Unit 2- Economic Decision Making

Why Capitalism Works http://www.youtube.com/watch?v=w6adVQrSUAc Prager University, George Gilder (social critic and author)

Notes Know that capitalism is an economic paradigm: here the capacity to produce goods and services are owned and controlled by individuals or groups. The market place is used to make decisions about how the basic economic questions are answered for individuals and society: • what goods & services should be produced? • how should society go about producing goods & services? • for whom should these goods and services be produced?

You have two cows… The following is a parody that was sometimes used in economic classes to explain introductory-level material. These jokes became popular in magazines around 1944. Copy them down as examples.

You have two cows… Socialism: You have two cows. The government takes one and gives it to your neighbour.

You have two cows… Communism: You have two cows. You give them to the Government, and the Government then gives you some milk.

You have two cows… Fascism: You have two cows. You give them to the Government, and the Government then sells you some milk.

You have two cows… Capitalism: You have two cows. You sell one and buy a bull.

You have two cows… Nazism: You have two cows. The Government takes both and shoots you.

You have two cows… New Dealism: You have two cows. The Government takes both, shoots one, buys milk from the other cow, then pours the milk down the drain.

Capitalism and Socialism http://www.youtube.com/watch?v=B3u4EFTwprM Capitalism and Socialism: Crash Course World History #33

The Capitalistic Paradigm 1. Economic Growth the overriding goal of capitalism was to achieve economic growth through the efficient use of resources (factors of production).

The Capitalistic Paradigm 2. Exchange money simplified trade so that an individual could sell a surplus item for purchasing power and then use the earned purchasing power to buy something else or save it for investment.

The Capitalistic Paradigm 3. Investment Know that capitalism encouraged saving for investment, allowing individuals to invest in business opportunities as a way of accumulating personal wealth from the profits of the business.

The Capitalistic Paradigm 4. Profits profits were seen as an incentive to encourage risk taking by entrepreneurs.

The Capitalistic Paradigm 5. Land -Know that the commercialization of land was seen as a method of making it more profitable and therefore more productive.

The Capitalistic Paradigm 6. Specialization the division and specialization of labour were seen as the efficient use of labour because it achieved high rates of production at a low per unit cost.

The Capitalistic Paradigm 7. Materialism In capitalism a major criterion for a high standard of living is the capacity to accumulate a large amount of goods and services.

The Capitalistic Paradigm 8. Competitive Individualism In the capitalistic paradigm every individual is expected to be self-sufficient and to compete with others in an effort to achieve success.

Analysis 1. What are some of the positive aspects of capitalism? Based on today’s notes and videos, answer the following: 1. What are some of the positive aspects of capitalism? 2. What are some of the positive aspects of socialism? 3. What are some of the negative aspects of capitalism? 4. What are some of the negative aspects of socialism? 5. What aspects of our society, if any, do you feel should be ran based on socialistic principles? 6. What aspects of our society, if any, do you feel should be ran based on capitalistic principles?