Chapter 3: Political economy and ethics Flashcards
Economic System
Structure and processes that a country uses to allocate its resources and conduct its commercial activities
Centrally planned economy
Economic system in which a nation’s land, factories, and other economic resources are owned by the government, which plans nearly all economic activity.
Central planning is rooted in the ideology of collectivism
Just as collectivist cultures emphasize group over individual goals, a centrally planned economy strives to achieve economic and social equality for the sake of the collective, not the individual.
Factors contributing to the decline in central planning
Failure to create economic value. Eg. failed to provide quality goods at the lowest possible price.
Failure to provide incentives. Eg. there were few incentives to create new technology.
Failure to achieve rapid growth. Eg. An economic system based on private ownership fosters growth much better than one hampered by central planning.
Failure to satisfy customer needs. Eg. People were tired of low standards of living and the black market.
Mixed Economy
Economic system in which land, factories, and other economic resources are rather equally split between private and government ownership. Eg. Govt keeps control of steel, iron, oil and gas industries.
Privatization
Policy of selling government-owned economic resources to private operators. With the aim to increase economic efficiency, boost productivity and raise living standards.
Market economy
an economic system in which production and prices are determined by unrestricted competition between privately owned business.
Political economy
Study of how a country manages its affairs by using its political, economic and legal systems.
Political system
Structures, processes and activities by which a nation governs itself.
Anarchism
the belief that only individuals and private groups should control a nations political activities
Pluralism
Both public and private groups play a role in a nation’s political activities.
Totalitarianism
the belief that every aspect of peoples lives must be controlled to be effective
Totalitarian system
Political system in which individuals govern without the support of the people, tightly control people’s lives and do not tolerate opposing viewpoints. Eg. North Korea
Theocratic system
Political system under the control of totalitarian religious leaders.
Theocracy
Political system in which a country’s religious leaders are also its political leaders.
Secular totalitarianism
Political system in which leaders rely on military and beaurocratic power. Eg. Communist, tribal and right wing.
Communism
Belief that social and economic equality can be obtained only by establishing an all powerful communist party and by granting the government ownership and control over all types of economic activity. Eg. China
Socialism
Belief that social and economic equality is obtained through government ownership and regulation to the means of production.
Tribal totalitarianism
One tribe, or ethnic group, imposes its will on all others with whom it shares a national identity. Eg. Africa’s tribal borders.
Right-wing Totalitarianism
the government endorses private ownership of property and a market based economy but grants few political freedoms. Eg. Brazil 1980’s opposing communism
Democracy
Political system in which government leaders are elected directly by the wide participation of the people or by their representatives.
Representative democracy
Democracy in which citizens elect individuals from their groups to represent their political views. They provide - freedom of expression - periodic elections - full civil and property rights - minority rights - nonpolitical bureaucracies
Private sector
Segment of the economic environment comprising independently owned firms that seek to earn profits.
Capitalism
Belief that ownership of the means of production belongs in the hands of individuals and private business. Also known as the free market.
Governments role in a market economy
Antitrust (antimonopoly) laws - Laws designed to prevent companies from fixing prices, sharing markets and gaining unfair monopoly advantage.
Preserving property rights
Providing a stable fiscal and monetary environment
Preserving political stability
Legal system
Set of laws and regulations, including the processes by which a country’s laws are enacted and enforced and the ways in which its courts hold parties accountable for their actions.
Nationalism
Devotion of a people to their nations interest and advancement.
Common law
Legal system based on a country’s legal history (tradition), past causes that have come before its courts (precedent), and how laws are applied in specific situations (usage). Eg US Aus Canada
Civil law
Legal system based on a detailed set of written rules and statues that constitute a legal code. Porta Rico, Cuba, Western Europe.
Theocratic law
Legal system based on religious teachings. Eg. Islamic Hindu
United Nations
International organization formed after WW2 to provide leadership in fostering peace and stability around the world.
Intellectual property
Property that results from people’s intellectual talent and abilities.
Property rights
Legal rights to resources and income they generate.
Industrial property
Patents and trademarks
Patent
Property rights granted to the inventor of a product or process that excludes others from making, using or selling the invention.
Trademark
Property right in the form of words or symbols that distinguish a product and its manufacturer.
Copyright
Property right giving creators of original works the freedom to publish or dispose of them as they choose.
Berne convention
International treaty that protects copyrights.
Product liability
Responsibility of manufacturers, sellers, individuals, and others for damage, injury or death caused by defective products.
Value added Tax (VAT)
Tax levied on each party that adds to a product throughout its production and distribution.
Ethical behavior
Persons behavior in accordance with guidelines for good conduct or morality.
Corporate social responsibility
Practice of company’s going beyond legal obligations to actively balance commitments to investors, customers, other companies and communities.
Carbon footprint
Environmental impact of greenhouse gases (measured in units of carbon dioxide) that results from human activity.
