SSTP: POWER, GOVERNANCE, AND THE ECONOMIC SYSTEMS

Economics

Study of how societies and individuals choose ways on how to use and manage resources in order to fulfill their wants and needs.

Economic Goods

Things that money can buy and that are the objects of our economic wants.

Wealth

Material economic goods; the kind we can see, feel, and accumulate.

Needs

You can’t live without it.

Wants

You can live without it.

Wants

Life is more enjoyable with it.

Economic Goods

Anything with a price tag.

Scarcity

Limited resources + unlimited wants

Factors of Production

All the human and nonhuman resources that go into the production of material goods.

• Labor

• Natural Resources

• Capital

The three factors of production.

Labor

This is the effort we exert in the work we do.

Natural Resources

The base of material products.

Capital

The productive equipment to make things easier.

4

An economy must perform at least _ basic functions.

• Microeconomics

• Macroeconomics

Branches of Economics

Microeconomics

The study of how individuals, households, firms, and governments make choices, and how those choices affect prices, the allocation of resources, and the well-being of other agents.

Macroeconomics

The study of the economy as a whole.

Macroeconomics

The study of economy-wide phenomena, such as the growth rate of a country’s total economic output.

Classical Economics

Focuses on the idea that the economy works best when markets are free, and the government interferes as little as possible.

Adam Smith

The Father of Modern Economics

Adam Smith and David Ricardo

Economists who believed that when people pursue their own interests in business and trade, the whole economy grows.

Invisible hand

The idea that the market grows when people pursue their interests on their own.

Classical Economics

Self-regulating democracies and capitalistic market developments form the basis for _ _.

Classical Economics

This became closely associated with economic, and later, political freedom.

Neoclassical Economics

In this theory, the central economic problem is the limited nature of social resources.

Neoclassical Economics

This theory believes that economics as science should study the organization of an economy in order to establish welfare by the optimal allocation of resources.

Neoclassical Economics

This theory states that we should maximize satisfaction with limited resources.

Neoclassical Economics

The economy can be understood as an exchange economy in which rational actors with exogenously determined resource allocations interact in markets.

Neoclassical Economics

In this theory, productivity is seen as the source for the functioning of the economy and the determinant of the wealth of a nation.

Marxist Economics

Theory of economics dveloped by Karl Marx.

Marxist Economics

Focuses on the problems of capitalism.

Marxist Economics

This theory states that workers produce value through their labor but are paid less than the value they create. The extra value becomes profit for business owners.

Karl Marx

He believed this system causes inequality and conflict between workers and owners, and that it could lead to major changes in society.

Marxist Economics

Derived from a German economist’s seminal works, this theory critiques capitalism's treatment of labor, arguing that it exploits workers and undervalues their contributions.

Marxist Economics

This school of thought challenges classical economic theories by advocating for a system where the state plays a crucial role in economic decisions to ensure fairer wages and benefits across society.

Neoclassical Economics

It is the modern development of classical economics.

Classical Economics

This theory suggests economic freedom in order for the whole economy to grow.

Monetarism

An economic theory that emphasizes the role of government in controlling inflation by managing the money supply within the economy.

Monetarism

Developed in the 1940s by economist Milton Friedman.

Monetarism

Arose as a counterpoint to Keynesian economics, which advocates for government intervention to stabilize economic fluctuations.

Monetarism

Argue that excessive government spending can lead to inflation, proposing instead that a stable money supply should be maintained to ensure economic stability.

Historical Method

Involves the systematic study of past events, institutions, and processes to provide a descriptive "database" for political inquiry, enabling causal narratives and process-tracing.

Comparative Method

A way of studying political phenomena by comparing a small number of cases to draw generalizations about the origins of large-scale outcomes like revolutions or welfare states.

Scientific Method

A structured, systematic process of observation, hypothesis testing, and public verification to produce objective and reproducible findings.

Inductive Method

A relationship between theory and research where theory is generated out of research findings—meaning the researcher starts with observations and builds a theory at the end.

Deductive Method

A theory-driven approach where the researcher derives specific hypotheses from a general conceptual framework, which are then subjected to empirical testing for confirmation or rejection.

Theoretical Method

Fundamentally about offering explanations for why people act the way they do in politics.

Robert E. Goodin

He noted that in political science, "theory" essentially means "explanation."

Observational Method

Systematically collects data on political behavior and outcomes in their natural settings, without manipulating any variables or randomly assigning subjects.

Behavioural Method

It aims to explain and predict political actions strictly through objective, quantifiable data collected from observable political behavior, rather than relying on subjective feelings or moral judgments.

Politics

The activity by which groups reach binding collective decisions through attempting to reconciles differences among their members.

Power

The currency of politics.

Power

Concerned with the distribution, exercise, and consequences.

Authority

The right to rule.

Authority

Right to act, rather than the power to do so.

Authority

Creates its own power so long as people accept it to make decisions.