1. Chapter 6
Pump Primer
Identify the two questions that help determine whether an economy is capitalistic or socialistic

2. Chapter 6
Economic Systems

3. Objectives Describe mercantilism
Chapter 6
Objectives
Describe mercantilism
Describe Adam Smith’s contribution to economics
Define laissez-faire liberalism
Identify the two questions that help determine whether an economy is capitalistic or socialistic
Describe each of the major forms of capitalism
Describe each of the major forms of socialism
Explain how free-market capitalism compares to scriptural principles
Explain how socialism compares to scriptural principles

4. Chapter 6
Biblical Integration
Christians should avoid coveting others' wealth, for God considers wisdom to be of more valve than wealth. (Ex.20:17; Prov. 16:16)

5. the ability to do or have the things that bring personal satisfaction
Chapter 6 pp
wealth
the ability to do or have the things that bring personal satisfaction

6. goal = increase holdings of gold and silver
Chapter 6 pp
Mercantilism
promoted the acquisition of precious metals, not as the means to an end, but as the end itself
goal = increase holdings of gold and silver
misled into thinking that stockpiling money was the same as accumulating wealth

7. Mercantilism: Five-Point Program
Chapter 6 pp
Mercantilism: Five-Point Program
exploration: discover and seize new sources of good and silver
trade: reach a favorable balance of trade
domestic manufacturing: increase domestic manufacturing to produce more goods to sell abroad

8. Mercantilism: Five-Point Program
Chapter 6 pp
Mercantilism: Five-Point Program
colonization: encourage colonizing new territories to acquire new supplies of the factors of production
alliances/treaties/conquest: use foreign relations to minimize competition

9. Five-Point Program Problems
Chapter 6 pp
Five-Point Program Problems
exploration
plunder to reach this balance
support privateers to steal from neighboring nations

10. Five-Point Program Problems
Chapter 6 pp
Five-Point Program Problems
trade
difficult to reach this balance
domestic manufacturing
limited amounts of goods available for purchase in home nation

11. Five-Point Program Problems
Chapter 6 pp
Five-Point Program Problems
colonization
increased tensions between the colonists and their monarchs
alliances/treaties/conquest
drove up prices and caused inflation

12. “Father of Laissez-Faire Economics” Wrote The Wealth of Nations
Chapter 6 pp
Adam Smith
“Father of Laissez-Faire Economics”
Wrote The Wealth of Nations

13. wealth = economic prosperity of the citizens mercantilist nation:
Chapter 6 pp
The Wealth of Nations
wealth = economic prosperity of the citizens
mercantilist nation:
wastes itself to produce for others
despised for its hostile practices

14. a treatise against mercantilism misconception = money is wealth money:
Chapter 6 pp
The Wealth of Nations
a treatise against mercantilism
misconception = money is wealth
money:
provides ability to purchase wealth
provides no utility of itself
is only a tool

15. from the French, to “let alone”
Chapter 6 pp
laissez-faire
from the French, to “let alone”

16. Laissez-Faire Rulers Citizens leave subjects alone
Chapter 6 pp
Laissez-Faire
Rulers
leave subjects alone
allow subjects to seek personal profit
Citizens
free to specialize in jobs
free to exchange goods with one another

17. Criticism: creates a selfish, greedy, anti-social nation
Chapter 6 pp
Laissez-Faire
Criticism: creates a selfish, greedy, anti-social nation
Defense: seek out needs of others to profitably satisfy them
“The Invisible Hand”

18. Modern Economic Systems
Chapter 6 pp
Modern Economic Systems
Capitalism: economic freedom
Socialism: state-controlled economies

19. Modern Economic Systems
Chapter 6 pp
Modern Economic Systems
Two fundamental questions:
Who owns the nation’s factors of production?
Who answers the three economic questions?

20. Chapter 6 pp
socialistic
a central authority, committee, or the people in common own the factors of production and make nearly all significant economic decisions

21. Chapter 6 pp
capitalistic
private individuals own the factors of production and make almost all significant economic decisions

22. Economic Systems Socialism Capitalism less personal ownership
Chapter 6 pp
Economic Systems
Socialism
less personal ownership
less personal decision-making
Capitalism
more personal ownership
more personal decision-making

23. Chapter 6
p. 111

24. Most extreme form of capitalism Private citizens:
Chapter 6 pp
Radical Capitalism
Most extreme form of capitalism
Private citizens:
own all the factors of production
make all economic decisions
have no government

25. Radical Capitalism Unscriptural
Chapter 6 pp
Radical Capitalism
Unscriptural
denies legitimacy of government (Rom. 13:1, 4)
impractical
free market cannot exist without government
anarchy without government

26. Classic Liberal Capitalism
Chapter 6 pp
Classic Liberal Capitalism
Adam Smith
Government must exist, but with minimal control

27. Classic Liberal Capitalism
Chapter 6 pp
Classic Liberal Capitalism
Responsibilities of government:
to protect citizens from foreign aggression
to protect the rights of its citizens from infringements by others
to provide public goods

28. State Capitalism Citizens own: natural resources financial capital
Chapter 6 pp
State Capitalism
Citizens own:
natural resources
financial capital
labor

29. Government intervenes:
Chapter 6 pp
State Capitalism
Government intervenes:
decision-making process
insuring egalitarian goals
Welfare state: extreme state capitalism

30. State control of cornerstone industries
Chapter 6 pp
Social Democracy
State control of cornerstone industries
Private ownership of nonessential businesses
highly regulated

31. large scale government ownership of a nation’s companies
Chapter 6 pp
nationalization
large scale government ownership of a nation’s companies

32. selling nationalized businesses back to private stockholders
Chapter 6 pp
privatization
selling nationalized businesses back to private stockholders

33. Centralized Socialism
Chapter 6 pp
Centralized Socialism
National government:
central owner
decision maker
Envisioned by Karl Marx

34. Centralized Socialism
Chapter 6 pp
Centralized Socialism
Criticisms:
destroys incentives for entrepreneurs
eliminates incentives for individual workers to produce better goods and services
creates shortages and black markets

35. Most extreme form of socialism
Chapter 6 pp
Communism
Most extreme form of socialism
Factors of production managed by everyone in common

36. Contrasting Capitalism and Socialism
Chapter 6 pp
Contrasting Capitalism and Socialism
What does the Bible say?
Supports for capitalism:
the principle of personal, private ownership of property
the principle of individual accountability for decisions (rewards and punishments)

37. Contrasting Capitalism and Socialism
Chapter 6 pp
Contrasting Capitalism and Socialism
Instructions for business owners:
treat employees with respect
pay them a decent wage
pay them on time
Wealth should not draw us away from God