1. Copyright © 2012 Pearson Education, Inc. All rights reserved. Growth of Corporate & Government Power Chapter 2 Growth of Corporate & Government Power This multimedia product and its contents are protected under copyright law. The following are prohibited by law: Any public performance or display, including transmission of any image over a network; Preparation of any derivative work, including the extraction, in whole or in part, of any images; Any rental, lease or lending of the program.

2. Copyright © 2012 Pearson Education, Inc. All rights reserved. Myth or Fact? The economy of the U.S. represents a pure form of capitalism. The economy of the U.S. represents a pure form of capitalism. The primary motivation of corporations is to turn a profit and to ensure corporate growth. The primary motivation of corporations is to turn a profit and to ensure corporate growth. MythFact

3. Copyright © 2012 Pearson Education, Inc. All rights reserved. Types of Economic Systems Capitalism refers to a system where: Capitalism refers to a system where: the means of production and distribution are privately held the means of production and distribution are privately held the profit motive is the primary force guiding people’s economic behavior the profit motive is the primary force guiding people’s economic behavior there is free competition among both producers and consumers of goods there is free competition among both producers and consumers of goods and there is minimal government intervention and there is minimal government intervention

4. Copyright © 2012 Pearson Education, Inc. All rights reserved. Types of Economic Systems Socialism refers to economies in which: Socialism refers to economies in which: the means of production and distribution are collectively held the means of production and distribution are collectively held the goods and services that people need are provided and equitably distributed the goods and services that people need are provided and equitably distributed and there is a central means of control and there is a central means of control

5. Copyright © 2012 Pearson Education, Inc. All rights reserved. Types of Economic Systems Communism refers to economies in which: Communism refers to economies in which: all goods are communally owned all goods are communally owned people would not work for wages but would give according to their abilities people would not work for wages but would give according to their abilities and there would be no scarcity of goods and services and there would be no scarcity of goods and services the state would become less important and its role would dwindle the state would become less important and its role would dwindle

6. Copyright © 2012 Pearson Education, Inc. All rights reserved. Mixed Economies Mixed economies are where there is a strong element of both capitalism and socialism. Mixed economies are where there is a strong element of both capitalism and socialism. Most industry is privately owned and oriented toward profit making; however many important industries may be state owned. Most industry is privately owned and oriented toward profit making; however many important industries may be state owned.

7. Copyright © 2012 Pearson Education, Inc. All rights reserved. The Corporate Economy Factors that distinguish corporations from individually owned businesses Factors that distinguish corporations from individually owned businesses Corporations have access to much broader source of capital than do individuals Corporations have access to much broader source of capital than do individuals Stockholders, who own the corporation, have only limited liability should the corporation be sued or go bankrupt Stockholders, who own the corporation, have only limited liability should the corporation be sued or go bankrupt The ownership of corporations is separate from the control of its policies and daily affairs The ownership of corporations is separate from the control of its policies and daily affairs

8. Copyright © 2012 Pearson Education, Inc. All rights reserved. Forms of Corporate Growth MonopoliesOligopoliesConglomerates Multinational corporations Global corporations

9. Copyright © 2012 Pearson Education, Inc. All rights reserved. Forms of Corporate Growth Monopoly: the exclusive control of a commodity or service by a single company Monopoly: the exclusive control of a commodity or service by a single company Oligopoly: the control of a commodity or service by a small number of companies Oligopoly: the control of a commodity or service by a small number of companies Conglomerate: a corporation formed by the merger or acquisition of a number of diversified industries Conglomerate: a corporation formed by the merger or acquisition of a number of diversified industries

10. Copyright © 2012 Pearson Education, Inc. All rights reserved. Forms of Corporate Growth Multinational Corporations: Multinational Corporations: Global Corporations: Global Corporations:

11. Copyright © 2012 Pearson Education, Inc. All rights reserved.Unionization The number and size of unions has grown over the past century, but they have declined some over the last few decades. The number and size of unions has grown over the past century, but they have declined some over the last few decades. The decline in unionization is due: The decline in unionization is due: to a decline in the number of blue-collar jobs to a decline in the number of blue-collar jobs to many companies relocating to states with weak unions to many companies relocating to states with weak unions to active opposition to unionization by employers to active opposition to unionization by employers to unions facing increasing hostility from the public to unions facing increasing hostility from the public

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16. The Functionalist Perspective Big government and big business are problems because they can lead to policies and practices that are inconsistent with cultural values and political and economic reality. Big government and big business are problems because they can lead to policies and practices that are inconsistent with cultural values and political and economic reality. The concentration of power becomes a social problem when some influential group believes that it is not receiving its fair share of resources and strives to do something about it. The concentration of power becomes a social problem when some influential group believes that it is not receiving its fair share of resources and strives to do something about it. The Conflict Perspective

17. Copyright © 2012 Pearson Education, Inc. All rights reserved. Is There a Power Elite in the U.S.? The Power Elite Model The Power Elite Model Argues that there exists a small group of very powerful people who make just about all the important decisions in the U. S. Argues that there exists a small group of very powerful people who make just about all the important decisions in the U. S. The power elite is a cohesive group, and the interests of its various members in the government, military, and corporate sectors tend to coincide The power elite is a cohesive group, and the interests of its various members in the government, military, and corporate sectors tend to coincide

18. Copyright © 2012 Pearson Education, Inc. All rights reserved. Is There a Power Elite in the U.S.? The Pluralist Model The Pluralist Model Views power as pluralistic, or spread over a large number of groups with divergent values, interests and goals Views power as pluralistic, or spread over a large number of groups with divergent values, interests and goals With the vote, the public can exercise some constraint over the behavior of those in power With the vote, the public can exercise some constraint over the behavior of those in power

19. Copyright © 2012 Pearson Education, Inc. All rights reserved. The World Economic System World Systems Theory World Systems Theory Posits that the world’s nations have become increasingly interdependent and are now linked in a worldwide system where some nations have more power than others. Posits that the world’s nations have become increasingly interdependent and are now linked in a worldwide system where some nations have more power than others. This network of nations includes core nations, peripheral nations, and semi-peripheral nations. This network of nations includes core nations, peripheral nations, and semi-peripheral nations.

20. Copyright © 2012 Pearson Education, Inc. All rights reserved. Problems with the Concentration of Power The concentration of power creates many problems for society including: The concentration of power creates many problems for society including: a reduction in economic competition a reduction in economic competition the dominance of corporate profit-making goals over societal goals the dominance of corporate profit-making goals over societal goals threats to democratic institutions threats to democratic institutions the dwindling of unions the dwindling of unions worker dislocation and unemployment worker dislocation and unemployment abuse of government authority abuse of government authority

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22. Future Prospects Alleviating problems related to power include: Alleviating problems related to power include: reducing the size of the government and budget deficits reducing the size of the government and budget deficits reorganizing government so that abuses are less likely reorganizing government so that abuses are less likely encouraging action by citizens that serve as a counterbalance to government and corporate power encouraging action by citizens that serve as a counterbalance to government and corporate power globalizing the labor force and establishing labor rights globalizing the labor force and establishing labor rights reorganizing the economy to reduce worker exploitation and unemployment reorganizing the economy to reduce worker exploitation and unemployment