International

Contemporary
Analysis
Political
Systems
 SYSTÈMES
PoliticalPOLITIQUES
Systems

Extreme left Center Extreme right

Conservatism

Democratic
socialism

Communism

Liberalism Fascism
 Political Systems

Left Center Right

Equality Inequality

Conservatism
Democratic
socialism
Liberalism
Communism

Fascism
As you will see below, the use of the vertical and horizontal axes creates quadrants in which we can
situate the approximate location of each ideology.
Democratic
Political freedom
Capitalism

Democratic
Socialism

State-control Economic
Economy freedom

Dictatorial socialism
(Communism) Political repression

Dictatorial capitalsm
(Fascism)
The concept of system A regularly interacting or
interdependent group of items
forming a unified whole
*https://www.merriam-
webster.com/dictionary/system

David Easton defined a

system as a set of variables
whatever the degree of
relationship among them.
D. EASTON, Analyse du système
politique, Paris, A. Colin, 1974, p. 23.

What underlies the idea of

system is the principle of
interdependence.
The concept of political
system
Political system
It can be defined as the set of interactions by which resources and valuables
are distributed by authority inside a society.
D. EASTON, Analyse du système politique, Paris, A. Colin, 1974, p. 23.

A mechanism with the authority to

allocate resources and valuables in a
society thus achieving harmonization of
diverse and contradictory interests.

Its specific property is not to

distribute resources and valuables,
but rather to distribute them by the
use of authority.

Denis Monière/Jean Herman Guay, Introduction

Aux théories politiques, (1987)
 The State and the political power
The political system is constituted by the mechanisms and the government
institutions, destined to conquer, to exercise and to retain political power.
Each State adopts a political system.

Political power implies the exercise by the state of a social control by the
governors over the governed. In this sense, the state is a dominant
organization.

Denis Monière/Jean Herman Guay, Introduction

Aux théories politiques, (1987)
 Ideology
An integrated set of ideas and beliefs (or ideas transformed into
beliefs) designed to explain one´s attitudes as a member of a
society and to establish a line of conduct based on those ideas
and beliefs.

Les systèmes, les idéologies, les institutions politiques et le problème de leur diffusion.

Monsieur Karl Loewenstein

 What underlies ideologies
Ide
olo
gy
Beliefs
Ideas Opinions

Resolutions to the problems of life

Concorde and
Food
harmony among
Shelter individuals.
Environment Order and law

The economic systems and political regimes in the world are based on a
diversity of ideologies.
 Individualism:
Absolutism:   In its economic and
Monarchical dynastic political aspects:
theocratic liberalism, capitalism
and freedom of
enterprise

Constitutionalism: Social Collectivism:

Amenaza
Institutionalized
de
by Typology of Democratic or
proletarian socialism
parliamentarism;
productos
The rule of law, and
sustitutos
ideologies (Communism) and the
democracy ideology of the
welfare state.

Elitism:
Nationalism: Aristocratic,
Imperialism; racism; Corporatist.
colonialism

Les systèmes, les idéologies, les institutions politiques et le problème de leur diffusion. - Monsieur Karl Loewenstein
 Political Systems

Political systems can be assessed according to two dimensions.

• The first is the degree to which they emphasize collectivism as opposed to
individualism.
• The second is the degree to which they are democratic or totalitarian.

International Business. Mc Graw Hill. Chapter 2

• ... the social order depends on the exercise of a certain coercion and any
form of political organization implies the use of a certain constraint.
Collectivism

• It refers to a political system that stresses the primacy of collective goals

over individual goals.
• It can be traced to the ancient Greek philosopher Plato (427-347 BC), who
in The Republic argued that individual rights should be sacrificed for the
good of the majority and that property should be owned in common.
• In modem times, the collectivist mantle has been picked up by socialists.
 • Marx argued that the few benefit
at the expense of the many in a
capitalist society where individual
freedoms are not restricted.

• While successful capitalists accumulate considerable wealth, Marx

postulated that the wages earned by the majority of workers in a capitalist
society would be forced down to subsistence levels.
• In a socialist system, trade is regulated according to a planned economy; In
a capitalist system, trade is determined by the market.
What Does Modern-Day Socialism look like?

• In the early 20th century, socialism split into

1. Communism – socialism can only be achieved
through violent revolution and totalitarian
dictatorship (Bolshevik Revolution in 1917 in Russia)
– in retreat worldwide by mid-1990s
2. Social democrats – socialism is achieved through
democratic means
– retreating as many countries move toward free market
economies
– state-owned enterprises have been privatized

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 What Is Individualism?

