2: Growth, Capitalism and Modernity

Question 1

What is a system made up of? Often have…

Answer 1

Made up of components and relationships (interdependencies) between them

Often defined as having specific goals, purposes or outputs

Question 2

What is a social system? examples

Answer 2

Made up of actors (individuals/groups) and relationships between them

Term referring to all systems where humans (or groups) are the primary components

e.g. bakery, global financial system, family, Canada (as a country)

Question 3

What is an economic system?

Answer 3

Social system of production, allocation and distribution, and consumption of goods and services within a society

Question 4

What is economic growth? What are the two reasons for it?

Answer 4

Economic growth results when the output (total goods and services) of an economy grows because:

1. more land, labour, or capital (equipment, animal power, fossil fuels, etc) are devoted to the production of goods and services
2. the productivity of these factors of production (land, labour, capital) are increased

Question 5

What are the means of production?

Answer 5

Land, labour, capital

Question 6

When did stone tools start to be used? When did anatomically modern humans appear?

Answer 6

stone tools ~2,500,000 BCE

~200,000 BCE anatomically modern humans

Question 7

What kind of social systems did the hunter/gatherers of the paleolithic have?

Answer 7

Social groups, usually of less than 50 people

Simple social systems of governance and economic production/exchange (similar to small family networks)

Production and consumption in society was very low

Question 8

What is technology

Answer 8

Knowledge and processes that can be applied to expand human capabilities

e.g. stone axe -> steel axe -> chainsaw

Question 9

When did the First Agricultural Revolution happen? What did it consist of? What happened to social systems

Answer 9

~9,000 BC in some areas of the world
Major transformation of human social systems: increasingly complex social systems

Human settlements formed and domestication of plants and animals began (more control over food supply allowing ppl to settle in one place)

Question 10

The First Agricultural Revolution lead to the creation of…

Answer 10

Individual property rights institutions for things like plants, animals and land

Areas became attached to certain groups of people. Individuals and families controlled certain spaces

Question 11

What is an institution?

Answer 11

Rules of the game in a society, or, more formally, are the human devised constraints that shape human interaction

Question 12

Think of institutions as…

Answer 12

all the rules (formal institutions) and norms (informal institutions) that affect members of society

Question 13

What are property rights?

Answer 13

The rules or formal institutions that outline who has ownership over property (and if it can be sold), who can use it, what can be done with it, and who can make further rules regarding its use

Question 14

Agricultural surplus allows for…

Answer 14

specialization of labour & increase in trade

e.g. thatching a roof, religious leaders, healers

Question 15

When was the early modern era? What happened?

Answer 15

Starting with the Renaissance, the period from about 1400 through 1700 saw most of Europe transition from medieval social systems to early modern social systems

Question 16

Key aspects of the early modern era

Answer 16

• decline influence of the catholic church (particularly in terms of influence over knowledge, governance, and economic production)
• rise of the scientific method
• rise of liberalism
• rise of merchant capitalism

Question 17

What is liberalism

Answer 17

A political and social philosophy that promotes individual rights, civil liberties, democracy, and free enterprise (contrasts w individuals being seen as having different worth and status due to their birth status or religious standing)

Question 18

Who was Cosimo de Medici

Answer 18

Italian banker and politician who established the Medici family as effective rulers of Florence during much of the Italian Renaissance
Merchant republic

Question 19

What happened in the late modern era?

Answer 19

• 2nd agricultural revolution
• the industrial revolution
• health improvements and population rise
• rise of capitalism
• government led modernization (public health, etc)

Question 20

When was the second agricultural revolution? What happened in the UK and much of europe?

Answer 20

Mid 17th through mid 19th century

Common lands were declared private property through enclosure acts. This increased incentive to improve land productivity and led to modernization of farming.

Question 21

Food yields in the 2nd agricultural revolution? This led to…

Answer 21

Increased yields with new kinds of crops and innovative farming practices being developed and arriving from around the globe
Greatly increased agricultural production and freed up labour for other forms of work (e.g. factories)

Question 22

When was the industrial revolution? What happened

Answer 22

• ~1750 to 1900
• technological changes led to dramatic productivity increase
• ag labour -> industrial labour
• massive increase in coal consumption and beginnings of fossil fuel driven economy

Question 23

The industrial revolution was accompanied/accelerated by…

Answer 23

major institutional changes (enclosure acts, new banking systems, democratic government, rise of capitalism, etc)

Question 24

Who was Adam Smith? What kinds of questions did he ask

Answer 24

Wrote the Wealth of Nations

Who should direct the economy? How should scarce things (labour, land, coal, food, nails) be managed? What results in the greatest common good?

Question 25

What was Adam Smiths philosophy on self interest?

Answer 25

People work, produce, etc not our of humanity but out of their own self interest

Question 26

What is homo economicus?

Answer 26

Simple model for a person: ‘ ideal type’
Self interested individual
Does a perfect cost-benefit analysis on every decision (production/consumption) based upon their own preferences

Question 27

What is homo economicus motivated by?

Answer 27

To employ his/her resources (land, labour, $, etc) in an efficient manner to achieve his/her personal desires

Question 28

Slides 33-36

Answer 28

Market forces

Question 29

Decision making power in a free market

Answer 29

Is decentralized and in the hands of individual members of society who are free to decide what to sell and buy, what to transport from place to place, what to produce, what labour to engage in, and so on

Question 30

Prices in free markets

Answer 30

Are the result of the demand for goods and services (based on the preferences of free decision makers) and the availability (scarcity) of those goods and services

Question 31

People in free markets

Answer 31

Are self interested and have incentives to maximize their own productivity and to value and protect their property

Question 32

Continued growth in the 20th century

Answer 32

• more economies opened to capitalism
• gov began to manage capitalism in effort to avoid boom/bust cycles
• gov expanded modernization efforts including water systems, roads, schools systems, hospital systems, highway systems, communication systems, electrical grids, airports, etc

Question 33

GDP definition

Answer 33

Gross domestic product is the total value of final goods and services produced (sold) within a territory during a specified period
Essentially % more ‘stuff’ produced in the territory

Very common way of measuring the output of a society/economic growth

Question 34

What is the GDP per capita

Answer 34

GDP per individual in the territory