Chapter 12

1. 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 • 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