the cohesiveness of religion in the context of globalization and multiculturalism. Contemporary sociology of religion may also encompass the sociology of irreligion (for instance, in the analysis of secular-humanist belief systems). The sociology of religion is distinguishedfrom the philosophy of religion in that it does not set out to assess the validity of religious beliefs. The process of comparing multiple conflicting dogmas may require what Peter L. Berger has described as inherent \"methodological atheism”. Whereas the sociology of religion broadly differs from theology in assuming indifference to the supernatural, theorists tend to acknowledge socio-cultural reification of religious practice. According to Kevin J. Christian et al., \"Marx was the product of the Enlightenment, embracing its call to replace faith by reason and religion by science.\" But he \"did not believe in science for science's sake … he believed that he was also advancing a theory that would … be a useful tool … effecting a revolutionary upheaval of the capitalist system in favours of socialism.\" As such, the crux of his arguments was that humans are best guided by reason. Religion, Marx held, was a significant hindrance to reason, inherently masking the truth and misguiding followers. Marx viewed alienation as the heart of social inequality. The antithesis to this alienation is freedom. Thus, to propagate freedom means to present individuals with the truth and give them a choice to accept or deny it. In this, \"Marx never suggested that religion ought to be prohibited.\" Central to Marx's theories was the oppressive economic situation in which he 235 CU IDOL SELF LEARNING MATERIAL (SLM)

dwelt. With the rise of European industrialism, Marx and his colleague Friedrich Engels witnessed and responded to the growth of what he called \"surplus value\". Marx's view of capitalism saw rich capitalists getting richer and their workers getting poorer (the gap, the exploitation, was the \"surplus value\"). Not only were workers getting exploited, but in the process they were being further detached from the products they helped create. By simply selling their work for wages, \"workers simultaneously lose connection with the object of labour and become objects themselves. Workers are devalued to the level of a commodity - a thing …\"From this objectification comes alienation. The common worker is led to believe that he or she is a replaceable tool, and is alienated to the point of extreme discontent. Here, in Marx's eyes, religion enters. Capitalism utilizes our tendency towards religion as a tool or ideological state apparatus to justify this alienation. Christianity teaches that those who gather up riches and power in this life will almost certainly not be rewarded in the next (\"it is harder for a rich man to enter the Kingdom of Heaven than it is for a camel to pass through the eye of a needle …\") while those who suffer oppression and poverty in this life while cultivating their spiritual wealth will be rewarded in the Kingdom of God. Hence Marx's famous line - \"religion is the opium of the people\", as it soothes them and dulls their senses to the pain of oppression. Some scholars have recently noted that this is a contradictory (or dialectical) metaphor, referring to religion as both an expression of suffering and a protest against suffering. 8.3 MEANING Culture and Community. After the War of 1812 several organizations dedicated to the cultivation of an American artistic culture were founded. While their primary goal was the development of the arts in America, many of these organizations also helped to shape a nascent American arts community. By helping to connect artists with other like-minded men and women, these institutions helped to foster an increasingly national minded sense of culture and drew attention to the uplifting effects aesthetic culture could have on American audiences. The American Academy of Fine Arts in New York was founded in 1802 by Edward Livingston and others, originally for the purpose of housing casts of such works as the Apollo Belvedere, Dying Gladiator, and Laocoön Group, sent home from the Louver by Livingston’s brother Robert in the hope that “a constant view of the finest Models” would bring about a great appreciation of the arts in the United States. The Pennsylvania Academy of the Fine Arts, founded in Philadelphia in 1805, also acquired a respectable collection based on casts from the Louver. These early academies were established as gentlemen’s clubs, more concerned with Americans as patrons than with Americans as artists. Many of these early arts academies, including the Boston Athenaeum and academies in Charleston and Baltimore operated as joint-stock companies with subscribers owning a share of the property and receiving privileges such as free admission to exhibitions. Shares in the American Academy were twenty-five dollars apiece, not a small sum. 236 CU IDOL SELF LEARNING MATERIAL (SLM)

