1. Chapter Three Population and Culture
Section Two
Political and Economic Systems

2. Types of Economic Systems
Any economic system must answer three basic questions:
What and how many goods and services will be produced?
How will these products be produced?
How will these products and the wealth from their sale be distributed?

3. Traditional Economy
In many parts of the world, especially in rural and less developed areas, nearly all goods and services are consumed by one family or village.
There is little left over for trade.
These economies are also called subsistence economies.
There is little need for markets, because there are almost no excess goods to sell.

4. Market Economy
This system gives great freedom to individuals and groups.
It is also called a free enterprise system or capitalist market economy.
Private individuals or groups decide what will be produced, how much will be produced, and the prices that will be charged, for goods and services.
These decisions are influenced by the “law of supply and demand”.
The main motivation is for each individual or group to increase their economic well-being.
In “pure” capitalism, the government would play no role in the economy.
In the U.S. and other countries, the government does have some influence. It operates the post office, police, fire dept. and public schools. It also regulates employee safety and health.

5. Command Economy
An economy controlled by a single, central government is a command economy.
Nearly all decisions are made by an authoritarian leader.
The government decides what and how much will be produced. It also decides how much will be charged for goods and services.
One example of a command economy is communism.
Under a communist system, the government owns and operates all the major farms, factories, utilities and stores. Government planners decide what will be produced and how much it will cost.

6. Mixed Economy
Some nations have a mix of traditional, command, and market economies.
Socialism is an example of this sort of economy.
The basic philosophy of socialism is that the government should own and run some basic industries, such as transportation, communications, banking, coal mining, and the steel industry.
Private enterprise operates most other parts of the economy.
Socialists believe that wealth should be distributed more equally and that everyone is entitled to certain goods and services.
Socialist countries are sometimes called “welfare states” because they provide social services such as housing, health care, child care, and pensions.
To pay for these services, these countries usually impose high taxes on their citizens.

7. Types of Government
Government- the institution through which society makes and enforces its public policies and provides for its common needs
Keeping order within society
Protecting the society from outside threats
Providing some services to its people

8. Government Structure Every country contains smaller units
These may be called states, provinces, or republics
Government can be classified according to the relationship between the smaller units and the central government.
There are three classifications of government according to how a government is structured. All nations follow one of these sorts of structure

9. Unitary System The central government runs the system
The central government makes laws for the entire nation
Local governments have only those powers that the central government gives to them
Great Britain and Japan are examples of Unitary Systems

10. Federation
Some powers are given to the national government and other powers are reserved for more local governments
The United States is a federation
Our Constitution outlines the powers given to the federal and state governments

11. Confederation
Smaller political units keep their sovereignty and give the central government only very limited powers, usually in the areas of defense and foreign commerce
In the 1860’s the southern states separated from the United States and formed the Confederate States of America

12. Government Authority
There are five classifications of government according to how it exercises its authority

13. Authoritarian Leaders hold all, or nearly all, political power
Until modern times, most countries had this sort of government

14. Dictatorship
An authoritarian form of government in which power is concentrated in a small group or even a single person
Most common form of authoritarian government today
Most dictators use military force or political terror to gain and exercise power
People are not free to express their own opinions

15. Totalitarianism The most extreme form of dictatorship
The government controls every part of society: politics, economy, and personal lives
Nazi Germany under Hitler and the Soviet Union under Stalin are examples of this

16. Monarchy
The most common kind of authoritarian rule throughout most of history
Monarchs: kings, queens, pharaohs, shahs, sultans, emperors, inherit their positions by being born into a ruling family
In the past monarchs ruled as dictators, today most monarchs rule with limited or little power called a constitutional monarchy
Real power rests with a lawmaking body and the monarch serves as a national symbol
United Kingdom is an example of this today

17. Democracy
Any government where people have the power to chose their leaders and set government policy is a democracy
A constitutional monarchy can also be a democracy
Almost all democracies today are representative democracies
Eligible adult citizens elect representatives to make the country’s laws

18. The World’s Countries
There are over 200 independent countries in the world today
Four characteristics which define a country are:
Clearly defined territory
Population
Sovereignty
Government

19. Territory Territory includes: Land Water Natural resources
Largest nation in area: Russia
Smallest nation in area: Vatican City
Resources can be more important than area.
Some small nations have important resources.
This has been the cause of many wars over the centuries
National boundaries are sometimes defined by rivers or mountains.
Most are defined by treaties or agreements

20. Population
Population size does not determine the existence of a country
Some countries have large areas of land, but small populations: Canada and Australia
Some countries have small areas of land, but many people and densely populated: Japan and the Netherlands
Some have great diversity in their population: United States and India
Some populations share a similar culture and background: Sweden and Greece
Citizens are usually assured protection by their governments. In return they pay taxes, serve in the military, or carry out other obligations.

21. Sovereignty Sovereignty- A nations freedom from outside control.
It can rule itself by establishing its own policies and determining its own course of action.
A sovereign nation can act independently, deal equally with other sovereign nations, and protect its territory and citizens.
Some nations benefit from their geography to help maintain their sovereignty: United Kingdom and Switzerland
Some nation’s geography makes it difficult to defend: Belgium and Poland