Work and Unemployment
THE GLOBAL CONTEXT: THE ECONOMY IN THE 21
The European Union
In 2007 the European Union (EU) accepted 2 new member nations (Romania and Bulgaria), forming the largest single trading bloc in the world and
representing one-fourth of the world’s wealth.
Residents of EU countries can buy and sell goods and services in any of the 27 member countries without tariff barriers.
Most of the EU countries share a common currency, the euro.
The EU reflects the increasing globalization of economic institutions.
The economic institution refers to the structure and means by which a society produces, distributes, and consumes goods and services.
In recent decades innovations in communication and information technology have spawned the emergence of a global economy—an
interconnected network of economic activity that transcends national borders and spans the world.
The globalization of economic activity means that increasingly our jobs, the products and services we buy, and our nation’s political policies and
agendas influence and are influenced by economic activities occurring around the world.
Socialism and Capitalism
Socialism is an economic system characterized by state-ownership of the means of production and distribution of goods and services.
In a socialist economy the government controls income-producing property.
Theoretically, goods and services are equitably distributed according to the needs of the citizens.
Socialist economic systems emphasize collective well-being rather than individualistic pursuit of profit.
private individuals or groups invest capital (money, technology, machines) to produce goods and services to sell for a profit in a
Whereas socialism emphasizes social equality, capitalism emphasizes individual freedom.
Capitalism is characterized by economic motivation through profit, the determination of prices and wages primarily through supply and demand,
and the absence of government intervention in the economy.
More people are working in a capitalist economy today than ever before in history.
Critics of capitalism argue that it creates too many social evils, including alienated workers, poor working conditions, near-poverty wages,
unemployment, a polluted and depleted environment, and world conflict over resources.
In reality, there are no pure socialist or capitalistic economies.
Rather, most countries have mixed economies, incorporating elements of both capitalism and socialism.
Most developed countries, for example, have both private-owned and state-owned enterprises, as well as a social welfare system.