economic sociology

Critical Enquiry Skills
[Name]
[Institution Affiliation]
[Date]

Question 1
The issue of executive pay is primarily a concern of companies, their management, the shareholders of these companies, the employees and all activism and regulatory groups. Below is a brief description of how each of these groups interacts with the issue:
Shareholders: these are the real owners of the company. The CEO’s salary is derived from their money, and therefore when misappropriated, it leads to losses.
The CEO: as this is his pay, its alteration and regulation concerns his livelihood.
Activists groups: with particular regard to the shareholder representative group, they are tasked with ensuring shareholders money is not wasted.
Workers Association: these fight for fair remuneration of all employees especially the lowest paid and must assume that very high executive salaries undermine a company’s inability to pay workers on the ground.
Regulatory authorities i.e. JSE: their role in ensuring proper conduct is withheld in the running of companies mandate that they investigate discrepancies in the payment of executives.
The government: with its primary role being the ensuring of sustainable livelihoods for everyone, it must be concerned with the executive pay and how it affects the productivity of cooperation as well as the income of the lower level employees.
Burrell & Morgan’s theory are correctly placed to analyze the social challenge regarding exorbitant executive pay. This is because the nature of this compensation is deemed to introduce social inequality by affecting the level of salaries that can be afforded to lower employees.

