Globalization The process by which the economic and social systems of nations are connected together so that goods, services, capital and knowledge move freely between nations. * JV or M&A etc
Economic Systems – Tradition-Based Societies: rely on traditional communal roles and customs to carry out basic economic tasks. – Command Economy: economic system based primarily on a government authority making the economic decisions. – Market Economy: economic system based primarily on private individuals making the main economic decisions.
“Free” Markets and Trade • Free Markets = each individual is able to voluntarily exchange goods with others and to decide what will be done with what he or she owns without interference from government.
• Free Trade = citizens may freely trade goods with
the citizens of other nations without the interference of tariffs, quotas, or other government limits on the goods citizens may buy from or sell to foreign citizens.
Locke’s State of Nature • All persons are free and equal. • Each person owns his body and labor, and whatever he mixes his own labor into. • People’s enjoyment of life, liberty, and property are unsafe and insecure. • People agree to form a government to protect and preserve their right to life, liberty, and property.
Aggregate of Demand by John Maynard Keynes • According to Kaynes, the sum of demand of three sectors of the economy: 1. Households; 2. Businesses; 3. Government.
Free Trade and Utility • Advocated by Adam Smith. – everyone prospers if nations specialize in making and exporting goods whose production costs for them are lower than for other nations. • Advocated by David Ricardo. – everyone prospers if nations specialize in making and exporting goods whose opportunity costs to them are lower than the opportunity costs other nations incur to make the same goods.
income. – Sale of one’s own labor. – Ownership of the means of production (i.e. buildings, machinery, land, and raw materials). • Capitalism and its private property system creates alienation among workers.
Marx on Alienation • In capitalism, workers become alienated when they lose control of their own life activities and the ability to fulfill their true human needs. • Capitalism alienates workers from their own productive work, the products of their work, their relationships with each other, and from themselves.
Mixed Economy • Mixed Economy = an economy that retains a market and private property system but relies heavily on government policies to remedy their deficiencies.
Class Discussion • In Malaysia, which industry do you think that we still need to have regulated and not to be control and monopolized by the capitalist.