In 1826 a group of New York artists grew dissatisfied with the American Academy. Led by portraitist Samuel F. B. Morse, they established the National Academy of Design as an artist- run organization that put on a series of exhibits limited to contemporary works by American painters, sculptors, and craftsmen. Philadelphia artists established a similar organization in 1835, the Artists’ Fund Society. In 1838 the American Art-Union opened in New York as the Apollo Association established to stimulate interest in national art expression through regularly changing exhibits of works by American artists on explicitly American subjects and through annual raffles open to Union members. Members were entitled to an engraving from one of the works shown and a chance in an annual lottery for an original work of art. By 1849 the Union had over eighteen thousand members, substantial annual receipts, and a daily attendance of several thousand. In 1848 the popular New York City periodical the Knickerbocker reported that the gallery had become “part of the public property as much as the fountains, the parks, or the City-Hall.” The success of the New York Union triggered the rise of similar organizations in Cincinnati, Philadelphia, Boston, Newark, and Brooklyn, where Walt Whitman would become involved in the Brooklyn Art Union, associated with the Brooklyn Institute. 8.4 TYPES Recent research demonstrates that cultural variables determine many economic choices— they even affect the speed of development and the wealth of nations.2 Researchers are now striving to better understand the mechanisms. In this paper, we investigate what we know about one specific mechanism: the relationship between culture and institutions. Both terms are often vague in the literature; we devote space to defining them properly, and we also sum up how various authors have defined them differently. Culture and institutions are endogenous variables, determined, possibly, by geography, technology, epidemics, wars, and other historical shocks. Can any causal link between the two be established? How do culture and institutions interact? One notable study—by Putnam et al., on social capital in Italy— illustrates how complex these issues are. Putnam and his colleagues took advantage of a natural experiment involving an institutional reform: in the early 1970s, Italy’s central government established 15 new regional governments. 3 Ideally, they would function identically throughout the country, but in practice they didn’t. The discrepancy was most pronounced between the centre-north and the south. Putnam and his colleagues hypothesized that the variance was due to regional differences in levels of cooperation, participation, and social interaction, and trust— four key “social capital” traits. They argued that these regional differences—dating back at least as far back as the 12th century—are a function of whether the given region had experienced the institution of free cities. Free cities developed a form of early participatory democracy, generating a feeling of belonging to a polity, whose functioning could guarantee both protection from aggression and the provision of public goods. As a result, citizens of free cities developed a deep sense of civic and cooperative 237 CU IDOL SELF LEARNING MATERIAL (SLM)

behaviour, a cultural trait they transmitted from generation to generation. Guiso, Sapienza, and Zingales formally tested this hypothesis, finding considerable support for it. A contemporary Italian city’s social capital, a “cultural” variable determining the success or failure of its institutions, correlates with its historical experience as a free city in the Middle Ages. 8.4.1 Classical Theories of Religion in Society The ideas of three early sociological theorists continue to strongly influence the sociology of religion: Durkheim, Weber, and Marx. Even though none of these three men was particularly religious, the power that religion holds over people and societies interested them all. They believed that religion is essentially an illusion; because culture and location influence religion to such a degree, the idea that religion presents a fundamental truth of existence seemed rather improbable to them. They also speculated that, in time, the appeal and influence of religion on the modern mind would lessen mile Durkheim, the founder of functionalism, spent much of his academic career studying religions, especially those of small societies. The totetism, or primitive kinship system of Australian aborigines as an “elementary” form of religion, primarily interested him. This research formed the basis of Durkheim's 1921 book, The Elementary Forms of the Religious Life, which is certainly the best‐known study on the sociology of religion. Durkheim viewed religion within the context of the entire society and acknowledged its place in influencing the thinking and behaviour of the members of society. Durkheim found that people tend to separate religious symbols, objects, and rituals, which are sacred, from the daily symbols, objects, and routines of existence referred to as the profane. Sacred objects are often believed to have divine properties that separate them from profane objects. Even in more‐advanced cultures, people still view sacred objects with a sense of reverence and awe, even if they do not believe that the objects have some special power. Durkheim also argued that religion never concerns only belief, but also encompasses regular rituals and ceremonies on the part of a group of believers, who then develop and strengthen a sense of group solidarity. Rituals are necessary to bind together the members of a religious group, and they allow individuals to escape from the mundane aspects of daily life into higher realms of experience. Sacred rituals and ceremonies are especially important for marking occasions such as births, marriages, times of crisis, and deaths. Durkheim's theory of religion exemplifies how functionalists examine sociological phenomena. According to Durkheim, people see religion as contributing to the health and continuation of society in general. Thus, religion functions to bind society's members by prompting them to affirm their common values and beliefs on a regular basis. Durkheim predicted that religion's influence would decrease as society modernizes. He believed that scientific thinking would likely replace religious thinking, with people giving only minimal attention to rituals and ceremonies. He also considered the concept of “God” to be on the verge of extinction. Instead, he envisioned society as promoting civil religion, in which, for 238 CU IDOL SELF LEARNING MATERIAL (SLM)

