1. Economics and Politics
Chapter 12
Economics and Politics

2. 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.

3. Revolutions Agricultural Revolution Industrial Revolution
New agricultural technology
Productive specialization
Permanent settlements
Trade
Industrial Revolution
Centralization of work in factories
Manufacturing and mass production
Specialization
Wage labor

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. Politics
Social institution that distributes power, sets a society’s agenda, and makes decisions.
Power – ability to achieve desired ends despite resistance from others

13. 3 basic sources of power
Force – actual or threatened use of coercion to impose one’s will on others
Influence – exercise of power through process of persuasion
Authority – power that has been institutionalized and is recognized by the people over whom it is exercised

14. 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

15. 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

16. 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

17. Political Revolution
Overthrow of one political system in order to establish another
Rising expectations
Unresponsive government
Radical leadership by intellectuals
Establishing a new legitimacy

18. Terrorism
Random acts of violence or threat used by an individual or group as a political strategy

19. War
Armed conflict among people of various societies, directed by their governments