1. Economics and Politics
Society The Basics
FOURTEENTH EDITION
Chapter 12
Economics and Politics

2. Learning Objectives (1 of 2)
12.1 Summarize historical changes to the economy Assess the operation of capitalist and socialist economies Analyze patterns of employment and unemployment in the United States Discuss the importance of corporations to the U.S. economy Distinguish traditional, rational-legal, and charismatic authority.

3. Learning Objectives (2 of 2)
12.6 Compare monarchy and democracy as well as authoritarian and totalitarian political systems Analyze economic and social issues using the political spectrum Apply the pluralist, power-elite, and Marxist models to the U.S. political system Describe causes of both revolution and terrorism Identify factors encouraging war or peace.

4. The Power of Society
Will the jobs you take throughout your life reflect choices you make based on your personal abilities and interests?

5. The Economy: Historical Overview Learning Objective 12
The Economy: Historical Overview Learning Objective 12.1: Summarize historical changes to the economy.
The economy operates in a predictable manner.
Goods and services ensure survival, make life easier, and contribute to social identity.
Economies of modern high-income nations are the result of centuries of social change.
Three technological revolutions reorganized production and, in the process, transformed social life: agricultural revolution, industrial revolution, and informational revolution.

6. The Economy Economy Goods Services
Social institution that organizes a society’s production, distribution, and consumption of goods and services
Goods
Commodities ranging from necessities to luxury items
Services
Activities that benefit others

7. Agricultural Revolution (1 of 2)
The earliest societies were hunters and gatherers with no distinct economy.
With surplus, the economy was a distinct social institution
Agricultural technology
Job specialization
Permanent settlements
Trade
As societies industrialize, a smaller share of the labor force works in agriculture.

8. Agricultural Revolution (2 of 2)
In the United States, much of the agricultural work that remains is performed by immigrants from -income nations. These farm workers from Mexico travel throughout Florida during the tomato harvest.

9. Industrial Revolution
Industrialization created economic change in five ways.
New sources of energies
Centralization of work in factories
Manufacturing and mass production
Specialization
Wage labor
New sources of energies
Steam-fueled machine operation
Centralization of work in factories
Impersonal factories replaced cottage industries
Manufacturing and mass production
Raw materials into a wide range of products
Specialization
Diverse division of labor and lower overall skill requirements
Wage labor
Working for strangers with intense supervision

10. Information Revolution and Postindustrial Society
Postindustrial economy
Productive system of service work and high technology
Information revolution altered fundamental character of work in three ways
From tangible products to intangible ideas
From mechanical skills to literacy skills
From factories to almost anywhere

11. Sectors of the Economy Primary sector Secondary sector Tertiary sector
Generates raw materials from environment
Secondary sector
Transforms raw materials into manufactured goods
Tertiary sector
Generates services rather than goods
As countries become richer, the primary sector becomes a smaller part of the economy and the tertiary or service sector becomes larger.
Source: Estimates based on World Bank (2012).
Global economy
Expanding economic activity that crosses national borders

12. The Global Economy Development
Five major consequences
Global division of labor
More products pass through many nations
National governments no longer control the economic activity within their borders
Small number of businesses control a vast share of the world’s wealth
Concerns raised about the rights and opportunities of workers
Development of a global economy has five major consequences.

13. Global Map 12-2 Service-Sector Employment in Global Perspective
The tertiary sector of the economy becomes ever larger as a nation’s income level rises. In the United States, Canada, the countries of Western Europe, much of South America, Australia, and Japan, about two-thirds of the labor force performs service work.
Source: Data from International Labour Organization (2012).

