Chapter 12

Economics and Politics

Economy

• Social institution that organizes a society’s production, distribution, and consumption of goods and services.

• Social institution – an organized sphere of social life designated to meet human needs.

Revolutions

• Agricultural Revolution1. New agricultural technology2. Productive specialization3. Permanent settlements4. Trade

• Industrial Revolution1. Centralization of work in factories2. Manufacturing and mass production3. Specialization4. Wage labor

Postindustrial Economy

• Productive system based on service work and extensive use of information technology.– From tangible products to ideas– From mechanical skills to literacy skills– From factories to almost anywhere

Sectors of the Economy

• Primary – the part of the economy that draws raw materials from the natural environment

• Secondary – part of the economy that transforms raw materials into manufactured goods

• Tertiary – part of the economy that involves services rather than goods

Global economy

• Expanding global activity with little regard for national borders– Global division of labor– Products through many nations– Governments can no longer fully control

inside borders– Small number of businesses control vast

share of the world’s economic activities

Capitalism

• Economic system in which natural resources and the means of producing goods and services are privately owned.– Private ownership of property– Pursuit of personal profit– Competition and consumer choice

Socialism

• Economic system in which natural resources and the means of producing are collectively owned

• Usually seen as a step between capitalism and communism– Collective ownership of property– Pursuit of collective goals– Government control of the economy

Communism

• Economic system under which all property is communally owned and no social distinction are made on the basis of people’s ability to produce

Hybrid Systems

• Welfare Capitalism – an economic and political system that combines a mostly market-based economy with extensive social welfare programs

• State Capitalism – an economic and political system in which companies are privately owned although they cooperate closely with the government

Corporations

• An organization with a legal existence, including rights and liabilities, apart from those of their members.– Concentrated– Linked– Not highly competitive

• Monopoly – illegal domination of a market by a single produce

• Oligopoly – domination of a market by a few producers

Politics

• Social institution that distributes power, sets a society’s agenda, and makes decisions.– Power – ability to achieve desired ends

despite resistance from others

3 basic sources of power

1. Force – actual or threatened use of coercion to impose one’s will on others

2. Influence – exercise of power through process of persuasion

3. Authority – power that has been institutionalized and is recognized by the people over whom it is exercised

Weber’s authority classification

• Traditional – power legitimized by respect for long-established cultural patterns

• Rational-Legal – power legitimized by legally enacted rules and regulations

• Charismatic – power legitimized through extraordinary personal abilities that inspire devotion and obedience

Global Political Systems

• Monarchy – power is transferred from generation to generation in a single family

• Democracy – power is exercised by the people as a whole

• Authoritarianism – denies popular participation in government

• Totalitarianism – extensively regulates people’s lives

Theoretical Analysis

• Pluralist model – sees power as dispersed among many competing interest groups

• Power-elite – sees power as concentrated among the rich

• Marxist political-economy – explains politics in terms of the operation of a society’s economic system

Political Revolution

• Overthrow of one political system in order to establish another– Rising expectations– Unresponsive government– Radical leadership by intellectuals – Establishing a new legitimacy

Terrorism

• Random acts of violence or threat used by an individual or group as a political strategy

War

• Armed conflict among people of various societies, directed by their governments