Chapter 3 Characteristics of Market System Capitalism

I. Characteristics of Capitalism      II. Modern Capitalism   III. Other Economic Systems      4/27/21

I. Basic (market economy)
  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.
            Example: How will America's economic system adapt to changes caused by 9/11?

    C. Adam Smith described the beginning of market based economy. Capitalism was the term
           Smith created in his 1776 Wealth of Nations:
An Inquiry into the Nature and Causes of the

    D. Basic characteristics described by Adam Smith



Characteristics of capitalism lead to Creative Destruction described
by 20th century sociologist and economist Joseph Schumpeter.
t was an important new idea of capitalism. Change involves new technology,
improved economic structures, the destruction of inefficient economic structures.
Capitalism allows this destruction to take place causing results in
participant insecurity, political dissatisfaction and a move toward socialism. 
The fight between labor and management has also brought much controversy.

II. Modern Capitalism Has New Features
     A. Tangible/Intangible Capital Goods and Technology important
     B. Specialization
         1) Complexity limits product lines.
         2) Division of Labor allows specialization by ability, training.

    C. Modern Capitalism has many "rent seekers" trying to increasing profit through politics.
         1. Corporate Capitalism: marketplace characterized by the dominance of hierarchicalbureaucratic corporations
         2. State Capitalism: is driven by the state, less reliance on markets as practiced in China. 
China's State Capitalism

3. Money Manager Capitalism: managers dominate savings, investing and markets
         4. Crony Capitalism or
Corporate Welfare has been around from the beginning.
         5. Neoliberal Capitalism began with the Reagan era of deregulation
III. Other Economic Systems

     A. Introduction
           1. Pure capitalism of Adam Smith never existed.
           2. Recent economic systems are Mixed Economies, a mixture of Capitalism and Socialism

      B. Mercantilism government uses protectionism to generate trade, profit and wealth.

      c. Socialism has collective ownership and management of economic resources that are more equally distributed.
      1.  Democratic Socialism as practiced in Western Europe 
has public ownership of key industries such as transportation, communication and health care.
a. Economic systems of Europe began moving away from socialism toward capitalism in the late 1970's.
Margaret Thatcher former prime minister of England started this trend.
Ronald Reagan agreed and stressed the market system during his presidency. 
Fabian Economics "came from a British socialist organization whose purpose was to advance 
              socialism as
and reformist rather than revolutionaries.

   D. Communism is the deal of those practicing a Marxian system.
1. 19th century philosopher
Karl Marx a new political system.
                Marx extensively criticized Capitalism, described a Utopian worker's world and was not concerned with process.

     2. Wealth is collectively owned and managed in this planned command economy
           3. The 
Paris Commune of 1871 along with the French Revolution explains why so many feared change
               promised by new liberal economic systems.
           4. Some equate communism with a totalitarian political system democratic communism has never existed.
           5. This very left pro-labor anti religious economic philosophy was despised by most Western Oligarchs,
                many of whom wanted Nazi Fascism over any brand of Communism. 
6. In 1917 Bolsheviks who wanted immediate revolution defeated the evolutionary oriented
Animal Farm? 72 minute Video

Quick  Notes  Concise 1-page Reviews
Macro  Ch 1-7   Ch 8 -13   Ch 14-18  Micro  Ch 19-22   23-28   29-33
Please link to use as textbook/supplement and Share 

II. Modern Capitalism Has New Features
A. Tangible and Intangible Capital Goods and Technology are important

B. Specialization
1) Complexity limits product lines.
2) Division of Labor allows specialization by ability, training.

C. Modern Capitalism has many "rent seekers" using politics to increasing profit.
1. Corporate Capitalism: a capitalist marketplace characterized by the dominance
    of hierarchical bureaucratic corporations
2. State Capitalism: driven by the state, it's less reliance on markets as in China.
China's State Capitalism
3. Money Manager Capitalism: managers dominate savings, investing and markets
4. Patrimonial Capitalism is living off of inherited wealth
5. Crony Capitalism has been around from the beginning.
    a. New name is Corporate Welfare
    b. How crony capitalism corrupts the free market 30 min video
    c. Hunter Lewis on crony-capitalism 30
    d. Geithner and Summers Crony Capitalist?
    e. Crony Capitalism Index
    f. The Rise and Fall of Nations 2016 goes after  "bad billionaires."
6. Neoliberal Capitalism began with the Reagan era of deregulation
Late Capitalism happens after the golden age as society moves toward Communism

