Ch. 13
Politics and the Economy
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The Transformation of Economic
Systems
 Economy (Market):
 The mechanism by which values are established in order to exchange
goods and services
 The system of distribution of goods and services
 Essential to our welfare
 Radically different today than in the past
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The Transformation of Economic
Systems
 Preindustrial Societies: Birth of Inequality
 Hunting and Gathering Societies
 High degree of social equality
 Pastoral and Horticultural Societies
 Surplus; trade between groups
 Agricultural Societies
 The invention of the plow; specialized division of labor
 Increasing Social and Economic Inequalities
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The Transformation of Economic
Systems
 Industrial Societies: Birth of the Machine
 Brought Previously Unseen Surpluses
 Conspicuous Consumption
 Factories Exploited Labor
 More Efficient Machines Led to Conspicuous Consumption
 Postindustrial Societies: Birth of Information Age
 Service Sector
 Vast Surplus of Goods
 Extensive Trade among Nations
 Wider Variety and Quantity of Goods
 Information Explosion
 Global Village
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World Economic Systems-Capitalism
Capitalism: Three components
 Private Ownership of Means of Production
 Market Competition
 Pursuit of Profit
 Laissez-Faire Capitalism – Government is not
involved in decision making
 Welfare or State Capitalism – Individuals have
certain rights but are overseen by the government –this
is the U.S. economy
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World Economic Systems-Socialism
Socialism - Three components:
 Public Ownership of Means of Production
 Central Planning
 Distribution of Goods without Profit Motive
 Needs Decided by Central Committee
 Designed to Eliminate Competition
 Everyone Works for the Government
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The Convergence of Capitalism
and Socialism
 Criticism of Capitalism: leads to social inequality
 Criticism of Socialism: not respecting individual rights
 Both capitalist and socialist systems have adopted features
from the other
 The convergence theory refers to the growing similarities
shared by capitalism and socialism
 i.e. Western banks in China, unemployment compensation in
the U.S.
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Work in the Postindustrial Economy
 The dual labor market
 Primary labor market–Jobs that provide extensive benefits to
workers
 Secondary labor market–Jobs that provide minimal benefits to
workers
 Labor unions–Organizations of workers that seek to improve wages and
working conditions through various strategies
 Decline of unions
 Shrinking industrial sector
 Service jobs are unlikely to be unionized.
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Self-Employment, Unemployment, and
Underemployment
 Involves exchange of goods and services not reported to the government,
including from work done “ on the side” and from illegal activities (drug
dealing)
 Undocumented workers – over 1 million
 Self-employment–Earning a living without being on the payroll of a large
organization
 Underemployment: Lower salaries, fewer benefits, and reduced/no pensions
 Many workers agree to cuts in pay and/or benefits.
 Jobs disappear as:
 occupations become obsolete.
 businesses change the way they do business.
 companies downsize or close.
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The Underground Economy
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Economic activity involving income not reported to
the government as required by law
 Most of us occasionally participate in the underground
economy in small ways.
 Much of the underground economy is due to criminal
activity.
 The largest segment is people who fail to report legally
earned income on their tax returns.
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Race and Gender in the Workplace
 In the past, white men have been the mainstay of the US
labor force.
 In the future, more workers will be women and minorities.
 The workplace must develop programs and policies that
meet the needs of a socially diverse workforce and encourage
everyone to work together effectively and respectfully.
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New Information Technology
and Work
 Computers are de-skilling labor (McDonaldization).
 Computers are making work more abstract.
 Computers limit workplace interaction.
 Computers increase employers' control of workers.
 Computers allow companies to relocate work.
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The Globalization of Capitalism
 Stagnant Paychecks: the productivity of U.S. workers has
increased year after year, yet inflation and cost of living has
affected the value of a paycheck
 New Economic System and Old Divisions of Wealth: U.S.
worker face high insecurities in the workplace with layoffs
and plant closings. Many are affected by outsourcing. The
wealthy are not really affected by the current recession.
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The Globalization of Capitalism
The Global Superclass: this term refers to the leaders of
the globe’s top multinational companies
 This class is very powerful and wealthy
 They have access to the top circle of political power
around the globe
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Corporations
Organizations with a legal existence, including
rights and liabilities, apart from those of its members
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 A few large corporations dominate the US economy.
 Economic concentration has created the conglomerate, a giant
corporation comprising many smaller corporations.
 Federal law forbids monopoly, the domination of a market by a
single producer.
 Oligopoly, the domination of a market by a few producers, is
legal and common.
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Global Capitalism and Our Future
 Global Trade will continue to increase
 Elimination of Tariffs
1) The Most Industrialized Nations will continue to garner the world’s
wealth
2) A major concern is that economic inequality will increase between rich
and poor nations and within rich and poor nations
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Politics
Democracy and Human Rights:
Having our Say
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The U.S. Political System
Republicans
 Older
 Middle to Upper Social
Classes
 Conservative
 Less government
Democrats
 Younger
 Minority Groups
 Women more than men
 Liberal
 Working classes
 More government
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Voting Patterns
 Non-Hispanic Whites most likely to vote
 Men and women tend to vote for different presidential
candidates
 The more people feel they have a stake in the system, the
more likely they are to vote
 Voter Apathy is present in the U.S.: indifference to votingWhy is it so widespread?
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Political Power in American Society: The Vote
Regular and Fair Elections?
 Voting is:
 an important source of power for citizens
 it enables people to remove incompetent, corrupt, or insensitive
officials from office
 To influence issues at the local, state, and national levels.