• Individualism refers to philosophy that an

individual should have freedom in his own economic
and political pursuits
– can be traced to Greek philosopher, Aristotle (384-322 BC),
who argued that individual diversity and private ownership
are desirable
– individual economic and political freedoms are the ground
rules on which a society should be based

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 What Is Individualism?
• Individualism is built on:
– Guaranteeing individual freedom and self-expression.
– The welfare of society is best served by letting people
pursue their own economic self-interest
– Small government

• It advocates for democratic political systems and

market economics
• It creates a more favorable environment for
international businesses to operate in.

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 What is
Democracy?
 What Is Democracy?

• Democracy refers to a political system in which

government is by the people, exercised either
directly or through elected representatives
– usually associated with individualism
– pure democracy is based on the belief that citizens should
be directly involved in decision making
– most modern democratic states practice representative
democracy where citizens periodically elect individuals
to represent them

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 What Is Totalitarianism?
• Totalitarianism is a form of government in which one person or
political party exercises absolute control over all spheres of human life
and prohibits opposing political parties
1. Communist totalitarianism – found in states where the
communist party monopolizes power
2. Theocratic totalitarianism - found in states where political
power is monopolized by a party, group, or individual that governs
according to religious principles
3. Tribal totalitarianism - found in states where a political party
that represents the interests of a particular tribe monopolizes power
4. Right-wing totalitarianism - permits some individual economic
freedom, but restricts individual political freedom

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 Types of governments
Pure dictatorship

Totalitarian

Purely private enterprise

Purely public company

Socialist Fascist

Liberal Moderate Conservative

Libertarian

Pure democracy
 Individualism vs. Collectivism

The liberal will tend to be more collectivist in the economic

aspect. He / she wishes the intervention of the State to control
the economic aspects of the enterprises and the population in
order to guarantee the equal distribution of the wealth.

But in social matters, the liberal is more individualistic.

The conservative on the other hand, will be more

individualistic in economic matters. They do not want state
intervention in economic affairs either of citizens or
businesses. Each person must fend for themselves
The conservative in the social aspect is more collectivist.
 Democracy Autocracy
Power of the people. Arbitrary power
Political (dictatorship).
representation. The people kept apart,
Supremacy of the Ruling elites. Absolute
law (Rule of law).  monarchy.

Anarchy
Aristocracy
Characterized by
Political systems Governance of a
the absence of a group of elites
Describe the main
government "The reign of the
categories of government
best"
organization.

Monarchy
Totalitarianism
A monarch occupies
Ideology of Terror.
the position of head of
Single Party holds
state. Parliamentary
All powers
monarchy,
Create a "new man"
constitutional,
absolute.
Economic
Systems
 There are three types of economic
systems: the market economy, the
command economy, and the mixed
economy.

The political ideology and

Economic economic system of a country
are synchronized. 
Systems
A free market system is likely in
countries where individual
objectives take precedence
over collective objectives.

Public enterprises and restricted markets

are characteristic of countries where
collective objectives are dominant.

International Business. Mc Graw Hill. Chapter 2

 MARKET ECONOMY

• A system in which economic agents (businesses, individuals) have the

freedom to sell and buy goods, services and capital.
• Each acts according to their interests; Profit, considered positively, appears
there as the reward of risk.
• The market economy promotes competition, innovation and
entrepreneurship, which translate into economic growth.

http://perspective.usherbrooke.ca/bilan/servlet/BMDictionnaire?iddictionnaire=1551
 MARKET ECONOMY

• The goods and services that a country produces are not planned by anyone.
• Production is determined by the interaction of supply and demand
• If demand for a product exceeds supply, prices will rise, signaling producers
to produce more.
• If supply exceeds demand, prices will fall, signaling producers to produce
less.
• In this system consumers are sovereign.
• For a market to work in this manner, supply must not be restricted.
 COMMAND ECONOMY

•  In a pure command economy, the government plans the goods and services that a
country produces, the quantity in which they are produced, and the prices at which
they are sold.
• Consistent with the collectivist ideology, the objective of a command economy is
for governments to allocate resources for "the good of society.“
• All businesses are state owned, the rationale being that the government can then
direct them to make investments that are in the best interests of the nation.
Why Things in Venezuela Just Keep Getting Worse:
https://www.youtube.com/watch?v=PzDTf7hGESQ
Venezuela growing economic crisis - BBC News:
https://www.youtube.com/watch?v=u-Z6Z5twP5I
 MIXED ECONOMY

• In a mixed economy, certain sectors of the economy are left to private ownership
and free market mechanisms
• While other sectors have significant state ownership and government planning.
• In mixed economies, governments also tend to take into state ownership troubled
firms whose continued operation is thought to be vital to national interests.

