Politics and the Global Economy

1
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

2
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

3
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

4
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)

5
Politics and the Global Economy

• 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

6
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

7
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

8
Politics and the Global Economy

• 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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Politics and the Global Economy

• 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

10
Politics and the Global Economy

• 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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Politics and the Global Economy

• Corporate welfare the government helps
  industries private corporations in their
  economic pursuits

12
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

13
Politics and the Global Economy

• Power is widely dispersed in society
• Public Policy reflects a balance among competing
  interest groups which is not necessarily the
  majority groups view

14
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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Politics and the Global Economy

• 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

16
Politics and the Global Economy

• The corporate rich influence the political
  process in three ways
• Financing campaigns of candidates who favor their
  causes
• Using PACs loophole contributions to obtain
  favors, tax breaks favorable regulatory rulings
• Gaining appointment to governmental positions