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The Economy and Politics
Chapter 13: The Economy and Politics
Section 1: The Economic Institution
Section 2: The Political Institution
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Economic Basics
• Everybody has needs (such as food and water) and wants (such as a
new car or stereo).
• Every society creates a system of roles and norms that governs the
production, distribution, and consumption of goods and services. This
system is called the economic institution.
• People’s needs and wants are unlimited, but resources are limited.
• Three questions of an economy:
– What goods and services should be produced?
– How should these goods and services be produced?
– For whom should these goods and services be produced?
• Answers depend on the factors of production, or resources needed
to produce goods and services (such as land and labor).
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Economic Systems
Basic Sectors
Industrial Societies
• Primary sector: extracting raw
materials from the environment
• Advances in technology helps
move focus to secondary sector
• Secondary sector: use of raw
materials to manufacture goods
• Higher levels of agricultural
production allows for more
people
• Tertiary sector: providing
services
• Job specialization increases
Preindustrial Societies
Postindustrial Societies
• Very little technological
development
• Focus is on tertiary sector
• All economic activity carried out
by human and animal labor
• Greater emphasis placed on
knowledge and the collection and
distribution of information
• Focuses on primary sector
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Economic Models
Capitalism
Socialism
• Capitalism: Factors of production
• Socialism: Factors of production
owned by the government;
government regulates economic
activity
owned by individuals; profit and
competition regulate activity
o
Law of supply: Producers will supply
products with high profit
o
Law of demand: Demand will increase as
the price decreases
• Laissez-faire capitalism: No
government regulation
• Free-enterprise systems: Limited
government control of business
• Economic activity controlled by
social need and central
governmental planning
• Ideal communism is a political
and economic system in which
property is communally owned
and social classes cease to exist
All economies fall somewhere in between these two idealized systems. Over time,
economies have moved toward the center of this continuum (these are known as mixed
economies).
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
The American Century
Rise of Corporate
Capitalism
Globalization of Corporate
Capitalism
• Corporation: A business
organization owned by
stockholders and treated by law
as if it were an individual person
• Multinational: A corporation that
has factories and offices in several
countries
• Oligopoly: A few large companies
control an industry
• Protectionism: The use of trade
barriers to protect domestic
manufacturers from foreign
competition
• Free trade: Unrestricted trade
between countries
• Generally headquartered in one
country
• Some large multinationals have a
bigger economy than some poor
nations
• Some sociologists see global
capitalism as the decline of nationstates
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Recent Developments
The Changing Nature of
Work
• In the United States, work
has shifted from an industrial
base to a service base.
• Companies have cut costs
by moving jobs to other
countries and by eliminating
jobs.
• The service sector has not
absorbed displaced workers.
E-commerce
• Business conducted over the
Internet
• Internet allows companies to
automate many purchases
• Internet allows customers to
purchase at home
• Concerns about personal
information and keeping it
safe
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Recent Developments
Trouble Ahead?
• Challenges include government debt, Social
Security system, subprime mortgage crisis, and
rising fuel prices
• About half of Americans carry debt on a credit
card, with an average debt of $10,000
• The national debt is ~$18.2 trillion
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Main Idea
What four changes have occurred in the
American economy since 1900?
1) Rise of corporate capitalism;
2) Increased globalization;
3) Changing nature of work: industrial
services;
4) Rise of e-commerce.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Sociological View of Politics
• For society to run smoothly, people must often act together for
the common good.
• In complex societies power is exercised by the state—the
primary political authority in society.
• A political institution is the system of roles and norms that
governs the distribution and exercise of power in society.
• Political institutions have evolved over time.
• Functionalists see the state as centering on the task of
maintaining order in society.
• Conflict theorists look at the way in which political institution
affects social change.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Main Idea
What are two sociological views of politics?
• Functionalists analyze political
institution in terms of the state;
• Conflict theorists focus on how the
political institution brings about social
change.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Legitimacy of Power
Legitimacy refers to whether those in power are viewed as
having the right to control, or govern, others.
