Chapter 2

Political Economy
 Link between economic and political systems
 Belief that economic systems will create laws / institutions that protect the economic systems

Political Economy
 Political
 Democracy
 anarchy
 Aristocracy
 Oligarchy
 dictatorship
 Monarchy
 tyranny
 Economic
 Market economy
 Traditional economy
 Command economy

Origins and Evolution of Government
 City - State:
 Sumerians (Iraq 3000BC)
 Direct Democracy:
 Athens (Greece 5th Century BC)
 Representative Democracy (Rome 500
BC)
 Middle Ages: Feudalism to Nation-
State
 Feudalism
 Absolute Monarchs v. Early Parliaments

Age of Revolutions
 Monarchs as despots
 1215 Magna Carta
 King John
 (trial by jury, due process, life, liberty, property)
 1628 Petition of Rights
 Charles I
 (unlawful detention; limited martial law)
 1688 Bill of Rights: Glorious
Revolution or Bloodless Revolution
(1688 England): constitutional monarchy;
 William and Mary
 (parliamentary elections, fair trial, freedom from excess bail, cruel and unusual punishment)

Age of Revolution
 American Revolution: constitutional democracy
 Den of terrorists
 French Revolution (1789): constitutional democracy to authoritarian regime; totalitarianism
 Russian Revolution (1917): ‘communism’
 Theory v. Reality

Modern Totalitarianism
 Communism
 Joseph Stalin (1922-1953) USSR
 Communism party supreme power
 State control economy
 Suppression of opposition
 Hostility to religion, human rights

Modern Totalitarianism
 Fascism
 Benito Mussolini (1922 - 1943) Italy
 Dictator supreme power
 Every one serve the state (Hegel)
 Extreme nationalism
 Censorship and terror

Modern Totalitarianism
 Nazism
 Adolf Hitler (1933 - 1945) Germany
 Nazi party holds supreme power
 Racial superiority
 Territorial expansion
 Elimination of ‘inferior minorities’
 Reject democracy / civil liberties

Forms of Government:
Today
 Monarchy
 Rule by one
 Hereditary Ruler
 King Abdullah, Saudi Arabia

Forms of Government:
Today
 Dictatorship
 Rule by one
 Military coup d’etat or coup
 General Pervez Musharraf (1999-
2008)
 Pakistan

Forms of Government:
Today
 Theocracy
 Rule of a few religious leaders
 Single state supported religion
 Vatican City (nation); Pope
 Iran; Islamic Republic
 Ayatollah Khomeini

Forms of Government:
Today
 Single-Party State
 Constitution allows for one party
 Or people ‘move’ to dominate party - sycophancy
 Leading member of party control party and government
 elite

Forms of government:
Today
 Direct democracy
 Athens, Ancient Greece
 Ohlone Indians, California
 Switzerland
 Referendum on laws
 Initiative
 recall

Forms of Government:
Today
 Parliamentary Democracy
 Prime Minister
 Ministers with portfolios
 Parliament ministers
 Votes of no confidence
 People elect parliament; parliament elects prime minister
 Great Britain; Canada

Forms of Government:
Today
 Presidential Democracy
 People elect president (directly or indirectly)
 People elect legislature
 Responsive to people
 Legitimacy
 Checks and balances
 Difficult to remove president
 gridlock

Distribution of Power
 Unitary system
 Centralized
 Power in national government
 Japan
 Great Britain

Distribution of Power
 Federal System
 Federalism
 National and regional (state or province) share power
 Flexible
 Experiment with policy
 Address local needs

Distribution of Power
 Confederal system
 Confederation
 States have more power than central government (national government)
 Articles of confederation - first American
Government
 South during the Civil War
 Supranational Organizations: European Union
(EU)

Economic Systems
 Basic Questions all Economic
Systems must answer
 What goods and services should be produced?
 How should these goods and services be produced?
 For Whom? How should the people share the goods and services?

Four Factors of
Production
 How should the factors of production be used?
 Land
 Labor
 Capital
 Entrepreneurship

Economic Systems:
Traditional
 Decisions are made by custom
(ancestors) - three basic questions
 Inuit of Alaska

Economic Systems:
Market Economies
 Market economy; capitalism, free enterprise
 Interaction of supply and demand
 Invisible hand: individual decisions of producers and consumers

Economic systems:
Command Economies
 Government decides three basic questions
 Socialism /Communism
 Central planners
 Problems: shortages

Economic Systems:
Mixed Economies
 Blends reliance on market forces with government involvement in the market place
 Regulation
 Inspection
 USA: market to mixed economy
 PRC: Command to mixed economy