Lecture 12 Economics and Politics

The Economy The economy operates in a predictable manner Goods: Commodities ranging from necessities to luxury items Services: Activities that benefit others Economies of modern high-income nations are the result of centuries of social change © 2013 Pearson Education, Inc. All rights reserved.

Agricultural Revolution The earliest societies were hunters and gatherers with no distinct economy Economy as a distinct social institution: Agricultural technology Job specialization Permanent settlements Trade © 2013 Pearson Education, Inc. All rights reserved.

The Industrial Revolution New sources of energies Steam-fueled machine operation Centralization of work in factories Impersonal factories replaced cottage industries Manufacturing and mass production Raw materials into a wide range of products Specialization Diverse division of labor and lower overall skill requirements Wage labor Working for strangers with intense supervision © 2013 Pearson Education, Inc. All rights reserved.

The Information Revolution and Postindustrial Society Postindustrial economy System of service work & high-technology Information revolution altered fundamental character of work in three ways: From tangible products to intangible ideas From mechanical skills to literacy skills From factories to almost anywhere © 2013 Pearson Education, Inc. All rights reserved.

The Size of Economic Sectors, by National Income Levels of Country

Sectors of the Economy Primary sector Generates raw materials from environment Secondary sector Transforms raw materials into manufactured goods Tertiary sector Generates services rather than goods © 2013 Pearson Education, Inc. All rights reserved.

The Global Economy Global economy–Expanding economic activity with little regard to national borders This activity has five major consequences: Global division of labor Products pass through many nations National governments no longer control the economic activity within their borders A small number of businesses now control a vast share of the world’s wealth Raises concerns about the rights and opportunities of workers © 2013 Pearson Education, Inc. All rights reserved.

Agricultural Employment in Global Perspective

Service-Sector Employment in Global Perspective

Capitalism “Justice” in a capitalist system amounts to marketplace freedom Three distinct features: Private ownership of property Pursuit of personal profit Competition and consumer choice Socialism Justice” in a socialist context is meeting everyone’s needs in roughly equal manner Three distinct features: Collective ownership of property Pursuit of collective goals Government control of the economy © 2013 Pearson Education, Inc. All rights reserved.

Alternative Systems Welfare capitalism Economic & political system that combines Market-based economy & social welfare programs State capitalism An economic & political system; companies privately owned cooperate closely with govt © 2013 Pearson Education, Inc. All rights reserved.

Capitalism vs. Socialism Economic productivity GDP is $13,500 Economic equality More income disparity Personal freedom Emphasizes freedom to pursue personal self-interest Economic productivity GDP is $5,000 Economic equality Less income disparity Personal freedom Emphasizes freedom from basic want Economic productivity GDP is $5,000 Economic equality Less income disparity Personal freedom Emphasizes freedom from basic want © 2013 Pearson Education, Inc. All rights reserved.

The Changing Pattern of Work in the United States, 1900–2011

Work in the Postindustrial Economy Labor unions Organizations of workers that seek to improve wages & conditions through various strategies Decline of unions Shrinking industrial sector Service jobs are unlikely to be unionized © 2013 Pearson Education, Inc. All rights reserved.

Professions Theoretical knowledge Self-regulated practice Authority over clients Orientation to community rather than self-interest © 2013 Pearson Education, Inc. All rights reserved.

Self-Employment, Unemployment, and Underemployment Self-employment–Earning a living without being on the payroll of a large organization Every society has some unemployment. Jobs disappear as: Occupations become obsolete Businesses change the way they do business Companies downsize or close Underemployment: Lower salaries, fewer benefits, and reduced/no pensions Many workers agree to cuts in pay and/or benefits © 2013 Pearson Education, Inc. All rights reserved.

Official U.S. Unemployment Rates for Various Categories of Adults, 2011

New Information Technology and Work Computers are de-skilling labor Computers are making work more abstract Computers limit workplace interaction Computers increase employers' control of workers Computers allow companies to relocate work © 2013 Pearson Education, Inc. All rights reserved.

Projected Increase in the Number of People in the U.S. Labor Force, 2011–2018

Corporations Economic Concentration Conglomerates and Corporate Linkages Corporations: Are They Competitive? Corporations and the Global Economy © 2013 Pearson Education, Inc. All rights reserved.

Monarchy Constitutional monarchy Symbolic heads of state Political principles rule Elected official actually rules Examples: Great Britain, Spain, Denmark Absolute monarchy Rulers claiming power based on divine right Examples: Saudi Arabia, Kuwait, Bahrain © 2013 Pearson Education, Inc. All rights reserved.

Democracy Representative democracy Authority in hands of elected leaders, accountable to the people The US isn’t truly democratic Extensive use of unelected bureaucratic officials Wealthy have more political clout than the impoverished Political economy The interplay of politics and economics Capitalist societies claim freedom while socialist societies claim security © 2013 Pearson Education, Inc. All rights reserved.

Political Freedom in Global Perspective

Other Political Systems Authoritarianism–A political system that denies popular participation in government Authoritarian government is indifferent to people’s needs Examples: Saudi Arabia, Bahrain, Ethiopia Totalitarianism A highly centralized political system that extensively regulates people’s lives Seeks to bend people to the will of the government Vietnam, North Korea © 2013 Pearson Education, Inc. All rights reserved.

The Rise of the Welfare State Individualism Welfare state–Government agencies and programs provide benefits to population One in seven US workers is a government employee The US welfare state is still smaller than those of many other high-income nations. © 2013 Pearson Education, Inc. All rights reserved.

Special-Interest Groups Special-interest groups Strong in nations where political parties tend to be weak Employ lobbyists to work on their behalf Political action committee (PAC) Organization formed by a special-interest group, independent of political parties, to raise And spend money in support of political goals © 2013 Pearson Education, Inc. All rights reserved.

Sources Macionis, John J Society: The Basics (Twelfth Edition). Boston, MA: Pearson 28