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Related Words, Beliefs, Background

Worldview Theme #19: Capitalism

Worldview Theme #19A: Economic Individualism    Worldview Theme #19B:  Corporate Capitalism
Contrast Worldview Themes #19 and #48 --    these themes involve orientations, beliefs or behavior that are (more or less) diametrically opposed!            

Contrast Worldview Themes #19 and #49B --    these themes involve orientations, beliefs or behavior that are (more or less) diametrically opposed!            

Contrast Worldview Themes #19 and #50B --    these themes involve orientations, beliefs or behavior that are (more or less) diametrically opposed!           

competition vs. co-operation--the former involves two or more rivals in a contest where typically only one wins, profits or comes out ahead, the latter involves a mutually beneficial association where people help each other.    

economics--a social science concerned with allocating resources to satisfy human needs and wants, and thus with the production, distribution and end uses of goods and services. It is important to understand that there are alternative ways this allocation might be made. 

economics, behavioral–challenges neoclassical economics based on appreciation of human nature and research involving "how actual people make financial decisions" as Barack Obama put it in 2009.  With economic crisis casting doubt on "markets know best," governments may increasingly turn to behavioral economists' ideas to restore prosperity. 

economics, neoclassical–is based on beliefs that 1) when it comes to allocating capital, free markets know best--thus government interference should be minimal; 2) rational individuals guided by self-interest create efficient markets.  

economic system, functions of--generally refers to individuals and socioeconomic / political institutions within a society producing, distributing, and consuming goods and services, deciding questions of ownership, and allocating economic resources (and their costs and benefits).  These are handled differently in different systems (capitalist, socialist, etc.)  Specifically these functions include making decisions as to what goods/  services will be produced / offered, at what price and quantity, how production will occur and products distributed, managing the factors of production and associated problems, how services will be delivered, how benefits are distributed, how costs / burdens are shared,  etc.     

egoism -- the belief that individual self interest is the basis for all human behavior and that this is how it ought to be

end of game strategy -- a strategy that can be adopted by a participant in either games or real life interactions with others in which belief that the game is about to end determines the strategy employed. Examples: 1) if you are certain you’ll never see a particular person again, you may decide that it’s okay to cheat that person out of something , and 2) if you are certain that Armageddon is fast approaching, you’ll have little incentive to care about the long-term environmental health of the planet.

financial literacy--according to the National Endowment for Financial Education, this is "the ability to read, analyze, manage, and communicate about the personal financial conditions that affect material well-being. Financial literacy includes the ability to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and respond competently to life events that affect everyday financial decisions, including events in the general economy."  

free lunch, there is no such thing as a--refers to the belief that neither a person nor a society can truly get something for nothing: even if something appears to be free there are always hidden costs. The costs may have to be paid in the future, someplace far away, by someone else, be distributed over many people, or they may show up in another form (such as an opportunity cost, environmental cost, increased disorder, etc.)  The physical basis for this belief--which becomes a principle for ecologists and others studying closed systems--can be found in the laws of thermodynamics.  Economists link it to opportunity costs being incurred when choices are made. (If something is free, no opportunities are forfeited!) 

individualism -- a social philosophy and belief system that places individual interests and rights above those of society, and individual freedom, self-reliance and independence above any social contract obligations

invisible hand --from Adam Smith, a founder of capitalist economics, who in 1776 wrote that in pursuing economic self interest, a person “who intends only his own led by an invisible hand to promote...the public interest.” 

laissez-faire -- refers to free market capitalism being left alone to operate without government interference

money--a token or object that is generally accepted (both legally and socially) as a medium of exchange in paying for goods provided, services rendered, or settling debts. It also provides a measure of value or standard for gauging relative worth / wealth. Most economic transactions directly or indirectly involve money--one exception being a barter economy where money is not needed.

mutualism -- an economic theory popular among some anarchists. Its chief belief is the idea that a market without government interference would not involve profit because firms would then compete for workers just as workers compete for firms. Without government protection of monopolies, its proponents claim, each worker would receive fair and full compensation -- since no deduction for profit to the employer would be removed. 

opportunity cost--an economics concept that puts the cost of resources used in a certain way at the value of what these resources could have brought in or produced if they had instead been used in some alternative way (deemed to be the best).  It represents the most highly valued opportunity forfeited when a choice is made.

profit–the revenue taken in minus the cost outlay associated with a business transaction.

scarcity--a condition that exists when peoples' "wants" exceed the limited resources available to satisfy them.  The related need to decide how limited resources are allocated leads to rationing and a means for doing so.  Price is one such rationing device. People compete  for what is scarce, and in making choices incur opportunity costs. 

