Politics and the Economy
The social institutions of economy and politics are intricately intertwined and they always will be. Economies organize how a society makes and distributes its goods and services to other member’s in society. Goods are things that are made or grown and services are specific things that someone does for another person. Goods and services are given in exchange for some type of payment. Politics is the social institution through which power is acquired, usually referring to either government or state. Political institutions are responsible for creating, enforcing, and applying new laws.
Capitalism is the economic system based on ownership of production and distribution of goods (Barnes 2006). Capitalists are in favor a system called free enterprise. Free enterprise means the government should not interfere in the economy and that the laws of supply and demand will make sure that the economy runs efficiently and that people’s needs are met. Capitalism is characterized by competition in which there is a rivalry in supplying these goods. People that are purchasing goods are looking for the best possible deal and the sellers look to make as much money as they can. Socialism is an economic system that says the government or the state should be in charge of economic planning, production and distribution of goods (Schumpeter, 2006). Socialism tends to favor cooperation where capitalism is characterized by competition.
The relationship between politics and the economy are strongly tied together because the government controls the means of production and any change to an economic institution without a change to a political institution can cause huge failures and erosion as time goes on. Where we see this represented in our current economy is during election time. The state of the nation’s economy can negatively influence voter behavior come election time. It will be interesting to see how this plays out this year in the upcoming...
References: Barnes, P. (2006). Capitalism 3.0. California: Berrett-Koehler Publishers.
Schumpeter. J (2006). Capitalism, Socialism and Democracy. New York: Routledge.
Please join StudyMode to read the full document