Final - Chapter 12 Economics and Politics Flashcards
Economy
The social institution that organizes a society’s production, distribution, and consumption of goods and services.
Goods - commodities ranging from necessities (food, clothing shelter) to luxury items (cars, swimming pools, yachts).
Services - activities that benefit people (work of priests, physicians, teachers, specialists)
Note: 3 x in the past technological revolutions reorganized the economy - transforming social life: 1. agriculture revolution; 2. industrial revolution; 3. informational revolution (postindustrial)
Industrial revolutions - changes on economy
- New source of energy
- Centralization of work in factories
- Manufacturing and mass production
- Specialization
- Wage labor
Changes b/c of economy moving from industrial to postindustrial
Postindustrial economy - a productive system based on service work and computer technology.
Changes:
- From tangible products to ideas
- From mechanical skills to literacy skills
- From factories to almost anywhere
Sectors of modern economy
- Primary Sector
- the part of the economy that draws raw materials from the natural environment.
(ex. agriculture, raising animals, fishing, forestry, and mining)
- the part of the economy that draws raw materials from the natural environment.
- Secondary Sector
- the part of the economy that transforms raw materials into manufactured goods.
(ex. refining petroleum into gasoline or turning metals into tools and automobiles).
- the part of the economy that transforms raw materials into manufactured goods.
- Tertiary Sector
- the part of the economy that involves services rather than goods.
(ex. food service, clerical, sales, law, health care, advertising, and teaching).
- the part of the economy that involves services rather than goods.
Economic models - Capitalism and socialism
Capitalism - Is an economic system in which natural resources and the means of producing goods and services are privately owned.
1. Private ownership of property; 2. Pursuit of personal profit; 3. Competition and consumer choice.
Socialism - an economic system in which natural resources and the means of producing goods and services are collectively owned.
1. Collective ownership of property; 2. Pursuit of collective goals; 3. Government control of the economy.
Socialism verses Communism
Communism - Most generally, communism refers to community ownership of property, with the end goal being complete social equality via economic equality. Communism is generally seen by communist countries as an idealized utopian economic and social state that the country as a whole is working toward; that is to say that pure communism is the ideal that the People’s Republic of China is (was?) working toward. Such an ideal often justifies means (such as authoritarianism or totalitariansim) that are not themselves communist ideals.
Fundamentally, communism argues that all labor belongs to the individual laborer; no man can own another man’s body, and therefore each man owns his own labor. In this model all “profit” actually belongs in part to the laborer, not, or not just, those who control the means of production, such as the business or factory owner. Profit that is not shared with the laborer, therefore, is considered inherently exploitive.
Socialism - Most generally, socialism refers to state ownership of common property, or state ownership of the means of production. A purely socialist state would be one in which the state owns and operates the means of production. However, nearly all modern capitalist countries combine socialism and capitalism.
The University of Idaho, and any other public school or university, is a “socialist” institutions, and those who attend it or work for it are partaking in socialism, because it is owned and operated by the state of Idaho. The same is true of federal and state highways, federal and state parks, harbors etc.
Pros to capitalism and socialism
Economic Productivity: (ex - 1980’s)
- Capitalism = $13,500 per person per year.
- Socialism = $5000 per person per year.
Economic Equality: (ex. 1970s)
- Capitalist = income ratio 10 to 1 (higher standard of living but greater income inequality).
- Socialist = income ratio 5 to 1 (greater income equality but lower standard of living).
Personal Freedom:
- Capitalism = freedom to pursue self interest (many personal freedoms but also many inequalities economically, and less freedom for poor b/c lower income).
- Socialism = freedom of basic want (more equal economically, but no freedom to travel in or outside of country).
Labor Market
Shrinking of primary sector (agriculture)
- U.S. 1900’s = 40% were farmers
- U.S. 2011 = 1.6% in agriculture
- Farms of past replaced by corporate agribusinesses.
Collars:
- Blue collared = manual labor (industrialization swelled blue collared jobs by providing mass amounts of factory jobs)
- White collared = service occupations
(1950 - revolution of white collared jobs - service jobs.
Primary versus Secondary labor markets
Primary Labor Markets - market that generally consists of high-wage paying jobs, social security, and longer-lasting careers. (ex. teaching, accounting, law, plumbers etc…)
Secondary Labor Markets - labor market consisting of high-turnover, low-pay, and usually part-time or temporary work. (ex. retail, light manufacturing, etc…)
Labor Unions
Organizations that seek to improve wages and working conditions through various strategies, including negotiations and strikes.
Decline of labor unions
Due to shrinking industrial sector of the economy.
Also - laws affect union strength.
Profession
A prestigious white-collar occupation that requires extensive formal education.
(ex - ministry, medicine, law, academia, and architecture, accountancy, social work, etc.)
4 Characteristics:
- Theoretical Knowledge.
- Self-regulating practice.
- Authority over clients.
- Community orientation rather than self-interest.
Unemployment Severity
A personal problem and also caused by the economy.
In US 2012 12.2% were listed as unemployed
Underground economy
- tax evasion
- illegal drugs
- Overseas of holdings of U.S. currency.
- Crime
- illegal prostitution
- illegal gambling
Computers changing workplace
- Computers are deskilling labor.
- Computers are making work more abstract.
- Computers limit workplace interaction.
- Computers increase employers’ control of workers.
- Computers allow companies to relocate work.
Economic concentration
Largest corporations that dominate our nation’s economy. 2, 604 corporations with assets exceeding $2.5 million (81 % of all corporate assets).
example - Walmart in 2012 revenue $444 billion.
Conglomerates and Corporate Linkages
Conglomerates - giant corporations composed of many smaller corporations. (ex. PepsiCo is a conglomerate that includes Pepsi-Cola, Frito-Lay, Gatorade, Tropicana, and Quaker).
Also links b/c owning each other’s stock.
Corporations also linked through interlocking directorates, networks of people who serve as directors of many corporations.
Monopoly and Oligolpoly
Monopoly - the domination of a market by a single producer. (illegal)
Oligopoly - the domination of a market by a few producers. (legal)
Global Corporations
Largest corporations are based in the United States, Japan, and Western Europe, but their marketplace is the entire world.
Lower-income countries contain the most of the world’s people and resources and labor forces are low.
Politics
The social institution that distributes power, sets a society’s goals, and makes decisions.
Power verses authority
power - the ability to achieve desired ends despite resistance from others.
authority - power that people perceive as legitimate rather than coercive.
Max Weber’s Types of Authority
- Traditional Authority - power legitimized by respect for long -established cultural patterns.
- Rational-legal Authority - power legitimized by legally enacted rules and regulations.
- Charismatic Authority - power legitimized by extraordinary personal abilities that inspire devotion and obedience.
Contemporary Political Systems
- Monarchy - a political system in which a single family rules from generation to generation. (absolute and constitutional monarchies)
Democracy - political system that gives power to the people as a whole.
Authoritarianism - political system that denies the people participation in government.
Totalitarianism - a highly centralized political system that extensively regulates people’s lives.
Global Government
- No b/c world is still split into states BUT United Nations step towards global government.
- Multinational corporations represent new political order b/c power to shape events.
- Information Revolution brought politics to world stage (FB, email, text, twitter, etc)
- Several thousand Nongovernment Organizations (NGOs) seek to advance global issues, such as human rights and environmental protection.
