Societies: facts and challenges
Vette woorden = core concepts
Lecture 1
Multilevel structure
Local (community) ex. Antwerp
Regional ex. Flanders
National (nation state) ex. BE
Supranational ex. EU
Global ex. World
18th century: Civil rights for individual freedom
19th: Political rights: to participate in exercise of political power
20th: Social rights: to live the life of a civilized being according to the
standards prevailing in the society - Social rights are government-guaranteed
rights to essential services and protections (like healthcare, education, and social
security) that enable people to live decently and participate in society.
The market: the members of a society engage in exchange, on the market.
Most markets rely on sellers offering their goods or services to buyers in
exchange for money. A PLACE! Not an actor, the market itself doesn’t do
anything. Exchange = essential feature, money isn’t
The Great Enrichment (Industrial revolution) early 19th century -Homo sapiens
invents steam engine: Economies of scale: increase of productivity; Putting out
system factory system; Urbanization: migration towards large cities (firms are
here); Paid for amount of hours worked: change in relation and meaning of work;
Deep transformation of societies
Social institutions: are the fundamental structures through which people
live, work, cooperate, and organize society. They shape how tasks, rights,
duties, and resources are distributed.
Family: The family is an informal, private, non-profit institution where people
create new members, care for each other, pool resources, and provide mutual
support. It is the oldest and most natural form of social organization.
Firm: A firm is a formal, private, for-profit institution that uses labor and capital
to produce goods and services. It emerged strongly during the Industrial
Revolution and is central to modern market economies.
Government: The government is a formal, public, non-profit institution with the
authority to create and enforce laws, collect taxes, and provide public goods. It
coordinates large, complex societies and regulates markets.
GDP: Gross Domestic Product = metric of a society’s total economic output / of
the market value of all the final goods and services produced and sold (not
resold) in a specific time period by country
,GDP per capita: GDP of a society/total number of inhabitants of that society
Commodification = the transformation of things (goods, services, labour) into
commodities that are sold on the market (Marxist notion)
Free self-regulating market = market without regulation by the government,
Ex. Russia in 1990s (Washington Consensus), Bitcoin
Civil society: voluntary associations, non-profit organizations, charities
(= formal, non-profit, private) (“fourth basic institution”)
The basic structure of a society: Describes how tasks, rights and duties, and
advantages of social cooperation are divided between the members of the
society and the basic institutions requires a “theory of justice” and a central
fault line
A central fault line: ownership and allocation of the production means
Theory of justice: what is required to divide advantages of social cooperation
Capitalism:
Private ownership of production means
Allocation of production means by free exchanges on the market (you
decide what the price is of what you own)
Adam Smith’s invisible hand
Own interest = important!
Marxism/socialism:
Collective ownership of production means
Allocation of production means by centralized planning (government
decides prices,…)
“From each according to his ability, to each according to his needs”
Welfare state:
Socialism and capitalism as extreme (utopian) basic structures on the
ideological left-right scale (intermediate positions are possible!)
Opposing views to decide allocation
= A welfare state guarantees social rights and protects citizens against
life-course risks through redistribution, social insurance, and publicly
funded services.
= Through this state, the government of a society intervenes in the play
of market forces to improve the welfare of its members
= the set of policies in which the government intervenes, power of
government is used in four directions
o Correct market failures and provide public services
, o Cover social risks
o Reduce inequalities
o Mitigate poverty
Welfare state…
o As pragmatic alternative to pure capitalism: there’s no deep
theory, just reacting to what’s happening
Most welfare states started from capitalism
o Are omnipresent
o In different forms (influenced by Marxism and corporatism)
Structural interpretation of the welfare state: as a response to societal problems
created by unregulated (free) market capitalism / as a damage-limiting, problem-
solving device
Alternative interpretation of the welfare state: from power resource theory, as
a product of interest conflicts, class struggle and class alliances / as a
result of working-class power achieved through organization by labour unions or
left parties
Corporatism:
Between Capitalism and Socialism/Marxism
Deliberation and cooperation between the institutional representatives
of capitalists (who deliver capital) and laborers (who deliver labour)
Allocation of production means by deliberation and market (what are
the terms in which we are exchanging labour?)
