Understanding Culture, Society, and Politics

Governor Pack Road, Baguio City, Philippines 2600

Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

ECONOMIC AND NON-STATE INSTITUTIONS

I. TOPICS:

1. Historical Overview of Economy

2. Economic Processes and Systems
3. Relationship of State and Markets
4. Non-state institutions and its typologies
5. Interrelationship of Government and Non-state Institutions

II. LEARNING OBJECTIVES:

Through discussion and the module, the learners are able to:
1. Analyze economic organization and its impacts on the lives of people in the society.
2. Recognize other forms of economic transaction such as sharing, gift exchange, and
redistribution in his/her own society.
3. Identify the functions of non-state institutions in society.
4. Evaluate the impact of interventions of non-state institutions in the process of governance of
state.

III. DISCUSSION

A. INTRODUCTION

The societal world has been through several changes, advancements, and innovations since
the dawn of the Neolithic stage. Consequently, these changes have greatly affected the social,
cultural, political, and most especially economic aspect of societies. Due to various and numerous
technological improvements, the whole economic processes have also been developed.
Form (2014) argued that the shift in the technological capacity of societies has allowed for “the
formation and extension of markets, modifications of property relations (such as the change from
feudal lord-peasant relations to contractual proprietor-tenant relations), and changes in the
organization of labor (such as the change from independent craftsmen to factories).”
In response to the changes, society was consisting of social structures and social institutions that
are governed by norms and values. Each individual in a society has specific roles and functions that
are meant to achieve societal equilibrium. The cases of human predicament show how human rights
are being violated and deposed by institutional actors such as government. The creation of state and
non-state institutions became more relevant in the advent of globalization and urbanization, as these
two institutions presented the capacity to create diverse impact ranging from the social, cultural,
economic and up to the political (University of Arizona, 2014).
In this module, you will be able to have a better understanding of some of the significant facets
of the economy – the various economic systems, banks, and other economic entities. You will also
come across different business organizations. Furthermore, you will be able to understand the
relationship between the state and market. Lastly, the succeeding sections of this module discuss the
elements of non-state institutions in relation to their background, features, and functions.

B. THE ECONOMY: HISTORICAL OVERVIEW

❖ Economy - is the social institution that organizes a society’s production, distribution, and
consumption of goods and services.
• As an institution, the economy operates, for better or worse, in a generally predictable
manner. Goods are commodities ranging from necessities (food, clothing, shelter) to
luxury items (cars, swimming pools, yachts). Services are activities that benefit others (for
example, the work of priests, physicians, teachers, and computer software specialists).
• The economies of modern high-income nations are the result of centuries of social
change. We turn now to the three technological revolutions that reorganized production
and, in the process, transformed social life.
1. Agricultural Revolution - The earliest human societies were made up of hunters and gatherers
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

