THE E

CONOMY AND

POLIT

ICS

CH

AP

TE

R 1

3

BUILD ON WHAT YOU KNOW• Why might sociologists be interested in the

economy?•Consider: methods of gathering or producing food•Distribution of limited resources • Ways people earn and spend money

• How might political systems reflect the ideals of a society?•Consider: methods of election•Distribution of power•Historical factors

THE ECONOMIC INSTITUTION

• We all have basic needs (food, clothes, shelter)•All have wants as well, new car, phone, TV

• Although the wants aren’t necessary they add to quality of life

• Economic institution: system of roles/norms that governs the prod, dist, and cons, of goods and services •Results from scarcity •Must decide how best to use resources to satisfy wants/needs

THE ECONOMIC INSTITUTION

• To best decide, we ask these 3 things•1)What good/service should be produced•2)How should it be produced•3)For whom are they being produced

• These things depend on a societies factors of production: resources need to produce goods/services• Land, labor, capital, entrepreneurship

ECONOMIC SYSTEMS

• ^^^ comprise of 3 sectors:• Primary: extraction of raw materials from the enviro•Secondary: manufacturing of raw materials• Tertiary: provision of goods/services

ECONOMIC SYSTEMS

PREINDUSTRIAL ECONOMIC SYSTEMS

• Labor done by man/animal

• Majority of pop. Focuses on food production

• Labor is in the primary sector

• As tech. improves, food prod. is more efficient •More people can focus on secondary/tertiary needs

ECONOMIC SYSTEMS

INDUSTRIAL ECONOMIC SYSTEMS

• Shift from primary to secondary sector

• Agricultural productivity increases•Support a larger population

• Technological advances bring job specialization • This will increase productivity and create jobs

ECONOMIC SYSTEMS

POSTINDUSTRIAL SOCIETIES

• Tertiary becomes most important sector • Technology is a main cause in this shift

• Greater emphasis on knowledge & distribution of info •Creates admin, managerial, and professional jobs

• Results in higher standard of living•Which leads to a demand for more services

• Factors of production are owned by individuals

• Profit/competition regulate economic activity

• Minimum gov’t interference

• Industrial & postindustrial societies

• “pure” forms are ideal types

• Factors of production owned by the gov’t

• Economic activity regulated by the gov’t

• Pure form is communism

Capitalism Socialism

Economic Models

ECONOMIC MODELS

• 2 basic economic models for industrial/post societies

• Capitalism: factors of production are owned by individuals rather than the gov’t•Competition regulates econ. activity

• Socialism: factors of production are owned by the gov’t•Gov’t regulates economic activity

• No society purely has a capitalistic/socialistic econ model

CAPITALISM • Self-interest leads consumers to purchase

goods/services at lowest possible prices

• Competition ensures businesses produce goods/services wanted by consumers• For prices they’re willing to pay

• Prices in a purely capitalist system are regulated by laws of supply and demand, not gov’t• Law of supply: producers will supply more products when they can charge higher prices, fewer when they must charge lower prices • Law of demand: consumers demand more of a product as the price decreases

CAPITALISM

• Invisible hand

• Laissez-faire capitalism: “let people do as they choose”

• Gov’t regs protect consumers and promote fair business

• Limited gov’t control in a capitalist economy is known as free-enterprise systems

SOCIALISM

• Pure socialist system, econ act. Is controlled by social need and through gov’t central planning

• What to produce: based on society

• Who will produce: gov’t determines what factory/how much• No variety, one type of good

• For whom to produce: based on need, not ability to pay

• Ultimate form of socialism is communism: property is communally owned

SOCIALISM

• Under communism classes cease to exist and gov’t declines •Karl Marx: bourgeoisie vs proletariat leads to conflict

• True communism has never been achieved

• Those who adopted strong socialist economy adopt•Totalitarianism: those in power exercise complete authority over citizens

AMERICAN ECONOMY

• Major changes since the early 1900’s• Corporate capitalism & e-commerce

RISE OF CORPORATE CAPITALISM

• Corporation: business org. owned by stockholders and treated by law as if it were a person• Stockholders don’t control co.’s • Generate 88% of sales in U.S. (only 20% of business)

• Oligopoly: market sit. Where a few large firms control the industry

AMERICAN ECONOMY

• Oligopolies control prices and quality of products • Makes it difficult for competitors to enter market• Lobbying power

• Protectionism: trade barriers to protect domestic firms• Free trade: no trade barriers between countries

• Multinational Co.: any corp. that has factories/offices in several countries • (Wal-Mart has a bigger economy than 160 countries)

E-COMMERCE

• Computers have brought the greatest change to busi.

• E-commerce: business conducted over the internet

• In ’03 17M U.S. homes spent $33B on web purchases

• What is the internet really?

THE POLITICAL INSTITUTION

• In order for society to run smoothly, we exercise power: ability to control behavior of others w/ or w/o consent• The more complex the society, power is exercised by the state:

primary political authority

• Political institution: system of roles/norms that governs the dist. And exercise of power in society

• Functionalist: law creation/enforcement, settling differences w/ ppl, provision of services, est. of economic/social policies

• Conflict: how it brings social change (competition for power)

LEGITIMACY OF POWER

• Regardless of your view, soc. Are interested in legitimacy

• Legitimacy: whether those in power are viewed as having the right to control/govern

• The right to govern is based on 3 types of authority according to Max Weber• Traditional: power based on long standing customs (heredity)• Rational-legal: formals rules/regs provide basis for authority

(laws)• Charismatic: personal charac. of the individual exercising power

• Opposite of authority is coercion: illegitimate power, exercised through force/fear

TYPES OF GOVERNMENT

DEMOCRACY • Democracy: power exercised through the

people

• Monarchy: gov’t where 1 person rules • Usually divine right, currently limited power

• In most cases, monarchs are figure heads which is called a Constitutional monarchy• Power rests in elected officials

• In order for democracy to exists, you need:• Industrialization, access to info, limits on power, shared values

AUTHORITARIAN SYSTEMS

• Authoritarianism: gov’t where power rests firmly w/ the state• Public has little/no say in political

decisions

• When power resides in the hands of 1 person it is a dictatorship• Extreme authoritarianism is also

totalitarianism

• Ppl succumb to totalitarianism to escape the feelings of powerlessness and isolation • Makes people feel more secure after

giving in

AMERICAN POLITICAL SYSTEM

• Political party: org. that seeks to gain power through legitimate means• Have to appeal to voters wants/needs• U.S. considered to have two-party

system (rare in a democracy)

• Two-party system/”winner take all” rule discourages formation of minority parties • Also means parties don’t have sharp

differences • No party wants to adopt “extreme”

positions

AMERICAN POLITICAL SYSTEM

• Interest groups: org. that attempts to influence the political decision making process• 1,000’s lobbying for business, labor, medicine,

environment

• Many use PACs to collect/distribute political campaign contributions

• PACs and Super PACs contribute millions to campaigns

AMERICAN POLITICAL SYSTEM

• Political participation at the heart of democracy• U.S. has one of the lowest voter turnouts for a democratic country in

the world

• Participation varies with race, employment, and age

• If we have such a low voter turnout, who makes decisions?

• Power-elite model: political power is exercised by/for the privileged • For only making up 1% of pop. they are heavily represented in politics

• Pluralist model: interest groups control political process and compete w/ one another for power• Argue the competition prevents power from becoming concentrated in the hands of a few people