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Contemporary World Economic Systems

Throughout the twentieth century, capitalism and socialism were the principal economic models in industrialized countries. Sociologists often use two criteria criteria property ownership and market control-to distinguish between types of economies. However, keep in mind that no society has a purely capitalist or
socialist economy.


Capitalism is an economic system characterized  by private ownership of the means of production, fmm which personal profits can be derived throughmarket competition and without government intervention, Most of us think of ourselves as "owners' of private property because we own a car, a television, or other possessions. However, most of us are not capitalists; we spend mOlley on the things we own rather than n1r1ke mOlley from them. Only a relatively few people own income-producing property from which a profit can be realized by producing and distributing goods  and services. Everyone else is a consumer. "Ideal"capitalism has four distinrcive features: (1) privaie ownership of the means of production, (2) pursuit of personal prof t, (3) competition, and (4) lack of government intervention.

Private Ownership of the Means of Production Capitalist economies are based on the right of individuals to own income-producing property, such as land, water, mines, and factories, and the right to "buy" people's labor.In ifte early stages of industrial capitalism (1850- J 890). virtually all  the capital for investment in the United States was individually owned-prior to the Civil War. an estimated two hundred families controlled all major trade and financial organizations. By

the 18905. individual capitalists, including Andrew Carnegie. Cornelius Vanderbilt, and John D. Rockefeller, controlled most of the capital in commerce, agriculture, and industry (Feagin. Baker. and Feagin. 2006). As workers grew tired of toiling for the benefit of  capitalists instead of for themselves. some of thembanded together to form the first national labor union, the Knights of Labor, in J 869.A labor union is a group of employees who join together to bargain with an employer or a group of employers over wages, benefits, and working conditions. The Knights of Labor
included both skilled and unskilled laborers, but the American Federation of Labor (AFL), founded in 1886, targeted groups of skilled workers such' as plumbers and carpenters; each of these craft unions maintained autonomy under the "umbrella" of the AFL. Under early monopoly capitalism (1890-1940), most ownership rapidly shifted from individuals to huge corporations-large-scale organizations that have legal powers, such as the ability to enter into contracts and buy and sell property, separate from their individual owners, During this period, major industries, including ·.oil, sugar, and grain. came  under the control of a few corporations owned by shareholders. As a general rule, individual shareholders- persons who hold or own shares of stock in acorporation-cannot be blamed for the actions of the
corporation. Thus, shareholders are able to protect  their personal assets while limiting their liability for the corporation's actions or debts.

A1; automobile and steel plants shifted to mass production, workers once again perceived that their needs were not being met. In 193 5 the Congress of Industrial O organizations (CIO) was established to represent both killed and unskilled workers in entire industries such as automobile manufacturing. According to John Sargent,
a steelworker, I got in the mills in 1936,and I [was] fortunate to be caught up in a great movement of the people in this country .... IA] movement of the kind that we had . . . in the 00 was a movement that moved millions of people, literally,and changed not on I)' the course  f the working man in this country, but also the nature
of the relationship between the working manand the government and between the working man and the boss. (qtd, in Watkins, 1993: 274)

In 1937,GMworkers held their first sit-down strike  The workers occupied the plants but refused to work, thus paralyzing production (McEachern. 2003). The sit-down strike represented a new approach that came to dominate U.S.labor activism (Watkins, 1993). In advanced monopoly capitalism (1940-present), ownership and control of major industrial and business sectors .

businesssectors have become increasingly concentrated. Economic concentration is the degree to which a.  relatively small number of  cqptrol adisproportionately large share of a nation's economic r sources. Today, many corporations are global in scope. Transnational corporations are large corporationsthat are headquartered in one country but sell and produce goods and services in many countries. These corporations playa major role in the economies and governments of many nations. The magnitude of these corporations is shown in • Table,,13.I. which compares the revenues of the world's twenty-five largest t  ans national corporations with the gross domestic product  of entire countries.Transnational corporations;re not dependent on  the labor,' capital, or technology of anyone countryand may move their operations to countries where wages and taxes arelower and the potential prof ts are higher. Corporate considerations of this kind help explain why many jobs formerly located in the United States have shifted to lower-income nations where few employment opportunities exist and workers can be paid significantly less than their U.S.counterparts, This appears to be a fact of life.  workeraare producing parts for automobiles and computers or cooking hamburgers ill a fast- restaurant owned by a transnqtional corporation such as McDonald's, which prides itself on placing "Golden Arches" throughout the world.

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