example, civic celebrations, parades, and patriotism take the place of church services. If traditional religion were to continue, however, he believed it would do so only as a means to preserve social cohesion and order. 8.4.2 Contemporary Theories of Religion in Society Early essentialists, such as Tylor and Frazer, looked for similar beliefs and practices in all societies, especially the more primitive ones, more or less regardless of time and place.They relied heavily on reports made by missionaries, discoverers, and colonial civil servants. These were all investigators who had a religious background themselves, thus they looked at religion from the inside. Typically they did not practice investigative field work, but used the accidental reports of others. This method left them open to criticism for lack of universality, which many freely admitted. The theories could be updated, however, by considering new reports, which Robert Ranulph Marett did for Tylor's theory of the evolution of religion. Field workers deliberately sent out by universities and other institutions to collect specific cultural data made available a much greater database than random reports. For example, the anthropologist E. E. Evans-Pritchard preferred detailed ethnographical study of tribal religion as more reliable. He criticised the work of his predecessors, Müller, Tylor, and Durkheim, as untestable speculation. He called them \"armchair anthropologists\". A second methodology, functionalism, seeks explanations of religion that are outside of religion; i.e., the theorists are generally atheists or agnostics themselves. As did the essentialists, the functionalists proceeded from reports to investigative studies. Their fundamental assumptions, however, are quite different; notably, they apply what is called methodological naturalism\". When explaining religion they reject divine or supernatural explanations for the status or origins of religions because they are not scientifically testable.In fact, theorists such as Marett excluded scientific results altogether, defining religion as the domain of the unpredictable and unexplainable; that is, and comparative religion is the rational (and scientific) study of the irrational. The dichotomy between the two classifications is not bridgeable, even though they have the same methods, because each excludes the data of the other. The functionalists and some of the later essentialists (among others E. E. Evans-Pritchard) have criticized the substantive view as neglecting social aspects of religion. Such critics go so far as to brand Tylor's and Frazer's views on the origin of religion as unverifiable speculation. The view of monotheism as more evolved than polytheism represents a mere preconception, they assert. There is evidence that monotheism is more prevalent in hunter societies than in agricultural societies. The view of a uniform progression in folkways is criticized as unverifiable, as the writer Andrew Lang and E. E. Evans-Pritchard assert. The latter criticism presumes that the evolutionary views of the early cultural anthropologists envisaged a uniform cultural evolution. Another criticism supposes that Tylor and Frazer were individualists (unscientific). However, some support that supposed approach as worthwhile, 239 CU IDOL SELF LEARNING MATERIAL (SLM)

