Basic Characteristics of Capitalism
A. Economic systems determine what to produce, how to produce, and
who will receive production.
B. An economic system must also have the ability to adapt to changing
economic environments. For example, How will America's economic
system adapt to changes caused by September 11?
C. Adam Smith described the beginning of market based capitalism.
1. His 1776 book The Wealth of Nations first described of capitalism.
2. It described capitalism as it was practiced in 18th century England.
3. For more visit econlib.org/library/Enc/bios/Smith.html
D. Basic characteristics described by Adam Smith
1. Private property-the right to own resources and bequeath property
2. Freedom of enterprise-own a business
3. Freedom of economic choice-work/not work, spend/not spend
4. Role of self-interest
a. People are by nature economic creatures
b. Self-interest is a fundamental characteristic of people
5. Competitive market system
a. Many buyers and sellers
b. Market participants, buyers and sellers, have little control over price
c. Competition performs the organizing and controlling functions for a
6. Limited government ("Laissez-faire ")
a. Government should let markets be with a hands-off philosophy)
b. Acceptable government involvement has become an important
political question in the United States during the last few decades.
c. Francois Quesnay popularized the term laissez faire.
7. Characteristics of capitalism lead to Creative Destruction
a. First described by 20th century sociologist and economist
Joseph Schumpeter, it was an important new idea for
b. Change involves the creation of technology improved economic
structures and the destruction of inefficient economic structures.
c. Capitalism allows this destruction to take place.
d. The fight between labor and management has also brought much
e. Let Us Now Praise Private Equity explores the application of
creative destruction to the poor job creation during the great
recession. National Review. 2/6/12
f. Carnival of Creative Destruction: a futurist predicts change
g. Rust Belt Almanac Mid-West decline and Creative Destruction
8. The Success and Price of Capitalism - Documentary Video 1:02
Modern Capitalism has many
A. Complex Market System Setting Prices
B. Importance of Capital Goods and Technology
1) Complexity requires company produce limit their product lines.
2) Division of Labor allows specialization by ability ad training.
D. Unique Descriptions of Modern Capitalism
1. Corporate Capitalism: a capitalist marketplace characterized
by the dominance of hierarchical, bureaucratic corporations.
2. Crony Capitalism has been around from the beginning.
a. New name is Corporate Welfare
b. How crony capitalism corrupts the free market 30 minute video
c. Hunter Lewis on crony-capitalism 30 minute video
d. Geithner and Summers accused of being Crony Capitalist 2/16/15
3. Money Manager Capitalism: money managers dominate savings and
investing and markets impacting economy's performance
4. State Capitalism: economy driven by state, less reliance on markets,
practiced in China
5. Democratic Capitalism vs. Capitalistic Democracy
is about cost effectiveness.
6. Patrimonial Capitalism is gentry living off of inherited wealth.
7. Capital in the Twenty-First Century is very popular by Thomas Pikett
a. Capitalism vs. Democracy editorial 1/28/14
b. Capitalism in the Twenty-First Century editorial 3/25/14
c. Taking on Adam Smith and Karl Marx NYT 4/19/14
d. Capitalism is Not to Blame for Middle-Class Plight
8. Capitalism is a concise overview from reference.com
Sources of Economic
"rent-seeking is expending resources on political activity to increase one's share of existing wealth without creating wealth"
III. Criticism of Modern
A. Crises Capitalism is a concise video contains ideas about capitalism resulting from
The Great Recession of 2008-2009
B. Current Political Economy Questions stem from the criticism.
C. Why is Chinese Capitalism Better than American Capitalism?
D. Why Intellectuals Hate Capitalism by Robert Nozick
E. American Politics Are we a Democracy? A Republic? A Polyarchy?
Noam Chomsky breaks down American Politics today and American
Politics that our founders envisioned.
