Government provides order to society through the services it offers and the making and enforcement of the law. The economy is an institution that distributes goods and services to meet the needs of society.
The government and economy institutions exist on a local, state, national, and international level. They provide a framework and rules to structure society. Both the government and the economy are organized by power and authority. According to sociologist Max Weber, power allows individuals or groups to exert their will even they are opposed by others. Authority is a type of power that is viewed as legitimate by the population. A government wielding authority can maintain stability and carry out its ends without having to resort to force.
In addition to the overall concept of economy and government, you should know of comparative economic and political systems. The most important distinction is between capitalism and socialism. In capitalism, resources and the means to produce goods and services are privately controlled by individuals and organizations. The desire for profit drives commercial activity. Socialism is a system in which resources and the means of producing goods and services are managed collectively. A socialist economy relies on government regulation to match productive output to the demands of consumers. Capitalist societies are considerably more productive and tend to enjoy a higher degree of political freedom. Socialist societies tend to generate less per capita income but also have decreased wealth disparity.
One trend of economic modernization is the division of labor, in which an increasing number of Individuals engage in highly specific work. This trend contrasts with traditional labor frameworks in which all members of society participate in more or less the same daily activities. As a result of the division of labor, members of a society must rely on one another to meet their daily needs.
Key Points
• The government and economy institutions exist on a local, state, national, and international level. They provide a framework and rules to structure society. Both the government and the economy are organized by power and authority.
• Authority can be enacted through tradition, bureaucracy, or charisma.
• The most important distinction found in comparative economic and political systems is between capitalism and socialism. In capitalism, resources and the means to produce goods and services are privately controlled by individuals and organizations. Socialism is a system in which resources and the means of producing goods and services are managed collectively.
• One trend of economic modernization is the division of labor, in which an increasing number of Individuals engage in work that is highly specific, and members of a society must rely on one another to meet their daily needs.
Key Terms
government: provides order to society through the services it provides and the making and enforcement of law.
economy: an institution that distributes goods and services to meet the needs of society.
power: allows individuals or groups to exert their will even they are opposed by others.
authority: a type of power that is viewed as legitimate by the population and can be enacted through tradition, bureaucracy, or charisma.
comparative economic and political systems: study of major international economic and political systems and the role each plays in influencing global economics and politics.
capitalism: the resources and the means to produce goods and services are privately controlled by individuals and organizations. The desire for profit drives commercial activity.
socialism: a system in which resources and the means of producing goods and services are managed collectively.
division of labor: individuals engage in work that is highly specific, and members of a society must rely on one another to meet their daily needs.