Chapter ThreeChapter ThreePopulation and CulturePopulation and Culture

Section TwoSection Two

Political and Economic SystemsPolitical and Economic Systems

Types of Economic SystemsTypes of Economic Systems

• Any economic system must answer three basic questions:

1. What and how many goods and services will be produced?

2. How will these products be produced?

3. How will these products and the wealth from their sale be distributed?

Traditional EconomyTraditional Economy

• In many parts of the world, especially in rural and less developed areas, nearly all goods and services are consumed by one family or village.

• There is little left over for trade.• These economies are also called

subsistence economies.• There is little need for markets, because

there are almost no excess goods to sell.

Market EconomyMarket Economy

• This system gives great freedom to individuals and groups. • It is also called a free enterprise system or capitalist market

economy.• Private individuals or groups decide what will be produced, how

much will be produced, and the prices that will be charged, for goods and services.

• These decisions are influenced by the “law of supply and demand”.• The main motivation is for each individual or group to increase their

economic well-being.• In “pure” capitalism, the government would play no role in the

economy. • In the U.S. and other countries, the government does have some

influence. It operates the post office, police, fire dept. and public schools. It also regulates employee safety and health.

Command EconomyCommand Economy

• An economy controlled by a single, central government is a command economy.

• Nearly all decisions are made by an authoritarian leader.• The government decides what and how much will be

produced. It also decides how much will be charged for goods and services.

• One example of a command economy is communism.• Under a communist system, the government owns and

operates all the major farms, factories, utilities and stores. Government planners decide what will be produced and how much it will cost.

Mixed EconomyMixed Economy

• Some nations have a mix of traditional, command, and market economies.

• Socialism is an example of this sort of economy.• The basic philosophy of socialism is that the government should

own and run some basic industries, such as transportation, communications, banking, coal mining, and the steel industry.

• Private enterprise operates most other parts of the economy.• Socialists believe that wealth should be distributed more equally and

that everyone is entitled to certain goods and services.• Socialist countries are sometimes called “welfare states” because

they provide social services such as housing, health care, child care, and pensions.

• To pay for these services, these countries usually impose high taxes on their citizens.

Types of GovernmentTypes of Government

• Government- the institution through which society makes and enforces its public policies and provides for its common needs

1. Keeping order within society

2. Protecting the society from outside threats

3. Providing some services to its people

Government StructureGovernment Structure

• Every country contains smaller units• These may be called states, provinces, or republics• Government can be classified according to the

relationship between the smaller units and the central government.

• There are three classifications of government according to how a government is structured. All nations follow one of these sorts of structure

Unitary SystemUnitary System

• The central government runs the system

• The central government makes laws for the entire nation

• Local governments have only those powers that the central government gives to them

• Great Britain and Japan are examples of Unitary Systems

FederationFederation

• Some powers are given to the national government and other powers are reserved for more local governments

• The United States is a federation

• Our Constitution outlines the powers given to the federal and state governments

ConfederationConfederation

• Smaller political units keep their sovereignty and give the central government only very limited powers, usually in the areas of defense and foreign commerce

• In the 1860’s the southern states separated from the United States and formed the Confederate States of America

Government AuthorityGovernment Authority

• There are five classifications of government according to how it exercises its authority

AuthoritarianAuthoritarian

• Leaders hold all, or nearly all, political power

• Until modern times, most countries had this sort of government

DictatorshipDictatorship

• An authoritarian form of government in which power is concentrated in a small group or even a single person

• Most common form of authoritarian government today

• Most dictators use military force or political terror to gain and exercise power

• People are not free to express their own opinions

TotalitarianismTotalitarianism

• The most extreme form of dictatorship

• The government controls every part of society: politics, economy, and personal lives

• Nazi Germany under Hitler and the Soviet Union under Stalin are examples of this

MonarchyMonarchy

• The most common kind of authoritarian rule throughout most of history

• Monarchs: kings, queens, pharaohs, shahs, sultans, emperors, inherit their positions by being born into a ruling family

• In the past monarchs ruled as dictators, today most monarchs rule with limited or little power called a constitutional monarchy

• Real power rests with a lawmaking body and the monarch serves as a national symbol

• United Kingdom is an example of this today

DemocracyDemocracy

• Any government where people have the power to chose their leaders and set government policy is a democracy

• A constitutional monarchy can also be a democracy

• Almost all democracies today are representative democracies

• Eligible adult citizens elect representatives to make the country’s laws

The World’s CountriesThe World’s Countries

• There are over 200 independent countries in the world today

• Four characteristics which define a country are:

1. Clearly defined territory

2. Population

3. Sovereignty

4. Government

TerritoryTerritory

• Territory includes:

1. Land

2. Water

3. Natural resources• Largest nation in area: Russia• Smallest nation in area: Vatican City• Resources can be more important than area.• Some small nations have important resources. • This has been the cause of many wars over the centuries• National boundaries are sometimes defined by rivers or

mountains.• Most are defined by treaties or agreements

PopulationPopulation

• Population size does not determine the existence of a country• Some countries have large areas of land, but small populations:

Canada and Australia• Some countries have small areas of land, but many people and

densely populated: Japan and the Netherlands• Some have great diversity in their population: United States and

India• Some populations share a similar culture and background: Sweden

and Greece• Citizens are usually assured protection by their governments. In

return they pay taxes, serve in the military, or carry out other obligations.

SovereigntySovereignty

• Sovereignty- A nations freedom from outside control.• It can rule itself by establishing its own policies and

determining its own course of action.• A sovereign nation can act independently, deal equally

with other sovereign nations, and protect its territory and citizens.

• Some nations benefit from their geography to help maintain their sovereignty: United Kingdom and Switzerland

• Some nation’s geography makes it difficult to defend: Belgium and Poland