capitalism!
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CAPITALISM!
“No other economic system in the history of the world has been as successful”
-Civics Textbook copyright 2008
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What is Capitalism?
An economic system in which private citizens own and use the factors of production in order to seek a profit.
Based on free markets and private ownership
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Not to be confused with “FREE ENTERPRISE”
This is simply another adjective used to describe the American Economy.
Competition is allowed to flourish with a MINIMUM OF GOVERNMENT INTERFERENCE
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We operate under both headings; our economic system is
known as:
FREE MARKET CAPITALISM
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What makes Capitalism Work?
• Markets• Economic Freedom• Private Property Rights• Competition• Profit Motive• Voluntary Exchange
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MARKETS
• Local, regional, national or global• They connect different sectors of the
economy• Chart of 522 – the one from the essay….– The Business Sector and Consumer Sector are
connected through Factor Markets and Product Markets…
• Consumer Sovereignty– The consumers decide what the businesses are
producing
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Economic Freedom
FACTOR MARKET - We get to choose what type of job to have…, and we can choose when and where we would like to work.
PRODUCT MARKET - Consumers have the Right to choose the products we buy. Businesses have the right to produce whatever they want
Comes with Consequences……
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Private Property Rights
FACT: We can keep whatever we earnFACT: We have the right to own our own
property (“stuff”)FACT: People take care of things better when
they OWN them…
RESULT: People work hard so they can get more “stuff” to own.
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Competition
• The struggle between buyers and sellers to get the best products at the lowest prices
• Competition btw sellers drives prices down• Buyers compete to find the best “deals”
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Competition
• Competition rewards the most efficient producers
• Competition punishes the least efficient producers
• The result of competition in Capitalism is:– Efficient production, high quality products, more
satisfied customers
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Profit Motive
• People are free to risk their savings or any part of their wealth in a business venture
• Could go either way….
• Profit Motive is the driving force that encourages individuals to improve their material well being…– They are trying to “make a profit”
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Voluntary Exchange
• The act of buyers and sellers freely and willingly engaging in market transactions
• Both parties feel like they are getting a good deal…engaging in a beneficial exchange….a win-win situation…
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Laissez-faire Economics
French for “to let alone”The founding principle of Capitalism