International

Contemporary
Analysis
Political Systems
 SYSTÈMES
PoliticalPOLITIQUES
Systems

Extreme left Center Extreme right

Conservatism

Communism Democratic Fascism

socialism

Liberalism
As you will see below, the use of the vertical and horizontal axes creates quadrants in which we can
situate the approximate location of each ideology.

Political freedom

Democratic Democratic
Socialism Capitalism
State-control Economic
Economy freedom

Political repression

Dictatorial capitalsm Dictatorial socialism

(Fascism) (Communism)
 The
concept of
political
system
Political system
It can be defined as the set of interactions by which resources and valuables
are distributed by authority inside a society.
Political systems are the formal and informal political processes by which
decisions are made concerning the use, production and distribution of
resources in any given society.
D. EASTON, Analyse du système politique, Paris, A. Colin, 1974, p. 23.

A mechanism with the authority to

allocate resources and valuables in a
society thus achieving harmonization of
diverse and contradictory interests.

Its specific property is not to

distribute resources and valuables,
but rather to distribute them by the
use of authority.

Denis Monière/Jean Herman Guay, Introduction

Aux théories politiques, (1987)
 The State and the political power
The political system is constituted by the mechanisms and the government
institutions, destined to conquer, to exercise and to retain political power.
Each State adopts a political system.

Political power implies the exercise by the state of a social control by the
governors over the governed. In this sense, the state is a dominant
organization.

Denis Monière/Jean Herman Guay, Introduction

Aux théories politiques, (1987)
Ideology
An integrated set of ideas and beliefs (or ideas transformed into
beliefs) designed to explain one´s attitudes as a member of a
society and to establish a line of conduct based on those ideas
and beliefs.
Les systèmes, les idéologies, les institutions politiques et le problème de leur diffusion.

Monsieur Karl Loewenstein.

A political ideology is a set of ideas, beliefs, values, and

opinions, exhibiting a recurring pattern, that competes
deliberately as well as unintentionally over providing plans of
action for public policy making in an attempt to justify, explain,
contest, or change the social and political arrangements and
processes of a political community.

International Encyclopedia of the Social & Behavioral Sciences 2001, Pages 7174-7177
 What underlies ideologies

Ideology

Beliefs
Ideas Opinions

Resolutions to the problems of life

Food Concorde and
Shelter harmony among
individuals.
Environment Order and law

The economic systems and political regimes in the world are based on a
diversity of ideologies.
The roles of political ideologies

The role of political ideologies is to establish a set of

ideas that can be used to provide the foundation of
political organization. As a result, all political ideologies
have three specific features:

1. A realistic interpretation of society as it currently

is.
2. An idealized interpretation of society. Essentially,
an idea of what society should be like.
3. An action plan on how to create a society that
reflects the needs and wants of all its citizens.
Essentially, a plan of how to get from number one
to number two.

https://www.studysmarter.co.uk/explanations/politics/political-
ideology/id
 Individualism:
Absolutism: In its economic and
Monarchical dynastic political aspects:
theocratic liberalism, capitalism
and freedom of
enterprise

Constitutionalism: Social Collectivism:

Amenaza by Democratic or
Institutionalized
de Typology of proletarian socialism
parliamentarism;
productos
The rulesustitutos
of law, and
ideologies (Communism) and the
democracy ideology of the
welfare state.

Elitism:
Nationalism: Aristocratic,
Imperialism; racism; Corporatist.
colonialism

Les systèmes, les idéologies, les institutions politiques et le problème de leur diffusion. - Monsieur Karl Loewenstein
 Political Systems

Political systems can be assessed according to two dimensions.

• The first is the degree to which they emphasize collectivism as opposed to
individualism.
• The second is the degree to which they are democratic or totalitarian.

International Business. Mc Graw Hill. Chapter 2

• ... the social order depends on the exercise of a certain coercion and any
form of political organization implies the use of a certain constraint.
 Collectivism

Any of several types of social

organization in which the individual
is seen as being subordinate to a
social collectivity such as a state, a
nation, a race, or a social class.

• It refers to a political system that stresses the primacy of collective goals over individual goals.

• It can be traced to the ancient Greek philosopher Plato (427-347 BC), who in The Republic
argued that individual rights should be sacrificed for the good of the majority and that property
should be owned in common.

• In modem times, the collectivist mantle has been picked up by socialists.

 • Marx argued that the few benefit
at the expense of the many in a
capitalist society where individual
freedoms are not restricted.

• While successful capitalists accumulate considerable wealth, Marx

postulated that the wages earned by the majority of workers in a capitalist
society would be forced down to subsistence levels.

• In a socialist system, trade is regulated according to a planned economy; In

a capitalist system, trade is determined by the market.
 What Does Modern-Day Socialism look like?