In 2008 and early 2009 the U.S. government took an 80 percent stake in AIG to stop
that financial institution from collapsing, the theory being that if AIG did collapse, it
would have very serious consequences for the entire financial system.
What Determines A Country’s Level
Of Economic Development?

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 What Determines A Country’s Level
Of Economic Development?
• Two ways to measure levels of economic
development are
1. Gross national income (GNI) per person
2. Purchasing power parity (PPP) involves adjusting
GNI by purchasing power
• Nobel-prize winner Amartya Sen argues economic
development should be seen as a process of
expanding the real freedoms that people
experience
– the removal of major impediments to freedom like
poverty, tyranny, and neglect of public facilities
– the presence of basic health care and basic education

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 What Determines A Country’s Level
Of Economic Development?
• The United Nations used Sen’s ideas to
develop the Human Development Index
(HDI) which is based on
– life expectancy at birth
– educational attainment
– whether average incomes are sufficient to meet
the basic needs of life in a country

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How Do Countries Compare on Economic
Development?
http://databank.worldbank.org/data/reports.aspx?
source=2&series=SI.POV.GINI&country=#
Beyond
the First
Decade of
the 21st
Century
Global GDP Growth
 How Do Countries Compare on Economic
Development?

What is the 'Gini Index'

The Gini index is a measurement of the income distribution of a
country's residents. This number, which ranges between 0 and 1 and is
based on residents' net income, helps define the gap between the rich
and the poor, with 0 representing perfect equality and 1 representing
perfect inequality. It is typically expressed as a percentage, referred to
as the Gini coefficient.
http://www.investopedia.com/terms/g/gini-index.asp

Classification as per Gini index

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html

Why Some Countries Are Poor and Others Rich

https://www.youtube.com/watch?v=9-4V3HR696k
 How Does Political Economy Influence
Economic Progress?
• Innovation and entrepreneurship are the engines of
long-run economic growth
• Innovation and entrepreneurship require a market
economy and strong property rights
• Democratic regimes are probably more conducive to
long-term economic growth than dictatorships, even
the benevolent kind
• Subsequent economic growth leads to the
establishment of democratic regimes

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 How Do Geography And Education Influence
Economic Development?
• Countries with favorable geography are more
likely to engage in trade, and so, be more
open to market-based economic systems, and
the economic growth they promote
• Countries that invest in education have higher
growth rates because the workforce is more
productive

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 How Is The Political
Economy Changing?
• Since the late 1980s, two trends have emerged
1. Democratic revolution (late 1980s and early 1990s)
– many totalitarian regimes failed to deliver economic progress to the
vast bulk of their populations
– new information and communication technologies have broken
down the ability of the state to control access to uncensored
information
– economic advances of the last 25 years have led to increasingly
prosperous middle and working classes who have pushed for
democratic reforms
2. A move away from centrally planned and mixed economies
– more countries have shifted toward the market-based model

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 What Is The Nature Of
Economic Transformation?
• The shift toward a market-based system
involves
– deregulation – removing legal restrictions to the
free play of markets, the establishment of private
enterprises, and the manner in which private
enterprises operate
– privatization - transfers the ownership of state
property into the hands of private investors
– the creation of a legal system to safeguard
property rights

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 What Does The Changing
Economy Mean For Managers?
• Managers must consider
1. Political risk - the likelihood that political forces will cause
drastic changes in a country's business environment that
adversely affects the profit and other goals of a business
enterprise
2. Economic risk - the likelihood that economic
mismanagement will cause drastic changes in a country's
business environment that adversely affects the profit and
other goals of a business enterprise
3. Legal risk - the likelihood that a trading partner will
opportunistically break a contract or expropriate property
rights

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 Review Question
A political system that stresses the primacy of
collective goals over individual goals is called

a) individualism
b) collectivism
c) a democracy
d) a market economy

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 Review Question
_____ believe(s) that socialism can only be
achieved through violent revolution and
totalitarian dictatorship.

a) communists
b) social democrats
c) social republicans
d) Plato

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 Review Question
A form of government in which one person or
political party exercises complete control over all
spheres of human life and prohibits opposing
political parties is

a) a democracy
b) a representative democracy
c) totalitarianism
d) socialism

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 Review Question
______ is found in states where political power
is monopolized by a party according to
religious principles.

a) tribal totalitarianism
b) right-wing totalitarianism
c) theocratic totalitarianism
d) communist totalitarianism

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 Review Question
In which type of economic system are all
productive activities privately owned?

a) a mixed economy
b) a command economy
c) a representative economy
d) a market economy

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 Review Question
Which is not a primary determinant of a
nation’s rate of economic development?

a) its political system

b) its economic system
c) its geography
d) its currency

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