Chapter 5- Socialism and Capitalism

Question 1

socialize and individual’s cost or value

Answer 1

spread it to society at large

Question 2

An advocate of socialism asserts:

Answer 2

that the individual should act to promote the good of society, not to promote the individual’s well being.

Question 3

Karl Marx

Answer 3

father of socialism: Production should come “from each, according to his ability, to each, according to his need”

Question 4

authoritarian choice

Answer 4

only alternative to individual economic freedom, state’s decisions are made by a dictator, the peoples’ elected
representatives, or by popular vote

Question 5

original rationales for socialism

Answer 5

fairness, firms have more power than individuals, rigid class systems don’t allow for true economic movement, unemployed masses due to advances in technology

Question 6

modern rationales for socialism

Answer 6

we must socialize individual decisions by state force in order to counter nature’s socializing effects

Question 7

exteral cost

Answer 7

costs spill over to other people

Question 8

external benefit

Answer 8

benefits spill over to other people

Question 9

externalities

Answer 9

external costs and external benefits

Question 10

maintaining socialist order: if people disagree — two options:

Answer 10

1) allow individual choice (doesn’t maintain socialist order)
2) use force and threat of force to maintain socialist order

Question 11

fascism

Answer 11

A system under which the state does not take title to property, but orders the use of that property and the individual in any way it
wishes

Question 12

US socialism is generally:

Answer 12

fascistic in nature

Question 13

eminent domain

Answer 13

where property is taken for state public use, such as roads, and parks, but the owner is compensated (sometimes state takes and sells purely for business interests)

Question 14

civil forfeiture

Answer 14

where a person is suspected of a crime and that person’s property is seized because it is automatically suspected as having contributed to the crime : often, la enforcement targets individuals they believe have large sums of cash which is then used to fund law enforcement (other bureaucrats sometimes get cuts)

Question 15

latest socialist rationale in the US

Answer 15

if the state provides any good from which the
individual might derive external benefits—for example, roads, schools, and courts—that no property is
private and the state is justified in dictating the use of the individual’s property and income

Question 16

% of total spending done by the state as a measure of socialism

Answer 16

When government spending, as a percentage of total economic activity,
grows, the economy becomes more socialistic

Question 17

the right to “the pursuit of happiness”

Answer 17

the right to hold and use property freely, to choose one’s profession, to make contracts, and to travel

Question 18

in capitalist view, society’s best interest is:

Answer 18

promoted by individuals with property rights making voluntary decisions

Question 19

incentive problem of socialism

Answer 19

Socialism divorces consumption from production

and, in that way, takes the incentive to voluntarily serve