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SOCI 100 (54)

Economics and Politics

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SOCI 100
Debra Pentecost

4/16/2013 10:49:00 PM Chapter 12: Economics and Politics Economics and politics are social institutions, a major sphere in social life, or societal subsystem, organized to meet human needs. The Economy: Historical Overview  Economy – social institution that organizes a society’s production, distribution and consumption of goods and services The Agricultural Revolution  Animals as plows – development of agriculture  More productive than hunting and gathering  Resulted in surpluses – not everyone had to produce food anymore  Resulted in specialized work – making tools, raising animals, building dwellings  Towns sprang up – linked by network of traders  Four factors: agricultural technology, specialized work, permanent settlements, trade The Industrial Revolution Changed the economy in five ways:  New sources of energy – steam engine (James Watt)  heavy machinery  Centralization of work in factories – moved work from home to factories  Manufacturing and mass production – turn raw materials into finished products  Specialization – repeated single task over and over, small individual contributions to finished product  Wage labour – sold their labour to strangers instead of working for themselves  Production of countless new products  raised standard of living  Unequally shared benefits of industrial technology The Information Revolution and Post-Industrial Society  Post industrial economy – productive system based on service work and high technology  Automated machinery  reduced role of human labour  Post industrial era marked by shift from industrial work to service work  Driving change: the computer  New kinds of products and new forms of communication Three Major Changes: o From tangible products to ideas – work involves manipulating symbols o From mechanical skills to literacy skills – speaking and writing well + using computers o From factories to almost anywhere – allows people to work from anywhere; high interconnectedness: ―virtual office‖  Blurs the line between work and home life Sectors of the Economy  Primary sector o Part of the economy that draws raw materials from the natural environment o Agriculture, fishing, forestry, mining – largest in low income nations  Secondary sector o Part of the economy that transforms raw materials into manufactured goods o Refining petroleum into gasoline, turning metals into cats o Globalization of industry – all of the world‘s countries derive a share of their economic output from the secondary sector o Accounts for greater economic share in low income nations than in high  Tertiary sector o Part of the economy that involves services rather than goods o Grows with industrialization o Dominates economies of middle income and high income countries o Clerical jobs, positions in food service, sales, law, healthcare, teaching, etc. Economic Systems: Paths to Justice Capitalism – An economic system in which natural resources and the means of producing foods and services are privately owned  Justice = freedom of the marketplace – anyone can produce, buy and invest according to self interest  Businesses are privately owned Three Distinctive features:  Private ownership of property o The more capitalist an economy, the more private ownership there if of wealth producing property – factories, real estate and natural resources  Pursuit of personal profit o ―natural‖ way of doing business  Competition and consumer choice o Free market system with no government interference o Consumers guide the market economy Socialism – An economy system in which natural resources and the means of producing goods and services are collectively owned  Justice = not competing to gain wealth but meeting everyone‘s basic needs in an equal matter Three Distinctive features:  Collective ownership of property o Limits rights to private property – especially ones that are used to generate income o Government controlled  Pursuit of collective goals o Entrepreneurial spirit – greedy, individualistic o Encouraged to work for the common good for all  Government control of the economy o Centrally controlled or command economy operated by the government o Small role of commercial advertising Relative Advantages of Capitalism and Socialism Economic Productivity  GDP – Measure of economic output – allows us to compare the economic performance of nations of different population sizes  Capitalist countries out produced socialist societies by a ration of 2.7 to 1  South Korea (capitalist) out produced North Korea (socialist) by 18 to 1 Economic Equality  Distribution of resources within the population  Income ratios based on the earnings of the richest 5% of the population and poorest 5% of the population  Capitalist nations had an income ratio of 10 to 1  Socialist nations: 5 to 1  Capitalist economies support a higher overall standard of living but with greater income inequality  Socialist economies – more economic equality but lower overall living standard Personal Freedom  Capitalism – freedom to pursue self-interest  Socialism – freedom from basic want  Socialist economies‘ goal of equality requires the state to regulate the economy  limits personal choices and opportunities for citizens Corporations  Corporation – core of today‘s capitalist economy – an organization with a legal existence, including rights and liabilities, apart from that of its members Economic Concentration  Largest corporations dominate our nation‘s economy  Largest Canadian corporation in terms of sales: General Motors  Highly concentrated – only give corporations exceeded revenues of $10B  Most Canadian corporations are small, family owned, self-emplyoed Corporate Linkages  Economic concentration creates conglomerates – giant corporations composed of many smaller corporations o How they form: corporations enter new markets, spin off new companies, merge with other companies o Linked because they own each other‘s stock  worldwide
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