1.8 and 1.9 Flashcards
What is the capitalist revolution?
The emergence in the eighteenth century and eventual global spread of a way of organising the economy that we now call capitalism
What is capitalism
An economic system characterised by a particular combination of institutions
What is an economic system?
Way of organising the production and distribution of goods and services in an entire economy
What is meant by institutions in capitalism?
Various set of laws and social customs regulating production and distribution
What institutions characterise capitalism
Private property
Markets
Firms
What is private property
Right to private property to enjoy possessions
exclude others from it
and dispose of them
What are markets?
Way of connecting people who mutually benefit from exchanging goods and services through the process of buying and selling
How do markets differ from the other ways goods and services are exchanged
Reciprocity - the transfer of goods and services is reciprocated with something in return
Participation is voluntary - It willingly occurs as both buyer and seller expect to benefit
Competition - Supply and demean as people won’t charge to high as people will opt for the cheaper option
What are firms
Way of organising production with the following characteristics
- one or more people own capital goods used for production
- Wages/Salaries being paid to employees
- Direct employees in production
- Goods/services are the property of the owner
- Goods and services are sold on markets for profit
Why are markets and private property essential for firms to functions ?
Outputs and capital goods are private property: The firms capital goods belong to the owner so do the outputs
Firms use markets to buy inputs and sell outputs : The profits depend on whether products Are bought in markets , markets also used for inputs
Why would capitalism be described as a class of systems
Due to the way institutions combine with eachother , families, governments
What accounts for the success of capitalism as an economic system
A combination of competition among firms , concentration of power and cooperation within them
How could capitalism lead to Growth in living standards
Technology
Specialisation
