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The Economy and Politics. Chapter 13. The Economic Institution. Everybody has needs (such as food and water) and wants (such as a new car or stereo).
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The Economy and Politics Chapter 13
The Economic Institution • 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.
The Economic Institution • 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).
The Economic Institutions • Basic Sectors • Primary sector:extracting raw materials from the environment • Secondary sector:use of raw materials to manufacture goods • Tertiary sector: providing services
The Economic Institution • Industrial Societies • Advances in technology helps move focus to secondary sector • Higher levels of agricultural production allows for more people • Job specialization increases
The Economic Institution • Preindustrial Societies • Very little technological development • All economic activity carried out by human and animal labor • Focuses on primary sector
The Economic Institution Postindustrial Societies • Focus is on tertiary sector • Greater emphasis placed on knowledge and the collection and distribution of information
The Economic Institution • 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
The Economic System • 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
The Economic System • 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).
The Economic System • 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
The Economic System • 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
The Economic System • 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
The Economic System • 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
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
The Economic System • 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.
The Political System • 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.
The Political System • 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.
The Political System • 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.
The Political System The Legitimacy of Power • Legitimacy refers to whether those in power are viewed as having the right to control, or govern, others
The Political System • 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.
The Political System • 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
The Political System • 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.
The Political System 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.
The Political System 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.
The Political System Conditions for Democracy • Industrialization • Access to Information • Limits on Power • Shared Values
The Political System • Industrialization • Most democratic societies are industrialized. • Lenski says the educated urban population of industrial societies expect a voice.
The Political System • Access to Information • Democracy requires well-informed voters. • Democracies are strongest in societies where the public and media have open access to information.
The Political System • 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.
The Political System Shared Values • Although the right to hold opposing views is a cornerstone of democracy, a shared set of basic values is essential.
The Political System In a government based onauthoritarianism, power rests firmly with the state. However, this is not Weber’s authority of legitimate power
The Political System Types of Authoritarian Systems • Absolute Monarchy • Dictatorship • Junta • Totalitarianism
The Political System • 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.
The Political System • 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.
Main Idea • What are the two basic types of government? • Democratic and authoritarian
The Political System 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.
The Political System Multiparty Systems • 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.
The Political System 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.
The Political System American Politics 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.
The Political System American Politics 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.
The Political System American Politics 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.
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.