Unit 2

Question 1

What is a political-economic (PE) system?

Answer 1

The institutional configuration and social structure of an economy.

Question 2

What characterizes a kin-ordered PE system?

Answer 2

It is the main form of economic organization throughout most of human history, with smaller populations, self-sufficiency, and simple political institutions.

Question 3

What is the role of kinship ties in a kin-ordered PE system?

Answer 3

Kinship ties are extremely important and typically the only significant form of economic organization.

Question 4

How are economic processes structured in a kin-ordered PE system?

Answer 4

They are structured by mechanisms of reciprocity, trust, and moral norms and obligations.

Question 5

What are the limitations of income and wealth in a kin-ordered PE system?

Answer 5

Income and wealth inequality is limited.

Question 6

What are the technological capabilities of a kin-ordered PE system?

Answer 6

Societies have limited technological capabilities, such as hunting and gathering.

Question 7

What characterizes a tributary PE system?

Answer 7

Kinship ties are no longer the chief integrating force; government becomes the basic integrating force with more centralization of political power.

Question 8

What is the economic structure of a tributary PE system?

Answer 8

Economic processes are mainly structured by hierarchical redistribution.

Question 9

What is the primary economic activity in a tributary PE system?

Answer 9

Most of the population is engaged in subsistence farming, with elites extracting agricultural surpluses.

Question 10

What defines a socialist PE system?

Answer 10

It is characterized by command or planned economies where one of several coordination and allocation mechanisms may be dominant.

Question 11

What is capitalism?

Answer 11

A political-economic system where the market mechanism is dominant, with capital privately owned by capitalists.

Question 12

What are the most salient properties of capitalism?

Answer 12

1. A central profit motive
2. Perpetual accumulation of capital
3. Private ownership of means of production
4. Wage labor
5. Higher levels of specialization
6. Persistent competition
7. Continuous expansion
8. Increasing commodification
9. Recurrent financial crises
10. Rapid mass-marketing of innovations

Question 13

What are the four core institutions of capitalism?

Answer 13

i. Private property
ii. Factor markets
iii. Capitalist firms
iv. Credit-based banking systems

Question 14

What are coordination and allocation mechanisms (CAM)?

Answer 14

Mechanisms that decide how people and organizations allocate their time and resources.

Question 15

What is market CAM?

Answer 15

Bilateral voluntary exchange based on individual self-interest and the enforcement of private property.

Question 16

What is state CAM?

Answer 16

Unilateral action and exchange based on legal rules and coercion.

Question 17

What is hierarchy CAM?

Answer 17

Exchange based on asymmetric power and bureaucratic rules.

Question 18

What is community CAM?

Answer 18

Multilateral voluntary exchange based on social solidarity and trust.

Question 19

What is association CAM?

Answer 19

Multilateral voluntary exchange based on collective self-interest and organizational concentration.

Question 20

What is network CAM?

Answer 20

Bilateral or multilateral voluntary exchange based on relations and contractual bonds.

Question 21

What are the four types of political-economic systems based on dominant CAM?

Answer 21

i. Kin-ordered
ii. Tributary
iii. Capitalist
iv. Socialist

Question 22

What is a mixed economy?

Answer 22

Real economies that exhibit more than one mechanism.

Question 23

What are capital goods?

Answer 23

Physical assets used in the production process, including factories and infrastructure.

Question 24

What are capital flows?

Answer 24

Money transfers between countries to buy assets.

Question 25

What are the means of production?

Answer 25

Assets and resources necessary for a society to engage in production.

Question 26

What is a factor market?

Answer 26

Markets where businesses obtain resources needed to produce goods and services.

Question 27

What is a goods and services market?

Answer 27

Markets where consumers make their purchases.

Question 28

What is a social market economy?

Answer 28

An economy that assures property rights and maintains markets with an extensive social safety net. (Germany)

Question 29

What is the Mezzogiorno problem?

Answer 29

A situation where a relatively affluent country contains a long-standing depressed regional economy.

Question 30

What is Gross Domestic Product (GDP)?

Answer 30

A measure of the total value of goods and services produced within a country's borders typically within a year.

Question 31

What is Gross National Income (GNI)?

Answer 31

A measure of the total income from goods and services that stays within a country typically within a given year.

Question 32

What is the Human Development Index (HDI)?

Answer 32

A composite measure of a country's longevity, education level, and national income.

Question 33

What is the Gini Coefficient?

Answer 33

A measure of income and wealth inequality within a country.

Question 34

What is a command or planned economy?

Answer 34

An economy where firms are owned and managed by the government, with price controls and moral incentives. Firms are owned and managed by the government Moral incentives are used by the government to encourage production Price controls Government owned firms have weaker incentives to be efficient Government may provide more equitable distribution of resources Examples Soviet Union, China (until 1970s), Cuba Problems include: Inefficiency, bureaucracy, shortages, surpluses, less consumer choice Centralised gov’t

Question 35

What is totalitarianism?

Answer 35

A form of government that permits no individual freedom and seeks to subordinate all aspects of life to the state.

Question 36

What is a socialist market economy?

Answer 36

An economy that combines elements of a command economy with market elements. (China)

Question 37

What are the key principles of Maoism?

Answer 37

1. Developing a rural economic base 2. Emphasis on egalitarianism 3. Antibureaucratic attitude 4. Opposition to traditional culture 5. Emphasis on regional decentralization.