Chapter summary imageIn America, the differences in the political parties many times revolve around the governments involvement in the economy.

What Are the Systems of Economics and Politics?

Economic Systems:

capitalism, socialism, and democratic socialism political systems: traditional, charismatic, and rational-legal authority.

How do Sociologists View Economic and Political Systems?


power is divided among groups who must work together.

Conflict Theory:

only the power elite have power.

Symbolic Interactionism:

leaders must be charismatic to gain power and prestige.

How Does the System Work for Veterans?

veterans do not receive all the medical care and assistance they need.



  • power is dispersed among different groups
  • groups must work together for society to function properly
  • global cooperation is beneficial for everyone
  • U.S. system of checks and balances

Conflict Theory

  • power is held by a small group of elites
  • elites are in a struggle to keep power, and non-elite are in a struggle to gain power
  • includes the U.S. democratic system
  • consolidation of media conglomerates

Symbolic Interactionism

  • leaders must have charisma in order to gain power
  • charismatic leaders can persuade people to do things they normally wouldn’t do
  • leader's sway can be used for good or evil

Key Terms

Economic System, or Economy

is the social system that helps a society organize what it produces, distributes, and consumes.


is an economic system in which individuals can own the means of production as well as the services that others may need.

Free Markets

generally refer to markets that are free from government control.


is the desire for a good or service.


is the amount of a good or service available.


is the exclusive possession or control of the supply or trade in a service.

Price Elasticity of Demand

is the change in a good’s demand as its price changes.


is the economic system by which resources and the means of production are owned collectively by the citizens.

Democratic Socialism

is the economic system that advocates running government democratically and for the good of the most people.

Convergence Theory

is the tendency for capitalism and socialism to converge.


is a business viewed as a “legal person” that has some objective, usually to make a profit for its owners.

Transnational Corporations or Multinational Corporations

are corporations that operate in at least two countries and have the interests of their company at heart rather than the interests of their home country.


is a long-standing trade restriction.

NAFTA (North American Free Trade Agreement)

is a policy that was established in 1994 to allow free trade between the United States, Mexico, and Canada.


are taxes levied on trade items.

Political Systems

are social institutions that are based on an established set of practices for applying and realizing a society’s goal.


is a political system whereby leadership is based on the idea that leaders are selected by divine right or heritage.

Authoritarian Regimes

involve an individual or small group taking power and using repression and other techniques to maintain it.


is a type of authoritarian government whereby the government controls everything in people’s lives, and generally those who disagree are punished.


refers to a single leader with absolute power.


is a small group of very influential people who control the government.


is a government whereby power is held by the people and exercised through participation and representation.alienation refers to a person’s sense of powerlessness, meaninglessness, and a general cynicism toward the political process.

Military-Industrial Complex

is a combination of the armed forces and defense industries that provide weapons and other materials to the country.


is a model whereby power is spread amongst the masses.


1. Why is it difficult for a nation to either be entirely capitalist or entirely socialist?

2. How do expanding markets affect countries’ economic and political systems?

3. What are the four problems and solutions Sachs proposes?

4. Why do poorer peripheral countries usually have traditional governments?

5. Do charismatic leaders always make the best leaders? Why or why not?

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