among others the anthropologist Robin Horton. The dichotomy between the two fundamental presumptions - and the question of what data can be considered valid - continues. Contemporary Theories of Religion: A Critical Companion (Routledge), edited by Michael Stausberg, presents a series of reviews of some of the major “contemporary” theories of religion. The chapters are surveys of the theories and as such cannot deal with any of them in great depth. Despite this fact, the book should be a useful starting point for students interested in theory and a way for scholars of religion to get their bearings on some of the latest theories. Those more sceptical of the possibility of grand theories, whom Stausberg refers to as “anti-theorists” will probably be less satisfied since many of their concerns are, frankly, not the concern of this book. However at least one contributor, Hughes, wonders whether general theories about religion are possible at all. The vast majority of the theories come out of the cognitive science of religion. The remaining few could be divided into social-systems perspectives and rhetorical approaches that argue for a clear religious or atheist agenda. Stausberg is correct to conclude that the volume offers ample “food for further thought”, as such the book is highly recommended. 8.5 FUNCTIONS On the theoretical side, values and beliefs are often treated differently. Several authors have developed models in which culture means beliefs about the consequences of one’s actions, but where these beliefs can be manipulated by earlier generations or by experimentation. For example, Guiso, Sapienza, and Zingales show how individual beliefs are initially acquired through cultural transmission and then slowly updated through experience, from one generation to the next. They use an overlapping generation model, in which children absorb their trust priors from their parents and then, after gaining real-world experience, transmit their updated beliefs to their own children. In this setting, multiple equilibria are possible. In the no-trust-no-trade equilibrium, beliefs of mistrust are transmitted from parents to children, who eventually shun trade and therefore do not learn about the trustworthiness of the population. Conversely, in the high-trust-high-trade equilibrium, parents transmit trust beliefs to their children, which encourages trade and learning about the true trustworthiness in the population. A temporary shock to trust can move a society permanently from one equilibrium to the other. Greif integrates game-theory and sociological concepts to define the relevance of cultural beliefs. In his view, “sociologists and anthropologists consider the organization of society to be a reflection of its culture, an important component of which is cultural beliefs. Cultural beliefs are the ideas and thoughts common to several people that govern interaction—between these people and between them, their gods, and other groups—and differ from knowledge in that they are not empirically discovered or analytically proved. In general, cultural beliefs become identical and commonly maintained, and communicated.” Greif asserts there is a subset of “rational cultural beliefs, which capture people’s expectations with respect to actions that others will take in various contingencies. … Past 240 CU IDOL SELF LEARNING MATERIAL (SLM)

cultural beliefs that sustain Nash equilibria provide focal points in repeated social interactions or when there are multiple equilibria.” Still others view culture as a more primitive phenomenon embodied in values and preferences. This definition, also used in psychology emphasizes the role of emotions in motivating human behaviour. The two interpretations are not mutually exclusive. Benabou shows that values and beliefs interact systematically. He incorporates “mental constructs” into a political-economy model and shows that these mental constructs interact with institutions to generate different beliefs, which could persist over time. Empirical investigation of the relevance of culture on economic outcomes is fairly new in economics. So far, the goal of most cultural economics papers has been to establish the relevance of culture. Economists have devoted scant attention to disentangling differences between a belief and a value component. The term culture, thus far, has been ambiguous, indicating both values and beliefs. For example, views differ on inequality and redistribution. Luttmer and Singhal highlight the “value component” and show a strong cultural persistence in the formation of preferences for redistribution by documenting a correlation between preferences for redistribution among second-generation immigrants and preferences for redistribution in the country of origin. Meanwhile, Alesina and Fuchs-Schündeln and Giuliano and Spilimbergo have shown that preferences for redistribution can be affected by political regimes or macroeconomic shocks— emphasizing the beliefs aspect of culture. Similar ambiguity exists in recent studies of the role of women in society. Alesina, Giuliano, and Nunn emphasize the value components of attitudes about women’s participation in the labour force, by showing a strong correlation between female labour force today and female participation in agriculture in preindustrial societies; the origin of which originated in differences in agricultural technologies hundreds of years ago. Meanwhile, Fogli and Veldkamp and Fernandez emphasize a beliefs component to explain the increase in female labour-force participation over time. These two papers—which independently investigate how changes in culture generate changes in female labour-force participation over time— present a dynamic model of culture in which people hold heterogeneous beliefs regarding the relative long-run payoff for women who work in the market versus those who work at home. Both papers conclude that female labour-force participation has increased over time as beliefs evolve due to intergenerational learning. Economists have measured culture in three ways: by using survey data; by looking at second- generation immigrants to isolate the impact of culture, holding constant the economic and institutional environment; and by collecting experimental evidence. Fernandez details the three approaches at length. We discuss them briefly below, then turn our attention to survey data, the most commonly used method for studying the interaction between culture and institutions. The most common tool for measuring culture is through survey questions: the answers to which are aggregated at the country level to measure values and beliefs. These country-level summaries are then correlated with economic outcomes. Drawbacks to this approach include reverse causality and omitted variables. Economists have tried solving these problems in several ways, with varying success: Gorodnichenko et al., Guiso et al., and 241 CU IDOL SELF LEARNING MATERIAL (SLM)

