Economic Video Lectures
I. Basic characteristics of capitalism
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 capitalism.
1. His book, The Wealth of Nations, was the first description of capitalism.
2. Published in 1776, it described capitalism as it was practiced in 18th century England.
3. For more visit http://www.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 market economy
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.
E. Creative Destruction described by 20th century sociologist and
economist Joseph Schumpeter was an important addition to the idea of capitalism.
1. Change involves the creation of improved economic structures based on
technology and the destruction of inefficient economic structures.
2. Capitalism allows this destruction to take place.
3. The fight between labor and management has also brought much
4. 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
1. Modern Capitalism has many additional features
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 describe 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 vide 12/22/13
c. Hunter Lewis on crony-capitalism 30 minute vide 1/25/14
3. Money Manager Capitalism: money managers dominate savings/investing markets impacting
4. Patrimonial Capitalism gentry living off of inherited wealth see also
5. Capital in the Twenty-First Century by Thomas Piketty a book review
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
a. The Fall of Rome reviews the market system of the Roman empire and how the author believes
government failures caused its demise..
b. Blackstone's Byron Wien, a successful capitalist, Discusses Lessons from his First-80-years
c. Coercive power of capitalism
d. Hoodwinked An Economic Hit Man Reveals Why the World Financial Markets Imploded--and
What We Need to Do to Remake Them, by John Perkins Buy the Book
e. Revisiting old argument about impact capitalism Economist Magazine 4/4/14
f. Pyramid Theory looks at capitalism as practice the US democracy.
g. Economic system has many concise definitions.
h. Business Isn't Capitalism 5/3/14
i. How Will Capitalism End 6/14
j. Has Capitalism Reached a Turning Point discussions on needed reforms Forbes, 9/26/14
3. Free Course Great Economists: Classical Economics and its Forerunners
a, The Successes and Price of Capitalism Video 1 hour
b. The End of Capitalism
Which is Better
II. The Circular Flow of Money
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|VII. Sundry Information
A. For a somewhat conservative view of capitalism visit Capitalism.org.
B. For a somewhat liberal view of capitalism visit The Shared Capitalism Institute.
C. Interesting Links from Reference.com
2. Why- Intellectuals Hate Capitalism by Robert Nozick
D. Current Events Internet Library has an interesting economics section.
E. 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.
F. 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 fairly distribute
production without substantially limiting the productive capabilities of capitalism which
have coped the Balance Sheet Recession known as with the Great Recession. 3/12/13
See People Not Voting Their Pocketbook is Literally Killing the Poor
G. Economic Report of the President 2014
H. BBC audio on the History of Capitalism
I. Center on Capitalism Columbia University is a great source of information
J. Is Capitalism Moral? A Commonwealth Club Podcast Debate – 10/ 22, 12
K. Strange Rebels 1979 and the Birth of the 21st Century is political economics
VIII. Quiz on Economic Systems with answers from steponicseconomics
5 Key Economic Questions an Economic System Must Answer
Class Discussion Question. Has President Obama been a Democratic Socialist?
"We can see that while China has overtaken Germany and Japan to become the world's second-largest economy (i.e., total area of the rectangle) its citizens are nowhere near being as rich as those of those countries or even Mexico." Source
Editors Note: It Is the Political Part of "Political Economy that is the problem.
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|XI. More discussion questions.
A. Something happened about 30 years ago to disconnected wage growth from productivity
1. Competition from Japan put the squeeze on corporate profits.
a. "... the expansion of Japanese car companies into foreign markets in the 1970s further
accelerated [Japanese] growth. Passenger car exports rose from 100,000 in 1965 to
1,827,000 in 1975." Automotive industry in Japan 1960s to today
b. From 1955 to 1965, Japan experienced a nominal growth rate of 10–20% annually
and real growth rates (adjusted for inflation) of 5–12%. In 1968, it surpassed the
Federal Republic of Germany (FRG) to stand second after the United States among
non-Communist nations in total value of GNP. [Editor's note] One of the few major
failings of U.S. industry was its slow response to the Japanese miracle, but like
politicians, they didn't act until there job was on the line.
c. Industrial sunset making north America's rust belt-1969-1984
2. Energy prices increased dramatically and companies that could not pass the higher
cost to customers felt a profit squeeze.
3. Companies affected had three choices.
a. Going out of business was the last choice.
b. Lower profits mean lower returns and was the next-to-last choice.
b. Cutting cost was the only choice as higher revenue, due to competition,
was off the table.
4. Cutting cost comes from higher productivity and lower wages
a. Germany and Japan also could and did increased productivity
b. Wages stagnated and a political problem emerged.
5. New Normal for wages because of the Competitive Adjustment from chapter 23.
B. Wrong: Nine Economic Policy Disasters and What We Can Learn from Them 2013by Richard
Grossman explores what we can learn from an historical look at government's fail economic policy
|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
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
Editor's Note: The recent large decrease in the Household resulted because people defaulted on mortgage debt and the Federal Reserve picked up the tap by printing money.
|Chapter 3 Homework Questions|