Midterm Flashcards
Agricultural Revolution
Formation of society due to sustainable food sources
Feudalism
Authority upholds safety and stability
Industrial Revolution
Technological advances allow entrepreneurs to own private companies
Law of Accumulation
People want to accumulate their wealth. Smith says that you should accumulate your wealth to put it back into society
Law of population
as wages rise workers will be able to live better and therefore the population will rise
Owen
Assumed people would work better when given good working conditions
Mill
pro-redistribution; everyone has a right to their income but over accumulation hurts society; economics concerns production and not distribution
Ricardo’s Theory of Rent
land is a limited factor; As population grows- workers & factory owners lose while landowners win (earn more by inheriting and not by working hard)
Pop. grows- food demand increases- land demand increases- cost of food increases
Theory of Comparative Advantage
the ability of a party to produce a particular good or service at a lower opportunity cost than another party
Malthus’ Population Theory
population growth occurs exponentially, so it increases according to birth rate (population can outgrow resources)
solution: moral restraint- don’t marry or reproduce until you can support a family (not realistic); disease/famine will also keep population in check
General Glut
Recessions/depressions are possible
money is a commodity, and excess demand for money can lead to a shortfall in demand for everything else (that is, a recession), which countercyclical government policy can rectify
gluts result from a decline in profits owing to insufficient demand. In turn, insufficient demand is caused by a disproportion in the distribution of income
Say’s Law
Supply creates its own demand (all income is spent)
when an individual produces a product or service, he or she gets paid for that work, and is then able to use that pay to demand other goods and services
Marx’s critique of capitalism- Profits as theft
Profits as theft: one man’s profit is another man’s loss (don’t raise prices above competition)
Marx’s critique of capitalism- Labor Theory of Value
value of a commodity could be measured objectively by the average number of labor hours necessary to produce it; human labor was the only common characteristic shared by all goods and services exchanged on the market
Marx’s critique of capitalism- Surplus Value
surplus value is equal to the new value created by workers in excess of their own labor-cost, which is appropriated by the capitalist as profit when products are sold
Surplus Value: profit= rev-costs (capitalism)
Marx: value= C+wages (V)+ surplus value (S)
Surplus creates crises & depressions; workers are only paid enough to buy portion of output
Marx’s critique of capitalism- Proletariat and Bourgeoisie
Proletariat: class of wage- earners in a capitalist society whose only possession of significant material value is their labor-power (their ability to work); capable of a revolutionary action to topple capitalism in order to create classless society
Bourgeoisie: those who own the means of production; mercilessly exploited the proletariat; sold factory goods for more than the value of the labour itself; worker does not benefit from this added value, and fails to benefit from the fruits of his/her own labour
Marx’s critique of capitalism- Dialectical Materialism
one class controls and thus exploits the other class that does not (bourgeoisie owns production and proletariat only owns their own labor); priority of matter over mind
Marx’s critique of capitalism- explanation of recessions
surplus value creates crises & depressions; workers are only paid enough to buy portion of output (recession)