o Government: player / playmaker of deliberation
Inspired by guilds
Ex. social dialogue (BE) why we have many strikes
Social contract: a hypothetical contract between the citizens of the society
which describes its basic structure (founding fathers: Hobbes, Locke and
Rousseau) are re-negotiated by ppl from overlapping generations can lead
to Parametric policy reform (overall structure stays the same, change in
parameters of existing policy system) or Structural policy reform
Lecture 2
Libertarianism: political philosophy that takes individual freedom as a central
value + argues that government intervention is (morally) wrong freedom so
important that they want a world without government
Liberalism: political philosophy that takes individual freedom as a central value +
argues that governments are a tool to ensure their liberties (for all)
Authoritarianism: political philosophy that takes order and stability as central
values and justifying restrictions on individual freedoms
, The ‘nightwatchman’ state (Nozick): a state with a self-regulating free market
– government only provides the public good “safety”
Counterfactual society: we start from a benchmark model to study it because
we have a really complex world
Benchmark model, 6 assumptions what the government does about it:
1- Individuals are rational (= consistent)
nudge decision making
2- Individuals have perfect information (about price and quality)
improve information
3- Markets are perfectly competitive (many buyers and sellers, without market
power, price takers, free entry)
anti-trust policies (ensuring free entry by breaking monopolies)
4- Markets are complete (= all products are supplied >< (if not:) a missing
market)
solve incomplete market problem (creating Pareto improvements)
5- There are no public goods (no goods that are non-rival + non-excludable)
provide public goods (providing or subsidizing)
6- There are no externalities
dealing with externalities
First welfare Theorem: in the benchmark model, free exchange on a self-
regulating market leads to a Pareto efficient outcome (= Adam Smith’s invisible
hand)
Allocation is Pareto efficient when it is IMpossibile to make a Pareto
improvement (= the self-regulating market is pareto-efficiënt when the 6
conditions of the benchmark model are fulfilled)
After a Pareto improvement someone is better off and nobody is worse off
Nudging/a nudge: particular way to present the choice that alters people’s
behaviour in a predictable way without restricting options (- related term: choice
architecture)
Framing: choice depends on how it is presented
Libertarian paternalism: all the options are possible but the choice architecture
matters in your decision
Predatory pricing: pricing below cost to drive a less financially strong rival out of
the market by making it incur losses (illegal)
Exclusive contracts: signing of contracts with buyers or suppliers that commit
them not to deal with a rival (illegal)
Bundling: selling a monopolized good only in conjunction with a competitively-
supplied product to prevent customers from buying the competitive product from
rivals (illegal)
Vette woorden = core concepts
Lecture 1
Multilevel structure
Local (community) ex. Antwerp
Regional ex. Flanders
National (nation state) ex. BE
Supranational ex. EU
Global ex. World
18th century: Civil rights for individual freedom
19th: Political rights: to participate in exercise of political power
20th: Social rights: to live the life of a civilized being according to the
standards prevailing in the society - Social rights are government-guaranteed
rights to essential services and protections (like healthcare, education, and social
security) that enable people to live decently and participate in society.
The market: the members of a society engage in exchange, on the market.
Most markets rely on sellers offering their goods or services to buyers in
exchange for money. A PLACE! Not an actor, the market itself doesn’t do
anything. Exchange = essential feature, money isn’t
The Great Enrichment (Industrial revolution) early 19th century -Homo sapiens
invents steam engine: Economies of scale: increase of productivity; Putting out
system factory system; Urbanization: migration towards large cities (firms are
here); Paid for amount of hours worked: change in relation and meaning of work;
Deep transformation of societies
Social institutions: are the fundamental structures through which people
live, work, cooperate, and organize society. They shape how tasks, rights,
duties, and resources are distributed.
Family: The family is an informal, private, non-profit institution where people
create new members, care for each other, pool resources, and provide mutual
support. It is the oldest and most natural form of social organization.
Firm: A firm is a formal, private, for-profit institution that uses labor and capital
to produce goods and services. It emerged strongly during the Industrial
Revolution and is central to modern market economies.
Government: The government is a formal, public, non-profit institution with the
authority to create and enforce laws, collect taxes, and provide public goods. It
coordinates large, complex societies and regulates markets.
GDP: Gross Domestic Product = metric of a society’s total economic output / of
the market value of all the final goods and services produced and sold (not
resold) in a specific time period by country
,GDP per capita: GDP of a society/total number of inhabitants of that society
Commodification = the transformation of things (goods, services, labour) into
commodities that are sold on the market (Marxist notion)
Free self-regulating market = market without regulation by the government,
Ex. Russia in 1990s (Washington Consensus), Bitcoin
Civil society: voluntary associations, non-profit organizations, charities
(= formal, non-profit, private) (“fourth basic institution”)
The basic structure of a society: Describes how tasks, rights and duties, and
advantages of social cooperation are divided between the members of the
society and the basic institutions requires a “theory of justice” and a central
fault line
A central fault line: ownership and allocation of the production means
Theory of justice: what is required to divide advantages of social cooperation
Capitalism:
Private ownership of production means
Allocation of production means by free exchanges on the market (you
decide what the price is of what you own)
Adam Smith’s invisible hand
Own interest = important!