Alesina et al. used instrumental variables, though the exclusion restriction has been problematic. Tabellini and Duranton et al. constructed cultural variables at the regional level, using country fixed effects to capture omitted cross-country differences. Tabellini has also used regional instruments to solve the problem of reverse causality and omitted variables at the regional level; however, despite progress, this does not solve the exclusion restriction problem. Alesina et al. went one step further, not only examining variation across countries and subnational districts but also using within-country variation controlling for subnational- district fixed effects. Overview on Culture ”In North’s theory, formal rules are created by the polity, whereas informal norms are “part of the heritage that we call culture.” Institutions, he says, are “the rules of the game.” Acemoglu, Johnson, and Robinson define institutions as mechanisms through which social choices are determined and implemented; they distinguish between economic institutions and political institutions. The latter are mechanisms for the distribution of political power across different socioeconomic groups. Political power, in turn, determines economic institutions. For example, in Acemoglu, institutions are represented by an indicator denoting which political pressure group in a given set has the power to control social choice. Institutional change is then the result of voluntary concessions by the controlling group, possibly under the threat of social contract. Greif defines an institution as “a system of social factors that conjointly generates a regularity of behaviour”—by “social factors,” he means “man-made, nonphysical factors that are exogenous to each person they influence,” including “rules, beliefs, norms, and organizations.” The two definitions are somewhat related, with one main difference. In North’s definition, the rules of the game are distinct from the way the game is played. Greif, on the other hand, does not regard institutions as exogenously specified rules. Instead, he treats institutions as endogenous, emphasizing that the behaviour of actors who enforce the rules of the game must be explained by institutions. According to Greif, institutions represent equilibria of a game, rather than the rules of the game. The problem with both definitions of institutions is that they overlap too much with culture, as “norms” and “conventions” are used to define both institutions and culture. This is especially true for Grief’s definition, which we find too broad and hard to quantify. Given this ambiguity, measuring culture and institutions separately would be possible only if one counts formal institutions as institutions. Thus, when we describe our measurement and when we review the literature on the interaction between culture and institutions, we refer to culture as values and beliefs and to institutions as formal institutions. Semantically speaking, we find it counterproductive and confusing to label culture as informal institutions. We find it confusing to label “everything”—from, say, the level of reciprocal trust in a society to constitutional rules about voting systems—as institutions. Clearly—this is the crux of our paper— culture and formal institutions are interrelated, but the label “informal institutions” implies that formal institutions determine informal ones, and that the latter are of secondary 242 CU IDOL SELF LEARNING MATERIAL (SLM)

importance. Once we agree that formal and informal institutions interact, and that either one may cause the other, then identifying certain values and beliefs as culture or informal institutions becomes merely a matter of semantics. We prefer the term culture over informal institutions; we find it more appropriate and less confusing. Similarly, for brevity, we sometimes refer to formal institutions simply as institutions. Formal and informal institutions can be complementary and can interact. Think, for instance, about legal formal institutions and trust. The former work better in a society with a high level of trust, at the very least because with more trust comes less litigation. Or, different cultural traits about the family and the relationships between its members affect the legal organization of the welfare state. In fact, the main theme of the present paper is precisely the study of the interaction between formal institutions and culture. Economists have measured culture in three ways: using survey data; by looking at second- generation immigrants to isolate the impact of culture, holding constant the economic and institutional environment; and by collecting experimental evidence. Fernández details the three approaches at length. We discuss them briefly below, then turn our attention to survey data, the most commonly used method for studying the interaction between culture and institutions. The most common tool for measuring culture is through survey questions, the answers to which are aggregated at the country level to measure values and beliefs. These country-level summaries are then correlated with economic outcomes. Drawbacks to Many recent papers have investigated the historical determinants of culture. Nunn summarizes the main determinants in six different groups: historical US migration, traditional farming practices, the slave trade, European history, religion, and early-childhood experiences or various episodes in a person’s life. See Nunn for all the relevant references. A recent literature has also looked at the deep roots of intergenerationally transmitted traits. For a general discussion on this topic, see Spolaore and Wacziarg. The World Values Survey is the tool most commonly used for cross-country comparison. Other barometers— the Latino Barometer, Asian Barometer, Eurobarometer, and Afro barometer, for example—focus on specific regions of the world. For the United States, it’s the General Social Survey. Another approach to calculating culture at the country level consists of taking the coefficients of the country fixed effects of a regression where the left-hand-side variable is the cultural value/belief after controlling for various individual-level characteristics. This approach solves concerns that the country-level average fails to capture the age composition of the population, differences in human capital, and so on.Most papers, starting from Knack and Keefer, follow this strategy. For a review, see Guiso, Sapienza, and Zingales. For other more recent examples, see Aghion et al., Alesina et al., Alesina and Giuliano, Alesina, Giuliano, and Nunn, Galasso and Profit, Guiso, Sapienza, and Zingales, Luttmer and Singhal this approach include reverse causality and omitted variables. Economists have tried solving these problems in several ways, with varying success: Gorodnichenko and Roland, Guiso, Sapienza, and Zingales, and Alesina, Giuliano, and Nunn used instrumental variables, though the exclusion restriction has been problematic. Tabellini and Duranton, Rodríguez-Pose, and Sandall 243 CU IDOL SELF LEARNING MATERIAL (SLM)