F. Is Capitalism Moral? A Commonwealth Club Podcast Debate
G. Hoodwinked An Economic Hit Man Reveals Why the
World Financial Markets Imploded--and What We
Need to Do to Remake Them, by John Perkins
H. Coercive power of capitalism
I. Capitalism and Inequality (Jerry Z. Miller, Foreign Affairs) Without social safety
nets capitalism is doomed through social disorder. Editor's Note: I've seen a lot of
verbiage blaming Capitalism for the inequality in the U.S. Inequality is a political
question. It is the responsibility of voters through politicians to equitably distribute
production without substantially limiting the productive capabilities of capitalism which
has coped well with the Balance Sheet Recession known as The Great Recession
See People Not Voting Their Pocketbook is Literally Killing the Poor
J. How Will Capitalism End 6/14
K. Has Capitalism Reached a Turning Point concerning reform, Forbes, 9/26/14
1. The Crisis of Capitalism, The Critique from the right
2. Unfettered Capitalism | Chris Hedges & Michael Moore 8:44
3. Capitalism in Crisis 1:40 is well-done
Capitalism Readings and Videos
Some Criticize Dramatically
Some Question his motives as
Ida Tarbell and other investigative journalists were called Muckrakers known today as investigative journalists. She exposed Standard Oil Trust. Working for McClure Magazine and other monthly magazines they help educated the public from 1890 to 1929 in what is known as the Progressive Era.
How Markets Work: The Circular Flow
Please tell Friends About This Free
A. Pure capitalism as described by Adam Smith never existed.
B. Recent economic systems have are Mixed Economies
(a mixture of Capitalism and Socialism)
See Democratic Capitalism vs. Capitalistic Democracy
1. Socialism emphasizes collective ownership and
management of economic resources that are more equally
2. Democratic Socialism, as practiced in Western Europe,
has public ownership of key industries such as transportation
a. The economic systems of Europe began moving away from
socialism toward capitalism in the late 1970's
b. Margaret Thatcher, former prime minister of England,
started this trend.
c. Ronald Reagan agreed and stressed the market system
during his presidency
d. Capitalism and Socialism
1. Capitalism vs. Socialism Video from Crash Course
in World History #33 uses humor for basics.
2. Laissez fair Capitalism vs. Socialism Video
e. See Social democracy
3. Communism is the ideal of those practicing a "Marxian
system" Those wanting immediate revolution became
known as known as Bolsheviks.
a. Named after 19th century philosopher Karl Marx
b. The public owns almost all wealth which is centrally managed,
a planned economy sometimes called a command economy.
c. The Paris Commune of 1871 along with the French Revolution
explains why so many feared change promised by new liberal
4. Fabian Economics The Fabian Society is a British socialist
organization whose purpose is to advance the principles of
socialism via gradualist and reformist, rather than revolutionary,
5. Feudalism is a system for structuring society around relationships
derived from the holding of land in exchange for service or labor.
a. New Feudalism refers to a theorized contemporary rebirth of
policies of governance, economy and public life reminiscent
of those present in feudal society
b. Feudalism Then and Now
6. Traditional economy, is where customs determines the economy
7. Oligarchy is when a few people distinguished by royalty, wealth,
family ties, education, corporate, or military have control. U.S. ?
8. Plutocracy is rule by the wealthy is practiced by many developing
a. plutocrats vs. populist is a controversial topic.
b. American Dynasty summarizes the plutocratic nature of the
9. Kleptocracy government exists to increase the personal wealth
and political power of its officials. Russia?
10. Theocracy: deity is officially recognized as the civil ruler and official
policy is governed by officials regarded as divinely guided.
see Vatican City Iran and Sikyong
a. Using Two Cows to explore using resources, Infographic 3/1/13
b. Harvey - Is Marxism Relevant Today? takes a while to load
c. Presidential Courage explores how Ronald Reagan deplored
d. 5 Questions an Economic System Must Answer
e. Book Collections
1) Classics of Political Economy
2) Classics of Political and Military Science
a. Economic Systems Capitalism vs. Communism, 13 minutes
b. Capitalism and Socialism is more of an editorial 14 minutes
c When-Capitalism- s Great and Not So Great
d. Milton Friedman Versus A Socialist 4 minutes
|Degrees of Socialism
|Country Economic Policies
1. Colonialism is where one nation assumes political or economic control over another. The practice has occurred throughout history and has been compatible with all economic and political systems.