In the early 20th century, socialism split into

Communism – socialism can only be achieved through violent revolution and totalitarian
dictatorship (Bolshevik Revolution in 1917 in Russia)

in retreat worldwide by mid-1990s

Social democrats – socialism is achieved through democratic means

retreating as many countries move toward state-owned enterprises have been
free market economies privatized
2-15
 What Is Individualism?
• Individualism refers to philosophy that an
individual should have freedom in his own
economic and political pursuits
– can be traced to Greek philosopher,
Aristotle (384-322 BC), who argued that
individual diversity and private ownership
are desirable
– individual economic and political
freedoms are the ground rules on which a
society should be based

2-16
 What Is Individualism?
• Individualism is built on:
– Guaranteeing individual freedom and
self-expression.
– The welfare of society is best served by
letting people pursue their own economic
self-interest
– Small government

• It advocates for democratic political systems

and market economics
• It creates a more favorable environment for
international businesses to operate in.

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What is Democracy?
 What Is
Democracy?
• Democracy refers to a political system in which
government is by the people, exercised either
directly or through elected representatives
– usually associated with individualism
– pure democracy is based on the belief that
citizens should be directly involved in
decision making
– most modern democratic states practice
representative democracy where citizens
periodically elect individuals to represent
them

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 What Is Totalitarianism?
• Totalitarianism is a form of government in which
one person or political party exercises absolute
control over all spheres of human life and
prohibits opposing political parties
1. Communist totalitarianism – found in states
where the communist party monopolizes
power
2. Theocratic totalitarianism - found in states
where political power is monopolized by a
party, group, or individual that governs
according to religious principles
3. Tribal totalitarianism - found in states where
a political party that represents the interests
of a particular tribe monopolizes power
4. Right-wing totalitarianism - permits some
individual economic freedom, but restricts
individual political freedom

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 Types of governments
Pure dictatorship

Totalitarian

Purely private enterprise

Purely public company

Socialist Fascist

Liberal Moderate Conservative

Libertarian

Pure democracy
Individualism vs.
Collectivism

• The liberal will tend to be more collectivist in the

economic aspect. He / she wishes the intervention
of the State to control the economic aspects of the
enterprises and the population in order to guarantee
the equal distribution of the wealth.

• But in social matters, the liberal is more

individualistic.

• The conservative on the other hand, will be more

individualistic in economic matters. They do not
want state intervention in economic affairs either of
citizens or businesses. Each person must fend for
themselves
• The conservative in the social aspect is more
collectivist.
 Democracy Autocracy

Power of the people. Arbitrary power

(dictatorship).
Political
representation. The people kept apart,

Supremacy of the Ruling elites. Absolute

law (Rule of law). monarchy.

Anarchy
Aristocracy
Political systems
Governance of a
Characterized by
Describe the main group of elites
the absence of a
government categories of government "The reign of the
organization. best"

Monarchy Totalitarianism
A monarch occupies Ideology of Terror.
the position of head of
Single Party holds
state. Parliamentary
monarchy, All powers
constitutional, Create a "new man"
absolute.
Economic Systems
 There are three types of economic
systems: the market economy, the
command economy, and the mixed
economy.

The political ideology and

Economic economic system of a country
are synchronized.
Systems
A free market system is likely in
countries where individual
objectives take precedence
over collective objectives.

Public enterprises and restricted markets

are characteristic of countries where
collective objectives are dominant.

International Business. Mc Graw Hill. Chapter 2

 MARKET ECONOMY

• A system in which economic agents (businesses, individuals) have the

freedom to sell and buy goods, services and capital.
• Each acts according to their interests; Profit, considered positively, appears
there as the reward of risk.
• The market economy promotes competition, innovation and
entrepreneurship, which translate into economic growth.

http://perspective.usherbrooke.ca/bilan/servlet/BMDictionnaire?iddictionnaire=1551
 MARKET ECONOMY

• The goods and services that a country produces are not planned by anyone.
• Production is determined by the interaction of supply and demand
• If demand for a product exceeds supply, prices will rise, signaling producers
to produce more.
• If supply exceeds demand, prices will fall, signaling producers to produce
less.
• In this system consumers are sovereign.
• For a market to work in this manner, supply must not be restricted.
 COMMAND ECONOMY

• In a pure command economy, the government plans the goods and services that a
country produces, the quantity in which they are produced, and the prices at which
they are sold.
• Consistent with the collectivist ideology, the objective of a command economy is
for governments to allocate resources for "the good of society.“
• All businesses are state owned, the rationale being that the government can then
direct them to make investments that are in the best interests of the nation.
Why Things in Venezuela Just Keep Getting Worse:
https://www.youtube.com/watch?v=PzDTf7hGESQ
Venezuela growing economic crisis - BBC News: https://www.youtube.com/watch?v=u-
Z6Z5twP5I
 MIXED ECONOMY

• In a mixed economy, certain sectors of the economy are left to private ownership
and free market mechanisms
• While other sectors have significant state ownership and government planning.
• In mixed economies, governments also tend to take into state ownership troubled
firms whose continued operation is thought to be vital to national interests.

In 2008 and early 2009 the U.S. government took an 80 percent stake in AIG to stop
that financial institution from collapsing, the theory being that if AIG did collapse, it
would have very serious consequences for the entire financial system.
What Determines
A Country’s Level
Of Economic
Development?

