Characteristics of Capitalism
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 market based 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.
7. Characteristics lead to Creative Destruction
a. First described by 20th century sociologist and economist Joseph Schumpeter,
it was an important addition to the idea of capitalism.
b. Change involves the creation of improved economic structures based on
technology 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 in 2010 a futurist predicts change
g. Rust Belt Almanac relates Mid-West decline to Creative Destruction
II. 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: 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
d. Geithner and Summers accused of being Crony Capitalist 2/16/15
3. Money Manager Capitalism: money managers dominate savings/investing and
markets impacting economy's performance
4. State Capitalism: economy driven by state with less reliance on markets is 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, 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
8. Capitalism is a concise overview from reference.com
Two Sources of Creative Destruction
Which is Better
III. Criticism of Modern
A. Crises Capitalism video contains ideas about capitalism resulting from
The Great Recession of 2008-2009 is a concise study.
B. Why is Chinese Capitalism Better than American Capitalism? 1/2/11
C. Why Intellectuals Hate Capitalism by Robert Nozick
D. American Politics Are we a Democracy? A Republic? A Polyarchy?
Noam Chomsky breaks down American Politics today and American
Politics that our founders envisioned.
E. Is Capitalism Moral? A Commonwealth Club Podcast Debate – 10/ 22, 12
F. Hoodwinked An Economic Hit Man Reveals Why the
World Financial Markets Imploded--and What We
Need to Do to Remake Them, by John Perkins
G. Coercive power of capitalism
H. 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
I. How Will Capitalism End 6/14
J. Has Capitalism Reached a Turning Point discussions on needed reforms Forbes, 9/26/14
Capitalism Readings and Videos
Send thoughts to firstname.lastname@example.org
Suggestion to author Walter Antoniotti are welcome.
Some Criticize Dramatically
Some Question his motives.
Sam Walton went from doing
farm choirs to remaking U.S.
20 percent or more of the child population in 37 states and D.C. lived in food-insecure households in 2012, according to the most recent data available. New Mexico (29%) and Mississippi (29%) had the highest rates of children in households without consistent access to food.
How Markets Work: The Circular Flow
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Conclusion Four Horsemen 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.
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Is This Divergence an Economic or Political Issue?
More Project Data
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 An Economic
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Calvin and Hobbes Explain Modern Capitalism from The Daily Beast
US Produces Most Per Capita
We Borrow on Home Equity for Current Consumption.
Yet Many Seem Dissatisfied?