14. Economic Systems: Paths to Justice (1 of 2) Learning Objective 12
Economic Systems: Paths to Justice (1 of 2) Learning Objective 12.2: Assess the operation of capitalist and socialist economies.
Capitalism
Economic system in which natural resources and the means of producing goods and services are privately owned
Key features of capitalism
Private ownership of property
Pursuit of personal profit
Competition and consumer choice
Justice
Freedom of the marketplace is a capitalist system

15. Economic Systems: Paths to Justice (2 of 2)
Socialism
Economic system in which natural resources and the means of producing goods and services are collectively owned
Key features
Collective ownership of property
Pursuit of collective goals
Government control of the economy
Justice
Meeting everyone’s needs in roughly equal manner in a socialist system

16. Alternative Systems Welfare capitalism State capitalism
Economic and political system that combines market- based economy and social welfare programs
State capitalism
Economic and political system in which companies are privately owned but cooperate closely with government

17. Relative Advantages (1 of 2)
Capitalism
Economic productivity
GDP is $13,500
Economic equality
More income disparity
Personal freedom
Emphasizes freedom to pursue personal self-interest

18. Relative Advantages (2 of 2)
Socialism
Economic productivity
GDP is $5,000
Economic equality
Less income disparity
Personal freedom
Emphasizes freedom from basic want

19. Work in the Postindustrial U. S. Economy Learning Objective 12
Work in the Postindustrial U.S. Economy Learning Objective 12.3: Analyze patterns of employment and unemployment in the United States.
The changing workplace
In 1900, roughly 40% of U.S. workers were farmers.
In 2011, just 1.6% were in agriculture
Family farm replaced by corporate agribusinesses
Compared to a century ago, when the economy involved a larger
share of factory and farm work, making a living in the United
States now involves mostly white-collar service jobs.
Source: Estimates based on U.S. Department of Labor (2012).

20. Work in the Postindustrial U.S. Economy: Labor Unions
Organizations of workers that seek to improve wages and working conditions through various strategies, including negotiations and strikes
Reasons for union decline
Shrinking industrial sector
Newer service jobs not unionized
Changes in laws

21. National Map 12-1 Right-to-Work Laws across the United States
Unions oppose “right-to-work” laws because these laws limit the power of unions to organize workers.
In general, right-to-work laws have been enacted in the South and in many of the Plains States and western states.
By contrast, states in the Northeast, in much of the Midwest, and on the West Coast have not enacted right-to-work laws. How do you think the two categories of states typically voted in the 2012 presidential election
Source: National Conference of State Legislatures (2012).

22. Professions Professions Characteristics
Prestigious white-collar occupation that requires extensive formal education
Characteristics
Theoretical knowledge
Self-regulated practice
Authority over clients
Orientation to community rather than self-interest
Includes the ministry, medicine, law, academia, architecture, accountancy, and social work

23. Self-Employment, Unemployment, and Underemployment (1 of 2)
Earning a living without being on the payroll of a large organization
Unemployment
Jobs disappear as occupations become obsolete, businesses change operational plans, and companies downsize or close.
Although college graduates have a low risk of unemployment,
race is related to unemployment for all categories of people.
Source: U.S. Department of Labor (2013).
Every society has some unemployment
Self-employment
2012: 7% of today’s workers
Most are small business owners.
More likely blue-collar than white-collar
Unemployment
2012: 8.1%
40% of unemployed out of work for more than half a year
People who gave up looking for jobs not included in statistics

24. Self-Employment, Unemployment, and Underemployment (2 of 2)
Lower salaries, fewer benefits, and reduced/no pensions
Many workers agree to cuts in pay and/or benefits

25. The “Jobless Recovery”
Impediments to job recovery
Smaller workforce before the recession
More companies have opened factories/offices abroad.
The U.S. economy is simply not growing fast enough.
In global terms, U.S. workers are simply too expensive and not highly skilled enough to fare well in today’s economy.
The economy operates in cycles, with periods of prosperity followed by periods of
recession—
what we commonly call “boom and bust.” In

26. New Information Technology and Work
The Information Revolution is changing what people do in a number of ways
De-skilling labor
Making work more abstract
Limiting workplace interaction
Increasing employers' control of workers
Allowing companies to relocate work
In today’s corporate world, computers are changing the nature of work just as factories did more than a century ago.
In what ways is computer-based work different from factory work? In what ways do you think it is very much the same?

