Comparative Politics CH 4 PT 2

Political-economic system

Relationship between political and economic institutions in a particular country as well as the policies and outcomes created

4 BASIC Political-economic systems

Liberalism, Social Democracy, Communism, Mercantilism

Liberalism

Goal is to MAXIMIZE economic freedom to promote growth

Laissez-faire -letting the economy operate with minimal regulation leads to best outcome

State’s role is limited but emphasizes supporting free markets.

• protect private property, enforce contracts, break up monopolies

EX: UK, US,

Social Democracy

Balance freedom AND equality

State plays an active role in shaping the economy

Strong protection on private property, free trade, significant redistribution of wealth

High taxes, public investments, help the poor

Communism

Eliminate individual economic freedom to achieve equality

Active state intervention, no private property, massive redistribution of wealth

Price, wages, trade, and jobs are all regulated by the state.

Mercantilism

The economy is used to promote the state. The power of the state depends on wealth

EX: Japan focusing on cars and Pokémon cards and specializing to help promote Japan’s economy.
Goal: Maximize state wealth as a means to increase state power.

Economic freedom and equality are lower priorities

Parastatals

Industry partially owned by the gov’t

EX: British Broadcasting Corporation

Gini Index

Measures the amount of inequality in a society

Higher gini index - more unequal societies

Human Development Index

Evaluates overall wealth, health, and knowledge of a country’s people.

Economic Liberalization

Policy changes aim to limit the power of the state and increase the power of the market and private property in the economy