Authority
Coercion
• Authority is legitimate power.
• Coercion is power used through
force and based on fear.
• Traditional authority is power
that is based on custom.
• Rational-legal authority is based
on rules and regulations.
• Charismatic authority is based
on the personal characteristics
of an individual exercising
power.
• All societies use coercion to an
extent, but an illegitimate system
has coercion as its main method
of maintaining order.
• The more that a government
relies on coercion, the less stable
that government will be.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Main Idea
What type of authority is the most difficult
to sustain from one leader to the next?
Why?
• Charismatic based on personality;
public opinion of a person can change
very quickly.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Types of Government
The state is the combined political structures of a society such as
the presidency, Congress, and Supreme Court in the United States.
The government is the people who direct the power of the state.
Democratic Systems
• Power is exercised through the people. Those who are governed
take part in the governing process.
• Representational democracies are those in which voters elect
representatives.
• Representatives make political decisions.
• Constitutional monarchies have monarchs, but ultimate power
rests with elected officials.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Conditions for Democracy
Industrialization
Access to Information
• Most democratic societies are
industrialized.
• Democracy requires wellinformed voters.
• Lenski says the educated urban
population of industrial societies
expect a voice.
• Democracies are strongest in
societies where the public and
media have open access to
information.
Limits on Power
Shared Values
• All governments exercise
power, but in democracies there
are clear limits placed on
government power.
• Although the right to hold
opposing views is a cornerstone
of democracy, a shared set of
basic values is essential.
• One way to do this is to spread
power among many groups.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Authoritarian Systems
In a government based on authoritarianism, power rests firmly with
the state. However, this is not Weber’s authority of legitimate power.
An absolute monarchy is an
authoritarian system in which the
hereditary ruler holds absolute
power.
A dictatorship is an authoritarian
system in which power is in the
hands of a single individual.
A junta is an authoritarian
system in which a small group
has seized power from the
previous government by force.
Totalitarianism occurs when
those in power exercise
complete authority over the
lives of individual citizens.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Main Idea
What are the two basic types of
government?
• Democratic and authoritarian
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Political Parties
Topics of special interest to sociologists are political parties,
special-interest groups, voter participation, political models, and
political socialization. A political party is an organization that
seeks to gain power legitimately.
Multiparty Systems
The Two-Party System
• Most democracies have multiparty
systems in which different parties
appeal to people on different
issues.
• Nearly all elected U.S. officials
since the Civil War have been
members of either the Democratic
Party or the Republican Party.
• This works because of
proportional representation—
seats in government are decided
by proportions of votes.
• Critics claim that this method of
election prevents growth of third
parties.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Who Rules the United States?
Interest Groups
• Interest groups leverage political power to influence policies.
• They use lobbyists, monetary donations, collection of petitions,
organized letter-writing campaigns, and media campaigns.
Political Participation
• United States has one of the lowest rates of voter participation.
• Only about 60 percent of voting-age people vote.
• Race and ethnicity, age, and education level affect rates of
voting.
Political Models
• The power-elite model states that political power is exercised by and
for the privileged few.
• The pluralist model states that the political process is controlled by
interest groups that compete with one another for power.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Main Idea
What methods do interest groups use
to gain politicians’ support?
• Lobbying
• Campaign contributions
• Petitions
• Letter-writing campaigns
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.
The Economy and Politics
Political Socialization
Family
Mass Media
• Children begin learning political
beliefs from their parents and
other relatives.
• The political viewpoint of the
mass media is not always
announced directly.
• Parents may also conduct
deliberate socialization activities
such as taking a child to vote.
• Political messages become
explicit during a campaign
season.
School
Peer Groups
• Children recite the Pledge of
Allegiance every day.
• People with similar
characteristics tend to share
political beliefs.
• Students learn the political
histories of the country and of
their states.
• Economic status and age are two
of the major factors that influence
a person’s political views.
Original Content Copyright © Holt McDougal. Additions and changes to the original content are the responsibility of the instructor.