27. Corporations Learning Objective 12
Corporations Learning Objective 12.4: Discuss the importance of corporations to the U.S. economy.
Economic concentration
Largest corporation dominate U.S. economy
Conglomerates and corporate linkages
New markets, spin offs, mergers, shared stock, interlocking directorates
Corporation
Organization with a legal existence, including rights and liabilities, separate from that of its members
Conglomerate
Giant corporation composed of many smaller corporations
Corporations: Are They Competitive?
Large corporations not operationally independent
Monopolies forbidden; oligopoly allowed
Corporations and the Global Economy
Corporations account for most global output.
Modernization theory: Support market as key to global prosperity
Dependency theory: Call for replacing markets with government-based economic policies

28. Corporations and the Global Economy
Corporations account for most global economic output.
Modernization theory: Market is the key to global progress and affluence.
Dependency theory: Multinationals worsen global inequality and increase dependency of poor nations on rich nations.
Economic future of U.S. will occur in global arena.
There is need to address global inequality and population increase.

29. Power and Authority Learning Objective 12
Power and Authority Learning Objective 12.5: Distinguish traditional, rational-legal, and charismatic authority.
Power
Ability to achieve desired ends despite resistance from others (Weber)
Authority
Power that people perceive as legitimate rather than coercive (Weber)

30. Politics and Government
Social institution that distributes power, sets a society’s goals, and makes decisions
Government
Formal organization that directs the political life of a society
Government
Formal organization that directs the political life of a society demand compliance from the population
Most governments do not threaten their people (Weber).
Every government tries to make itself seem legitimate.

31. Authority (1 of 3) Traditional
Power legitimized through respect for long established cultural patterns
Authority declines as societies industrialize.
Traditional authority is also a source of strength for patriarchy.
Modern scientific thinking, the specialization demanded by industrial production, and the social changes and cultural diversity resulting from immigration all combine to weaken tradition.

32. Authority (2 of 3) Rational-legal
Power is legitimized by legally enacted rules and regulations.
Rationally enacted rules also guide the use of power in everyday life.
Authority resides not in the person but in the office.
Bureaucratic authority

33. Authority (3 of 3) Charismatic
Power legitimized through extraordinary personal ability and devotion and obedience are inspired.
Authority depends less on a person’s ancestry or office and more on personality.
Routinization of charisma transforms authority into some combination of traditional and bureaucratic authority.

34. Monarchy Learning Objective 12
Monarchy Learning Objective 12.6: Compare monarchy and democracy as well as authoritarian and totalitarian political systems.
Absolute monarchy
Rulers claiming power based on divine right
Examples
Saudi Arabia, Kuwait, Bahrain
Monarchy is typically found in societies that have yet to industrialize.
The recent political unrest throughout the Middle East indicates growing resistance to this form of political system in today’s world.
Even so, King Abdullah and members of his royal family strengthen their control of Saudi Arabia through their support of Arabic heritage and culture.

35. Politics in Global Perspective: Monarchy
Constitutional monarchy
Symbolic heads of state
Political principles rule
Elected official actually rules
Examples: Great Britain, Spain, Denmark

36. Democracy Representative democracy
Authority in hands of elected leaders chosen by people in elections
The United States is not truly democratic
Extensive use of unelected bureaucratic officials
Wealthy have more political influence than impoverished

37. Democracy and Freedom: Capitalist and Socialist Approaches
Capitalist societies
Claim freedom
Provide broad political liberties which mean more to rich than poor
Socialist societies
Claim security
Provide limits to individual choices

38. Global Map 12-3 Political Freedom in Global Perspective
In 2013, a total of 90 of the world’s 195 nations, containing 43 percent of all people, were politically “free”; that is, they offered their citizens extensive political rights and civil liberties.
Another 58 countries, which included 23 percent of the world’s people, were “partly free,” with more limited rights and liberties.
The remaining 47 nations, home to 34 percent of humanity, fall into the category of “not free.” In these countries, government sharply restricts individual initiative.
Between 1980 and 2013, democracy made significant gains, largely in Latin America and Eastern Europe.
Source: Freedom House (2013).