D. Angrynomics:
1. What happens when the economy becomes a rigged game? video
Capitalism 4.0 video

E. Democratic Capitalism vs. cost effective Capitalistic Democracy.

F. Readings
1. Capital in the Twenty-First Century was a very popular 2014 book by Thomas Pikett.
    a. Capitalism vs. Democracy editorial 1/28/14
    b Capitalism in the Twenty-First Century 3/25/14
    c. Taking on Adam Smith and Karl Marx NYT 4/19/14
    d. Sequester Capitalism, Democracy and Money Theories
2. Capitalism is Not to Blame for Middle-Class Plight         
3. Capitalism is a concise overview from
Calvin and Hobbes Explain Modern Capitalism 

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 Capitalism
A. Business Downturns Continue
1. Post WW2 International Economic Competitive Adjustment
2. U.S. Normality Changed by 7 Competitive Adjustments
3. World Changed and Good Jobs Disappeared
4. Middle-Class Plight

B. Videos
1. The Successes and Price of Capitalism
2. Capitalism in Crisis 1:40 is well-done.
3. Crisis of Capitalism  11:10 also well done
4. Seven Bad Ideas from the left and
5. Ten Reasons to be Bullish on U.S. Economy
6. The Crisis of Capitalism, The Critique from the right
7. Unfettered Capitalism, Chris Hedges Michael Moore video
8. The End of Capitalism
The Private Sector against corruption 30 min
Crisis of Capitalism Understood 11 min video
11. Great Recession from a Classical-Keynesian View
from Roger Farmer Pepperdine School of Public Policy
How the Economy Works 9.11 min. video
      b. Refining Classical Economics 9.29
c. Effect of the Great Depression 9.14
1970's oil shock shocks the world of economics 8.52
  e. How bad is the economy and where is it going 7.41
American Government: Republic Not Democracy 10.0


Criticize Dramatically

Some Question his motives as Michael Moore's estimated net worth is 50 million dollars.





Investigative journalist Ida Tarbell journalist called a Muckrakers known. 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. Her work represents hw we slowly improve the people properly represented by our democratic republic. See Inequality and the monopolies of unfettered techno markets

C. Philosophy

1. Why Intellectuals Hate Capitalism by Robert Nozick
2. Is Capitalism Moral? A Commonwealth Club Podcast
3. Coercive power of capitalism
4. 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 United States.
          Inequality is a political question. It is the responsibility of

voters through politicians to equitably distribute production
          without substantially limiting the productive capabilities of
. An example would be how well the economy 
          adjusted to the  2007-8 Balance Sheet 
Great Recession.  
   by Obama Care and now its up to our economy to make 
The income distribution problem it caused has been helped
  sure it is economically efficient.
5. Capitalism Versus the Philosophers
     See People Not Voting Their Pocketbook is Killing the Poor

D. Capitalism and Business
1. Reimagining Capitalism: Documentary of the Week
2. Chinese Capitalism Better than American Capitalism
3. Hoodwinked
An Economic Hit Man Reveals Why the World Financial Markets Imploded--
    and What We  Need to Do to Remake Them, by 
John Perkins
How Will Capitalism End
5. Has Capitalism Reform Reached a Turning Point Forbes
6. Revisiting Old Argument About Impact Capitalism
7. Economic Report of the President 2014 is positive
8. The Great Recession looks at a recent capitalistic failures.
9. Chicken Shit Club: Why the Justice Department Fails to Prosecute Executives.” video

Is Time to Take More from the Top 1/10 of 1%? 

IV. Other Economic Systems
A. Introduction
         1. Pure capitalism of Adam Smith never existed.
         2. Recent economic systems are Mixed Economies
             (a mixture of Capitalism and Socialism) See
             Democratic Capitalism vs. Capitalistic Democracy
3. Quick History of Economics
video 10 min.
    B. Mercantilism
        2. Mercantilism explained
3 min video
3. Mercantilism 5 min video
Socialism has collective ownership and
          management of economic resources that
          are more equally distributed.
          1. See
A Concise History of Socialism
          Socialism-What You Should Know About
          2. Democratic Socialism as practiced in Western
              Europe has public ownership of key industries such
              as transportation and communication.
              a. 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. Social Market Economy is a social and economic
                  system combining free market capitalism which
                  supports private enterprise, alongside social policies
                  which establish both fair competition within the
                  market and a welfare state and strong anti-inflation
             e. Democratic Socialism in America is a negative view
             f.  Fabian Economics "came from a British socialist
organization whose purpose was to advance 
                 socialism as gradualist, reformist rather than
       3. Capitalism and Socialism
           a. Capitalism and socialism a 14 min video from
   Crash Course Video in World History
#33 uses humor teaching the basics.
           b. Laissez fair Capitalism vs. Socialism Video
See Social Democracy
           c. What is China's State Capitalism?
               Question: Will China's system morph into
               Democratic Socialism?
           d. Marxism 101 How Capitalism is Killing Self video

