Overview
This lecture introduces the sociology of economics, outlining different economic systems, components of the economy, and important concepts like monopolies, oligopolies, conglomerates, and globalization.
Types of Economic Systems
- Capitalism features open competition, private wealth, and property, driven by profit in a free marketplace.
- Socialism involves government ownership and control of most economic resources, resulting in a closed market.
- Mixed economies combine elements of both capitalism and socialism, as seen in countries like Japan and Canada.
Components of the Economy
- The formal economy includes income taxed by the government from legitimate jobs.
- The informal economy involves untaxed income, such as unreported cash tips or illegal activities like drug trafficking.
- The global economy is an interconnected international exchange of goods, services, technology, and ideas, enabled by modern communication and transportation.
Market Structures and Business Types
- Monopolies occur when one company dominates an entire market, though these are now rare.
- Oligopolies are markets dominated by a few companies, which may lead to higher prices due to limited competition, seen in industries like airlines and telecoms.
- Conglomerates are large corporations owning diverse businesses, such as Disney.
- Multinational corporations operate in many countries worldwide, like McDonald's and Burger King.
Social and Economic Challenges
- Terrorism aims to disrupt economic and political stability through threats or violence.
- Xenophobia is an irrational fear of foreigners, often relating to concerns about job competition in the economy.
Key Terms & Definitions
- Capitalism — Economic system based on private ownership and profit-driven free markets.
- Socialism — Economic system where the government owns and controls resources and production.
- Mixed Economy — Combines private and public ownership within the marketplace.
- Formal Economy — Income and business activities that are taxed and regulated by the government.
- Informal Economy — Economic activities not taxed or monitored by the government.
- Global Economy — Worldwide interconnected marketplace for goods, services, and ideas.
- Monopoly — One company controls a product or service market.
- Oligopoly — Few companies control a market, limiting competition.
- Conglomerate — Corporation owning multiple, diverse businesses.
- Multinational Corporation — Company operating in multiple countries.
- Terrorism — Use or threat of violence to disrupt economic/political systems.
- Xenophobia — Fear or dislike of foreigners, particularly related to economic competition.
Action Items / Next Steps
- Review key economic systems and definitions in preparation for test three.
- Be familiar with examples of different market structures and their implications.