Social Institutions of Economy and Politics, Research Paper Example

Social institutions of economy and politics are very closely connected in any society, at both national and international level. In terms of sociology, economy can be defined as “social system that produces, distributes, and consumes goods and services in a society” (Cliffnotes, 2012). Hence, as one can see, the economy is still a social system catering for the needs of society in terms of consumption goods’ and services’ production, which makes the economy an inherently social phenomenon. As for politics, from the sociological viewpoint, it is the distribution of power and dominance in a certain state, or the relationship of the state government and its society. The initial stage of sociology and politics development provided a quite isolated view of both in relation to one another; politics was more focused on the government apparatus, while sociology took a much broader view, studying the social mechanisms of broader population. However, the interconnections between the governments and their nations have come to the fore in the 20^th century, and it became impossible to separate the three vital aspects of any state’s functioning – economy, politics, and sociology.

With proper regard to society and economy, as well as the role of the government in controlling the economy, one should refer to the competing views of social order such as capitalism and socialism. As for capitalism, Katsuhito (2009) indicated that historically, there have been two views on capitalism – that of Adam Smith (“the invisible hand” of price mechanisms) and the Keynesian revolution (denying the “ideal state” of capitalism). However, the Keynesian economic rules failed with the coming of globalization, since the global economic crisis that started in 2007 in the USA and quickly grasped the rest of the world provided additional evidence for the validity of the pricing mechanisms’ rule in the free market economy.

As for socialism, it is often seen with a negative implication, since it was the forefront agenda of the Soviet Union; hence, socialism is often associated with communism. However, there are many positive features of socialism that any modern and democratic society can find appealing. For instance, as Timbers, Chia, and Morris (n. d.) admitted, the society in the conditions of socialism should be run for the common good in contrast to the capitalist society seen as fostering the individual effort, individual initiative, and individual striving for prosperity. In socialism, economic collaboration rather than economic competition is seen as a viable tool of achieving success in the market. Moreover, socialism presupposes a certain amount of economic planning, and favors putting a certain amount of production means into collective/cooperative ownership (Timbers et al., n. d.).

As one can see from the present account, socialism is surely a more protective regime in terms of social welfare. Under the conditions of capitalism, competition is the leading drive in people’s economic activity, which indeed leads to the success of the few at the expense of many people’s failure. In the conditions of capitalism, few people are becoming very rich, while large groups of population have to live below the average because of their incapability in achieving the commercial success. From this perspective, socialism seems a more humane and more caring mechanism for economic organization in the state, with a certain amount of cooperative ownership, with strong economic planning by the state that deprives capitalists of a certain degree of economic freedom, but at the same time ensures the higher opportunities for the larger groups of population.

Summing the present argument up, one has to note that there has always been a close and multi-dimensional relationship between politics and economy, since the government cannot exist and operate in isolation from the state economy. Hence, the economic principles according to which the state functions are often determined by the government, the extent to which it is involved in the economy of the country, which always has both positive and negative implications for the market participants and general population. The current economy is mostly capitalist, but some states have tried to incorporate the socialism elements into their political and economic systems; thus, the UK and the EU have social democracy as their prime orders.

References

Cliffnotes (2012). Economy Defined. Retrieved from http://www.cliffsnotes.com/study_guide/Economy-Defined.topicArticleId-26957,articleId-26905.html

Katsuhito, I. (2009). Two Views of Capitalism. Tokyo Foundation. Retrieved from http://www.tokyofoundation.org/en/topics/2nd-end-of-laissez-faire/chapter-1-two-views-of-capitalism

Timbers, A., Chia, J., & Morris, D. (n. d.). Socialism. Retrieved from http://morrischia.com/david/portfolio/boozy/research/socialism.html