SOCIAL STUDIES 30 CAPITALISM PRIVATE ENTERPRISE ORIGINS OF

SOCIAL STUDIES 30 CAPITALISM / PRIVATE ENTERPRISE

ORIGINS OF CAPITALISM • MERCANTILISM – ECONOMIC SYSTEM WIDELY PRACTICED IN EUROPE TIL END OF 18 TH CENTURY • PRIVATE ENTERPRISES ONLY FUNCTION BY SUBMITTING TO DETAILED INTERVENTION & SUPERVISION IN BUSINESS BY GOVT • ECONOMICS TOO IMPORTANT TO BE LEFT TO INDIVIDUALS • ESTABLISHED PROTECTIVE TARIFFS • FORBADE IMPORTS OF CERTAIN GOODS • LIMITED WORKERS TO TRAVEL • GOVT RESTRICTIONS EVERYWHERE • COLONIES SUPPLY RAW MATERIALS TO MOTHER COUNTRY IN CERTAIN SHIPS • GOVT SET MONOPOLY CONTRACTS – EX. HUDSON BAY COMPANY • REGULATE TRADE, PRICE, QUALITY

ADAM SMITH • BOOK, ‘WEALTH OF NATIONS’ 1776 • ‘LAISSEZ – FAIRE’ • INVISIBLE HAND • PHYSIOCRAT • GOVT LAWS & RESTRICTIONS HINDERED ECON GROWTH • GOVT ONLY INTERFERE IN ECONOMY – TO PROTECT COUNTRY AGAINST FOREIGN ENEMIES – ENSURE COMPETITION – MAINTAIN LAW & ORDER – PROTECT INDIVIDUAL RIGHTS

INDUSTRIAL REVOLUTION • 1800 s – TRANSFORMATION WHICH STARTED IN ENGLAND • TRADITIONAL AGRICULTURAL ECONOMY INTO URBAN, FACTORY SYSTEM OF PRODUCTION • STEAM ENGINE

INVISIBLE HAND • EXPRESSION USED BY ADAM SMITH TO EXPLAIN FACT THAT THE SELFISH ECONOMICALLY GOVERNED ACTIONS OF ALL INDIVIDUALS OF A SOCIETY ULTIMATELY COMBINE TO BENEFIT ALL OF SOCIETY • SUPPORTED BY ADAM SMITH AND DAVID RICARDO

THOMAS MALTHUS • ‘ESSAY ON POPULATION’ – 1798 • WORLD’S POP INCREASING AT FASTER RATE THAN ABILITY TO PRODUCE FOOD • MALTHUS SAID – POVERTY WAS NATURES WAY OF LIMITING POPULATION & INTERFERENCE WOULD DISRUPT NATURE’S PLAN • CHARITY INTERFERE WITH NATURE’S WAY OF KILLING OFF WEAK

DAVID RICARDO • ARGUED POVERTY WAS INESCAPABLE • HIGHER WAGES = LARGER FAMILIES = TOO MANY WORKERS = LOWER WAGES THAN BEFORE • BELIEVED POVERTY WAS A LAW OF NATURE THAT GOVTS SHOULD NOT CHALLENGE

CHARLES DARWIN • ‘ON THE ORIGIN OF SPECIES’ – 1859 • SURVIVAL OF THE FITTEST • SOCIAL DARWINISM – THE MISGUIDED ADAPTATION OF DARWIN’S BIOLOGICAL THEORIES TO ASPECTS OF HUMAN SOCIETY

J. D. ROCKEFELLER • AMERICAN TYCOON • ‘BIG BUSINESS IS MERELY THE SURVIVAL OF THE FITTEST, THE WORKING OUT OF THE LAW OF NATURE AND THE LAW OF GOD

PRIVATE ENTERPRISE • PRIVATE PROPERTY • PRICE SYSTEM, BASED ON SUPPLY AND DEMAND • COMPETITION • FREEDOM TO BUY AND SELL • PROFIT MOTIVE • LITTLE GOVT INTERVENTION IN ECONOMY • INEQUALITIES • MARKETS

Features of the Private Enterprise Economy • • • Private ownership of resources Consumer sovereignty Price & profit motive determine output Competition Distribution depends on ability to earn income

PROS & CONS OF MARKET PROS • INCENTIVE TO PRODUCE GOODS THAT PUBLIC WANTS • INCENTIVE TO ACQUIRE SKILLS • VARIETY OF GOODS & SERVICES • EFFICIENCY • GOOD QUALITY • LOW PRICES • SELF – RELIANCE • WEALTH FACTOR CONS • CONSUMERS MANIPULATED BY ADS • PRICE & INCOME NOT REFLECT WHAT IS BEST FOR SOCIETY • BOOM & BUST CYCLES • MONOPOLIES CAN EMERGE = UNREASONABLE PRICES • ENVIRONMENTAL PROBLEMS • INSECURITY • TOUGH TO BREAK POVERTY CYCLE • RICH – POOR GAP

CLASSICAL LIBERAL • 19 TH CENTURY (1800 s) – CAPITALISM & LIBERALISM = INDIVIDUAL • TRADITIONAL / CLASSICAL LIBERAL • THEY WISH TO MAXIMIZE INDIVIDUAL LIBERTY BY LIMITING GOVT INTERVENTION • JOHN STUART MILL ‘ON LIBERTY’ – ONLY JUSTIFICATION FOR GOVT ACTION WAS TO PROTECT INDIVIDUALS FROM BEING HARMED BY OTHERS • STATE NO REGULATE MORAL STANDARDS, PROVIDE ECONOMIC BENEFIT, PROTECT INDIVIDUALS FROM HARMING THEMSELVES, OR PROVIDE CHARITY • J. S. MILL – LATER SUPPORTED LAWS AGAINST CHILD LABOR & UNSAFE WORKING CONDITIONS

NEO - CONSERVATISM • SUPPORT CAPITALISM AND FREE ENTERPRISE – – – MILTON FRIEDMAN PRESTON MANNING RALPH KLEIN MIKE HARRIS GEORGE BUSH • OPPOSES GOVT REGULATIONS • STATE ENTERPRISE TO BE SOLD TO PRIVATE OWNERS

MILTON FRIEDMAN • MONETARIST • SUPPLY-SIDE ECONOMIST • DISLIKED GOVT FISCAL POLICY OF TAX AND SPEND • BELIEVED GOVT SHOULD CONTROL EXPANSION OF MONEY SUPPLY TO ASSURE STEADY RATE OF ECONOMIC GROWTH WITHOUT INFLATION • ATTACKED GOVT INTERVENTION • ‘NO SUCH THING AS A FREE LUNCH’ • CHAMPION OF FREE ENTERPRISE • WON NOBEL PRIZE OF ECON - 1976

RALPH KLEIN • NEO – CONSERVATIVE – PRIVATIZE LIQUOR STORES – CUTS TO HEALTH CARE – CUTS TO EDUCATION – PRIVATIZED ENERGY SECTOR – PRIVATIZED MOTOR VEHICLE BUREAUS