    D. Command Driven Communism is those practicing a Marxian.
1. 19th century philosopher
Karl Marx created the political system.
            a. Marx extensively criticized Capitalism
            b. Mark described a Utopian worker's world.
            c. He was not concerned with getting from a to b.
       2. Wealth is collectively owned and managed in this
command economy.
3. The  Paris Commune of 1871 along with the French 
           Revolution explains why so many feared change
           promised by new liberal economic systems.
       4. Some equate communism with a totalitarian political 
           system democratic communism has never existed.
       5. This very left pro-labor anti religious economic
            philosophy was despised by most Western Oligarchs
            many of whom Nazi Fascism over any brand of

6. How Marx Got On The Wrong Side Of History
7. In 1917
who wanted immediate revolution
           defeated the evolutionary oriented


Ronald Reagan and Margaret Thatcher at the White House, 16 November 1988 
Click to enlarge.

Editors Note: Most unbiased observers would feel uncomfortable calling U.S. Democratic social radical. Followed by many of the great countries of Europe after WWII, it did very well but some would feel it drifted toward communism. by trying to redistribute too much wealth from the top toward the bottom. Prime Minister Margaret Thatcher pushed Great Briton toward capitalism by selling many large state owned industries and instituted  business deregulation. Ronald Reagan followed suit in the U.S. though he concentrated on deregulation. Some 30 years later Thatcher's Great Brittan has fared better than more socialistic continental European where 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.

Image result for Political Systems graphs




    E. Corporate Fascism
         1. Similar to
Plutocracy-rule by wealthy 
Plutocrats vs. populist is a controversial topic. 
         3. American Dynasty summarizes Bush family plutocracy 

     F. Less Dominate Systems
        1. Feudalism structures society around relationships 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 a U.S. ?

            b. Feudalism Then and Now
        2. Traditional economy is directed by custom. 
        3. Kleptocracy government exists to increase the
            personal wealth and political power of officials Russia? US?
Antitrust and How Kleptocracy Corrupts What Markets Are Supposed to do Well 24
        4. 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

     G See The History of Economic Thought  1 hr 37 Min

 V. Country Economic Policies
A. Colonialism
where one nation assumes political or
           economic control over another nation is
           The practice has occurred throughout
           history and has been compatible with all economic
            and political systems.
1. Economics of Colonialism

2. Settler Colonialism








Colonialism Maps


        2. Greece, Endgame of Neocolonial Exploitation
3. Teaching Decolonization Resource Collection

. Mercantilism
is economic nationalism to build a
         wealthy powerful state.
         1. A system of political economy designed to create
             wealth by restraining imports and encouraging exports.

         2. Some feel 
Neomercantilism is practices by Japan, 
             China and Germany. See

             How Mercantilism Started the American Revolution 5 min. video
3. Term Mercantilism was first used in a disapproving sense by Adam Smith
             because its goal was monopoly power for commerce participa

     C. Current Political Economy Controversies

   D. Readings for Other Economic Systems
Two Cows explore using resources.
             Infographic 3/1/13

2. Economic system has concise definitions.
3. Is Marxism Relevant Today? takes a while to load.
4. Presidential Courage explores how Ronald
             Reagan deplored Communism.

5. Questions Economic Systems Must Answer
 6. Book Collections
Classics of Political Economy
Classic Books of Political and Military Science



  Editor's notes on U.S. government
Political science developed during the Age of Enlightenment . In the United State a philosophy State Liberalism developed with many ideas coming from John Lock's Second Treaties on civil government. Liberalism seeks individual freedom under the law.

Liberal values from Lock concern an individual's natural rights of equality, liberty, property, the necessity of consent, and limited government.  Order and importance of these rights was then and still is the focal point of U.S. political discussions. For about three-hundred years these discussions have centered on minimal state liberalism (today's conservatism) vs. active state liberalism (today's liberalism). The question was to what degree should   government get involved with the protection of which of an individual's natural rights. How much property through taxes should be used to foster equality?

