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GMGT 1010 > What is capitalism? > Flashcards

What is capitalism? Flashcards

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1
Q

capitalism

A

an economic system that allows for private ownership of the means of production. Assumes that economic decision making is in the hands of individuals who make decisions to earn a profit.

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2
Q

Three central features of capitalism

A

wage labour, private ownership of the means of production, production for exchange and profit

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3
Q

assumptions of capitalism

A

private property, individualism, economic freedom, equality of opportunity, competition, profit maximization, work ethic, customer sovereignty, role of govt

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4
Q

what is private property?

A

the legal right to own and use economic goods (means of production)

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5
Q

what are the 3 means of production?

A

land, capital, labour

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6
Q

what is individualism?

A

the individual, and not society or a collective, is the paramount decision maker in society

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7
Q

what does individualism assume?

A

that the individual is inherently rational and that individuals seek to maximize self interest

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8
Q

what is economic freedom?

A

few restrictions on business activity
ie voluntarily enter business, enter contracts, locate anywhere

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9
Q

what is equality of opportunity?

A

the assumption that all individuals or groups have an even chance at responding to some condition in society

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10
Q

what is equality of results/outcome

A

when affirmative action is taken to ensure people who are disadvantaged are making gains. Tries to make up for systemic issues

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11
Q

what is competition

A

when many rival sellers seek to provide goods and services to many buyers

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12
Q

what is profit maximization

A

“the profit motive is when companies act to maximize profit margin, there is usually pressure for growth

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13
Q

what is the assumption fo work ethic?

A

a code of values that claim that work is desirable and a natural activity

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14
Q

what is consumer sovereignty

A

the assumption that consumers have and exercise the power over producers through the decisions they make in purchasing goods and services

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15
Q

what is the assumption of the role of government in capitalism?

A

in perfect capitalist market, govt intervention would be virtually non-existing

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16
Q

Laissez-faire capitalism

A

“pure capitalism”
minimum govt intervention
govt strictly limited to police and fire protection

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17
Q

state capitalism

A

the state (govt) undertakes commercial (for profit) activities
govt owned enterprises, but means of production are still owned by enterprises

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18
Q

stakeholder capitalism

A

balances the needs of shareholders with stakeholder (ie employees, suppliers, customers, local communities)

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19
Q

Clean capitalism

A

incorporates social, economic and ecological costs into the marketplace/prices we pay
ie: Canadian carbon tax

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20
Q

US Style Capitalism

A

-shareholder
-closer to pure capitalism
-limited govt involvement
-less worker representation in corporate world
-lower union density

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21
Q

Chinese Capitalism

A

-state capitalism
-govt organized economic activities
-govt owned enterprises
-political over economic incentives

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22
Q

German Capitalism

A

-stakeholder capitalism
-stronger govt involvement in corporate policy
-worker representation thru co-determination

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23
Q

Japanese capitalism

A

-collective capitalism
-strong govt involvement in business
-interlocking business groups
-lifetime employment norm

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24
Q

Canadian Capitalism

A

-more state involvement than US, less than Germany/Japan
-stable and cooperative relationship btwn business and govt
higher union density than US

