8. Economics and Politics

The economy is a social system that produces, distributes, and consumes goods and services in a society. Three sectors make up an economy: The primary sector refers to the part of the economy that produces raw materials. The secondary sector, made up of mills and factories, turns the raw materials into manufactured goods. The tertiary sector refers to services rather than goods, and includes distribution of manufactured goods, food and hospitality services, banking, sales, and professional services like architects and physicians,.

Economic development Economic development is the development of economic wealth of countries or regions for the well-being of their inhabitants. It involves two things: Economic growth and equitable distribution of income. Planned economy A planned economy is an economic system in which decisions about the production, allocation and consumption of goods and services is planned ahead of time, in either a centralized or decentralized fashion.

Predominant Economic Systems Capitalism Three key principles define the economic system of capitalism: • Private ownership, • Competition, • Profit-seeking, Three key principles define the economic system of socialism: • State ownership. • No competition. • Non-profit-seeking system.

Democratic socialism is an economic system where the government maintains strict economic controls while maintaining personal freedom. In State capitalism large corporations work closely with the government, and the government protects their interests with import restrictions, investment capital, and other assistance.

Modern Corporations and Multinationals A corporation is a business that is legally independent from its members. Corporations may incur or pay debt, negotiate contracts, sue and be sued. Corporations range in size from local retail stores to larg corporations. Management of the company remains separate from, but accountable to, the ownership.

Forms of corporations A conglomerate is a corporation made up of many smaller companies, or subsidiaries, that may or may not have related business interests. Monopolies occur when a single company accounts for all or nearly all sales of a product or service in a market. Oligopolies exist when several corporations have a monopoly in a market. Multinationals are corporations that conduct business in many different countries.

Politics and Major Political Structure Politics is the social structure and methods used to manage a government or state. A nation is a people with common customs, origin, history, or language. A state is a political entity with legitimate claim to monopolize use of force through police, military, and so forth. Nation-state refers to a political entity with the legitimate claim to monopolize use of force over a people with common customs, origin, history, or language. Sociologists and political scientists prefer the term nation-state to “country”.

Totalitarianism is a political system that exercises near complete control over its citizens' lives and tolerates no opposition. Authoritarianism is a political system less controlling than totalitarianism, but still denying citizens the right to participate in government. Democracy is a political system where the government is ruled either directly by the people or through elected officials who represent them.