Chapter 3 Characteristics of Market
Characteristics of Capitalism 2
|I. Basic Characteristics of Capitalism (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. 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 as practiced in 18th century England.
2. Why is The Wealth of Nations So Important? Video
3. For more visit econlib.org/library/Enc/bios/Smith
D. Basic characteristics described by Adam Smith
|II. Modern Capitalism has Many New Features|
A. Complex Market System Setting Prices
B. Importance of Capital Goods and Technology
1) Complexity limits product lines.
2) Division of Labor allows specialization by ability, training.
D. Unique Descriptions of Modern Capitalism
1. Corporate Capitalism: a capitalist marketplace
characterized by the dominance of hierarchical,
2. 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 min video
d. Geithner and Summers Crony Capitalist?
3. Money Manager Capitalism: money managers dominate
savings and investing and markets impacting economy's
4. State Capitalism: economy driven by the state, less
reliance on markets, practiced in China. Editors Question:
Will China's system morph into Democratic Socialism?
Sources of Economic
"rent-seeking is expending resources on political activity to increase one's share of existing wealth without creating wealth"
Democratic Capitalism vs. Capitalistic
is about cost effectiveness of democracy.
6. Patrimonial Capitalism is living off of inherited wealth.
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 reference.com
4. Calvin and Hobbes Explain Modern Capitalism
Criticism of Modern
1.The Successes and Price of Capitalism
2. Capitalism in Crisis 1:40 is well-done.
3. Seven Bad Ideas from the left
4. The Crisis of Capitalism, The Critique from the right
5. Unfettered Capitalism, Chris Hedges & Michael Moore 8:44
6. The End of Capitalism
7. The Private Sector against corruption 30 min
8. Great Recession from a Classical-Keynesian View
from Roger Farmer Pepperdine School of Public Policy
a. Who are the Academic Sc 9.11
b. Refining Classical Economics 9.29
c. Effect of the Great Depression 9.14
d. 1970's oil shock shocks the world of economics 8.52
e . How bad is the economy and where is it going 7.41
a. Why Intellectuals Hate Capitalism by Robert Nozick
b. Is Capitalism Moral? A Commonwealth Club Podcast
c. Coercive power of capitalism
d. 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
capitalism. An example would be how well the economy
adjusted to the 2007-8 Balance Sheet Great Recession.
The income distribution problem it caused has been helped
by Obama Care and now its up to our economy to make
sure it is economically efficient.
See People Not Voting Their Pocketbook is Killing the Poor
a. Chinese Capitalism Better than American Capitalism
Hoodwinked An Economic Hit Man Reveals Why the
World Financial Markets Imploded--and What We
Need to Do to Remake Them, by John Perkins
b. How Will Capitalism End 6/14
c. Has Capitalism Reform Reached a Turning Point Forbes
d. Revisiting Old Argument About Impact Capitalism
e. Economic Report of the President 2014 is positive
f. The Great Recession looks at a recent failure
C. Center on Capitalism Columbia University has information.
Are questions raised here
Some Question his motives as
Ida Tarbell an investigative 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 how we slowly improve the people properly represented by our democratic republic.
|IV. How Markets Work: The Circular Flow|
Free Internet Libraries
A. Pure capitalism of Adam Smith never existed.
B. Recent economic systems are Mixed Economies
(a mixture of Capitalism and Socialism) See
Democratic Capitalism vs. Capitalistic Democracy
1. Socialism has collective ownership and management
of economic resources that are more equally distributed.
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. Capitalism and Socialism
1. Capitalism vs. Socialism a Crash Course Video in
World History #33 uses humor teaching the basics.
2. Laissez fair Capitalism vs. Socialism Video
See Social democracy
3. Communism is the ideal of those practicing a "Marxian
system. " Bolsheviks wanted immediate revolution.
a. 19th century philosopher Karl Marx created the system.
b. Wealth is collectively owned and managed in this
planned,` command economy.
c. The Paris Commune of 1871 along with the French
Revolution explains why so many feared change
promised by new liberal economic systems.
d. Some equate communism with a totalitarian political
system democratic communism has never existed.
Fabian Economics Fabian Society is a
|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
|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. though he concentrated on deregulation. Some 30 years later Thatcher's Great Britan has fared better than more socialistic continental European 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.|
VI. Political Systems
A. The Basics Video 3:28
B. Republics exist when governmental power resides
in a constitutionally determined government of
elected leaders operating according do law which
protects individual and minority rights.