Marxism/socialism:
Collective ownership of production means
Allocation of production means by centralized planning (government
decides prices,…)
“From each according to his ability, to each according to his needs”
Welfare state:
Socialism and capitalism as extreme (utopian) basic structures on the
ideological left-right scale (intermediate positions are possible!)
Opposing views to decide allocation
= A welfare state guarantees social rights and protects citizens against
life-course risks through redistribution, social insurance, and publicly
funded services.
= Through this state, the government of a society intervenes in the play
of market forces to improve the welfare of its members
= the set of policies in which the government intervenes, power of
government is used in four directions
o Correct market failures and provide public services
, o Cover social risks
o Reduce inequalities
o Mitigate poverty
Welfare state…
o As pragmatic alternative to pure capitalism: there’s no deep
theory, just reacting to what’s happening
Most welfare states started from capitalism
o Are omnipresent
o In different forms (influenced by Marxism and corporatism)
Structural interpretation of the welfare state: as a response to societal problems
created by unregulated (free) market capitalism / as a damage-limiting, problem-
solving device
Alternative interpretation of the welfare state: from power resource theory, as
a product of interest conflicts, class struggle and class alliances / as a
result of working-class power achieved through organization by labour unions or
left parties
Corporatism:
Between Capitalism and Socialism/Marxism
Deliberation and cooperation between the institutional representatives
of capitalists (who deliver capital) and laborers (who deliver labour)
Allocation of production means by deliberation and market (what are
the terms in which we are exchanging labour?)
o Government: player / playmaker of deliberation
Inspired by guilds
Ex. social dialogue (BE) why we have many strikes
Social contract: a hypothetical contract between the citizens of the society
which describes its basic structure (founding fathers: Hobbes, Locke and
Rousseau) are re-negotiated by ppl from overlapping generations can lead
to Parametric policy reform (overall structure stays the same, change in
parameters of existing policy system) or Structural policy reform
Lecture 2
Libertarianism: political philosophy that takes individual freedom as a central
value + argues that government intervention is (morally) wrong freedom so
important that they want a world without government
Liberalism: political philosophy that takes individual freedom as a central value +
argues that governments are a tool to ensure their liberties (for all)
Authoritarianism: political philosophy that takes order and stability as central
values and justifying restrictions on individual freedoms
, The ‘nightwatchman’ state (Nozick): a state with a self-regulating free market
– government only provides the public good “safety”
Counterfactual society: we start from a benchmark model to study it because
we have a really complex world
Benchmark model, 6 assumptions what the government does about it:
1- Individuals are rational (= consistent)
nudge decision making
2- Individuals have perfect information (about price and quality)
improve information
3- Markets are perfectly competitive (many buyers and sellers, without market
power, price takers, free entry)
anti-trust policies (ensuring free entry by breaking monopolies)
4- Markets are complete (= all products are supplied >< (if not:) a missing
market)
solve incomplete market problem (creating Pareto improvements)
5- There are no public goods (no goods that are non-rival + non-excludable)
provide public goods (providing or subsidizing)
6- There are no externalities
dealing with externalities
First welfare Theorem: in the benchmark model, free exchange on a self-
regulating market leads to a Pareto efficient outcome (= Adam Smith’s invisible
hand)
Allocation is Pareto efficient when it is IMpossibile to make a Pareto
improvement (= the self-regulating market is pareto-efficiënt when the 6
conditions of the benchmark model are fulfilled)
After a Pareto improvement someone is better off and nobody is worse off
Nudging/a nudge: particular way to present the choice that alters people’s
behaviour in a predictable way without restricting options (- related term: choice
architecture)
Framing: choice depends on how it is presented
Libertarian paternalism: all the options are possible but the choice architecture
matters in your decision
Predatory pricing: pricing below cost to drive a less financially strong rival out of
the market by making it incur losses (illegal)
Exclusive contracts: signing of contracts with buyers or suppliers that commit
them not to deal with a rival (illegal)
Bundling: selling a monopolized good only in conjunction with a competitively-
supplied product to prevent customers from buying the competitive product from
rivals (illegal)