constructed cultural variables at the regional level, using country fixed effects to capture omitted cross-country differences. Tabellini has also used regional instruments to solve the problem of reverse causality and omitted variables at the regional level; however, despite progress, this does not solve the exclusion restriction problem. Alesina, Giuliano, and Nunn went one step further, not only examining variation across countries and subnational districts but also using within-country variation controlling for subnational-district fixed effects. The second way of measuring the role of culture, holding institutions constant, is to look at the way immigrants from different countries behave in the same destination country, typically the United States. This approach should capture vertical transmission of cultural traits.14 The literature has been using mostly second-generation immigrants, who constitute a more appropriate sample than first-generation immigrants because issues of disruption and selection due to migration are more attenuated. Though the issue of selection due to migration is mitigated, it could still be a concern. Different groups immigrated for different reasons and at different times, hence the nature of self-selection differs. Most papers discuss how the nature of self-selection biases the results. This approach involves running regressions where the left-hand-side variable is the outcome among second-generation immigrants and the dependent variable is the same outcome in the country of origin. The regressions show the relevance of culture, holding institutions constant, since immigrants face the same institutional environment. Persistence of cultural traits among second-generation immigrants has been found for female labour-force participation. Giuliano shows that living at home with parents is also a cultural trait that immigrants bring with themselves. Luttmer and Singhal look at preferences for redistribution and find that immigrants from societies where the welfare state is more generous maintain those preferences in their destination countries.16 Grosjean shows that crime levels in US counties today correlate to the settlement of the counties by herders from Scotland. The percentage of Scottish–Irish immigrants is a proxy for the prevalence of a “culture of honour” and the associated violence that were transmitted from generation to generation. In this case, the percentage of immigrants of a certain origin can be seen as a proxy for certain cultural beliefs.Fernández and Fogli find similar results for fertility. The authors use data from the European Social Survey and study immigrants in twenty-six destination countries. On the relationship between a culture of honour in the United States and the presence of Scottish–Irish immigrants, see Nisbett and Cohen. A different view on the culture of honour in the South is proposed by Wyatt-Brown. The author sees the ethos of honour at the heart of the traditional southern culture. According to the author, the defence of slavery was By observing people from different countries in the same institutional environment, the evidence coming from the study of second-generation immigrants shows that some cultural traits travel with people when they move to a society with different institutions and values. 244 CU IDOL SELF LEARNING MATERIAL (SLM)

