Economics Flashcards by Keith Miller

Why might government practices not reflect economic values of liberalism?

To regulate industry
Moderate the boom and bust nature of the market business cycle
offer social welfare programs

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an ideology that values the freedom of individuals — including the freedom of religion, speech, press, assembly, and markets — as well as limited government. It developed in 18th-century Europe and drew on the economic writings of Adam Smith and the growing notion of social progress.

classic liberalism

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18th-century philosopher and political economist. Best known for his classic treatise An Inquiry Into the Nature and Causes of the Wealth of Nations, he is credited with establishing the discipline of political economics. The ideas put forward in his work represented a radical departure from the then-dominant economic policy and philosophy of mercantilism, which had held sway in Europe for three centuries.

Adam Smith

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(free enterprise/private enterprise): based on the ideas of supply and demand, where the individuals participating in the market decide the answers to what, how and who.

laissez-faire capitalism

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impacts of classical liberal thought on 19th century society

laissez-faire capitalism
industrialization
class system
limited government

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The process in which a society or country transforms itself from a primarily agricultural society into one based on the manufacturing of goods and services.

industrialization

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The hierarchical organization by which a society or community is divided into classes.

class system

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limited government

very little government intervention in the economy

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ideologies that developed in response to classical liberalism

classic conservatism (Edmund Burke)
Marxism
socialism
welfare capitalism

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A political philosophy or attitude emphasizing respect for traditional institutions, distrust of government activism, and opposition to sudden change in the established order.

classic conservatism (Edmund Burke)

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the system of economic and political thought or doctrine that believes the state throughout history has been a device for the exploitation of the masses by a dominant class, that class struggle has been the main agency of historical change, and that the capitalist system, containing from the first the seeds of its own decay, will inevitably, after the period of the dictatorship of the proletariat, be superseded by a socialist order and a classless society.

Marxism

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The government runs this economy in order to promote the goals of equality

planned economy

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other terms for a planned economy

public enterprise
socialism
communism

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has both individuals participating in the market and the government makes decisions.

welfare capitalism or mixed economy

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evolution of modern liberalism as a response to classical liberalism

labour standards and unions
universal suffrage: everyone has the right to vote
welfare state
protection of human rights
feminism

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Values of socialism/collectivism

collective interest
collective responsibility
economic equality
public property
co-operation
adherence to collective norms

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Values of Classic Liberalism/individualism

self-interest
individual rights/responsibilities/freedoms
economic freedom
private property
competition
rule of law

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Humans should be co-operative, helpful, and compassionate.

Collective interest

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Society, through government, should be responsible for the well-being of its members.

Collective Responsibility

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Government should intervene in the economy - for example, by taxing profits and earnings and by offering social programs – to ensure a more equitable distribution of wealth among citizens in society.

Economic equality

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The government should own major industries and run them on behalf of the people. Profits from these industries should be kept by the government and then redistributed throughout society.

Public property

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People should co-operate to achieve collective goals.

Co-operation

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People should follow rules and norms that benefit society. Society should be structured so that there is equality among the people.

Adherence to collective norms

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Individuals should act int their own self-interest.

Self-interest

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Individuals should be responsible for their own well-being.

Individual rights/responsibilities/freedoms

The economy should be determined by market forces such as supply and demand. The government should not intervene in the economy.

Economic freedom

Individuals should have the right to own, buy, or sell property.

Private property

This benefits society when people work in their own self-interest, leading to innovation, motivation, and lower prices.

Competition

No one is above the law, and each individual is accountable to the law.

Rule of law

According to classical liberalists, what is the only function of the government?

-to protect individuals' natural right to life, liberty, and property.

What do classical liberalists emphasize?

-economic liberalism (maximum rights and freedoms) for certain individuals (risk takers, such as business owners/entrepreneurs).