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25
Corporations:
A company/group of people authorized to act as a single entity (legally a person) and recognized as such in law
26
Freedom of association:
guarantees the right of employees to meaningfully associate in the pursuit of collective workplace goals. Assumed to be fundamental to forming a corporation
27
Privately owned corporation (advantage and disadvantage)
Owned privately (founders, founding family) Advantage: no shareholders to answer to Disadvantage: have to raise capital privately ie IKEA
28
Publicly traded Corporation (advantage and dis)
Traded on the stock market (anyone can buy shares) Advantage: can raise capital on stock market Disadvantage: must answer to shareholders ie Apple
29
crown corporation (advantage and dis)
Wholly-owned federal or provincial organizations that function like independent companies Advantage: greater freedom that govt arranges, proviedes services that could not be provided by private industries Disadvantage: still subject to constraints of govt ie CBC, MB Hydro
30
2 types of owners in a corporation
direct, indirect
31
direct corporation owner
shareholder (your name is directly on your share)
32
indirect corporation owner
mutual fund holder (have a share thru your portfolio)
33
corporation board director
ultimate governing body of corporation elected by shareholders must fufill many obligations (hiring/firing officers), oversee operations
34
corporation officers
top managers hired by board of directors oversee operations of corporation
35
non profit organization
An organization that uses it’s surplus revenues to further achieve purpose or mission, rather than distributing it’s surplus income to the organization’s shareholders as profit/dividends ie Humane Society, Winnipeg Harvest
36
cooperative
Businesses owned and operated by a group of individuals
37
types of cooperative
worker, consumer, mixed
38
3 technological breakthroughs in the early 1900s
electrical power, automobiles, gasoline engine
39
results of the automobile industry
effects of the technology (urbanization, interdependence), mass production, rise of big business, rise of antitrust legislation, bureaucracy
40
bureaucracy
Max Weber features of ideal bureaucracy: -division of labour -rules and regulations on roles -hierarchy of authority -technical qualifications for jobs -impersonality
41
precipitating factors of Wpg general strike
Large pop returning from WWI Large influx of European immigrants Low wages, high unemployment
42
what was good in the roaring 20s?
increasing pop, growth of cities, low unemployment, increasing wages
43
stock market crash and the great depression
-GDP reduced by half btwn 1929 and 1933 -unemployment soared ~ 1/4 without job
44
causes of the great depression
Speculative boom from 1920s stock market boom Weakness on the farm (inelastic demand....prices down, demand down) Weakness in the factory (tech and unemployment) Income inequality (low demand and high unemployment...the middle class was seen as stabilizing but now gone)
45
what helped the great depression come to an end?
the new deal and the rise of the public sector, WWII
46
the new deal and rise of the public sector
FDR is president government began to intervene in markets rise of national banks and start of the federal reserve monetary policy (public spending, adjusting interest rates)
47
WWII
-led to increase in govt role in economy -Employment act of 1946 -Govts role in the market was focused not on if they should intervene, but how -Emergence of fiscal policy ------Taxation and expenditure to boost economy
48
employment act of 1946
as soldiers return home from war, they are nervous about finding jobs as economy transitioned from making wartime goods and the great depression still fresh in minds. This bill made the general goals full employment, full production, and stable prices. Citizens have a "right" to a job
49
after wwII
-US and CAN not devastated like many Euro cities -Productive capacity of US rapidly expanded as a response of the war effort -Tech efficiency increased -post war demand drop never came
50
The Golden Age of Capitalism
-Business was boomin -Workers and managers kind of got along -Active role for govt in the economy
51
why did workers and managers get along in the golden age?
-Capital-labour accord -Key role of unions -Wages tracked productivity (if productivity increases, wage should too) -Management/labour cooperation
52
govts active roles during the golden age in the economy
-GI Bill (education/training when coming home from military) - military spending -Highway production -Other social spending
53
Demise of the golden age causes
OPEC oil shocks Inflation Stagflation and unemployment
54
when did income inequality begin to widen?
the end of the golden age
55
when was the golden age
1950-1970
56
what happened to the economy in the 1970s?
Stagflation in the 1970s combined high inflation with uneven economic growth. -Biz had lost some of it’s power to workers and the emerging social movements that had emerged in the 1960s (ie environmental)
57
precipitating factors of globalization
collapse of the Bretton Woods system, flexible exchange rates
58
Globalization of Production and Finance
-increased mobility of capital, -the emergence of China, -the rise of BRICS (Brazil, Russia, India, China, South Africa. More manufacturing going to these countries bc of cheap labour, outsourcing to here huge growth in international trade)
59
what is neoliberalism
A modern politico-economic theory favouring free trade, privatization, minimal govt intervention in business, reduced public expenditure on social services etc ie... lassiez-faire capitalism returns
60
when did neoliberalism emerge?
1980s
61
the 1980s
-neoliberalism -Globalization and the neoliberal reforms gave business more power than it had seen since early 1900s -Economic growth was strong. GDP was growing. Corporate profits were increasing -wages were going down and the gap btwn the rich and the poor was increasing -seems like capitalism is good!
62
the great recession effects in the short term
Collapse of housing bubble Value of mortgage-backed securities collapsed Large investment banks were heavily invested in these securities Lehman Brothers goes out of business Stock market fell by 44% btwn May 8 and Mar 9 Credit markets froze
63
the great recession effects in the long term
Wage stagnation and household debt Housing bubble Financial deregulation
64
effects of the great recession
Unemployment doubled and peaked at 10.1% World tade flows decreased 38% in 9 months Govt bailout of other financial institutions $780 billion in spending to stimulate economy It became okay to talk about capitalism in biz school
65
how did canada avoid the worst of the great depression?
CAN integrated regulation of banks, insurance companies, and large investment dealers Financial institutions were less highly leveraged Canadian capital requirements are above international requirements Incentives not to lend in high risk scenarios
66
the economy in the past 3 years
-Right-wing Backlash to Globalization and neoliberalism -The “Gig” Economy -COVID-19
67
Right-wing Backlash to Globalization and neoliberalism
Rise of nationalism -tho there has recently been major pushback by parties that traditionally have championed such policies -Starting to see more nationalistic policies that challenge existing forms of globalization -People on all sides of the political spectrum are starting to speak out against the negative aspects of globalization and neoliberalism
68
the gig economy
-The introduction of new technologies has created a new economy and shaped many occupations -“Side hustles” emerge -Massive shift has major implications for working conditions, worker power, consumer choice
69
covid and capitalism
Role of govt: deeming things “essential” regardless of how much they get compensated Role of business in society: shut down of lots of businesses leads to weak downtown and has lots of implications Consumer culture: conservative spending, shift to ecommerce
70

GMGT 1010 (3 decks)

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