Chapter Summary

CHAPTER 13: PROBLEMS IN POLITICS AND THE GLOBAL ECONOMY

Politics and the economy are deeply related. Both are powerful social institutions. Politics concentrates on how power is acquired and exercised by certain groups and individuals. The economy addresses the production, distribution, and consumption of goods and services. Together, they form the political economy.

There are three major economic systems. Capitalism is characterized by private ownership of the means of production relying in market competition. Socialism relies on public ownership of the means of production and the pursuit of collective goals and centralized decision making. But neither capitalism nor socialism exists in their pure form. The mixed economy combines elements of both. Various forms of the mixed economy exist including state capitalism, democratic socialism, and welfare capitalism.

Because not all nations are at the same stage of economic development there is a widely stratified global economy. This is regardless of the economic system the country utilizes. Based upon the primary type of economic production a nation uses determines its industrial classification. In preindustrial economies most workers engage in primary sector production. In the industrial economy workers are engaged in secondary sector production. In the postindustrial society tertiary sector production is the emphasis. The United States is one of several high-income nations classified as an advanced industrial society. This means the economy places a greater dependency on the international division of labor.

Today, the most important corporate structure is the transnational corporation. These are companies headquartered in one country that operate in many countries. The corporation is a legal entity of its own, entering into contracts, buying and selling property, and engaging in other business activity. Because of their size and power, wealth is concentrated among a relatively few corporations. This creates an imbalance of power and affluence among the nations and people of the world, contributing to poverty, exploitation, and greed. These companies of concentrated wealth and power sometimes form monopolies where a single firm controls an industry or an oligopoly, a situation in which a small number of companies or suppliers control and entire industry or service. Further complicating corporate structures are interlocking corporate directorates. Members of the board of directors of one corporation sit on the boards of other corporations. This diminishes competition between the corporations and produces interdependence. It becomes a positive asset for the corporate world and an exploitation of the consumer.

Because the global economy is more and more becoming a “shop ‘til you drop” mindset, national and consumer debt is skyrocketing. The national debt of the United States is over eight trillion dollars. Adding to the national debt is the government’s financial aid to industries and private corporations for advertising, marketing, and other purposes. Known as corporate welfare, this practice passes a 90 billion dollar a year burden onto the taxpayer.

Closely related to the economy are the politics of a society. Because an essential component of politics is power, it greatly influences the type of economy that exists. Legal political authority is called government, or the state. It includes all levels of bureaucratized political activities including executive, central, and local administrations, the courts, armed forces, and police. Because political participation and political freedom varies so widely worldwide it creates a social problem. In addition to poverty and poor living conditions, it also results in civil war and ethnic violence. It is estimated that well over three million people were killed in civil wars and ethnic violence within nations between 1990 and 2000.

In the United States democracy, or rule by the people, serves as the political system. American democracy is a representative democracy. Elected officials carry out the interests of those they represent. In a direct participatory democracy all citizens of the society meet regularly to discuss and decide issues.

Even in countries where people have the right to vote for their representatives and are encouraged to do so, voter apathy may be high. In the United States only 54 percent of the eligible voters took part in the 2004 presidential election. In 2002 only 39 percent of the voters took part in elections for the U. S. Senate and House of Representatives. In addition to voter apathy, a threat to political representation is the degree of influence special interest groups can generate with candidates and representatives. Although there are laws to limit the monetary support any one person can generate financially there are loopholes and procedures that encourage a pooling of funds. Special interest groups have a significant influence in the political decisions of American democracy. Among the largest political contributors in the United States are labor unions, realtor associations, lawyers, and the medical association.

Because of the complexity of politics in industrial and postindustrial societies, government has blossomed into a bureaucratic entity. The bureaucracy tends to take on a life of its own, including its perpetual funding. One major feature of this bureaucratic structure has been the establishment of the military-industrial complex that has combined manufacturers with Congressional leaders and top military officials. In addition to this emphasis on militarism, the political bureaucracy is fond of a technique called pork barreling which brings projects, funds, and jobs to home districts of influential congressmen and senators. In some cases these projects come at a high expense with a limited value, other than the political aspects of it.

Sociologists study the political economy from either the functionalist or conflict perspectives. Functionalists stress the pluralist model that stresses how power is dispersed through many competing interest groups. The conflict perspective stresses the elite model that concentrates power in the hands of a small, select group with the masses being relatively powerless.

The future of the political and economic systems in the United States and globally will be based on a number of issues. Among these are how much money is allocated for the war machine, international programs, and domestic programs. How economic leaders manage their corporations may have as much of an influence on national and world events as the decisions of the politicians who govern the world.