Five recurring themes have been present in these political discussions.
1) American Exceptionalism  exists because the country was formed at a unique time and place which allowed it to be special with a responsibility to provide an example of appropriate government. 2) The dynamic flexibility of America Liberalism has allowed concepts concerning individual rights to adjust as required by evolving circumstances. 3) The
reconstitution of American government after the Civil War, the New Deal, and other less significant reconstitutions has been beneficial though controversial. 4) An expansion of "we the people" from white men of property, to white men, to all men, to all citizens, and recently continued with the addition of homosexuals.  5) Space, the freedom to separate individuals from oppressive government, religion, and other potentially tyrannical organizations has continued though some feel modern America has lost some of this space. Source: Cycles of American Political Thought See The Founders Constitution for a vast source of writings about the constitution. Editor's Note: Secretary of the Treasury Alexander Hamilton orchestrated  the first federal tax on imports in 1789. Many believers in state rights were unhappy even though tax revenue was needed to pay Revolutionary War debt of both state and federal governments. Relative to GDP, it was the largest federal debt to exist until 1933 when revenue a collapse caused D3 (deep-do-do). Hamilton began the practices of increasing taxes (though not enough) to pay for war, paying interest and paying principle over a number of years. The practice of refinancing principal began after WWI. Some call this passing debt to our children but it has been 100 years and none has been paid so far. The practice of not increasing taxes to pay or war started with Bush II when he cut taxes while starting two wars and increasing Medicare. Hamilton (to the dismay of       Jefferson) also began the practices of the federal government paying state founding father Madison "...defines a faction as "a number of citizens, whether amounting to a minority or majority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community".[14] with many states   showing their appreciation by telling the federal government to stay out of state business. This    practice continues today. Source 



VI. Political Systems  
Politics is about power and control. See A New History of Power 20:16
1. Commonwealth is a political community founded for the common good.
2. Oligarchy: power effectively rests with a small number of people.
    a. US is an Oligarchy Northwestern study concludes
    b. German Oligarchs financed Hitler.
    c. Is America an Oligarchy
    d. The Power Elite: first full-scale study of structure and distribution of power in USA
What the 1% Don't Want You to Know
1. 24 min video Paul Krugman fears Oligopoly power
        2. Patrimonial Capitalism leads to Oligarchy Capitalism

        3. Polyarchy has decentralized rule where many smaller governments
            tailored to the needs and desires of the local populations.
        4. Fascism a form of is a form of radical authoritarian nationalism is
            considered by some to be right-wing as it is social conservatism
            and uses authoritarian means to oppose egalitarianism.
        5. Totalitarianism: the state holds total authority over society and seeks to control
            all aspects of public and private life.
        6. Libertarianism  wants to limit power.
            See Liberalism, Constitutionalism and Democracy
        7. Dictatorship rules by a few or one person. Germany had Hitler as dictator, he
            controlled a few advisors and a strongly nationalistic totalitarian state resulted.
Populism is not mob rule-Thomas-Frank podcast from the
Political Systems consists of a government and politics.
1. Republic government exists when a constitutionally determined representative
    government of elected leaders operating according to laws to protect individual
    rights which include equality, liberty, property and  necessity of consent.
    a. There are many application of Republican concepts. What constitutes a
        right and their relative importance of rights has been continually debated
    b. John Adams "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."
    c. In United States v. Cruikshank (1875) the Supreme Court ruled that
        "equal citizens" was inherent to the republic ideal.
    d. Colonial America developed in an untamed wilderness far from the
        mother country. This was a  unique historical circumstance resulted
        in the concept of American Exceptionalism
2. Federalism divides powers between member units so that political order
    is constitutionally decentralized between at least two units. Each level has
    some final authority and has some areas of self government.
    a. Federalism in the United States protects states rights with a concept
of Dual Federalism but hardships caused by the Great Depression led
         some toward the concept of Cooperative Federalism
     b. A conservative look at Federalism

c. The political Revolution of 1800 entailed Jefferson's Republicans
         taking over for the Federalist Washington, Hamilton and Adams. It
         began a 200 plus year battle concerning Federal Government power.  
Incorporation of the Bill of Rights enhanced the movement away form Federalism
"Originally the Bill of Rights only protected the rights it enumerated from federal
              infringement, allowing states and local governments to abridge them.
         2. In 1868 the
Fourteenth Amendment began the process of
        supplying all right to all people. Citizenship for blacks was first.
  the Supreme Court in held that the First and Second Amendment
             did not apply to state governments. See
United States v. Cruikshank

3. In 1897 Supreme Court ruled that federal property rights applied to state and local laws.
Chicago, Burlington and Quincy Railroad v. City of Chicago