living off the land. In these technologically simple societies, there was no distinct economy.
Rather, producing and consuming were part of family life.
• When people harnessed animals to plows, beginning some 5,000 years ago, a new
agricultural economy was created that was fifty times more productive than hunting and
gathering.
2. Industrial Revolution - By the mid-eighteenth century, a second technological revolution was
under way, first in England and then in North America. The development of industry was even
more powerful than the rise of agriculture in bringing change to the economy. Industrialization
changed the economy in five fundamental ways:
a. New sources of energy. Throughout history, “energy” had meant the muscle power of
people or animals. But in 1765, the English inventor James Watt introduced the steam engine.
One hundred times more powerful than animal muscles, early steam engines soon drove
heavy machinery.
b. Centralization of work in factories. Steam-powered machines soon moved work from homes
to factories, the centralized and impersonal workplaces that housed the machines.
c. Manufacturing and mass production. Before the Industrial Revolution, most people grew or
gathered raw materials such as grain, wood, or wool. In an industrial economy, the focus
shifts so that most people work to turn raw materials into a wide range of finished products
such as processed foods, furniture, and clothing.
d. Specialization. Centuries ago, people worked at home, making products from start to finish.
In the factory, a worker repeats a single task over and over, making only a small contribution
to the finished product.
e. Wage labor. Instead of working for themselves, factory workers became wage laborers
working for strangers, who often cared less for them than for the machines they operated.
• The Industrial Revolution gradually raised the standard of living as countless new products and
services fueled an expanding marketplace.
• Yet the benefits of industrial technology were shared very unequally, especially at the
beginning. Some factory owners made vast fortunes, while the majority of industrial workers lived
close to poverty. Children, too, worked in factories or in coal mines for pennies a day. Women
working in factories were among the lowest paid, and they endured special problems.
3. Information Revolution and Postindustrial Society - By about 1950, the nature of production was
changing once again. The United States was creating a postindustrial economy, a productive
system based on service work and high technology. Automated machinery (and later, robotics)
reduced the role of human labor in factory production and expanded the ranks of clerical
workers and managers.
• The postindustrial era is marked by a shift from industrial work to service work. Driving this
change is a third technological breakthrough: the computer. In general, there have
been three significant changes:
a. From tangible products to ideas. The industrial era was defined by the production of goods; in
the postindustrial era, people work with symbols. Computer programmers, writers, financial analysts,
advertising executives, architects, editors, and all sorts of consultants make up more of the labor
force in the information age.
b. From mechanical skills to literacy skills. The Industrial Revolution required mechanical skills, but
the Information Revolution requires literacy skills: speaking and writing well and, of course, knowing
how to use a computer. People able to communicate effectively are likely to do well; people
without these skills face fewer opportunities.
c. From factories to almost anywhere. Industrial technology drew workers into factories located near
power sources, but computer technology allows people to work almost anywhere. Laptop and
wireless computers and cell phones now turn the home, a car, or even an airplane in a “vir tual
office”.
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

Fig. 1: Evolution of Economy

Figure 1 is an illustration of how economy started from the ancient times up to the modern times,
as it highlights the money-driven economy represented by casinos more than the simplistic hunting
tradition.

C. ECONOMIC PROCESSES

ECONOMIC PROCESSES

1. Reciprocity
• In most situations, when you give something away, you expect something in return.
• This economic process entails the exchange of commodities between parties, often on an
individual basis.
• In reciprocity, there are no goods and services lost because it is a circular process wherein
you just receive and return the favor.
• Barter is the most common form of reciprocity, as this process includes the exchange of
• commodities between individuals.
➢ According to Marshall Sahlins (1965), there are three major types of reciprocity.

Table 1: Sahlins’ Types of Reciprocity (1965)

 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

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2. Transfers
• When resources from one individual or organization are given to another with no
expectation of return. E.g. Transfer of financial aids, government subsidies, and social
security.
3. Redistribution
• Economic redistribution occurs when the resources of one, several individuals, or groups are
collected and distributed proportionally or equally to participating members. E.g.
progressive income tax systems and charity donations.
• For instance, progressive income tax systems allow for a process of ensuring that the poorer
members of society are given ample resources to cover their basic needs through the
imposition of higher taxes among the wealthy.
• On the other hand, when wealthy people make charity donations, they get similar effects
that are highly beneficial for them. These donations can affect their social conscience or
social image, allowing them to gain public recognition and admiration.
• In less complex societies, this can be seen in the form of a tribute, a process where members
of society give gifts to their chief, expecting that the latter would ensure their group’s
economic a and political security.
• The marriage tradition of patrilineal societies known as bride price, or the transferring of
wealth from the man’s family to the woman’s family as a form of gift prior to the wedding is
an example of how redistribution occurs on a micro level. E.g. Bride price in Vanuatu.