2-30
 What Determines A
Country’s Level
Of Economic Development?
• Two ways to measure levels of economic
development are
1. Gross national income (GNI) per person
2. Purchasing power parity (PPP) involves adjusting
GNI by purchasing power
• Nobel-prize winner Amartya Sen argues
economic development should be seen as a
process of expanding the real freedoms that
people experience
– the removal of major impediments to
freedom like poverty, tyranny, and neglect of
public facilities
– the presence of basic health care and basic
education

2-31
What Determines
A Country’s Level
Of Economic
Development?

• The United Nations

used Sen’s ideas to
develop the Human
Development Index
(HDI) which is based on
– life expectancy at
birth
– educational
attainment
– whether average
incomes are
sufficient to meet
the basic needs of
life in a country

2-32
How Do Countries Compare on Economic
Development?
http://databank.worldbank.org/data/reports.aspx?source=2&series=SI.
POV.GINI&country=#
Beyond
the First
Decade of
the 21st
Century
Global GDP Growth
 How Do Countries Compare on Economic
Development?

What is the 'Gini Index'

The Gini index is a measurement of the income distribution of a
country's residents. This number, which ranges between 0 and 1 and is
based on residents' net income, helps define the gap between the rich
and the poor, with 0 representing perfect equality and 1 representing
perfect inequality. It is typically expressed as a percentage, referred to
as the Gini coefficient.
http://www.investopedia.com/terms/g/gini-index.asp

Classification as per Gini index

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html

Why Some Countries Are Poor and Others Rich

https://www.youtube.com/watch?v=9-4V3HR696k
 How Does Political
Economy Influence
Economic Progress?

INNOVATION AND INNOVATION AND DEMOCRATIC

ENTREPRENEURSHIP ENTREPRENEURSHIP REGIMES ARE
ARE THE ENGINES OF REQUIRE A MARKET PROBABLY MORE
LONG-RUN ECONOMY AND CONDUCIVE TO LONG-
ECONOMIC GROWTH STRONG PROPERTY TERM ECONOMIC
RIGHTS GROWTH THAN
DICTATORSHIPS, EVEN
THE BENEVOLENT
KIND

SUBSEQUENT
ECONOMIC GROWTH
LEADS TO THE
ESTABLISHMENT OF
DEMOCRATIC
REGIMES

2-37
• Countries with
favorable geography
are more likely to
engage in trade, and
so, be more open to
market-based
economic systems,
and the economic
growth they promote
• Countries that invest
in education have
higher growth rates
because the workforce
is more productive

How Do Geography And Education Influence

Economic Development?

2-38
 How Is The Political
Economy Changing?
• Since the late 1980s, two trends have
emerged
1. Democratic revolution (late 1980s and
early 1990s)
– many totalitarian regimes failed to
deliver economic progress to the vast
bulk of their populations
– new information and communication
technologies have broken down the
ability of the state to control access
to uncensored information
– economic advances of the last 25
years have led to increasingly
prosperous middle and working
classes who have pushed for
democratic reforms
2. A move away from centrally planned and
mixed economies
– more countries have shifted toward
the market-based model

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 What Is The Nature Of
Economic
Transformation?
• The shift toward a market-based system
involves
– deregulation – removing legal restrictions
to the free play of markets, the
establishment of private enterprises, and
the manner in which private enterprises
operate
– privatization - transfers the ownership of
state property into the hands of private
investors
– the creation of a legal system to
safeguard property rights

2-40
What Does The Changing
Economy Mean For
Managers?
• Managers must consider
1. Political risk - the likelihood that political
forces will cause drastic changes in a
country's business environment that
adversely affects the profit and other goals of
a business enterprise
2. Economic risk - the likelihood that economic
mismanagement will cause drastic changes in
a country's business environment that
adversely affects the profit and other goals of
a business enterprise
3. Legal risk - the likelihood that a trading
partner will opportunistically break a
contract or expropriate property rights

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 Review Question
A political system that stresses the primacy of
collective goals over individual goals is called

a) individualism
b) collectivism
c) a democracy
d) a market economy

2-42
 Review Question
_____ believe(s) that socialism can only be
achieved through violent revolution and
totalitarian dictatorship.

a) communists
b) social democrats
c) social republicans
d) Plato

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 A form of government in which one person or
political party exercises complete control over all
spheres of human life and prohibits opposing
Review political parties is

Question a) a democracy
b) a representative democracy
c) totalitarianism
d) socialism

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 ______ is found in states where political power
is monopolized by a party according to
religious principles.
Review a) tribal totalitarianism
Question b) right-wing totalitarianism
c) theocratic totalitarianism
d) communist totalitarianism

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 Review Question

In which type of economic system are all

productive activities privately owned?

a) a mixed economy
b) a command economy
c) a representative economy
d) a market economy

2-46
 Review Question

Which is not a primary determinant of a

nation’s rate of economic development?

a) its political system

b) its economic system
c) its geography
d) its currency

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