 3. Democracy exists when government power resides in a constitutionally determined electorate
     each with an equal say in determining majority will. Political decisions are such that majority's
     power is absolute and unlimited The most difficult issue concerning the success of a democracy
     concerns controlling the possibility of Majority Tyranny
coming from Majority Factions as explored
The Federalist Papers.
 a. Controlling majority factions is more difficult in times of war when freedom of speech is questioned
         to maximize the state's police powers.
Gilbert v. Minnesota (1920) dealt with a state law prohibiting interference with the military's
         enlistment efforts. It was the beginning of a movement away from property rights and toward
         the liberty rights of
Whitney v. California 
(1927) dealt with the prosecution of a woman or aiding the Communist
         Labor Party. It also
furthered the individual liberty movement.
 d. Beginning in the 1950's the movement toward individual liberty morphed into the    
         Civil Rights































C. Kinds of Democracy

    1. Presidential Democracy haserican Politics Are we a Democracy? A Republic? A Polyarchy?
        In this 7.04 video Noam Chomsky breaks down his view of
        politics today and the politics that our founders envisioned.
        b. Current Political Economy Controversies provide discussion areas.
    2. Parliamentary Democracy as practiced in Great Brittan has an
        executive  branch that derives its legitimacy from and is held 
        accountable to a legislature (parliament). The executive and
        legislative branches are thus interconnected. 
        a. Head of state is normally a different person from the
            head of government. Called a prime minister, they are
            appointed from the majority party or from a coalition of parties
            when no one party have varying digress political responsibility
         b. England's Queen has only ceremonial responsibilities.
    3. Democratic Republic vs. Parliamentary Democracy by
        President Wilson's His comparison would make many
        founding fathers unhappy as they feared budget instability
        and anarchy similar to that of the French Revolution.

D. Making Laws in a Democracy
1. Direct Democracy
also known as pure democracy has the
      on policy initiatives.
   2. Indirect democracy or representative democracy is when the
          electorate chooses officials to make laws on their behalf.
   3. Initiatives and Referendums exist in some U.S. States.
         a. Part of the early 20th century Progressive Movement
         b. Allowed voters to put a proposed law on the ballot for
            approval and also to void existing state law. 
        c. D.C. and 27 states have this direct democracy tool.
        d. Referendumania Direct democracy is spreading
            across Europe, not always a good thing. 5/21/16
        e. Brexit was Democracy in its Purest Form 7/16
  4. Constitutional Amendments expanded "We" of
       "We the people..." which moved U.S toward Republicanism.
       a. The 1911 17th Amendment changed the election of U.S.
           Senators from the House of Representatives to voters.
       b. The 1919 19th Amendment gave women voting rights.
       c. The 1971 26th Amendment lowered voting age to 18.
       d. Eliminating the Electoral College would move the process
           closer to the people, Republicanism and a direct democracy
           majority. See Athens-The Truth About Democracy video
    6. The War On Democracy Video
    7. Republican Principles developed during Jefferson's presidency.
    8. US Voting Rights Timeline
    9. Walt Whitman shows the spirit and his energy sort of
       define America “Democratic Vistas.

F. Republic vs. Democracy
     1. In a republic the sovereign is the individual, it is government of the people.
         In a democracy, the sovereign is the group, the majority, it is government
         by the people.
         a. Liberal Democracy try to maximizes the represented cohorts ex. U.S.
         b. Illiberal Democracy limit cohorts ex. China is modified Marxism
     2. Republic v. Democracy and other governments
     3. An Important Distinction: Democracy v Republic
     4. Republic v Democracy
     5. Why faster growth with a democratic presidents-timing is everything.
     6. Building a Democratic Republic
     7. Book Summaries Internet Library's reviews Meacham's biography of
        Jefferson and other political economy writings.

 G. Democracy and Capitalism
    1. Capitalism is in Constant Conflict with Democracy 8/8/20
    2. Pyramid Theory looks at Capitalism as Practiced in the US Democracy.
    3. Alexis de Tocqueville wrote about capitalism and democracy
         in 19thnd democracy America. Read Democracy in America
    4. Trading Democracy for Corporate Rule Part 1
         video from Documentary Films
    5. Capitalism Will Eat Democracy
    6. Democracy Is a Threat to Any Power System- Noam Chomsky
 84 Min Video
Democracy is an Insurance Policy for the Rich, they aren't paying
         for the policy.
12 min

H. Is democracy, like communism, a failed doctrine? Videos
    1. Terminal Democracy Documentary Film
    2. After Democracy Documentary Film
    3. Legalize Democracy Documentary Film

I. Tenth Amendment to the United States Constitution
   is part of the Bill of Rights as ratified on December 15, 1791.
   1. 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.
   2. This requires judicial interpretation.
   3. Tyranny of the Status Quo - Part 1 - Beneficiaries

Unit VI. Review Commonwealth, Republic, Democracy, Federalism, Polyarchy,
Fascism, Totalitarianism, Libertarianism

The US constitution was seen as very important because republican government had not succeeded very often due to an inability to limit majority power. It was written at a time when the science of politics developed by John Lock and others would help develop a document that would promote stability and control majority factions. Controls included  Separation of powers/ authority among three branches of government, the legislature, the President, and the courts. Within the legislature power was again separated such that the Senate could stop a bill passed by the House of Representatives, the President could veto a passed Congressional bill, Congress could override said veto with a 2/3 vote, and the Supreme Court could stop the President and Congress by declaring a law unconstitutional. These checks and balances between the branches were to protect minority rights from factions.