Figure 2: Bride price in Vanuatu in the South Pacific Ocean

4. Market Transactions
• Market is referred to as the exchange of goods and services that involves buying and selling
processes.
• Market is about making money, capital, income, and growth (Women and Economy, 2011).
• Humans have several needs and wants that are deemed as bases of market sellers for
producing goods and services.
• After the production of goods and services, everything is brought to the market for the
purpose of selling.
• Buyers are then expected to purchase the available market supplies (goods and services)
for the purpose of consumption and satisfying their needs.
• The key element that separates market transactions from reciprocity and redistribution is the
use of standardized currency. It simply means that you cannot buy a can of soda from the
grocery by giving a chicken that you raised in your backyard.

D. ECONOMIC SYSTEMS
• Each country, through its government, would take various actions so that resources would be
properly allocated and wealth as much as possible, be equally distributed. To meet such
goals, states have adopted different economic systems.
1. Traditional Economy – is the economic system whereby the means of production is based on
traditions, practices, and even beliefs of the people. In this kind of economy, the people employ
the same practices which were also by their forefathers. E.g. Manual way of farming
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

2. Command Economy – the means of production is owned and controlled by the government. The
government decides what, how much, and for whom to produce.
• This particular system is seen in countries like North Korea and China, because their governments
do not only regulate but also have direct control over the economy.
3. Market Economy – the means of production in this economic system is controlled by private
enterprises. Free trade is evident. Here, the government does not directly control the market forces.
• The role of government is to regulate economic activities and provide the society what the
market does not offer, such as infrastructure, health, education, and defense. Countries that
apply capitalism like United States strongly adhere to this economic system.
4. Mixed Economy – This is a combination of the three other economic system. 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. E.g. Iceland, Sweden, France, etc.
* Economic System prevalent in the Philippines: The Philippines has a mixed economic system
because the three economic systems are seen in the country. However, the one that that is
prevalent is the market economy. Businesses are owned by private entities and not by the state.
On the other hand, the government regulates the different aspects of the market by enacting
laws, issuing licenses before a business could actually operate.

E. RELATIONSHIP OF STATE AND MARKET

• State and market are two different institutions, but they are interrelated and both perform critical
functions.
• The State, as the one that directs the nation as a whole, has a greater role in the attainment of
economic progress. Through its government, the state must be able to create laws, policies, and
programs that would be of real benefit to the nation. It is vital that the state is able to protect its
institutions from possible pressures that major actors of the market may cause.
• The State, being more dominant entity and as the protector of the welfare of the people, must
be able to regulate economic activities so as not to pose threat to the economy.

F. NON-STATE INSTITUTIONS AND ITS TYPOLOGIES

❖ Non-state Institutions – are institutions not related to the components of state. These
institutions function with minimal intervention from state institutions.
• Although states possess the official political power in a given territory, the capacity of
non-state institutions to affect the political and economic trajectory of a society cannot
be discounted.
• These non-state institutions include the following: banks and corporations, cooperatives
and trade unions, transnational advocacy groups, and developmental agencies and
international organizations. These non-state institutions are equally capable of
influencing policy formulation and implementation.
1. Banks and Corporations – There are several financial institutions that aid people in terms of money
and investments. In these institutions, everything is associated, related, and linked to money and
financial transactions.
• Banks – are known as the financial institutions that are authorized under the law to safe-keep
monetary deposits.
* Financial institutions are categorized in 5 forms:
Financial Institution Description
1. Commercial • Financial deposit with security and convenience which could be in the
Banks form of credit card, debit card, and check.
• Provides business, individual, and personal loans, enabling commercial
banks to earn interest
• Subjected to more regulations e.g. BDO, BPI, etc.
2. Investment • Financial intermediaries that perform a variety of services for businesses
Banks and some governments.
• Issue securities to the investing public. Make markets, facilitate mergers,
and other corporate reorganizations.
• Act as broker for institutional clients
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