Social Darwinism -- the application of Darwinian principles (natural selection, survival of the fittest, etc) to social practices as a natural defense of entrepreneurial capitalism

zero sum game -- generally speaking, a game (which can represent a social or economic interaction or conflict) in which someone wins and someone loses, to be contrasted with a game in which someone can win without someone else losing


capital -- an economics term referring to accumulated goods and resources (or their value) devoted to the production of other goods or set aside to produce income. Capital can take the form of money, raw materials, buildings, equipment, inventories, etc. While economists have long distinguished between “physical capital” and “human capital”, some have recently extended this scheme to include “natural capital”.

capitalism -- an economic system involving 1) private individual or corporate ownership of capital goods, 2) private rather than state control of investment , and 3) pricing, production and distribution of goods (for the most part) by agents or forces operating within the free market system.

collusion -- a secret agreement between businesses or firms that sets price and output in a way that decreases competition and increases profits.

corporation--created to conduct business as a single legal entity, with rights and duties.  For the self employed, incorporating has advantages–notably owners are generally not personally liable for corporate debts or activities.  Corporations,  upon issuing shares of stock, are owned by shareholders–ranging in number from a handful (for closely held ventures) to thousands (for publicly held ones). The corporation is the key organization unit of modern capitalist economies.  Many argue that because corporations are not persons (with moral responsibilities) they cannot be criticized in moral terms. 

economic efficiency -- may refer to either minimizing costs while maximizing production or wisely allocating consumption related expenditures to maximize consumer satisfaction

macroeconomics -- the branch of economics which involves relationships between broad economic aggregates, such as national income, employment, money supply, etc. To be contrasted with microeconomics

marginal propensity to consume -- in the economic theory behind consumer spending and disposable income, this term is defined as the fraction of an extra dollar of income that goes to purchase consumer goods.

marginal utility -- the added satisfaction to be had by consuming an additional unit of a commodity. Economic theory suggests that as a person consumes increasingly more of a commodity the marginal utility eventually declines.

market economy -- a private, free-enterprise system based on independent consumer agents, a price system, and economic forces of supply and demand

microeconomics --the branch of economics focused on individual decision making units, such as a person, household, or business. To be contrasted with macroeconomics.

monopoly -- a situation in a market economy when but a single seller exists for a commodity that has no realistic substitute

needs vs. wants--the former are something that you have to have, the latter are something you would like to have.  If you haven't guessed, needs are more basic, things like air to breathe, food to eat, water to drink, shelter, and other things-- including other people and non-material things they can provide, and other intangibles.  As an example of what might be in this last category are needs that involve feelings such as  "the need to feel valued".  How do you decide if something is really a need or merely a want?  One way is to ask yourself the question, "Can I survive without this?"   

non-economic variables -- things important in the human world but difficult to quantify or put a monetary value on -- including environmental, educational, health, cultural, aesthetic, sociological, political factors.

production, factors of--in both classical and neoclassical economics these are considered to be labor, land (including natural resources), and capital. These can be hired (labor for wages, land for rent, capital borrowed at some interest rate, etc.) or fired in a market economy.  

productivity--in economic terms, this refers to production output per unit of input.

public goods--goods or services that 1) aren't sold (so can't be allocated by the market system), 2)  whose consumption by one individual doesn't decrease the amount others can consume, and 3) provide no easy way to limit their consumption only to those who pay for them and exclude others who don't.  Examples include the benefits of national defense, weather forecasting services, lighthouses for coastal navigation, and clean air.  Many public goods--like the first three of our examples--exist only because of the collective decision of some group, often a government.  As for our fourth example, some consider classifying environmental things like clean air as public goods as inappropriate, preferring to think of them instead as part of "the commons."  

subsidy -- a government payment to producers or distributors in an industry that policy makers deem needs help. The subsidy can have the effect of the industry increasing prices, hiring more labor, exporting more products, expanding, etc. 

top down vs. bottom up–contrasting approaches to bringing change, solving problems, structuring interaction (compare centrally planned economies, market based ones).

wage and price controls -- regulations on wages and prices (typically limiting their rate of increase) which a government can impose to help combat inflation

utility -- in economic theory, this refers to the amount of use and satisfaction that a consumer gets from a particular purchase

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