Politically, the U.S. had a difficult beginning as the violence and anarchy surrounding the French Revolution made many Americans uneasy about their republican democracy. Historically, the Federalist and their active state liberalism ruled and then Jefferson and Jackson governed based on minimal state liberalism.  Then Lincoln used a strong federal government to preserve the Union and it lasted until the end of reconstruction when limited government helped by the Supreme Court fostered the Gilded Age. The Progressivism Teddy Roosevelt and Windrow Wilson ruled with active state liberalism until the First Red Scare and unionism following WW I brought back minimal state liberalism. The Great recession allowed FDR to use active state liberalism to tame the Great Recession and while active government was slowed by a Second Red Scare and the Korean War, the Kennedy assassination  in 1962's gave LBJ's the ability to use active state liberalism to pass The Great Society anti-poverty programs. A difficult 1970's because of Stagflation allowed Ronald Regan to blame big government and he returned to minimal state liberalism. Neither branch of state liberalism has controlled the 21st Century with society allowing a strong governmental response to 9/11 and then allow President Obama, a strong active state liberalism president, to pass Obamacare.

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 Democracy and a Republics are often interchangeably. Source

Does Current Political Economy Questions substantiate that democracy has not controlled government spending.

Editor's Note: Building a Democratic Republic is an interesting study of the 250 years of trial and tribulations required to build our government. It is from Part 2 of Turning Points in American History covers these topics.


Growing a Democratic Republic
7. Instigators Finally Hit a Nerve With The 1773 Boston Tea Party
8. A Hesitant Reluctant 1776 Nation Seeks Freedom
9. The French Save the Day
10. Shays 1786 Tax Rebellion Leads to a Constitution
12. 1800 Sees First Peaceful Democratic Power Transfer
12. US Undergoes First Peaceful 1800 Government Transfer

13. Marshal's 1803 Power Grab Creates a Third Separate Power
15._Who Are the People of We the People?

23. Who Protects the Unalienable 1866 Rights of Whom?
25. The 1870s Takes Away Unalienable Rights
33. 1930's_Government Safety33  Net
35. Deficits, Like War Deficits, Prove Attractive
42.1973 Finally Brings Fast Track Civil Rights

from Turning Points in American History

H. Building A Democratic Federalist Republic
    1. The Early Colonial Period
    2. Determining Political Power and "We the People"
3. Increasing We" of "We the People"
    4. Thomas Jefferson Leader of the Opposition

    5. Constitutional History of a Democratic Federalist Republic
6. Capitalistic Democracy Profitable Government


VII. Politics in the U.S. Democratic Republic
 A. Current Discussions
           1.It’s Time to Found a New Republic
           2. Income Inequality Analysis and Cures
Election Issues 2016
     B. U.S  Voting Rights Timeline   
           1. Primary Voting attempt to restrict in 2016
           2. New-Voting Restrictions-2010-election
     C. 20th Century U.S. Political Economy            
     D. Money in U.S. Politics Using 40 charts.
     E. Presidential Politics is a concise summary of Presidential Elections.
     F. Presidential Courage depicts great presidents serving democracy.
     G. The End Game for Democracy Bill Moyer's 3 minute video on all
          aspects of public and private life.
     H. A Republic No More Video 1:03 explores of U.S. Democracy and
          the concept of a Republic.
      I. Are representatives trustees representing the nation or are they
         delegates representing their constituency?
    J. Have you read the federalist papers of American-conservatism?
   has student articles with a conservative view.
K. Our Republican Constitution podcast on
concerning Judicial Review
and congressional power is a must for political science students
New President Power Proposed podcast from T. Moe of Stanford
Why Trump-Sanders Phenomenon Signals an Oligarchy on then
Brink of a Civilization-Threatening Collapse

  N. Democracy new book by the author of changes
           his see as needed by US political Economy
U.S. Government and Politics


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.

Market System Capitalism and Political Economy Videos

Global Economic Growth and the Rise of Populism
See Populism is not mob rule-Thomas-Frank podcast from the

Quiz on Economic Systems
 A. Provided with answers from steponicseconomics 
Exam Strategies +  has comprehensive testing advise.