Under the supervision of regulatory bodies such as the Securities and

•
Exchange Commission, FINRA and the US Treasury.
• Subjected to fewer regulations
E.g. PNB Capital and Investment Corporation, BPI Capital Corporation
3. Insurance • Aid individuals and companies in terms risk management and wealth
Companies preservation
• Capable of earning profit and paying claims, through their large number
of insurances
e.g. Pru Life Insurance Corp. of U.K., Philippine American Life and
General Insurance Company, Inc., etc.
4. Brokerages • Intermediaries in the transaction between buyers and sellers for the
purpose of security
• Commission-based earnings e.g. BPI Securities (BPITrade)
5. Investment • Help individuals invest funds or money with other investors to manage
companies/cor portfolios of security
porations • Purchase securities indirectly through a package product such as
mutual fund
e.g. Loan Star Lending Group Corporation
2. Cooperatives and Trade Unions – have the primary role of promoting labor welfare and good
industrial relations. They are organizations which comprises workers and laborers with common
goals, purposes, and interests. They mostly concern employment relations, decency, and
welfare. E.g. Kilusang Mayo Uno (Trade Union), Goodwill Advocacy Cooperative, etc.
3. Transnational Advocacy Group – serves as international catalysts for change. Aiming to achieve
international changes toward policies and practices. E.g. Green Peace which is popular for its
members’ active and alternative engagement of the public and concerned agencies in
relation to environmental issues.
• The pressure that transnational advocacy groups (TAGs) create in state institutions, and at
times to the general public, creates a negative image. Evans (2008) argue that
“transnational networks and corporations are considered the bad guys, whereas the
nongovernment organizations are the good guys.
• The issues being catered by the TAGs are human rights, consumers’ rights, women’s rights,
international peace and environmental issues.
4. Developmental Agencies – are organizations with specific aims and goals. The common
denominator among these organizations is the term development. These agencies concentrate
on the growth, progression, and advancement of specific societal concerns, which can be
infrastructure or social institutions.
❖ Major types of Organizations that are considered as Developmental Agencies:
a. International Organizations (NGOs) – Coppee (2011) stated that “one of the important roles
of international organizations is to translate agreed-upon values into rights and obligations.”
• The central role of international organizations is essentially to provide support and
assistance through organized framework to international cooperation. This cooperation
aims to be developed across several institutions over time. The United Nations (UN) is a
premier example based from its aims.
• They concentrate mostly on the distribution of equitable health and social
development. Also, these organizations have diverse networks that enable them to
provide and exchange support across different borders and localize their
implementations of international policies. E.g. UN and its specialized agencies,
Association of Southeast Asian Nations (ASEAN), European Union (EU), etc.
b. Nongovernmental Organizations – mostly working in limited territories, NGOs are often
characterized by their intensive collaboration with local stakeholders to improve their
beneficiaries’ conditions.
• Este (1992) defined NGOs as “those nonprofits, often voluntary, organizations that carry
a broad range of social development functions with and on behalf of people. The vast
majority of these organizations exists outside of government and, thus, their programs
emanate more from the expressed needs of people rather than from governments.”
• NGOs also aims to promote social change through their initiatives and organizational
methods. Many NGOs have targeted their efforts toward population groups that tend
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

to be undeserved by governmental programs, including women, the aged, physically

and mentally disabled persons, the poor, and various social groups that have been
marginalized by virtue of race, religion, ethnicity, caste, and social class. E.g. Philippine
Red cross, Children’s Mission Philippines, etc.

