Module 2 - Growth, Capitalism, Modernity

Question 1

What are ‘systems’? What can they be defined as having?

Answer 1

Systems are made up of components and relationships (interdependencies) between them.

Systems often can be defined as having specific goals, purposes, or outputs.

Systems are embedded and exist at many scales (systems are usually sub-systems and meta-systems).

Question 2

What are Social Systems? What are they made up of? Examples?

Answer 2

‘Social Systems’ as a term refers to all systems where humans (or groups of humans) are the primary components.

Made up of Actors (Agents) and relationships (interdependencies) between them.

Ex. bakery, a family, Canada, global financial system, system of social status , class

Question 3

What is an economic system?

Answer 3

An economic system is a social system of production, allocation and distribution, and consumption of goods and services within a society.
- society can be global or smaller groups
- fxns on exchanges

Question 4

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

Answer 4

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 is Economic Growth?

Answer 5

When more ‘stuff’ and ‘services’ are produced (and consumed).

Question 6

What 4 events signify a brief history of economic growth?

Answer 6

1. Hunter Gatherer Societies of Paleolithic
2. First Ag Revolution
3. Modern Period (~1500)
4. The 20th Century

Question 7

Describe the Hunter/Gatherers of the Paleolithic

Answer 7

• Social groups of less than 50 ppl
• Very simple social systems of governance and economic production/exchange
• By the end humans had fire, simple tools, simple weapons, and had migrated across the globe
• Overall production and consumption was low

Question 8

Technology

Answer 8

Knowledge and processes that can be applied to expand human capabilities

Question 9

When was the First Agricultural Revolution? What changed from the Hunter Gatherer Societies of the Paleolithic?

Answer 9

~9,000 B.C.
- Major transformation of human social systems
- Human settlements form and domestication of plants and animals begins
- Increasingly complex social systems evolve (“MY land”)
- Individual Property Rights institutions form for things like plants, animals, and land

Question 10

Institutions

Answer 10

Structures and mechanisms of social order and cooperation governing the behaviour of a set of individuals. Think of institutions as all of the rules (formal institutions) and norms (informal institutions) that affect members of society.

Question 11

Property rights

Answer 11

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 12

What does ‘Agricultural Surplus’ allow for?

Answer 12

Specialization of Labour and Increase in Trade

Question 13

What happened during the Early Modern Era? What are 3 key aspects?

Answer 13

~1400-1700 (starting with the Renaissance)

1. Decline in the influence of the Catholic Church over knowledge, governance, and economic production
2. Rise of Scientific Method
3. Rise of Liberalism
   - political and social philosophy that promotes individual rights, civil liberties, democracy, and free enterprise
   - contrasts with individuals being seen as having inherently different worth and status due to their birth status or religious standing

Question 14

What happened during the Late Modern Era?

Answer 14

• the 2nd Agricultural Revolution
• the Industrial Revolution
• Health Improvements and Population Rise
• Rise of Capitalism
• Government led Modernization (public health, the new deal and fordism, post war investments)

Question 15

When was the second agricultural revolution? What happened?

Answer 15

~mid 17th through mid 19th century; late modern era

• In the Uk and much of Europe common lands were declared private property through enclosure acts. This increased incentive to improve land productivity and led to modernization of farming.
• Increased yields with new kinds of crops and innovative farming practices being developed and arriving from around the globe
• Greatly increased ag production and freed up labour for other forms of work

Question 16

When was the Industrial Revolution? What happened?

Answer 16

~1750-1900

• Technological changes led to dramatic productivity increases and to ‘globalization’
• Transition from Ag Labour to Industrial Labour
• Massive increase in coal consumption and beginnings of fossil fuel driven economy
• Accompanied/Accelerated by major institutional changes (enclosure acts, new banking system, democratic gov’t, rise of capitalism etc.)

Question 17

What is a Homo Economicus?

Answer 17

• An Ideal Type
• Self Interested Individual
• Does a perfect cost-benefit analysis on every decision (production/consumption) based upon their own preferences
• Is motivated to employ his/her resources (land, labour, $, etc) in an efficient manner to achieve his/her personal desires

Question 18

What is Freedom to Choose?

Answer 18

Describes an individual’s opportunity and autonomy to perform an action selected from at least 2 available options, unconstrained by external parties.

Question 19

Laissez faire (free market economy)

Answer 19

Let people do as they choose, without much control from authority
- guides market forces

Question 20

What was Adam Smith’s idea of Market Forces?

Answer 20

…led by an invisible hand to promote an end which was no part of his intention…By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote it

Question 21

In a free market (laissez-faire) economy, decision making power is decentralized and in the hands of…

Answer 21

Individual members of society who are free to decide what to sell and buy, what to tranport from place to place, what to produce, what labour to engage in, and so on.

Question 22

In a free market, what are prices the result of?

Answer 22

The demand for goods and services and the availability (scarcity) of those goods and services.

Question 23

In a free market, people are what and have the incentive to maximize?

Answer 23

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

Question 24

In a free market, all of the ‘Market Forces’ result in what?

Answer 24

The most efficient use of resources.

Question 25

What is the main argument for a free market system?

Answer 25

Market Forces result in the most efficient use of resources.

Question 26

The adoption of capitalism has been an important factor in increasing economic productivity and growth because…

Answer 26

it creates incentive structures that reward increased production

Question 27

Capitalism is a system that is largely based upon the principles of…

Answer 27

free market economic systems

Question 28

What happened in the 20th Century?

Answer 28

Continued Growth
- more economies opened to mkt forces (capitalism) with varied approaches around the world
- Govts began to manage capitalism in an effort to avoid frequent mkt crashes
- Govts also greatly expanded modernization efforts

Question 29

What was the result of the continued growth during the 20th Century?

Answer 29

Dramatic rise in population

Question 30

What is GDP?

Answer 30

One very common way of measuring the output of a society
- GDP is the total value of final goods and services produced (sold) within a territory during a specified period

Question 31

What does “economic growth this year was 3%” mean?

Answer 31

GDP increased by 3% = 3% more ‘stuff’ was produced in the territory