Crash Course
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The Industrial Revolution
-Before Industrial revolution 80% of the population was farmers and 20% was other -In the 21th century 1% of the US population list their occupation as farmers -"The industrial revolution was an increase in production brought about by the use of machines and characterized by the use of new energy sources" - crash course -The Industrial revolution is not the same thing as Capitalism although it is connected to modern Capitalism -The industrial Revolution started in 1750 mainly in Europe -Steam engines was one of the biggest inventions -The Industrial Revolution is very interconnected -The Industrial Revolution was mainly in Britain because they had coal and high wages Capitalism
-Capitalism as an economic system and also a cultural system -It is characterised by innovation and investment to increase wealth -Mercantile Capitalism was an early form of capitalism -"Joint Stock Companies" were invented in the 17th century -Industrial capitalism was much larger in scale and in practice than mercantile capitalism -"An economic system that relies on investment of capital in machines and technology that are used to increase production of marketable goods" - Joyce Appleby's definition of industrial capitalism -Industrial capitalism was first developed in Britain in the 19th century -The English civil war helped with the growth of capitalism -Fewer people needed to work in agriculture in order to feed the population -In 1520 80% of the English population worked the land and by 1800 only 36% worked the land and by 1850 it had dropped to 25% -"Capitalism is also a cultural system, rooted in the need of private investors to turn a profit" - crash course - Socialism is an imperfect opposite to Capitalism -Karl Marx co-wrote the communist manifesto -Karl Marx was a philosopher and a Historian -Capitalism beat out Socialism |
Summarise in no more than 50 words, what is Capitalism? |
Capitalism is an economic system where production is owned by private companies and the market is free. Capitalism works by people who have desire to make things to earn more money. There is competition between companies in the free market. It works because of greed and self-interest.
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How Capitalism Works
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1. ‘The essence of Capitalism is economic freedom’. What do you understand this to mean? I understand this to mean that in Capitalism the economy is free from any government intervention
2. What are the two basic approaches to a modern economic system? One type of approach is the "free market economy" and the other type is the "Planned economy" 3. What does Layton mean by ‘true’ or ‘real’ capitalism? True capitalism is the original concept of capitalism. Real capitalism is the current version of capitalism that has a mixture of economic systems 4. What is a ‘mixed economy’? A mixed economy is an economy that incorporates certain aspects of Capitalism and certain aspects of planned economy 5. What does ‘individualism’ mean? It is the belief that every human is individually unique and special. Individuals come first then the economy comes second 6. Give an example of how someone’s ‘individual wealth’ could lead to an overall improvement in the ‘wealth of society’. If a person has money then he can pursue his personal gains, this can lead to other people earning more money 7. What two concepts did Adam Smith, introduce in his book, ‘Wealth of Nations’? 1. self-interest guides producers to make things the market wants, the pursuit of personal gain 2. The economy has a natural design, if it is left alone it will run itself and everyone will benefit from it 8. What does Smith mean by an ‘invisible hand’? He means that the economy will guide itself through the combination of self-interest, ownership and competition 9. Why does Capitalism thrive in a consumer culture? Because everybody buys things and this allows companies to create more products and when people buy these products it allows people to earn money this benefits Capitalism 10. Define what the owner class and working class are. The owner class is made up of the few people that can afford to pay for everything. The working class is made up of people that produce the goods and do not own any capital 11. According to Smith, what guides production and why? When people want something, supplies become less and prices go up, but when more products are made then the prices go down 12. How does Smith’s model of Capitalism improve society’s standard of living? Because it allows more products to be made and the price of these products become lower allowing less wealthy people to afford more things 13. What should be the role of government according to Smith? The role of the government is to maintain peace and order so that the economy can work without interruption 14. Explain what laissez-faire system of economics is. His system of economics is based on Supply and Demand 15. What is meant by ‘supply and demand’? When a product is wanted by the public (demand) then a large supply of those goods are made to satisfy the market 16. What is Mercantilism? It is a system that existed when most of the world was still using local barter to buy and sell things. Merchants in those times moved goods from one place to another and this is how they made profit 17. How are Capitalist, Socialist and Fascist economic systems basically different? Capitalist- the owner of a production is an individual and the individuals benefits from production, then the society. Socialist- the owner of production is the state and the society benefits from these productions. Fascist- the owner of production is the state and the state benefits from the production, then the society 18. Why didn’t true capitalism work in history? Because the distribution of wealth becomes very uneven. Also monopolies get rid of competition, which means the economy is no longer in it's original state. 19. Why did governments begin to intervene in the Capitalist economies in the early 20th century? Because the government started protecting the working class against the owner class, they passed laws such as the banning of child labor 20. What changes did the economist Keynes believe should be made to Capitalism in the 1930s? He believed that the government should intervene to help stabilize the economy by varying taxes and spending and manipulating interest rates |