Economics Assignment
Using your textbook, define the following terms – and provide a real world example for each one
- I) Economy // capitalism // state or welfare capitalism // oligopoly // socialism // corporation //interlocking directorate // transnational corporation // globalization // outsourcing or offshoring // conglomerate //deindustrialization // underemployed // monopoly (60)
Economy: determines how a society produces, distributes, and consumes goods and services.
EX: the stock market in the US determines how the economy will be the more the stocks raise the better the economy
Capitalism: An economic system based on private ownership of property and competition in producing and selling goods service
EX: the United States of America and the United Kingdom where there is economic freedom, which allows people to own properties and industries/organizations privately to make profits increasing competitiveness in the market (Eichhorn et al. 615).
State or welfare capitalism: an economic system that combines private ownership of property, market competition, and a government’s regulation of many programs and services (Na 29)
EX: IBM, which has permanent employment, extensive security, the involvement of employees, and the internal labor market as the elements of its employment system.
Oligopoly: domination of a market by a few large producers or supplies.
EX: the automobile industry or field of business is dominated by General Motors, Toyota, Ford, and Fiat Chrysler.
Socialism: an economic system based on the public ownership of the production of goods and services
EX: Cuba is a socialist country it lacks a stoke exchange and the essential services such as health and education are ran and controlled by the government (Ghosh & Ambar 8)
Corporation: an organization that has legal rights, privileges, and liabilities apart from those of its members
EX: Walmart Inc. has its privileges and rights, although it is not a person, legally, it is seen as one.
Interlocking directorate: the same people serve on the boards of directors of several companies or corporations.
EX: The situation of Arthur Levinson and Eric Schmidt, who both served at the boards of their own companies where they were CEOs and still served at the board of directors for Apple and Google
Transnational Corporation: a large company that’s based in one county but operates across international boundaries
EX: Nestle operates in several countries in the world, although its headquarters are found in Switzerland.
Globalization: the growth and spread of investment trade, production, communication, and new technology around the world
EX: with open boarders policy, people can invest in other countries just as Nestle, which has invested in different parts of the world, which has been made possible by globalization. Also, the fact that technology has made it easy to communicate with people from different regions of the world, bringing them much closer, creating a globalization situation.
Outsourcing or offshoring: sending works or jobs to another county to cut a company’s costs at home.
EX: outsourcing building contractors from China to build infrastructure in America due to their construction expertise and cheap labor.
Conglomerate: a corporation that owns a collection of companies in different industries.
EX: Samsung which is a giant electronics manufacturer but also makes ships, military hardware and also is runs an amusement park in Korea
Deindustrialization: a process of social and economic change resulting from the reduction of industrial activity, especially manufacturing.
EX: the rust belt of America, which consists of regions that had flourishing factories and industries back then, but now it is filled with old rust industries that no longer function.
Underemployed: people who have part-time jobs but want full-time work or whose jobs are below their experience, skill, and education level.
EX: a university/college graduate who works in a bar serving drinks or a factory as one of the assembly sector workers.
Monopoly: domination of a particular market or industry by one person or company.
EX: Microsoft and window, this makes Microsoft a unique company that can only provide the market with particular gadgets and software.
- II) Explain the major characteristics of capitalism and provide an example for each of these characteristics
Ex: What is a market competition where would you find an example of it? What product or industry do you see it happening? Who benefits from the competition? (20)
4 major characteristics of capitalism:
- Private ownership of the means of production: property (real state, bank) belongs to an individual or organization rather than the state or the community.
EX: in the United States, most of the essential sectors that the community needs to survive, such as schools, hospitals, and banks are privately owned instead of being under government or community control (Ghosh & Ambar 11).
- Market competition: owners of production compete in deciding what goods and services to produce and setting prices that offer consumers the greatest value in price and quality.
Ex: in the insurance companies in the US, they all have different regulations and guidelines for their policies which enhance competition in the market (Na 23). Both the consumers and the owners benefit from the competition as the consumers get price variations, and the competitor that is on top get more profits than the others.
- Profit: selling something for more than it costs to produce generates profits and the accumulation of wealth for individuals and companies.
EX: privately owned businesses such as real estate, schools, and banks tend to exploit their customers by offering services at a higher price than I cost to ensure that they maximize the returns of the business (Ghosh & Ambar 15).
- Investment: by investing in profit, capitalists can increase their own wealth.
EX: through investments in businesses that provide essential services and products to the population, it ensures that there is demand in those products, and even when they overprice them, they will be consumed increasing the profits gained (Eichhorn et al. 600).
III) Explain the difference between capitalism and state (welfare) capitalism – provide an example using current real-world example/corporation or industry to support your statement (20)
They are both an economic system and based on private ownership of property and competition in producing, for example, insurance companies, hospitals, and corporations such as Apple. In capitalism, the community or the government has very little control over the operations of the business (Na 7). But on the other hand, state (welfare) capitalism is including government regulation of many programs and services. In addition, that it has private industry, state (welfare) capitalist government owns or operates some of the largest industries and services for EX: (Education, transportations, postal service) that benefit the entire population.
Provide an example using current real-world example/corporation or industry to support your statement
** The answers for this entire are in your textbook exceptions being the actual examples you need to provide
Work cited
Eichhorn, Wolfgang, and Winfried Gleißner. “Methodology: Models and Theories in Economics.” Mathematics and Methodology for Economics. Springer, Cham, 2016. 597-625.
Ghosh, Chandana, and Ambar Nath Ghosh. “Capitalism Versus Socialism: A Few Country Studies.” An Introduction to Economics. Palgrave Pivot, Singapore, 2019. 137-163.
Na, Na. The economic theory of ‘managerial’capitalism. Springer, 2016.