Examples of classical liberalism

- Adam Smith's "invisible hand" - capitalism - free-market systems - laissez-faire policies

successful business owners and merchants (new rich)

nouveau riche

positive effects of classical liberalism

- allowed people the freedom to innovate and increase production - contributed to the development of great wealth for some - new businesses - inventions and technology - the success of the "nouveau riche"

negative effects of classical liberalism

- contributed to the wealth gap between people who were rich and those who were poor - contributed to the Depression of the 1930s - rise in child labour - the extreme poverty of the working class

Examples of modern liberalist policies

- the creation of public education - welfare - public housing - unions - civil rights legislation - labour standards and labour laws - protection of the environment

What does modern liberalism involve?

-significant government intervention at times (hands on).

Modern liberalism proposes....

- that people's rights should be included as a part of the political and economic systems in a society, including that all individuals should be valued equally. - that the government intervenes to ensure that the most vulnerable people (for example, the sick, elderly, unemployed, working poor) are cared for.

Modern liberalism promotes....

sharing the benefits of economic development and having some consideration for the environment and is interested in creating equality OF opportunity for all individuals.

a form of socialism with a democratic government; the ownership and control of the means of production, capital, land, property, etc., by the community as a whole -- combined with a democratic government.

Democratic socialism

ideological systems that rejected principles of liberalism

Communism in the Soviet Union -Leninism -Stalinism Fascism in Nazi Germany

the economic policy of the government of the Soviet Union from 1921 to 1928, representing a temporary retreat from its previous policy of extreme centralization and doctrinaire socialism. See this link for more information: http://www.historylearningsite.co.uk/new_economic_policy1.htm

New Economic Policy (under Lenin)

Method of planning economic growth over limited periods, through the use of quotas, used first in the Soviet Union and later in other socialist states. In the Soviet Union, the first set (1928–32), implemented by Joseph Stalin, concentrated on developing heavy industry and collectivizing agriculture, at the cost of a drastic fall in consumer goods. The second plan (1933–37) continued the objectives of the first. Collectivization led to terrible famines, especially in the Ukraine, that caused the deaths of millions. The third (1938–42) emphasized the production of armaments. The fourth (1946–53) again stressed heavy industry and military buildup.

Stalin's 5 year plans

labour camps in the Soviet Union

Gulags

( Russian: “restructuring”) program instituted in the Soviet Union by Mikhail Gorbachev in the mid-1980s to restructure Soviet economic and political policy. Seeking to bring the Soviet Union up to economic par with capitalist countries such as Germany, Japan, and the United States, Gorbachev decentralized economic controls and encouraged enterprises to become self-financing.

Perestroika

( Russian: “openness”) Soviet policy of open discussion of political and social issues. It was instituted by Mikhail Gorbachev in the late 1980s and began the democratization of the Soviet Union. Ultimately, fundamental changes to the political structure of the Soviet Union occurred: the power of the Communist Party was reduced, and multicandidate elections took place. This also permitted criticism of government officials and allowed the media freer dissemination of news and information.

glasnost

The policy’s chief features were the expropriation (take away from owner) of private business and the nationalization of industry throughout Soviet Russia, and the forced requisition (demand) of surplus grain and other food products from the peasantry by the state.

War communism

the major communist political party of Russia and the Soviet Union from the Russian Revolution of October 1917 to 1991.

Bolsheviks

the extent to which modern liberalism is challenged by alternative thought

* Aboriginal collective thought * environmentalism * religious perspectives * neo-conservatism (neoliberals) * postmodernism extremism

is a socialist movement to create a classless, moneyless, and stateless social order structured upon common ownership of the means of production, as well as a social, political and economic ideology that aims at the establishment of this social order.

communism

Countries with a planned or command economy

- Cuba (communist) | - Norway/Sweden (democratic socialism)

socialism achieved by the moral persuasion of capitalists to surrender the means of production peacefully to the people. - Robert Owen - Charles Fourier

Utopian Socialists

mixed economy has...

- both left and right wing economic ideas - combination of pubic and private property - social safety net

- refers to the practice of businesses providing welfare services to their employees. - refers to capitalist economies that include comprehensive social welfare policies.

Welfare capitalism

-is a concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life.