Post WW 2 Global Economic Growth
Competitive Adjustments and the Rise of Populism

Post WW 2 Economic Chronology

Neo Liberal Economist Caused Financial Collapse

Democracy Failures Caused Latest Popularism

Understanding Left Right Populism

Populism is the Rise

Trump's New Political Era?

U.S. Political Economy

Alexis de Tocqueville toured the U.S. and made some  salient observations about democracy. Read Democracy in America and On Majority Rule and Mediocrity
Listen on YouTube Listen on LibriVox
See Universal male suffrage began in 1884 France and was an important milestone  in the history of democracy. 

Summary: We seek individual liberty, social justice and economic efficiency with a Democratic Republic that uses a constitution to protects the minority, a Supreme Court to enforce the constitution and an ever expanding electorate deciding who does what, when and how. This continually changing electorate both legally and in practice has led to a somewhat dynamic Republic of the United Stated

Editors Note: Voter rules are again a hot 2015 political topic and equal rights have apparently been granted to homosexuals.


Understanding Fake News

Fake News Warnings
Claiming All Trumpisms are Fake News

Nation's Education Failures Continue
National Debt is a Catastrophe
Wages Continue to Stagnate
Wages Stagnation As Fake News
Belichick's Failed at Cleveland With a 36–44 Record

Curse of the Bambino
Bill's Famous 4th and 2 Indianapolis Decision


States With New Voting Restrictions Since the 2010 Election


U.S. Political Economy
2016 Presidential Election Issues 1p each

Current Political Economy Problems 7p

Brief U.S. Political History  Political Eras with Important Events 2p

Capitalistic Democracy Run Government at a Profit 1p

Recent Decades Ranked by Problems 2p

Great Recession 1p or 3 p

Severe Recessions 2p

History of US Banking 1p

US Economic Normality 1945-2015       page 2
5 Decades of Problems  1p

Under Construction and needs help. Interested?  e-mail

Return to Our Democratic Federalist Republic
Student participation welcome contact

Will Stagnate Median Income Hurt Our Children?
How Severe is the Great Recessions?
Is $17 Trillion Dollar Deficit Trouble?

Is the Country in Trouble?
Do People Vote Their Pocketbook?
Should Tea Party Share Its Tea?
Is Politics About The Money?

Class Discussion Questions/project #1 6/15

 A. How is the concept of creative destruction
           currently affecting the United States economy?
      B. Explain how the concept of creative destruction
          has affected European politics: 
          a. in the recent past 
          b. in the near future
      C. Read the John Adams section of Presidential 
for the economic political issues
          faced by President Adams at the turn of the 
          18th century. Are they similar to those faced by
           the U.S. early in the 21st Century. Cam these
           questions can be applied to most of America's
      D. President Obama been accused of being a
          Socialist? Begin with a nominal definition of
          relevant political and economic terms explored
          in this chapter and relate them to our current
          economy and politics. How accepted are
          political and economic concepts? What did
          suffrage have to do with this accusation. 
Presidential Politics: Party Politics and
          Presidential Elections from 1788 to 2012
20th Century U.S. Political Economy: An
nteraction of Politics and Economics.

E. Give examples of current political discussions
         designed to move the U.S. toward or from a
      F. Class Project can take a day, week, month, term,
          lifetime! Something happened during the last 30
          years to disconnected wage growth from
          productivity growth. 

     G. Course project/discussion # 2
          Using concepts explored in this chapter and this
          course Investigate
          1. Competition
          2. Energy cost
3. How are capitalism and democracy designed
        to return a normal growth in wages?
      4. Geekability 
      5. Other Stuff 

          Answers Class Discussion Questions

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.   People were encouraged to immediately spend what had been a retirement nest egg. There is nothing wrong with this as long as people realize that they may be delaying retirement.


More Chapter Stuff

Chapter Videos on One Page

Economic Normality Changed Seven Times 1945-2015
Rising Income
Increased Foreign Competition Began 1970's Wage Stagnation

1980's Bring Less Financial Regulation, Slow Wage Growth
U.S. Financial Bailouts and Economic Recovery
Poverty Stuck at 15% Since 1984
Profit Growth Beats Wage Growth in New Century

Wellbeing Continuing Growing


Building America's Democratic Federalist Republic
1. The Early Colonial Period
2. Determining Political Power and "We the People"
3. Increasing We" of "We the People"
4. Thomas Jefferson Leader of the Opposition

5. Constitutional History of Our
Democratic Federalist Republic
6. Capitalistic Democracy Profitable Government

Political Economy

U.S. Government and Politics

U.S. Political Economy

 Economic Issues    one-page

US Political Economy one page

Updated 12/14/16  

Is This Divergence an Economic or Political Issue?



