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