 In current U.S. practice, voting has severe limitations as a
means of exercising power.
 the range of candidates from which to choose is restricted
 the high cost of political campaigns reinforces the limited choice of
political candidates
 the exercise of power by those at the top of the American political
structure
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Lobbyists and
Special Interests
Special Interest Groups:
People Who Think Alike on a Particular Issue and
Mobilize for Political Action
Lobbyists:
People Paid to Influence Legislation who work for
Special Interest groups
 Often times, lobbyists are people who are retired from
the government
 The main criticism of Special Interest groups and
Lobbyists are that they buy votes
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Functionalist
Perspective
Functionalist Perspective: Pluralism (Diffusion
Among Many)
 The functionalist perspective believes that the U.S. is
ruled by many different groups
 There is a check and balance between the main branches
of the government: Legislative, Judicial, and Executive
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Conflict
Perspective
Conflict Perspective: The
Power Elite/Ruling Class
-Elites rule the government
(Mills and Dumhoff)
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Nationalism and the Nation-State
• For millennia people lived in small bands
and tribes that often allowed a great deal of
participation in governance by many or all
members.
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Nationalism – is the intense belief in the worth, rightness, and glory of one’s own
nation
Nation – an independent entity with full sovereignty
Sovereignty – a nation is sovereign when it answers to no higher power, except as
it may freely enter into treaties
State – term used by political scientists to refer to a sovereign government entity
Nation-state – a sovereign entity that represents the interests of people who share
a common culture, presumably a common language, as well as a common territory
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Democracy and Its Alternatives
 Democracy has been tried since ancient times, but
has often seemed unwieldy and fractious compared
to its alternatives.
 Democracy – or rule by the people
 Monarchy – or rule by a hereditary leader
 City-state – is a city that functions as an autonomous unit under its
own leadership (e.g., ancient Athens)
 Oligarchy – is rule by a powerful elite
 One-party system – governmental system that gives control to a
single party
 Two-party system – governmental system that includes two active
political parties
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Why is Democracy important?
• Many social scientists believe that it is a mechanism
that convinces us that we have some sort of power
when we actually don’t.
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This idea of Democracy…
…according to Joseph Stiglitz (Economist) is that it’s being
reconfigured and it’s changing.
 Stiglitz’s concepts:
-Democratic Deficit—gap between informal/intrinsic and
substantive rights.
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 Intrinsic rights: basic rights, freedom of speech—values
important to people
-instrumental mechanism in that if there were certain problems in
society then democracy as a process allows for that info to pass and
be disseminated —allows us to call out and hold governments
somewhat responsible/accountable.
 Substantive rights: crucial issue—what happens in
practice—US doesn’t do very well.
-Example: The average life of a Black male in Harlem is less than a
Bangladeshi
-ability to exercise those rights?
-What happens in cases where your social/intrinsic rights are being violated? Then it
affects your ability to participate in general, your community, vote, etc.
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Democratic Paradox: (Stiglitz’s concept)
 Democracy spreading around the world, other
countries/societies are embracing it (Arab Spring); but those
who have it don’t want it. This has to do with the way politics
are being reconfigured.
 Example: we still vote but it doesn’t function—people are
losing interest in the idea of democracy.
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So, Democracy today has to do with the working
definition of Democracy. This includes:
 Regular and fair elections—all members
 Effective competition
 Civil Liberties—political and civil rights—having right to vote, right to
run for office, etc.
But in order for democracy to function well, it
requires it’s 3 legs to be balanced. These are:
3) Civil society—the 3rd sector; lies between other 2 sectors
2) Government—fair elections; non-corrupt, etc.
1) Market—*what is happening in terms of the democratic deficit is that the
market is becoming more powerful and out of balance than the other two
legs
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 Democracy is a process leading to a “thing”—not really endpoint
because it’s constantly changing.
 But in a democracy decisions of government should be
transparent and open to discussion
 participation allows for accountability; but this isn’t happening.
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Is Democracy Universal?
Stiglitz makes the argument that everyone in the
world accepts democracy at some level.
 Institutions aren’t universal but the idea of having power over your
own life is universal.
 There is a more general notion that people should have some input in
their lives—this has been around since way past modern societies—
African and Native American tribes.
 Democracy isn’t tied to a state—having the ability or right to have a
say in these processes is accepted (perhaps not by those in power).
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How is globalization affecting
democracy?
 Issues mentioned above are being affected.
 Becoming larger than nation state
 Issues of power—who is accountable?
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Globalization
 Always been around
 Process
 Increased movement of food, ideas, culture, politics,
interconnectedness
 Technology is key
 Political – global one idea system
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The Right to Be Fully Human
 Following WWII, the UN drafted a comprehensive
declaration of human rights and has followed this
with statements on the rights of refugees,
children, women and others.
 Human rights – refers to the rights of individuals around the world
 Civil rights – refers to the rights of citizens of nations
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Democracy supposed to act on behalf of people – government is
supposed to enforce that.
 However, if government power is being compromised and put in others’
hands it takes away from people because of privatization (water, gas,
etc).
 This is seen as government convergence—more and more government
privatization and shifting power from government.
 Overlapping communities across borders because of increasing risks—ex.
Environmental problems, terrorism, etc.
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growing risk beyond scope of one nation
because of these things democracy needs to be rethought in this era
of globalization
o Who is supposed to resolve this? UN?
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 http://www.youtube.com/watch?v=-
1EHTt4HFng&feature=channel
 http://www.youtube.com/watch?v=tOLfGUKX8EE&feature=
channel
 http://www.youtube.com/watch?v=k_3K1PCZHE0&feature=
channel
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