Chapter 11

Politics and the Economy

Power and Authority

• Political system: social institution responsible for implementing and achieving society’s goals– Interacts closely with economic

system: social institution thorough which goods and services are produced, distributed, and consumed

– Politics: “who gets what, when, and how” (Lasswell)

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Power

• Sources of power in political systems– Force: actual or threatened use of coercion to

impose one’s political dissidents– Influence: exercise of power through process

of persuasion– Authority: institutionalized power recognized

by the people over whom it is exercised

█ Power: ability to exercise one’s will over others (Weber)

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Types of Authority

• Three ideal types of authority (Weber)

– Traditional authority: legitimate power conferred by custom and accepted practice

– Rational-legal authority: power made legitimate by law

– Charismatic authority: power made legitimate by leader’s exceptional personal or emotional appeal to his or her followers

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Types of Government

█ Monarchy: Form of government headed by a single member of a royal family

█ Oligarchy: Form of government in which a few individuals rule

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Types of Government█ Dictatorship and Totalitarianism

– Authoritarianism (Dictatorship): Government in which one person has nearly total power to make and enforce laws

– Totalitarianism: Involves virtually complete government control and surveillance over all aspects of a society’s social and political life

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Types of Government█ Democracy

– Government by the people

– Representative democracy: Elected members of legislatures make laws

– Direct democracy: direct participation by all citizens

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War and Peace

█ War: Conflict between organizations that possess trained combat forces equipped with deadly weapons

Legal definition typically requires formal declaration of hostilities

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War█ Global view studies how and why nations

become engaged in military conflict

█ Nation-state view stresses interaction of internal political, socioeconomic, and cultural forces

█ Micro view focuses on social impact of war on individuals and their groups

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Peace█ Peace: Absence of war and proactive

effort to develop cooperative relations among nations

– Global Peace Index: U.S. ranked 97 on list of 121 nations

– Since 1990s, 90% of armed conflicts occurred within states

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Economic Systems

█ Industrial society: Society that depends on mechanization to produce its goods and services

– Capitalism– Socialism

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The Industrial Revolution

• Brought five changes to the economy– New sources of energy– Centralization of work in factories– Manufacturing and mass production– Specialization– Wage labor

• New laws banned child labor, set minimum wage levels, improved workplace safety, and extended schooling and political rights to a large segment of the population

The Information Revolution and Postindustrial Society

• Postindustrial Economy– A productive system based on service work and

high technology

• Driving economic change: third technological breakthrough– Computer– Three important changes

• From tangible products to ideas• From mechanical skills to literacy skills• From factories to almost anywhere

Sectors of the Economy

• Primary Sector– 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

• Tertiary Sector– The part of the economy that involves

services rather than goods

Capitalism

• Four distinctive features:

– Private ownership of the means of production

– Pursuit of personal profit

– Competition

– Lack of government intervention

(Laissez-faire)

Socialism

• Three distinctive features:

– Public ownership of the means of production.

– Pursuit of collective goals.

– Centralized decision-making.

The Informal Economy

█ Informal economy: Transfer of money, goods, or services is not reported to the government

– Difficult to measure

In developing nations, informal economy represents 40% to 60% of total economic activity

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Conglomerates and Corporate Linkages

• Conglomerate– Giant corporations composed of smaller

corporations– Form as

• Corporations enter new markets• New companies spin off• Mergers

• Conglomerates are linked because they own each other’s stock

• Corporations are linked through– Interlocking directorates

• Networks of people who serve as directors of many corporations

• Linkages encourage illegal activity– Price-fixing

• Companies share information about their pricing policies

General Motors Board - Interlocking Directorates

Interlocking Directorates

Interlocking Directorates

Interlocking Directorates

Corporations: Are They Competitive?• Monopoly

– The domination of a market by a single producer– Forbidden by federal law

• Oligopoly– The domination of a market by a few producers– Legal and common

• Federal government regulates to protect the public interest– Often too little, too late, resulting in harm to millions

Corporations and the Global Economy• Corporations now account for most of the planet’s

economic output

• Biggest are based in U.S., Japan, and Western Europe– Their marketplace is the entire world

• Know that poor countries contain most of the world’s people and resources– Modernization theory – raises living standards– Dependency theorists – increase inequality

The Changing Face of the Workforce

• U.S. workforce is constantly changing– Sociologists and labor specialists

foresee workforce increasingly composed of women and racial and ethnic minorities

• 54% of new workers expected to be women from 1984 to 2014

– More diverse workforce means relationships between workers more likely to cross gender, racial, and ethnic lines

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Deindustrialization

• Deindustrialization: systematic, widespread withdrawal of investment in basic aspects of productivity– Can take the form of corporate restructuring– Downsizing: reductions in a company’s

workforce as part of deindustrialization– Social costs cannot be overemphasized

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The Globalization of Capitalism

• A New Global Structure and the Global Oppression of Workers

• Stagnant Paychecks– Trends in Leisure– Telecommuting

• The New Economic System and the Old Divisions of Wealth

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The Globalization of Capitalism

– High insecurity with layoffs, plant closings, and the prospect of more of the same

– Half of the entire country’s income goes to the richest fifth of Americans

– Only 3 percent goes to the poorest fifth

• The Global Superclass

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© 2013 Pearson Education, Inc. All rights reserved.

The Inverted Income Pyramid: The Proportion of Income Received by Each Fifth of the U.S. Population