8.6 SUMMARY  Therefore, cultural values are persistent; when immigrants move to a place with different institutions, overwhelmingly their cultural values change gradually, if ever, but rarely within two generations. Gavazzi, Petrov, and Schiantarelli go further, presenting evidence on the speed of evolution (or lack thereof) of a wide range of values and beliefs of different generations of European immigrants to the United States. This paper is the first to provide evidence of transmission beyond the second generation. They find that persistence differs greatly across cultural attitudes. Moreover, their study of higher-generation immigrants supports both evolving and persistent traits, while limiting the analysis to the second generation unduly emphasizes persistence. Further research is needed to understand which cultural traits persist (and why) and which tend to disappear more quickly.  Experimental evidence—the third tool for measuring the role of culture—has shown how people from different cultures behave differently when playing trust, public good, and ultimatum or dictator games. The classic reference is Henrich et al.’s study of small-scale societies. A critical issue with the experimental evidence is the external validity: how much can be generalized by games played with small groups and how much can one extrapolate general conclusions from them about a country, an ethnic group, et cetera? Experiments constitute an additional resource to measure cultural values such as trust, in addition to the subjective measures that can be obtained by survey data. We will review this literature more closely in section 3, where we look at the interaction between culture and institutions.  We turn our attention now to the cultural traits that have so far received the most attention in the empirical literature. In describing these variables, we refer to culture as both preferences and beliefs, without distinguishing between the two; this is the approach taken in most papers that used these measures. Generalized Trust: The most studied cultural trait is generalized trust toward others, where others refers to people the respondent does not know. The importance of this trait cannot be overemphasized. Arrow writes, “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.” This variable is measured in two ways: with surveys and laboratory experiments. In surveys, the question typically is, “Generally speaking, would you say that most people can be trusted or that you can’t be too careful when dealing with others?” Possible answers are typically either, “Most people can be trusted” or “Need to be very careful.”  This question can be found in such surveys as the many surveys ask questions regarding trust toward various institutions such as parliaments, governments, large 245 CU IDOL SELF LEARNING MATERIAL (SLM)

corporations, and banks. While in part the response to these questions may reflect cultural biases, they may simply measure the efficiency or corruption of these institutions. We don’t consider these variables in this paper. We discuss the issue of trust within a family, in the context of our treatment of cultural values regarding the family. World Values Survey (WVS), the General Social Survey (GSS), and the European Social Survey, and in most of the barometers (the Latino Barometer, the Afro barometer, the Asian Barometer, etc.). Individual characteristics such as education are positively correlated with trust.  Historically discriminated-against minorities have lower levels of generalized trust. Uslaner has shown that trust is a moral value, a persistent individual feature that doesn’t depend much on life experiences. Trust travels less well across than within racial or nationality groups. The level of trust is lower in ethnically diverse US cities and neighbourhoods. Also, people tend to trust members of their own nationality more than they trust foreigners.  This approach involves running regressions where the left-hand-side variable is the outcome among second-generation immigrants and the dependent variable is the same outcome in the country of origin. The regressions show the relevance of culture, holding institutions constant, since immigrants face the same institutional environment. Persistence of cultural traits among second-generation immigrants has been found for female labour-force participation shows that living at home with parents is also a cultural trait that immigrants bring with themselves.  Luttmer and Singhal look at preferences for redistribution and find that immigrants from societies where the welfare state is more generous maintain those preferences in their destination countries. Grosjean (forthcoming) shows that crime levels in U.S. counties today correlate to the settlement of the counties by herders from Scotland. The percentage of Scottish-Irish immigrants is a proxy for the prevalence of a “culture of honour” and the associated violence that were transmitted from generation to generation. In this case, the percentage of immigrants of a certain origin can be seen as a proxy for certain cultural beliefs. By observing people from different countries in the same institutional environment, the evidence coming from the study of second- generation immigrants shows that some cultural traits travel with people when they move to a society with different institutions and values. Therefore, cultural values are persistent; when immigrants move to a place with different institutions, overwhelmingly their cultural values change gradually, if ever, but rarely within two generations.  Gavazzi et al. go further, presenting evidence on the speed of evolution (or lack thereof) of a wide range of values and beliefs of different generations of European immigrants to the United States. This paper is the first to provide evidence of transmission beyond the second generation. They find that persistence differs greatly 246 CU IDOL SELF LEARNING MATERIAL (SLM)