Welfare state

A popular term used to refer to the economic policies of Ronald Reagan, the 40th U.S. President (1981–1989), which called for widespread tax cuts, decreased social spending, increased military spending, and the deregulation of domestic markets.

Reaganomics

An economic theory holding that bolstering an economy's ability to supply more goods is the most effective way to stimulate economic growth. -advocates income tax reduction because it increases private investment in corporations, facilities, and equipment. -trickle down theory According to the trickle-down theory, if tax rates are lower, people have an incentive to work more because they get to keep more of the income they earn. They then spend or invest that income, and either of these activities will improve everyone’s prosperity, not just the prosperity of those in the highest income brackets. What’s more, in the end, the government may actually collect more income tax despite the lower tax rates because of the additional work performed.

supply side economics

-another name for Keynesian economics. It is based on the thought that government intervention is necessary for economic growth and urges and justifies a government's intervention in the economy through public policies that aim to achieve full employment and price stability. Read more: http://www.businessdictionary.com/definition/demand-side-economics.html#ixzz2nZ00192Q

demand side economics

Trickle down theory explained

President Reagan's economic policies, commonly referred to as "Reaganomics" or supply-side economics, were based on this theory. The idea is that with a lower tax burden and increased investment, business can produce (or supply) more, increasing employment and worker pay. Reagan initially slashed the top income-tax rate from 70% to 50%. Critics see the policy as tax cuts for the rich and don’t think the tax cuts benefit lower-income earners. -does not support government intervention in the economy.

based on stimulating demand through government spending and other government interventions. An increase in government spending necessitates an increase in income-tax rates – the opposite of what trickle-down theory advocates.

Keynesianism

The set of programs and policies designed to promote economic recovery and social reform introduced during the 1930s by President Franklin D. Roosevelt

The New Deal

A term coined by economist Adam Smith that describes the natural phenomenon that guides free markets and capitalism through competition for scarce resources. See youtube video: http://www.youtube.com/watch?v=ulyVXa-u4wE

Invisible hand

An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate (mass) interactions of a country's citizens and businesses and there is little government intervention or central planning.

Market economy

The theory and system of political economy prevailing in Europe after the decline of feudalism, based on national policies of accumulating bullion, establishing colonies and a merchant marine, and developing industry and mining to attain a favorable balance of trade.

Mercantilism

A political and economic system of Europe from the 9th to about the 15th century, based on the holding of all land in fief or fee and the resulting relation of lord to vassal and characterized by homage, legal and military service of tenants, and forfeiture.

Feudalism

actions taken by government and banks to control the money supply

Monetary Policy

a protest movement formed by workers who showed their opposition to industrialization by destroying machines

Luddites

a working class movement in Great Britain that focused on political and social reform

Chartism

a movement advocating gender equality

Feminism

the taxing and spending powers of government

Fiscal Policy

a severe economic downturn that lasts several years

Depression

coming from local communities outside of traditional power structures

Grassroots movement

a system based on the common ownership of wealth

Communism

a state with a capitalist economy where the government softens the effects of market forces through the provision of social programs

Welfare State

a collection of ideologies centered on the principle of economic equality

Socialism

rights and freedoms to which all people are entitled

Human rights

an economic system based on central planning and government ownership

Command Economy

the extension of the vote to all citizens past a certain age

Universal Suffrage

a general slowdown in economic activity or a business cycle contraction

Recession

government enforced rules and regulations aimed at the protection of workers

Labour Standards

people who opposed the oppression of workers and who believed in the possibility of a perfect or ideal society

Utopian Socialists

extension of equality rights in the late 19th and early 20th centuries

* universal suffrage * labour standards/labour laws * labour unions * equality rights for women (feminism) * recognition of rights for Aboriginal peoples

ideologies that developed in response to classical liberalism

* Utopian Socialism * Marxism * Classic Conservatism

He said the people should make laws directly rather than have laws imposed upon them by high authorities. In order to ensure stability and security, people must, however, accept the role of government to enforce the general will of society.

Jean-Jacques Rousseau

Economics Flashcards

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