Chapter 7 - Politics 6th Edition

Mercantilism

An economic philosophy that takes the state to be the most significant economic actor, highlighting the extent to which economic relations are determined by political power.

Protectionism

Import restrictions such as quotas and tariffs, designed to protect domestic producers.

Autarky

An economic system that is self-sufficient and produces everything it needs.

Political economy

The study of the interaction of politics and economics. Focuses on the relationship between states and markets. Associated with Marxism.

Laissez-faire

The principle of non-intervention in economic affairs by the government. Based on the idea that the economy works best when left alone by government and 'perfect competition'.

Surplus value

A Marxist term denoting the value that is extracted from the labour of the proletariat through the mechanism of capitalist exploitation.

Economic system

A form of organization through which goods and services are produced, distributed, and exchanged; seen by Marxists as a 'mode of production'.

Capitalism (Economic system)

(1) Productive wealth is predominantly privately owned; (2) Economic life is organized according to market principles, resources are allocated through the price mechanism; (3) Wage labour replaces bonded serfdom; (4) Material self-interest and profit maximization provide the motivation for enterprise and hard work.

Social market

An economy that is structured by market principles and largely free from government interference, operating in a society in which cohesion is maintained through a comprehensive welfare system and effective public services.

Crony capitalism

A form of capitalism whereby the market is heavily distorted by collusion between the state and business, leading to limited competition and economic freedom.

Keynesianism

A theory (developed by J. M. Keynes) or policy of economic management, associated with regulating aggregate demand to achieve full employment.

Stagflation

A combination of economic stagnation, reflected in high or rising unemployment, and an increase in inflation.

Neoliberalism

A form of market fundamentalism. Emphasizes a belief in free-market economics, atomistic individualism and that unregulated market capitalism delivers efficiency, growth and widespread prosperity.

Market fundamentalism

An absolute faith in the market, reflected in the belief that the market mechanism offers solutions to all economic and social problems.

Social capital

Cultural and moral resources that help to promote social cohesion, political stability, and prosperity.

Supraterritoriality

A condition in which social life transcends territory through the growth of 'transborder' and 'transglobal' communication and interactions.

Homogenization

The tendency for all parts or elements (in this case, countries) to become similar or identical.

Indigenization

The process through which alien goods and practices are absorbed by being adapted to local needs and circumstances.

Transnational corporation

A company that controls economic activity in two or more countries.

Financialization

The reconstruction of the finances of businesses, public bodies and individual citizens to allow them to borrow money and so raise their spending.

The Washington Consensus

Coined by John Williamson to describe the policies that the international institutions based in Washington (the IMF, World Bank and US Treasury Department) favoured for the reconstruction of developing economies. 'Stabilize, privatize, liberalize.'

Sovereign debt crisis

A structural imbalance in state finances that makes it impossible to repay, or re-finance, the national debt without assistance from a third party.

The Paradox of Thrift

The paradox that increased saving by individual households may lead to a reduced overall saving because of its negative impact on consumption and growth.