across cultural attitudes. Moreover, their study of higher-generation immigrants supports both evolving and persistent traits, while limiting the analysis to the second generation unduly emphasizes persistence. Further research is needed to understand which cultural traits persist (and why) and which tend to disappear more quickly. Experimental evidence—the third tool for measuring the role of culture—has shown how people from different cultures behave differently when playing trust, public good, and ultimatum or dictator games.  The classic reference is Henrich et al.’s study of small-scale societies. A critical issue with the experimental evidence is the external validity: How much can be generalized by games played with small groups and extrapolate general conclusions from them about a country, an ethnic group etc.? Experiments constitute an additional resource to measure cultural values such as trust, in addition to the subjective measures that can be obtained by survey data. We will review this literature more closely in section 3, where we look at the interaction between culture and institutions. We turn our attention now to the cultural traits that have so far received the most attention in the empirical literature.  In describing these variables, we refer to culture as both preferences and beliefs, without distinguishing between the two; this is the approach taken in most papers that used these measures. Generalized trust the most studied cultural trait is generalized trust toward others, where others refers to people the respondent does not know. The importance of this trait cannot be overemphasized. Arrow writes, “Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence.” 8.7 KEYWORDS  Manner of Interacting- The attitudes that we convey in an attempt to get others to form certain impressions about us. According to Goffman, it is one of the sign vehicles we use to present ourselves to others, along with the setting and our appearance.  Mass Society- A large impersonal society in which individual achievement is valued over kinship ties and in which people often feel isolated from one another.  Melting Pot - A term used to refer to a pluralistic society in which people who originally come from different societies blend together to form a new society.  Multiculturalism - A term often used instead of “melting pot” to denote a pluralistic society in which the original cultural heritages of its citizens are recognized and respected. 247 CU IDOL SELF LEARNING MATERIAL (SLM)

 Neo-colonialism - Michael Harrington’s term for the tendency of the most industrialized nations to exploit less developed countries politically and economically. 8.8 LEARNING ACTIVITY 1. Create a session on Contemporary Theories of Religion in Society. ___________________________________________________________________________ ___________________________________________________________________________ 2. Create a survey on Classical Theories of Religion in Society. ___________________________________________________________________________ ___________________________________________________________________________ 8.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What is Religion? 2. Define the term Cultural? 3. Describe the term of Sociology of Religion? 4. What is meaning of Cultural Institutions? 5. Write the types of Cultural Institutions? Long Questions 1. Explain the Contemporary Theories of Religion in Society. 2. Discuss about the Classical Theories of Religion in Society. 3. Illustrate the Functions of Cultural Institutions. 4. Describe the overview of Sociology of Religion. 5. Examine the advantages of sociology. B. Multiple Choice Questions 1. Which is the control implementing through officials? a. Family b. non-formal c. Kinship d. Formal 248 CU IDOL SELF LEARNING MATERIAL (SLM)

2. What is the type of control organized through bureaucracy? a. Officials b. Informal c. Formal d. Court 3. What is the type of control organized through primary social institutions? a. Non-formal b. Formal c. Abnormal d. Informal 4. Who defined “family as more or less durable association of husband and wife with or without children or of a man or woman alone with children”? a. Ogburn & Nimcoff b. MacIver & Page c. Karve & Desai d. Srinivas &Yogendra Singh 5. What is the meaning of the term Famulus? a. Owner b. Servant c. Collection d. Group Answers 1-d, 2-c, 3-b, 4-a, 5-b 8.10 REFERENCES References book  MacQueen, K. (2002). What is Community? An Evidence-Based Definition for Participatory Public Health. American Journal of Public Health, 91, 1229-1238  Mahar, A., Cobigo, V., & Stuart H., (2013). Conceptualizing belonging. Disability and Rehabilitation, 35(12), 1026-1032. 249 CU IDOL SELF LEARNING MATERIAL (SLM)

 Mancini, J. A., Bowen, G. L., & Martin, J. A. (2005). Community Social Organization: A Conceptual Linchpin in Examining Families in the Context of Communities. Family Relations, 54(5), 570-582. Textbook references  Mancini, J. A., Nelson, J. P., Bowen, G. L., & Martin, J. A. (2006). Preventing Intimate Partner Violence: A Community Capacity Approach. Journal of Aggression, Maltreatment & Trauma, 13(3-4), 203-227.  Marsh, V. M., Kamuya, D. K., Parker, M. J., & Molyneux, C. S. (2011). Working with Concepts: The Role of Community in International Collaborative Biomedical Research. Public Health Ethics, 4(1), 26-39.  Martin, L., & Cobigo, V. (2011). Definitions matter in understanding social inclusion. Journal of Policy and Practice in Intellectual Disabilities, 8(4), 276-282. Website  https://www.econstor.eu/bitstream/10419/114123/1/dp9246.pdf  https://www.cliffsnotes.com/study-guides/sociology/religion/sociological-theories-of- religion  https://www.encyclopedia.com/history/news-wires-white-papers-and-books/cultural- institutions 250 CU IDOL SELF LEARNING MATERIAL (SLM)