Politics and the Global Economy

Preindustrial economies –
• Workers engage in primary sector
production which is the extraction of raw
materials and natural resources from the
environment
• Materials are used without much
processing
 Politics and the Global Economy
Industrial economies –
• Workers engage in secondary production
which is the processing of raw materials
into finished products
• Deindustrialization: capital is diverted
from investment in basic industries to
business practices such as mergers and
acquisitions and foreign investments
 Politics and the Global Economy
Postindustrial economies-
• Workers are involved in tertiary sector
production which is providing services
rather than goods as the primary source of
livelihood
The US is an advanced industrial society –
• We have a small sector of primary
production, large manufacturing sector & a
growing service sector
 Politics and the Global Economy
Flexible production (post-Fordism) –
• Technology is based on programmable
automated machines that a allow a variety of
products or models to be produced w/o
downtime or retooling
• Factories are organized so that workers are
rotated thru a variety of tasks, usually as a team
• Factories subcontract activities that they cannot
easily or cheaply perform to other companies
that can (subcontracting)
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Socialism – public ownership of the means
of production, the pursuit of collective
goals & centralized decision making
• The primary motivation for economic
activity is the collective good of all citizens
Democratic socialism – private ownership of
the means of production, the government
is very involved
 Politics and the Global Economy
Capitalism –
• Private ownership of production
• Pursuit of personal profit
• Competition
• Lack of government intervention (laissez-
faire policy; also called free enterprise
 Politics and the Global Economy
Transnational corporation – a large-scale
business organization that is
headquartered in one country but operates
in many countries which has the legal
power (separate from individual owners or
shareholders) to enter into contracts, buy
& sell property, and engage in other
business activity
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Economic concentration – just a few
individuals or corporations control the vast
majority of all economic resources in a
country
• Before the Civil War about 200 families
controlled the US economy, this gradually
shifted from families to corporations
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• Monopoly – a single firm controls an
industry & accounts for all sales in a
specific market
• Oligopoly – a small number of companies
or suppliers control an entire industry or
service
• Conglomerate – combination of
businesses in different commercial areas
which are owned by one holding company
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• Interlocking corporate directorates –
members of the board of directors of one
corporation also sit on the board of one or
more corporations
• Clayton Antitrust Act of 1914 – illegal for a
person to sit on the boards of directors of
two corporations that are in direct
competition with each other at the same
time
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• Corporate welfare – the government helps
industries & private corporations in their
economic pursuits
 Politics and the Global Economy
Functionalist perspective (pluralism) -
• Political leaders make decisions thru a
process of bargaining, accommodation
and compromise
• Leadership groups protect people from the
abuses of any one group
• Ordinary people influence public policy
thru voting & special interest groups
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• Power is widely dispersed in society
• Public Policy reflects a balance among
competing interest groups which is not
necessarily the majority group’s view
 Politics and the Global Economy
Conflict perspective (elite model) –
• Elites possess the greatest wealth,
education, status & other resources &
make the most important decisions for
society
• Elites generally agree on the basic values
& goals for the society
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• Power is highly concentrated at the top of
a pyramid-shaped social hierarchy & those
at the top set public policy for everyone
• Public policy reflects the values &
preferences of the elite, not of ordinary
people
• Elites use the media to shape the political
attitudes of ordinary people
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The corporate rich influence the political
process in three ways:
• Financing campaigns of candidates who
favor their causes
• Using PAC’s & loophole contributions to
obtain favors, tax breaks & favorable
regulatory rulings
• Gaining appointment to governmental
positions