Pump Primer Identify the two questions that help determine whether an economy is capitalistic or socialistic Chapter 6 Economic Systems Chapter 6 Objectives Describe mercantilism Describe Adam Smiths contribution to economics ID: 233851
Download Presentation The PPT/PDF document "Chapter 6" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Chapter 6
Pump Primer
Identify the two questions that help determine whether an economy is capitalistic or socialisticSlide2
Chapter 6
Economic SystemsSlide3
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 principlesSlide4
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)Slide5
pp. 106-110
Chapter 6
wealth
the ability to do or have the things that bring personal satisfactionSlide6
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
pp. 106-110
Chapter 6Slide7
Mercantilism: Five-Point Program
e
xploration: discover and seize new sources of good and silver
t
rade: reach a favorable balance of trade
d
omestic manufacturing: increase domestic manufacturing to produce more goods to sell abroad
pp. 106-110
Chapter 6Slide8
Mercantilism: Five-Point Program
c
olonization: encourage colonizing new territories to acquire new supplies of the factors of production
alliances/treaties/conquest: use foreign relations to minimize competition
pp. 106-110
Chapter 6Slide9
Five-Point Program Problems
exploration
plunder to reach this balance
support privateers to steal from neighboring nations
pp. 106-110
Chapter 6Slide10
Five-Point Program Problems
trade
difficult to reach this balance
domestic manufacturing
limited amounts of goods available for purchase in home nation
pp. 106-110
Chapter 6Slide11
Five-Point Program Problems
colonization
increased tensions between the colonists and their monarchs
alliances/treaties/conquest
drove up prices and caused inflation
pp. 106-110
Chapter 6Slide12
Adam Smith
“Father of Laissez-Faire Economics”
Wrote
The Wealth of Nations
pp. 106-110
Chapter 6Slide13
The Wealth of Nations
wealth = economic prosperity of the citizens
mercantilist nation:
wastes itself to produce for others
despised for its hostile practices
pp. 106-110
Chapter 6Slide14
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
pp. 106-110
Chapter 6Slide15
pp. 106-110
Chapter 6
laissez-faire
from the French, to “let alone”Slide16
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
pp. 106-110
Chapter 6Slide17
Laissez-Faire
Criticism: creates a selfish, greedy, anti-social nation
Defense: seek out needs of others to profitably satisfy them
“The Invisible Hand”
pp. 106-110
Chapter 6Slide18
Modern Economic Systems
Capitalism: economic freedom
Socialism: state-controlled economies
pp. 111-120
Chapter 6Slide19
Modern Economic Systems
Two fundamental questions:
Who owns the nation’s factors of production?
Who answers the three economic questions?
pp. 111-120
Chapter 6Slide20
pp. 111-120
Chapter 6
socialistic
a central authority, committee, or the people in common own the factors of production and make nearly all significant economic decisionsSlide21
pp. 111-120
Chapter 6
capitalistic
private individuals own the factors of production and make almost all significant economic decisionsSlide22
Economic Systems
Socialism
less personal ownership
less personal decision-making
Capitalism
more personal ownership
more personal decision-making
pp. 111-120
Chapter 6Slide23
p. 111
Chapter 6Slide24
Radical Capitalism
Most extreme form of capitalism
Private citizens:
own all the factors of production
make all economic decisions
have no government
pp. 111-120
Chapter 6Slide25
Radical Capitalism
Unscriptural
denies legitimacy of government
(Rom. 13:1, 4)
impractical
free market cannot exist without government
anarchy without government
pp. 111-120
Chapter 6Slide26
Classic Liberal Capitalism
Adam Smith
Government must exist, but with minimal control
pp. 111-120
Chapter 6Slide27
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
pp. 111-120
Chapter 6Slide28
State Capitalism
Citizens own:
natural resources
financial capital
labor
pp. 111-120
Chapter 6Slide29
State Capitalism
Government intervenes:
decision-making process
insuring egalitarian goals
Welfare state: extreme state capitalism
pp. 111-120
Chapter 6Slide30
Social Democracy
State control of cornerstone industries
Private ownership of nonessential businesses
highly regulated
pp. 111-120
Chapter 6Slide31
pp. 111-120
Chapter 6
nationalization
large scale government ownership of a nation’s companiesSlide32
pp. 111-120
Chapter 6
privatization
selling nationalized businesses back to private stockholdersSlide33
Centralized Socialism
National government:
central owner
decision maker
Envisioned by Karl Marx
pp. 111-120
Chapter 6Slide34
Centralized Socialism
Criticisms:
destroys incentives for entrepreneurs
eliminates incentives for individual workers to produce better goods and services
creates shortages and black markets
pp. 111-120
Chapter 6Slide35
Communism
Most extreme form of socialism
Factors of production managed by everyone in common
pp. 111-120
Chapter 6Slide36
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)
pp. 111-120
Chapter 6Slide37
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
pp. 111-120
Chapter 6