39. Other Political Systems (1 of 2)
Authoritarianism
Political system that denies popular participation in government
Authoritarian government is indifferent to people’s needs.
Examples: Saudi Arabia, Bahrain, Ethiopia

40. Other Political Systems (2 of 2)
Totalitarianism
Highly centralized political system that extensively regulates people’s lives
Seeks to bend people to the will of the government
Examples: Vietnam, North Korea
In totalitarian nations, government controls all aspects of people’s lives.
During the funeral of Kim Jong-Il, absolute ruler of North Korea, people were told to line the route used for his public funeral and display appropriate anguish at his death.
After the event, government officials examined photographs of the crowds and prosecuted those whose sorrow did not measure up to their demands.

41. Politics in the United States (1 of 2) Learning Objective 12
Politics in the United States (1 of 2) Learning Objective 12.7: Analyze economic and social issues using the political spectrum.
Individualism
Key descriptor for U.S. political culture
Welfare state
Government agencies and programs provide benefits to population
One in six
US workers is a government employee
The US welfare state is still smaller than those of many other high-income nations.

42. Politics in the United States (2 of 2)
Political spectrum
Ranges from extremely liberal on the left to extremely conservative on the right
Types of issues
Economic issues
Social issues
Economic issues
Taxing
Market and government involvement
Social issues
Class, race, and gender
Party identification

43. Politics in the United States: Class, Race, Gender, and Age
Class position
Majority hold mix of conservative and liberal attitudes.
Race
African Americans are generally more liberal than whites.
Gender
Women tend to be more liberal than men.
Age
Younger voters becoming more liberal.
Economic issues
Taxing
Market and government involvement
Social issues
Class, race, and gender
Party identification

44. The Presidential Election, 2012: Popular Vote by County
Barack Obama won the 2012 presidential election with 51 percent of the total popular vote, but he received a majority of the vote in only about one-fourth of the nation’s counties.
Obama and other Democrats did well in more densely populated urban areas, while Mitt Romney and other Republicans did well in less populated rural areas.
Can you explain why urban areas are mostly Democratic and rural areas are mostly Republican?
What other social characteristics do you think distinguish the people who vote Democratic from those who vote Republican?
Source: The Guardian (2012).

45. Politics in the United States: Special-Interest Groups
Strong in nations where political parties tend to be weak
Employ lobbyists to work on their behalf
Political action committee (PAC)
Formed by a special-interest group, independent of political parties
Organized to raise and spend money in support of political goals
In 2012, members of the House of Representatives seeking reelection spent an average of $1.5 million on their campaigns, with most of the money coming from outside organizations, including PACs.
Senators seeking reelection spent an average of $11 million on their races.
In 2012, Barack Obama and Mitt Romney together received and spent $2.6 billion on their presidential campaigns, including more than $500 million from PACs and other organizations (Center for Responsive Politics, 2012).
Does raising the most money matter? The answer is yes—in the 2012 elections, in 94 percent of the House races and 79 percent of the Senate races, the candidate who spent the most money ended up winning the election.
Lower-income people have more pressing financial needs, and so they tend to focus on economic issues, such as job wages and benefits.
Higher-income people, by contrast, provide support for many social issues, such as animal rights.

46. Politics in the United States: Voter Apathy
Americans are less likely to vote today than a century ago.
Half of registered voters participated in presidential election.
Participation rose to 57.5% in 2012.
People with a bigger stake in U.S. society are more likely to vote.
Conservatives: Apathy is political indifference
Liberals: Apathy is alienation

47. Theoretical Analysis of Power in Society (1 of 2) Learning Objective 12.8: Apply the pluralist, power-elite, and Marxist models to the U.S. political system.
Pluralist model: People rule
Analysis of politics that sees power as spread among many competing interest groups
One of the most significant political forces to develop in recent years is the Tea Party movement.
Pluralist model
Polsby (1959): Concluded that in New Haven, no one group—not even the upper class—ruled all the other
Supporters claim that government has grown too big, too expensive, and now threatens the people.
Do you see government as a “problem” the way many people on the right side of the political spectrum do?
Or do you see it as the “solution” the way many people on the left side of the political spectrum do?
Why?