See Greece and the Endgame of the Neocolonial Model of Exploitation
2. Mercantilism is economic nationalism to build a wealthy powerful state. It is system of political economy designed to enrich the country by restraining imports and encouraging exports. Some feel Neomercantilism is practices by Japan, China and Germany.
3. Current Political Economy Controversies create difficult policy questions.
Ronald Reagan and Margaret Thatcher at the White House, 16 November 1988 Click to enlarge.
|Editors Note: Most unbiased observers would feel uncomfortable calling Democratic Socialism radical. Followed by many of the great countries of Europe after WWII, it did very well but some would feel it drifted toward communism. Prime Minister Margaret Thatcher pushed Great Britan toward capitalism by selling many large state owned industries and instituted business deregulation. Ronald Reagan followed suit in the U.S. Some 30y years later Thatcher's Great Britan has fared better than more socialistic continental Europe as politicians have allowed government spending and borrowing to get out of control. Conservatives in America feel they must stop U.S. politicians from doing the same thing.|
VII. Political Systems
A. The Basics Video 3:28
B. Republics exist when governmental power resides in the a consti-
tutionally determined government is ruled by elected leaders run
according to law (from Latin: res publica) resulting in individual and
minority protected from the majority.
1. There are many application of Republican concept. In
the U.S. property rights are strongly associated with a
2. To John Adams it was "a government, in which all men,
rich and poor, magistrates and subjects, officers and people, masters and
servants, the first citizen and the last, are equally subject to the laws."
3. Law may be determined with a direct democracy also known as pure
democracy in which voters vote on policy initiatives directly or an
indirect democracy or representative democracy as in the U.S.
where citizens elect officials to make on their behalf.
a. The 1911 17th Amendment moved the election of U.S. Senators
from the house of Representatives to voters which was a movement
toward direct democracy. The 1919 19th Amendment and 1971
26th Amendment expanded the electorate thus moving the U.S.
closer to being a Republic as the electorate for a larger group of
b. Removal of the Electoral College from the presidential election
process favored by some would move the process closer to the
people which is Republicanism. It would be a move toward direct
democracy because majority rules. This move would make many
founding fathers unhappy.
c. The U.S. is basically a Republic though process often allows a
democratic majority to rule.
1. The Constitution protects the minority which is a Republican principle
using a democratic majority rules principle in the Supreme Court .
2. People make up the electorate which has changed continually both
legally and in practice making our Republic somewhat dynamic.
4. In United States v. Cruikshank (1875), the court ruled that the "equal
of citizens" were inherent to the idea of a republic.
C. Democracy exists when governmental power resides in the a
constitutionally determined electorate with equal say in determining
the majority which makes political decisions such that the majority’s
power is absolute and unlimited
1. Types of Democracy
a. Presidential Democracy has a president and the legislative
body and their functions are separated providing checks and
balances to limit the power of both the chief executive and the
b. Ten American Misconceptions about Democracy from econintersect
2. In a Parliamentary Democracy as practiced in Great Brittan, the executive
branch derives its legitimacy from and is held accountable to the legislature
a. The executive and legislative branches are thus interconnected.
b. The head of state is normally a different person from the
head of government who is often called a prime minister and is
appointed from the majority party or from a coalition of parties
needed to form a government. Heads of state have varying digress
political responsibility. It England the Queen has ceremonial
c. W. Wilson Contrasts Democratic Republic & Parliamentary Democracy
3. History of Democracy
a Overview from Wiki
b. Origin of Democracy video from Documentary Films
c. Athens-The Truth About Democracy video from Documentary Films
d. The War On Democracy video from Documentary Films
4. Is democracy, like communism, a failed human doctrine?
a. Towards An Ideal Form of Government
b. We, the Intelligent People of the United States ...
c. Three New Kingdoms.