The executives are in most cases given the responsibility of adjusting the salaries of lower employs. Using the Burrell & Morgan paradigms, one may question whether the CEO can understand the plight of the workers whose challenges he has not experienced. (Lamprecht, 2014) One of the matrices for the paradigms denotes that reality must be experienced to be appreciated. This could mean that unless the CEO may have been poor at one point, the will remain ignorant of the other workers’ plight whence they are so highly paid. (“Burrell & Morgan – Sociological Paradigms”, 2016)
The paradigms are also essential tools in attempting to justify either the pay or the regulation attempts. The functionalist paradigm suggests that relationship is concrete and therefore they can be studied through science. Therefore, this case assumes that the validity of such a hefty pay can be measured and correlated with the CEO’s performance. Through the articles read, it is clear that although this is a valid proposition, its application is not as easy as it seems. (Lamprecht, 2014) Although executives put their salaries at a justifiable range, they often include variable incomes that are quite fluid and difficult to analyze through the functionalist paradigm. The chief reason for this is that the targets that have to be met for the bonuses to be awarded are concealed from the public. This eliminates the concreteness of the relationship between pay and performance as one variable is unknown. (“Burrell & Morgan – Sociological Paradigms”, 2016)
The Interpretive Paradigm is more or less the evaluation of the ‘spiritual aspect’ of the organization. It is interested in the assessment the sustainability of various practices of an environment that has been created. Although not commonly used in the organizational management, it can be used to investigate the trends in CEO trends. The current call for regulation is a global movement which indicates that excessive CEO payments are a global trend. Even where shareholders have made attempts to introduce measures that will streamline this pay, the organizations’ have found a way of introducing loopholes that will enable the executives to pay themselves more that justly deserved. It is, therefore, essential to determine why this trend persists. The interpretive paradigm would look into social beliefs, and tendencies regarding executive pay together with the structural and cultural practices that enhance his notion.
The Radical Humanist Paradigm is on the other hand seen as anti-organization but is the footstone of the current trend where shareholders and lower level employees are demanding regulations in executive pay. The impact of this paradigm is twin fold in the phenomena. On the one hand, the massive unjustified payments that are paid to executives are seen as agents of stifling better functioning of organizations as well as lower level workers. The proposed regulations would, therefore, increase equality and empower lower level employees to achieve their full potential. On the other hand, the high executive pay is often offered as a means of attracting rare brilliant talents in management. It is thus thought that better pay will undoubtedly equal to the potential of the CEO. (“Burrell & Morgan – Sociological Paradigms”, 2016)Limiting this salaries could, therefore, be seen as a way of limiting their potential. On the other hand, the already hefty salaries may limit their potential because there is not motivation to work an extra mile. In this case, clearer evaluation measures would increase their potential y ensuring that they work an extra mile to earn the extra variable income.
The Radical Structuralism Paradigm is probably the most fundamental notion in the entire global effort to change the social settings. In this paradigm, the environment constantly changes through continuous changes in systems and in particular through political and financial crises. The current call for executive pay regulation arose in the midst of the ongoing global economic recession. In the US, bailing out of banks did not produce any significant stimulus to the economy because the majority of the aid went into financing salaries. The US Securities and Exchange Commission responded to widespread calls for reform by instituting a pay-ratio rule that will determine how much a CEO can earn in relationship to the low-wage employed in the firm. (“Burrell & Morgan – Sociological Paradigms”, 2016) Global forces occur in ripple effects and therefore it is expected that the phenomenon will extend to other global economic forums. In South Africa, the JSE has already begun the process of investigating the need for this rule even though the process may take years. Indeed, the process has begun in the middle of unrest in major mining companies protesting the gap in wages. (van Niekerk, 2015)
The challenge of the executive pay can be defined through the analysis of three economic paradoxes. These paradoxes will explain why the individual who works most at the bottom of the chain earns less that the executives at the top of the chain. These paradoxes are the Tullock paradox, the Mayfield paradox, and the antitrust paradox. The Tullock paradox involves corruption in the system and argues that it is significantly cheap to bribe the politicians considering the immeasurable benefits that the bribery can choice. The Mayfield paradox argues that while it is impossible to keep everyone inside the information loop, it is also impossible to keep everyone outside as well. Eventually, we have the antitrust paradox that demonstrated that the enforcement of antitrust policies increased prices through the protection of unworthy competitor.
The Tullock paradox can be the main explanation for the phenomenon observed today. Despite the vast gap in rich-poor salaries, there is minimal political intervention. In fact, in South Africa, minimizing company strikes are often broken by heavy police action. It would, therefore, seem that political will aligns itself more closely with the company owners than with the regular employee. There are two reasons that could explain such phenomena. One is the fact that since the political class coincides with the rich, it is part of the owners of these organizations. (Mukherjee, 2010)Besides, as already seen in the Burrell & Morgan case, it may difficult for the rich politicians to understand the plight of the poor workers without experiencing them. On the other hand, the Tullock paradox applies. Wealthy executives have realized the fact that it is easier to bribe politicians who will slow down changes than effect the pay regulation requirements
The Mayfield paradox is also prevalent in the management of the issue. The executives have tried to conceal the continued discrepancies by lowering the fixed salary and elevating varying income. However, it is clear that it is not possible to keep the information out of everyone’s scope. The knowledge of this scam is widespread, and therefore shareholders are demanding for more transparent bonus awarding processes. Despite this, so much of the information is still in the dark as not everyone can be in the loop at the same time. This leaves the regulatory attempts to trial and error.
The antitrust paradox involves the gap between the CEO and the staff. The upper classes perceive hostility for the low-income earners and therefore form cartels to defend themselves. On the other hand, the low-income majority is oppressed and forms unions to defend their rights. (van Niekerk, 2015) The mistrust between these groups leads to protection of nonperforming individuals, especially in the higher levels.
To solve these paradoxes, the organization needs to begin working as units rather than competitors. This method will assume that experience is not necessary to understand things but analyzing the environment through scientific hypothesis can help explain phenomena. (Mukherjee, 2010) It is thus assumed that the executives can understand the plight of the poor without experiencing the harsh realities of economic poverty. On the other hand, the low-income groups can understand the logic behind hefty payments and accept dialogue as the way to solve hence challenges. The challenge will also be solved through such legislations that regulate pay rations. His will eliminate the possibility of corruption in the system and ensure that reforms are instituted.
Question 2
As cognitive and analytic capabilities of computers grow, they will be used to adequately model the possible outcome of any two events, manage personnel and increase the speed of strategy execution. The ability to compare two events and make an effective decision on their impacts will minimize the need for critical executives. The management decisions will depend on software application and thus the high-end salaries can be streamlined. On managing employees, there are already progressive developments such as systems that biometrically log in staff and log them out at the end of the shift. This will minimize the staff required to ascertain presence at work and hence performance. Thirdly, technology makes it faster to implement a planned strategy and thus allows companies to differentiate far more quickly and consolidate substantial market share.
Question 3
a.
Income value in $
Income per customer 18000
number of customers 150000
total income 2700000000
expenditure initial development 800000000
customer production 750000000
total cost 1550000000
Profit 1150000000
b.
Income value in $
highest Income per customer 25500
number of customers 150000
total income 3825000000
expenditure initial development 800000000
customer production 750000000
total cost 1550000000
profit 2275000000
c. We can feasibly make a loss with this drug, and if so it would be a big loss
d. 10333.33333
e. 0.741935484

References
Burrell & Morgan – Sociological Paradigms. (2016). Faculty.babson.edu. Retrieved 3 December 2016, from http://faculty.babson.edu/krollag/org_site/org_theory/Scott_articles/burrell_morgan.html
Lamprecht, I. (2014). Is CEO pay excessive?. Moneyweb. Retrieved 3 December 2016, from http://www.moneyweb.co.za/archive/is-ceo-pay-excessive/
Mukherjee, S. (2010). Modern economic theory (1st ed.). New Delhi: New Age International (P) Ltd.
van Niekerk, R. (2015). Executive pay under renewed scrutiny. Moneyweb. Retrieved 3 December 2016, from http://www.moneyweb.co.za/moneyweb-opinion/columnists/executive-pay-under-renewed-scrutiny/