Chapter 13: The Economy and Politics Section 1: The Economic Institution

1. Chapter 13: The Economy and Politics Section 1:The Economic Institution Section 2:The Political Institution

2. Economic Basics • Everybody has needs (such as food and water) and wants (such as a new car or stereo). • Every society creates a system of roles and norms that governs the production, distribution, and consumption of goods and services. This system is called theeconomic institution. • People’s needs and wants are unlimited, but resources are limited. • Three questions of an economy: • What goods and services should be produced? • How should these goods and services be produced? • For whom should these goods and services be produced? • Answers depend on thefactors of production, or resources needed to produce goods and services (such as land and labor).

3. Economic Systems • Basic Sectors • Primary sector:extracting raw materials from the environment • Secondary sector:use of raw materials to manufacture goods • Tertiary sector: providing services • Industrial Societies • Advances in technology helps move focus to secondary sector • Higher levels of agricultural production allows for more people • Job specialization increases • Preindustrial Societies • Very little technological development • All economic activity carried out by human and animal labor • Focuses on primary sector Postindustrial Societies • Focus is on tertiary sector • Greater emphasis placed on knowledge and the collection and distribution of information

4. Economic Models • Capitalism • Capitalism:Factors of production owned by individuals; profit and competition regulate activity • Law of supply: Producers will supply products with high profit • Law of demand: Demand will increase as the price decreases • Laissez-faire capitalism: No government regulation • Free-enterprise systems:Limited government control of business • Socialism • Socialism:Factors of production owned by the government; government regulates economic activity • Economic activity controlled by social need and central governmental planning • Ideal communism is a political and economic system in which property is communally owned and social classes cease to exist All economies fall somewhere in between these two idealized systems. Over time, economies have moved toward the center of this continuum (these are known as mixed economies).

6. The American Century • Rise of Corporate Capitalism • Corporation:A business organization owned by stockholders and treated by law as if it were an individual person • Oligopoly: A few large companies control an industry • Protectionism: The use of trade barriers to protect domestic manufacturers from foreign competition • Free trade: Unrestricted trade between countries • Globalization of Corporate Capitalism • Multinational: A corporation that has factories and offices in several countries • Generally headquartered in one country • Some large multinationals have a bigger economy than some poor nations • Some sociologists see global capitalism as the decline of nation-states

7. Recent Developments • The Changing Nature of Work • In the United States, work has shifted from an industrial base to a service base. • Companies have cut costs by moving jobs to other countries and by eliminating jobs. • The service sector has not absorbed displaced workers. • E-commerce • Business conducted over the Internet • Internet allows companies to automate many purchases • Internet allows customers to purchase at home • Concerns about personal information and keeping it safe

8. Recent Developments • Trouble Ahead? • Challenges include government debt, Social Security system, subprime mortgage crisis, and rising fuel prices • About half of Americans carry debt on a credit card, with an average debt of $10,000 • The national debt is ~$18.2 trillion

9. Main Idea • What four changes have occurred in the American economy since 1900? • Rise of corporate capitalism; • Increased globalization; • Changing nature of work: industrial services; • Rise of e-commerce.

10. Sociological View of Politics • For society to run smoothly, people must often act together for the common good. • In complex societies power is exercised by the state—the primary political authority in society. • Apolitical institutionis the system of roles and norms that governs the distribution and exercise of power in society. • Political institutionshave evolved over time. • Functionalists see the state as centering on the task of maintaining order in society. • Conflict theorists look at the way in which political institution affects social change.

11. Main Idea • What are two sociological views of politics? • Functionalists analyze political institution in terms of the state; • Conflict theorists focus on how the political institution brings about social change.

12. Authority Coercion • Authority is legitimate power. • Traditional authorityis power that is based on custom. • Rational-legal authority is based on rules and regulations. • Charismatic authorityis based on the personal characteristics of an individual exercising power. • Coercion is power used through force and based on fear. • All societies use coercion to an extent, but an illegitimate system has coercion as its main method of maintaining order. • The more that a government relies on coercion, the less stable that government will be. Legitimacy of Power Legitimacy refers to whether those in power are viewed as having the right to control, or govern, others.

14. Main Idea • What type of authority is the most difficult to sustain from one leader to the next? Why? • Charismatic based on personality; public opinion of a person can change very quickly.

15. Democratic Systems • Power is exercised through the people. Those who are governed take part in the governing process. • Representational democracies are those in which voters elect representatives. • Representatives make political decisions. • Constitutional monarchies have monarchs, but ultimate power rests with elected officials. Types of Government The state is the combined political structures of a society such as the presidency, Congress, and Supreme Court in the United States. Thegovernmentis the people who direct the power of the state.

16. Conditions for Democracy • Industrialization • Most democratic societies are industrialized. • Lenski says the educated urban population of industrial societies expect a voice. • Access to Information • Democracy requires well-informed voters. • Democracies are strongest in societies where the public and media have open access to information. • Limits on Power • All governments exercise power, but in democracies there are clear limits placed on government power. • One way to do this is to spread power among many groups. Shared Values • Although the right to hold opposing views is a cornerstone of democracy, a shared set of basic values is essential.

17. Authoritarian Systems In a government based onauthoritarianism, power rests firmly with the state. However, this is not Weber’s authority of legitimate power. Anabsolute monarchyis an authoritarian system in which the hereditary ruler holds absolute power. Adictatorshipis an authoritarian system in which power is in the hands of a single individual. Ajuntais an authoritarian system in which a small group has seized power from the previous government by force. Totalitarianismoccurs when those in power exercise complete authority over the lives of individual citizens.

18. Main Idea • What are the two basic types of government? • Democratic and authoritarian

19. Multiparty Systems The Two-Party System • Nearly all elected U.S. officials since the Civil War have been members of either the Democratic Party or the Republican Party. • Critics claim that this method of election prevents growth of third parties. • Most democracies have multiparty systems in which different parties appeal to people on different issues. • This works because of proportionalrepresentation—seats in government are decided by proportions of votes. Political Parties Topics of special interest to sociologists are political parties, special-interest groups, voter participation, political models, and political socialization. A political party is an organization that seeks to gain power legitimately.

20. Who Rules the United States? Interest Groups • Interest groups leverage political power to influence policies. • They use lobbyists, monetary donations, collection of petitions, organized letter-writing campaigns, and media campaigns. Political Participation • United States has one of the lowest rates of voter participation. • Only about 60 percent of voting-age people vote. • Race and ethnicity, age, and education level affect rates of voting. Political Models • The power-elite model states that political power is exercised by and for the privileged few. • The pluralist modelstates that the political process is controlled by interest groups that compete with one another for power.

23. Main Idea • What methods do interest groups use to gain politicians’ support? • Lobbying • Campaign contributions • Petitions • Letter-writing campaigns

24. Political Socialization • Family • Children begin learning political beliefs from their parents and other relatives. • Parents may also conduct deliberate socialization activities such as taking a child to vote. • Mass Media • The political viewpoint of the mass media is not always announced directly. • Political messages become explicit during a campaign season. • School • Children recite the Pledge of Allegiance every day. • Students learn the political histories of the country and of their states. Peer Groups • People with similar characteristics tend to share political beliefs. • Economic status and age are two of the major factors that influence a person’s political views.