IR and the

Economic System

Prof. Jorge V. Sibal

UP SOLAIR
Economics is a science which deals
with wealth getting and wealth
using activities.

It deals with activities of people in --

 making a living (working or laboring)
 transforming resources into goods
and services (production)
 exchanging goods and services to
satisfy human wants (commerce)
Labor and the Economy

 Labor is the most important

component of any economic activity.
 Without labor, there will be no
economic process.
 There will be no social organization.
IR is labor economics
 IR or labor economics is the study of
relations of people engaged in economic
activities
 It is concerned with the directions and
consequences of decisions and choices
made by people in their economic activities.
 It is also managerial economics or human
resource management (HRM) whose focus
is on the decision making process made by
the leaders of the economic units like
organizations or institutions.
Economic philosophies and
ideologies

1. free-enterprise or capitalist economic

philosophy (Smith classical economics)
2. state-enterprise or socialist economic
philosophy (Marxist economics)
3. mixed-enterprise (private, state and
labor enterprises-led economic system-
Keynesian) or mixed economics (neo-
classical or post-socialist economics).
FREE SOCIALIST MIXED ECONOMIC
ENTERPRISE
ECONOMIC ECONOMIC SYSTEM
SYSTEM SYSTEM

*philosophy is *philosophy is *combines both

very very philosophies,
individualistic and socialistic, point some are profit
profit of view driven and
driven is common others by common
good and good
collectivist
Free Socialist Mixed
Enterprise Econ System Econ System
Econ System
Adam Smith -- Karl Marx -- Keynesian --

Free State State

enterprise, enterprise Intervention
market and state or post
Marxist-
driven initiated state, private
develop- develop- and labor
ment ment initiated
development
Free Enterprise Socialist Mixed
Econ System Econ System Econ System
Market-driven Planned State planned
production & economy, state economy but
pricing due to determines production and
“invisible hand” demand and exchange are
prices market-driven

Private State capital Combined

capital accumula- state-private
accumula- tion capital
accumulation
tion
Free Enterprise Socialist Mixed
Econ System Econ System Econ System

Trade-
Deregulated Mercantilist Mixed.
and outward and inward- selective
looking looking
Investment-
Liberalized, Private Mixed- state,
private private and
ventures
labor
are minimal
Free Enterprise Socialist Mixed
Econ System Econ System Econ System
Fiscal
State State Mixed- state
resources resources resources are
are in are in in
infrastructure
infrastruc- infrastruc- and social
ture & ture, services &
investments investments less in
are and enterprises
privatized enterprises
Free Enterprise Socialist Mixed
Econ System Econ System Econ System

Monetary
Deregulated Banks arte Mixed-
and minimal state-owned monetary
state & monetary system is
regulated by
interference policies and a state-owned
state- central bank
controlled
Free Enterprise Socialist Mixed
Econ System Econ System Econ System
Incomes

Low wage High wage, Mixed and

policy, state variable wage
employment provides policies and
state
is private employment intervenes to
sector and social provide jobs
concerns services
Free Enterprise Socialist Mixed
Econ System Econ System Econ System
Dominant
Elites
Middle class Revolutio- Middle class,
capitalist nary socialists, civil
intellectuals society,
capitalists and
-socialists, state
communists bureaucrats
and state
bureaucrats
Free Enterprise Socialist Mixed
Econ System Econ System Econ System
IR System
Paternalistic Committee Bi-partite,
, unilateral system- tripartite, co-
decision socialist determination
making state-owned
Stages of Economic
Development
1. Primitive Communal production or the
Hunting and Fishing Stage
2. Pastoral and Subsistence Agriculture
Stage (Slave System)
3. Agricultural System (Early Feudal
System)
4. Modern Agricultural System and
Handicraft Stage (Advance Feudalism,
Colonialism and Mercantilism, also pre-
capitalist stage)
Stages of Economic
Development
5. Industrial Period

a) free-enterprise or capitalist system

b) state enterprise or socialist system

6. Post-Industrial Period or mixed enterprise

economic systems and globalization (others
also call this stage as neo-colonialist or
imperialist stage or characterized by the global
transfer of surplus goods and capital from the
more developed nations to the less developed
nations)