1. Terminal Democracy video from Documentary Film
2. After Democracy video from Documentary Film
3. Legalize Democracy from Documentary Film
5. Republic vs. Democracy
a In a republic the sovereign is the individual, in a democracy, the
sovereign is the group, the majority.
b. Republic vs. Democracy and other forms of government video 10.35
c. An Important Distinction: Democracy vs. Republic
d. Republic vs. Democracy
e. Why faster growth with democratic presidents-timing is everything
f. Building a Democratic Republic
6. Democracy and Capitalism
a. Pyramid Theory Looks at Capitalism as Practice the US Democracy.
b. Trading Democracy for Corporate Rule Part 1 video from
Thoughts of our Founding Fathers toward a
Democracy varied dramatically. Federalist George Cabot of Massachusetts feared ..."the terrible evils of democracy," and felt Jefferson was unstoppable,..." From p368 of Thomas Jefferson The Art of Power, 2012, a biography by Jon Meacham as summarized by Walter Antoniotti
In the U.S. democracy the rights of the minority are protected, though not perfectly, by a strong constitution interpreted by the Supreme Court. Democracy and a Republic are often used interchangeably. Source
Current Political Economy Questions may substantiate that democracy could not control government spending.
Universal male suffrage began in 1884 France and was an important milestone in the history of democracy.
VIII. Politics in the U.S. Democratic Republic
A. U.S Voting Rights Timeline
B. 20th Century U.S. Political Economy History
C. Money in U.S. Politics Using 40 charts.
D Presidential Politics is a 5-page concise summary of Presidential Elections.
E. Presidential Courage depicts great presidents saving democracy.
F. The End Game for Democracy Bill Moyers 3 minute video all aspects
of public and private life wherever possible.
G. A Republic No More Video 1:03 explores of U.S. Democracy and the
concept of a Republic.
IX. Political Systems Sundry Materials
A. Political Systems have to do with control.
B. Tenth Amendment (Amendment X) to the United States Constitution,
which is part of the Bill of Rights was ratified on December 15, 1791.
C. The Tenth Amendment states the Constitution's principle of federalism by
providing that powers not granted to the federal government nor prohibited
to the States by the Constitution are reserved to the States or the people.
D. The Civil War was a power struggle over federal power and the 2000 federal
election is a good example of the struggle over power.
E. Libertarianism wants to limit power.
F. Relationship between Rights vs. Freedoms 9/1/14
G. We the Intelligent People of the United States provides insight into
American democracy. by Frank Li, Ph.D.4/23/14
H. The Book Summaries Internet Library's political section reviews
Hoodwinked, a book by John Perkins who feel international corporations
are altering capitalism
as practiced today.
I. Origins of Democracy and the Citizenship of Athens c. 440 BC – 430 BC
J. 10 American Misconceptions About Democracy
K. Eric X. Li: A tale of two political systems
Conclusion Four Horsemen 1:39 video is a collection of today's greatest sociological, political and economic voices that analyze and put into historical perspective the decisions and results of our economic and political systems.
Discussion Questions updated 2/14/15
Editor's Note: To solve the problem of not enough income for the middle classes in the 1980's, capitalism changed the name of Home Improvement Loans to Home Equity Loans and people were allowed to what had been a retirement nest egg before they retired. There is nothing wrong with this as long as people realize that they are delaying retirement.
Please Blog Friends About This Free Library Using
Is This Divergence an Economic or Political Issue?
Editor's Note: The recent large decrease in the Household debt resulted because people defaulted on mortgage debt and the Federal Reserve picked up the tap by printing money.
Educating the Class of 2030 for Employment and Creaativity
2. How Germany, Our Chief Competitor, Educates Toward Student Employability and Self-Esteem
3. Economist Lower Wage Predictions Came True
4. Individualized Curriculums for a Complex World
Next Chapter Demand and Supply
of Contents Economics
Here is a visual version of the well-known cow based
analogy of capitalism.
US Produces Most Per Capita We Borrow on Home Equity
for Current Consumption. Yet Many Seem Dissatisfied
Calvin and Hobbes Explain Modern Capitalism from The Daily Beas
Voters Hire Politicians That Overspend and
Promise More in the Future at all levels of Government
Cheap Imports Allow Even More Consumption.
Here is a visual version of the well-known cow based analogy of capitalism.
US Produces Most Per Capita
We Borrow on Home Equity for Current Consumption.
Yet Many Seem Dissatisfied?