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Flashcards in Chapter 4 Deck (28):
1

Capitalism

An economic system that operates on the basis of profit and market exchange and in which the major means of production and distribution are in private hands

2

Socialism

An economic system characterized by public ownership of property and a planned economy

3

Worker control socialism

Individual firms respond to a market when deciding what to produce and acquiring the necessary factors of production. Although the workers manage their factories, the capital assets of each enterprise are owned by society as a whole and not by private individuals.

4

Who was the foremost capitalist of the Renaissance?

Jacob Fugger

5

What kind of capitalism emerged in the Fuggers' time?

mercantile capitalism

6

Mercantile capitalism

capitalism that is based on mutual dependence between state and commercial interests.

7

Industrial capitalism

During the Industrial Revolution, industrialists replaced merchants as the dominant power in a capitalist economy. This is associated with large-scale industry.

8

What produced industrial expansion in the US?

a sound financial base, the technology for mass production, expanding markets for cheaply manufactured goods, and a large and willing labor force

9

Financial capitalism

Came to be as carious industries strove to strengthen their financing and shore up their assets. It's characterized by pools, trusts, holding companies, and the interpenetration of banking, insurance, and industrial interests.

10

State welfare capitalism

Government plays an active role in the economy, attempting to smooth out the boom-and-bust pattern of the business cycle through its fiscal and monetary policies. Also, government programs like Social Security and unemployment insurance seek to enhance the welfare of the workforce, and legislation legitimizes the existence of trade unions.

11

What helped usher in state welfare capitalism?

The economic and political challenges of the Great Depression of the 1930s.

12

These days, the increasingly worldwide scale of capitalism leads many contemporary commentators to see _______ _______ as a new stage or level of capitalist development?

Globalized capitalism

13

Globalization

The process in which economies of most countries are becoming more and more integrated thanks to the computer, Internet, satellites, cell phones, and other technological advances.

14

What are the four key features of capitalism?

1. the existence of companies
2. profit motive
3. competition
4. private property

15

Profit motive

Implies and reflects a critical assumption about human nature: that human beings are basically economic creatures, who recognize and are motivated by their own economic interests.

16

Who wrote An Inquiry into the Nature and Causes of the Wealth of Nations (1776)?

Adam Smith

17

According to Adam Smith, what is free competition?

The regulator that keeps a community activated only by self-interest from degenerating into a mob of ruthless profiteers.

18

Laissez fiare

french meaning- to let people do as they choose

19

Capital

Money that is invested for the purpose of making more money. (closely related to private property)

20

Two arguments for capitalism

1. The argument that the moral right to property guarantees the legitimacy of capitalism
2. The utilitarian-based economic argument of Adam Smith

21

What is a common defense of capitalism?

The argument that people have a natural right to property

22

What does Adam Smith say?

Each person's individual and private pursuit of wealth results as if guided by an invisible hand in the most beneficial overall organization and distribution of economic resources.

23

Oligopolies

A concentration of property and resources, and thus economic power, in the hands of few. (Karl Marx)

24

Corporate welfare

Assists business and protects it from competition

25

Alientation

separation of individuals from the objects they create, which in turn results in one's separation from other people, from oneself, and ultimately from one's human nature. (Karl Marx)

26

3 issues relevant to the US today

1. decline of American manufacturing
2. business's obsession with short-term results
3. changing attitudes toward work

27

Outsource

buying parts or whole products from other produces, both at home and abroad

28

Comparative advantage

the goods that it can produce at a lower opportunity cost than other countries can