48. Theoretical Analysis of Power in Society (2 of 2)
Power-elite model: Few people rule
Analysis of politics that sees power as concentrated among the rich
Marxist political-economy model: The system is biased
Analysis that explains politics in terms of the operation of a society’s economic system
Power-elite model
Lynd and Lynd (1937): Concluded that in “Middletown”, power elite was one family
Marxist political-economy model
Liazos (1982): Democratic society impossible as long as basic institutions do not meet needs of all

49. Power beyond the Rules: Political Revolution Learning Objective 12
Power beyond the Rules: Political Revolution Learning Objective 12.9: Describe causes of both revolution and terrorism.
Political revolutions have common traits
Rising expectations
Unresponsive government
Radical leadership by intellectuals
Establishing new legitimacy
In 2011, as part of the popular movement that swept across northern Africa and the Middle East, Egyptians forced President Hosni Mubarak from office.
Rising expectations
Tend to happen when quality of life is improving
Unresponsive government
Government unwilling or unable to reform
Radical leadership by intellectuals
Thomas Hobbes: Intellectuals provide the justification for revolution.
Establishing new legitimacy
Guarding against the counterrevolution

50. Power beyond the Rules: Terrorism
Acts of violence or the threat of violence used as a political strategy by an individual or a group.
Characteristics
Violence used as legitimate political tactic; channels of negotiation bypassed
Terrorism used by governments and individuals
Democratic countries especially vulnerable because of broad civil liberties
One person’s terrorist is another's freedom fighter
Terrorism is a complex political process typically involving parties with differing levels
of global power. The television series Homeland illustrates that terrorism is also a matter
of defining some parties as “good” and others as “evil” and sometimes never being
sure which is which. How accurately do you think the mass media in the United States
portray the global conflicts we call “terrorism”?

51. War and Peace Causes of war (Wright) Perceived threats Social problems
Political objectives
Absence of alternatives
Almost half of all U.S. deaths in war occurred during the Civil War (1861–65).
Sources: Compiled from various sources by Maris A. Vinovskis (1989) and the author.
Perceived threats
Threats to people and territory
Social problems
Internal problems and frustration
Political objectives
Show of force and protecting one’s own property
Moral objectives
Rallying people around morality
Absence of alternatives
Limited options

52. War and Peace: Social Class, Gender, and the Military
Military personnel typically from working class
Share of women in military increasing
Conventional warfare is symmetrical.
Terrorism is asymmetrical.
In 2013, the U.S. armed forces announced plans to integrate women into military combat operations by Do you see this as a step forward for women? Why or why not?

53. War and Peace: Costs and causes of militarism
$1.7 trillion spent annually on global military budgets
U.S. accounts for 41% of global military spending
Causes
Arms race
Military-industrial complex
Regional conflict
Nuclear weapons
Danger of catastrophic war increases with nuclear proliferation
4000 operational nuclear warheads exist today

54. Mass Media and War Learning Objective 12
Mass Media and War Learning Objective 12.10: Identify factors encouraging war or peace.
Mass media and war
Mass media provides selective information to a worldwide audience.
Television and other media are almost as important to the outcome of a conflict as the military that is doing the actual fighting.

55. Pursuing Peace Recent Approaches Deterrence High-technology defense
Diplomacy and disarmament
Keep talking about reducing arms
Resolving underlying conflict
Deterrence
Balance of power between societies
High-technology defense
Strategic defense initiative
Diplomacy and disarmament
Keep talking about reducing arms
Resolving underlying conflict
Increase spending on promoting peace rather than building up military