G. INTERRELATIONSHIP OF GOVERNMENT AND NON-STATE INSTITUTIONS

• Governments are faced with varying demands from its constituents. When governments are
unable to address such demands and their related issues, non-state institutions create
responses to facilitate government intervention through policy campaigns or even actual
delivery of demanded services and products.
1. Economic Alliance – Aims to promote economic improvement and, at the same time,
resolve issues concerning closed economies. The main objective is to produce economic
policies that lead to economic diversity and growth. The ASEAN Economic Community
(AEC) is one of the more recent examples of economic alliances formed by countries to
promote economic stability and sustainability in their region.
2. National security – is a state or condition where our most cherished values and beliefs, our
democratic way of life, our institutions of governance and our unity, welfare and well-being
as a nation and people are permanently protected and continuously enhanced. The
maritime dispute between China and the Philippines over the Panatag Shoal (Scarborough
Shoal) and the Spratlys has been the cause of threat to the national security of both
countries.
3. Disaster Mitigation and Risk Reduction – One of the areas where non-state institutions are
actively involved in its disaster response. In situations where logistical support is lacking, non-
state institutions often become the first responders in areas devastated by disasters. In the
aftermath of Typhoon Yolanda, Leyte and other neighboring provinces received support
from both state and non-state institutions.
4. Social Development – entails productivity, better efficiency, accomplishment, and
innovations. The pursuit of public health equity, or equal access to health systems, is one of
the foci of international organizations such as UN Development Program (UNDP) and World
Health Organization (WHO). Human rights and social justice is the focus of organizations
such as Amnesty International, Save the Children, and International Justice Mission. All of
these examples highlight the clamor for social development.

IV. ASSESSMENT:
A. Answer the following questions:
1. In what ways have the Duterte administration expanded the role of government in the
economy? In what ways have the political oppositions sought to limit the government? Limit your
answer to 6-8 sentences only.
2. How are developed and developing countries cope with the effects of a global economy?
What is the role of intergovernmental organizations in the ability of developed countries,
particularly the Philippines, to cope with the effects of the current global economy? Limit your
answer to 6-8 sentences only.
Rubrics:
Content Knowledge 2 points
Consistency of Thought & Application 3 points
Total 5 points each

B. Find and encircle all of the direction words that are hidden in the grid. The words may be hidden
in any direction. 20 points
 Understanding Culture, Society, and Politics
Governor Pack Road, Baguio City, Philippines 2600
Tel. Nos.: (+6374) 442-3316, 442-8220; 444-2786;
442-2564; 442-8219; 442-8256; Fax No.: 442-6268 Grade Level/Section: Grade 11/12
Email: email@uc-bcf.edu.ph; Website: www.uc-bcf.edu.ph

MODULE 8– UCSP Subject Teacher:

COMMAND SYSTEM BARTER RECIPROCITY

DEVELOPMENTAL AGENCIES BANKS UNITED NATIONS
INDUSTRIAL REVOLUTION BROKERAGES TRADE UNION
INFORMATION REVOLUTION TRIBUTE MIXED ECONOMY
INSURANCE COMPANIES NATIONAL SECURITY MARKET TRANSACTIONS
NON-GOVERNMENTAL ORGANIZATIONS ECONOMY SOCIAL DEVELOPMENT
TRANSNATIONAL ADVOCACY GROUPS CORPORATIONS

V. REFERENCES:
• Aguilar, M., et al. (2016) Society, Culture and Politics. Quezon City: The Phoenix Publishing
House Inc.
• Alejandria-Gonzalez, M. (2019) Understanding Culture, Society and Politics Module. Second
Edition. Makati City: DIWA LEARNING SYSTEMS INC.
• Henslin. (2006) Essentials of Sociology: A Down to Earth Approach, United States of America:
Pearson Education, Inc.
• Macionis, J., Sociology, United States of America: Pearson Education, Inc. 2012

VI. ADDITIONAL REFERENCES:

• https://www.youtube.com/watch?v=B8aV--1TMpQ: The Economy of the Philippines
(Documentary)
• https://www.youtube.com/watch?v=ZpvE04Nnqyw: Intro to Economic Institution
• https://www.youtube.com/watch?v=j_SN-Jz9rBY: Into to Non-state institutions
• https://www.youtube.com/watch?v=EJqCupjdiVg: Into to Non-state institutions
• https://corporatefinanceinstitute.com/resources/knowledge/economics/economic-system/
• https://www2.world-governance.org/article276.html: Non-state actors and World Governance