1. There are many application of Republican concept.
In the U.S. property rights are strongly associated
with a Republic.
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. State Initiatives and Referendums
1. Part of early 20th century progressive movement.
2. They allowed voters of a state to put a proposed
law on the ballot for voter approval and to put a
state law passed to be voided.
3. DC and 27 states have such direct democracy tools.
b. The 1911 17th Amendment changed election of U.S.
Senators from the house of Representatives to voters
which was a movement toward direct democracy.
1. The 1919 19th Amendment gave women the vote
2. 1971 26th Amendment lowered voting age to 18.
Editor's Note: The country decided young men and
women were old enough to die in Vietnam should
have the right to determine who makes the rules.
3. The expanded the electorate thus moving the U.S.
closer to being a Republic as the electorate for a
larger group of "citizens."
c. 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
of majority rules. Thiswould make many founding
fathers unhappy as they feared anarchy especially
after the French Revolution.
d. 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. The Supreme Court follows
the democratic majority rule principle.
2. The electorate which has continually changed both
legally and in practice making our Republic
somewhat dynamic. Editors Note: Voter rules
are again a hot topic in 2015.
3. In United States v. Cruikshank (1875) the court
ruled that the "equal citizens" were inherent to the
idea of a republic.
C. Democracy exists when governmental power resides in
a constitutionally determined electorate each with equal
say in determining the majority. It makes political decisions
such that the majority's power is absolute and unlimited.
Thoughts of our Founding Fathers
Democracy varied dramatically. Federalist
George Cabot of
Massachusetts feared ..."the terrible evils of
democracy," and felt Jefferson was unstoppable,..."
From p368 of
The Art of Power, 2012, a biography by Jon Meacham as
summarized by Walter Antoniotti
Democracy and a Republics 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.
Listen on YouTube
Listen on LibriVox
|VII. Politics in
the U.S. Democratic Republic
Current U.S. Political Economy Controversies provides data to assist analysis.
U.S Voting Rights Timeline
B. 20th Century U.S. Political Economy
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 serving democracy.
F. The End Game for Democracy Bill
Moyer's 3 minute video on all aspects
of public and private life.
G. A Republic No More Video 1:03
explores of U.S. Democracy and
the concept of a Republic.
H. Political Systems Sundry Materials
1. Political Systems are about control.
2. Tenth Amendment (Amendment X)
to the United States Constitution,
which is part of the Bill of Rights
as ratified on December 15, 1791.
a. 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.
b. This requires judicial interpretation.
3. The Civil War was a power struggle over
federal power and the 2000 federal
election is a good example of the
struggle over power.
4. Libertarianism wants to limit power.
5. Rights vs. Freedoms
6. We the Intelligent People of the U. S.
provides insight into American
democracy. by Frank Li, Ph.D.4/23/14
7. Book Summaries Internet Library's
reviews Hoodwinked, a international
corporations are altering capitalism as
8. Origins of Democracy and the Citizenship
of Athens c. 440 BC – 430 BC is about
the beginning of government.
9. Misconceptions About Democracy
10. Eric X. Li: A tale of two political systems
VIII. 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.
Editor's Note: The democracy we enjoy today has been built over 250 years. Part 2 of Turning Points in American History Explores the Journey.
Nerve With The 1773 Boston Tea Party
A Hesitant Reluctant 1776
Nation Seeks Freedom
The French Save the Day
1786 Shays' Tax
Rebellion Leads to Constitution
First Peaceful 1800 Transfer of a Power by a
Marshal Creates a Third Separate Power
"We the People..."
Who Are they?
Who Are they?
Protects Unalienable 1866 Rights of
The 1870's Takes Away
Government's 1930's Safety Net Deficits Like
War Deficits Prove Affective
Civil Rights Goes Fast
Track in 1963
IX. Market System Capitalism and Political Economy Videos
Quiz on Economic Systems
A. Provided with answers from steponicseconomics
B. Exam Strategies + has comprehensive testing advise.
G. Course project/discussion
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.
Is This Divergence an Economic or Political Issue?
Political Economy Controversies
For Those Wanting to Improve Education
Educating the Class of 2030 for Employment and Creativity
Here is a visual version of the well-known cow based analogy of capitalism.
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|