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CH 6 Economic History. What is Wealth?. $1 million dollar example Intrinsic vs. subjective value . Mercantilism. Mercantilism. Economic wealth translated into military power so the pursuit of favorable balances of trade ensued.

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what is wealth
What is Wealth?
  • $1 million dollar example
  • Intrinsic vs. subjective value
  • Economic wealth translated into military power so the pursuit of favorable balances of trade ensued.
    • Raw goods imported from colonies and exported as finished goods at higher prices.
    • Goal to export more than import to other nations
adam smith wealth of nations
Adam Smith- Wealth of Nations
  • Argument against mercantilism emerged in 1776 (what else happened that year?)
    • It is not the accumulation of gold and silver that makes a nation wealthy but the economic prosperity of its people.
    • Dismantled the money=wealth myth
    • Father of laissez-faire liberalism (leave alone)
      • Left free to prosper and grow with minimal intervention by the gov’t.
      • Gov’t exists to enforce laws against theft and fraud
modern economic systems
Modern Economic Systems
  • Spectrum
  • Ask:
    • 1. Who owns the nation’s factors of production?
    • 2. Who answers the three economic questions?
dialectical materialism1
Dialectical Materialism
  • History is a history of class warfare
  • Conflict between slaves and masters resulted in Feudalism
  • Evolved into present employee and employer dialectic under the free market (capitalism)
  • Each case (slave, serf, employee) the producers at the mercy of the owners of production.
  • Marx argued:
    • led to slave wages and exploitation of the working class.
    • He advocated for the gov’t to confiscate all tools of production and then act as a benevolent employer to all people in a revolution to overthrow the have’s.
    • Claim to distribute nation’s products in an egalitarian manner during a transitional socialist stage
    • Ultimately creating a communist society where the government ceases to exist, a truly classless society based on meeting needs is created and vices like greed, power, ambition etc. are no longer active
  • Critics argue the state never ceases to exist and the transition is often justified (as the ends justify the means), it often accompanied by heavy government control, censorship and oppression leading to the deaths of many.
communist manifesto
Communist Manifesto

Marx’s suggestions:

  • Abolish private property
  • Abolish rights of inheritance
  • Centralize all banking, communication, transportation operations under state control
  • Extend state ownership of factories
  • Impose a heavy progressive income tax to redistribute the wealth
consequences of communism
Consequences of Communism
  • In the Soviet Union
    • Led to severe shortages/millions died as industrialization was prioritized above agricultural production or consumer goods.
    • Workers worked harder in conditions comparable to or worse off than before
    • Millions died during Stalin’s rule due to oppressive government measures and purges
  • Animal Farm comparison
  • If Marx challenged capitalism, on what grounds does capitalism leave room for criticism?
    • Blind greed and ambition lead to exploitation and lack of human compassion
    • Rich get richer and poor get poorer; great income disparity
    • Socio-economic barriers to advancement
  • How do supporters defend capitalism?
    • Higher standard of living is produced over time
    • Individualism; each is responsible for wealth-building through hard work, efficiency, education etc.
    • Greater protection of freedoms and rights
    • Greed and ambition has to be offset by compassion