2015 Political Economy Controversies
cover poverty, middle class income and politics in 2015






Suggested Research Project
Economic Need Caused the Current Rise in Populism

Relevant Information

New: Liberal Democracy in Peril?

Post WW 2 Global Economic Growth Competitive Adjustments and the Rise of Populism

Post WW 2 Economic Chronology

Neo Liberal Economist Caused Financial Collapse

Democracy Failures Caused Latest Popularism

Understanding Left Right Populism

Populism is the Rise

Trump's New Political Era?

Other Topics

Fake News

Students Personal Finance

See Research Paper for assistance

suggestions to




More Project Data: For many years, Americans have worked hard, produce more, and voted to give  more and more of the income gains to the rich.

Editors Note: A closer look would reveal that these same voters allowed governments to build up debt,  governments and businesses to have large unfunded pension liabilities, and individuals to spend unrealized home equity using home equity loans.




For a Political Economy Approach Read History of the United States audio book from LibriVox.
Search archives for Charles A Beard.

Paper version from Gutenberg is easily searchable by topic.

Return to Last Chapter     Discussion Questions     Homework Questions      

Next Chapter Demand and Supply     Table of Contents       Economics Internet Library

Economic Reasons for Colonialism

-       by 1870s countries developing second industrial revolution facing double problem:

1 need to sell overproduction, new markets

2 need to buy larger amounts of raw materials at cheapest price

Besides: wish to invest surplus of capital in places with cheaper hand labour in order to get larger profits

RESULT:  most developed countries occupied territories esp. in Africa and Asia – areas with weak political and economic structures. This is known as colonialism.

Main countries: Britain, France, Germany,  Belgium, Italy  later also the United States and Japan


Population excess of industrialised countries: search better living conditions creating  colonies in areas having similar climate, i.e. South Africa, Australia, Algeria.

RESULT:  millions of Europeans emigrated to colonies preventing further social discomfort  to the  metropolis i.e. strikes, stoppage or workers rioting

POLITICAL the “national pride”  forcing to increase the number of colonies

MILITARY  need to occupy  ports,  build strategic canals to guard commercial routes in competition with nations aiming the same


Some countries mentioned moral or ethical reasoning: Europe’s civilising mission: due to technological supremacy + religious = sanitary, educational, improving lifestyles, social peace,… 

Joseph Rudyard Kipling (December 30, 1865January 18, 1936) was an English author and poet, born in Bombay, British India, and best known for his works The Jungle Book (1894), The Second Jungle Book (1895

However, later in life Kipling also came to be seen (in George Orwell's words) as a "prophet of British imperialism." Many saw prejudice and militarism in his works

(The heavy responsibility of the white man)

"The White Man's Burden" is a poem by the English poet Rudyard Kipling. I

RESULT: ideas lead to racism: white man superior to other races

JUST only a few intellectuals and socialist leaders opposed colonialism charging brutal and inhuman exploitation in colonies.


The Economist

"The East India Company foreshadowed the modern world in all sorts of striking ways. It was one of the first companies to offer limited liability to its shareholders. It laid the foundations of the British empire. It spawned Company Man. And—particularly relevant at the moment—it was the first state-backed company to make its mark on the world.

State-controlled companies account for 80% of the market capitalization of the Chinese stock market, more than 60% of Russia's, and 35% of Brazil's."

British-raj-Atrocity Exposed

In the early 19th century, the East India Company (EPIC) , had cut off the hands of hundreds of weavers in Bengal in order to destroy the indigenous weaving industry in favor of British textile imports (some anecdotal accounts say the thumbs of the weavers of Dacca were removed).

The violent deaths inflicted by the British are overshadowed by the excess deaths due to deprivation - the British managed to hold onto India by keeping most of the population (except for public servants, Princes and sepoys or Indian soldiers) in dire poverty on the verge of starvation. 

Torture By French During Algerian War of Independence












View image on Twitter



Economic System Alternatives


Here is a visual version of the well-known cow based analogy of capitalism.

from  Infographic and Daily Global  Economic Intersection Newsletter WikiMoney Explains Capitalism Around The World - An Infographic from WikiMoney

Calvin and Hobbes Explain Modern Capitalism 
from The Daily Beas



US Produces Most Per Capita

Voters Hire Politicians That Overspend and
 Promise More in the Future at all levels of Government

Cheap Imports Allow Even More Consumption.

We Borrow on Home Equity for Current Consumption.

Yet Many Seem Dissatisfied?





Market System Capitalism and Political Economy Videos